Emirates; The Success Story
His Highness Sheikh Ahmed bin Saeed Al Maktoum (SA), Chairman of Emirates Group and President of Dubai Department Civil Aviation, recently named one of the 20 leading figures in the German travel industry by Focus magazine, granted Breaking Travel News (BTN) an exclusive interview in which he shared his ambitious plans and luminous vision for Emirates Airline.BTN: Your Highness. As the chairman of Emirates Group, can you tell me something of the history of the airline?
SA: We launched Emirates on 25th October 1985, to support the development of Dubai, the Gulf’s most dynamic trade and tourism hub. From two leased aircraft, the airline has grown apace into a global travel and tourism group with 63 jets serving 76 destinations. Our vision has always remained the same - to offer consistently high-quality value-for-money service and to be the best airline on every route we fly. We have one of the world’s most modern, reliable and punctual fleets, offering top class comfort, catering and inflight entertainment. This is our recipe for success.
BTN: Emirates has won awards across a wide spectrum, setting standards for other airlines to aspire to. What is the key to your success and in which areas do you mainly focus, to ensure such high standards?
SA: With our modern fleet, comprehensive network, convenient schedules and associated businesses for cargo, IT, destination management, leisure, and in-house ground handling, we have enjoyed dramatic growth while keeping tight control of customer service and costs. We believe our success is due in part to receiving no Government protection or free fuel, and paying the same prices for services as any other airline.
We operate in Dubai’s totally Open Skies, where any airline can fly without restriction. As a result, more than 100 airlines now serve Dubai. We support this free-for-all for it is healthy, beneficial for the customer, and has made us strong and competitive.
The most important factor is untiring and dedicated commitment by our people. They come from more than 100 countries, and this variety of nationalities and backgrounds is a vital asset. Our reputation is also very strong, helping us to attract more than 240,000 applications to join the group last year—so we can select only the best.
BTN: How important is the Emirates brand?
Emirates is one of the world’s most awarded airlines, possibly THE most, earning some 250 international awards since it was founded in 1985. Superior customer service is seen as a trademark, and Dubai’s rapid growth as a tourist and business destination has also helped. Emirates and Dubai have contributed to each other’s momentum. Dubai is one of the world’s fastest-growing cities with a dynamic economy that has seen double-digit growth for more than a decade.
BTN: How important is your relationship with travel agents?
SA; Travel agents sell most of our tickets and services, and we work closely with them to make our partnership as productive and cost-effective as possible, for example by using the power of the Internet. We also sell through travel shops and airport ticket offices.
BTN: What is your response to the recent launch of ETIHAD?
SA: When we first took off in 1985, a total of 65 airlines served Dubai. Today more than 100 do so, and our strong results show we can cope with competition - in fact, we thrive on it. With passenger numbers in the region rising by 20 per cent a year, the cake is large enough for all to share. Of course, new airlines compete with us, but after investing so much money in our airline, service, and brand, we will do our best to surpass them in a spirit of friendly rivalry.
BTN: According to a recent survey by BTI Canada, the average cost of airline tickets fell in 2003 by 5.4% as more business travellers choose to travel no-frills. Low- Cost carriers put enormous pressure on many airlines in Europe and the U.S. Is there a market in the Middle East for Low-Cost carriers and how will Emirates compete?
SA: The appearance of “low cost carriers” in the region is in line with changes in what is traditionally an extremely dynamic industry. Emirates has flourished in it from the very start, without needing financial assistance, favouritism or subsidies from the government and acquiring planes by using its own resources, borrowing money on international markets or leasing aircraft. We continue to deal with changes ranging from the Dubai International Airport redevelopment to the impact of Sars and the Iraq war. We are quietly confident that we can face the challenge of low-cost airlines too, and as always by giving our customers what they require at prices they are ready to pay.
BTN: How effective has the internet proved to be as a distribution channel for Emirates?
SA: The impact of the Internet is already huge in the US and Europe and getting bigger every year. Our site went live two years ago, and growth so far is promising. We will promote further expansion with a series of campaigns to the mutual benefit of the industry.
BTN: Your in-flight service and entertainment is highly rated. In January you announced a partnership with Tenzing Communications to offer the world’s first regular, airborne wireless laptop service. How will this service enhance the customer experience and how do you think that inflight wireless technology will evolve in the next few years?
SA: We invest millions of dollars a year in information technology. Our new $8 million ice (information, communication & entertainment) system is proving a hit with customers on our ultra-longhaul Airbus A340s serving Australia and Japan. From 1st June, they will launch operations between Dubai and North America. We are the first airline to show BBC World news updates in flight, and first to give travellers the ability to send and receive emails and SMS from any seat, for just $1 a time. They can also phone anyone anywhere for US $5 a minute, and this service, subsidised from our own funds, has helped make ours the most widely-used inflight telephony system in the world. We see ‘being connected’ as something our customers now expect as a right, as they place so high a priority on staying in touch with home or office.
BTN: Congratulations on being named one of the 20 leading figures in the German travel industry for the second year by Focus magazine. How much business do you do in Germany?
SA: Germany is our second biggest European market, after the UK, and German customers are rightly choosy when they have the choice of so many high quality airlines. To serve them better, we offer convenient schedules, modern aircraft and unbeatable cabin crew. Thanks in large part to this, passenger numbers on German routes to and from Frankfurt, Munich and Dusseldorf have boomed in recent years, and so we have added extra services to keep pace with demand. We are keenly aware that we cannot be complacent in a market where efficiency, quality and commercial astuteness are so highly prized.
BTN: What did you have to achieve to become an official sponsor of the 2006 Fifa World Cup?
SA: When we were offered the opportunity to become an official sponsor of the 2006 FIFA World Cup, we were delighted as it fits our plans to become a global brand.
BTN: Having built a substantial presence in the European Market, you are about to expand into North America, with Emirates’ first non-stop service from New York to Dubai scheduled to start on June 1st. How significant has this venture been to your overall strategy?
SA: The route will link America’s largest city and top destination with Dubai, one of the world’s fastest-growing commercial hubs. We will offer unprecedented in-flight comfort and greatly improve connections for all travellers from North America to the Gulf, Africa, Indian sub-continent and Asia Pacific. People from the U.S. will connect to the world via Dubai and cut travelling time, in some cases dramatically. And the route is just the first step in our plans to serve the Americas, as we will serve many other gateways in the US, Canada and South America. The number of Americans on our flights has risen every year since 1992, when we opened a New York office. In the year to February 2004, numbers rose by 61 per cent in First, 47 per cent in Business and 31 per cent in Economy.
BTN: Your business has progressed regardless of world difficulties that have drastically affected the travel industry and other airlines. How have you achieved this?
SA:Travel is the world’s largest industry, and people will always want to travel for many reasons, despite short-term problems. Statistics from IATA, the International Air Transport Association, show a global rise of five per cent a year. Worldwide, that’s a very large number of people. We just aim to meet their needs - it’s not rocket science.
BTN: You recently announced that Emirates debut Eurobond issue is being launched at US$500 million, the largest ever unrated Eurobond issue by an airline and the largest unsecured issue by a corporation within GCC region of countries. A month later, what has been your investors’ response? What are you planning to do with the money?
SA: There has been an excellent response to our new bond, which closed on March 24 with a margin of 0.80 per cent over six months USD Libor. Interest in it was so strong that we have raised the target from USD 400 to USD 500 million. We have a wide geographical spread of investors, with more than a quarter of the investment coming from Europe /Asia and more than half from outside the UAE. The bond gives us a new source of funding as two thirds will come from new investors, and its success underlines investor confidence in our financial performance. The funds raised are not for specific expenditure, but general corporate finance purposes.
BTN: Emirates has significantly contributed to the economic success of Dubai and the United Arab Emirates? Can you comment specifically on your contributions?
SA: People here say “if it’s good for Emirates, it’s good for Dubai”. A lot of the growth is driven by tourism, backed by the government, particularly HH General Sheikh Mohammed bin Rashid Al-Maktoum. We are deeply involved with events like the Shopping Festival, Dubai Summer Surprises, Dubai World Cup and Dubai Desert Classic. The Dubai Airport Free Zone has led manufacturers to base operations here, and being the major airline makes it easy for us to get involved in transporting freight to and from other countries.
BTN: How important are your relationships with other airlines? Would Emirates consider any future alliance or merger with any international airline?
SA: We prefer not to join airline alliances, but instead like to retain our independence. Some airlines claim that sharing resources and exchanging passengers will bring economies of scale, lower unit costs and prices, and public benefits. But for airlines above a certain fairly modest size, economies of scale go into reverse, unit costs go up, and so do prices.
BTN: What are your goals for the immediate future and in the long term for Emirates?
SA: Quite simply, to be the best in every venture we undertake; to meet our customers’ expectations profitably, to contribute to the success of Dubai Inc., and to make the city the new global aviation hub for the 21st century.