Smoother ride
The year 2004 was a tough year for the industry as a whole, with much of it still fragile from the fallout of 9/11, Sars, the Iraq crisis, and more recently, soaring fuel prices.
These comments – from Emirates’ vice-chairman and group president Maurice Flanagan – sum up the woes of the airline industry, which he feel, have been oversimplified and distorted. Industry-wide losses since 2001 now amount to around $35 billion, but the estimated global airline loss of around $5 billion for last year was distorted by losses of $9 billion made by very large US carriers. They were beset by socio-economic crises that have not troubled the rest of the world to anything like the same extent, he says.
But, on a positive side, Flanagan says the global outlook for this year is brighter.“Already last year, international passenger traffic grew 15.3 per cent over the total for 2003, while cargo was up 13.4 per cent,” he points out. “Going east from the US, there are many bright spots. European carriers are picking up. Lufthansa, Air France-KLM and British Airways all announced positive third-quarter 2004 profits, and further east it looks better still. Cathay and Singapore Airlines have fully recovered from the effects of Sars, and year-in year-out are very profitable businesses. Qantas remains healthily profitable, and a number of low-cost carriers have started up, based on the Singapore open skies hub, where the Singapore government has provided a low cost terminal.”
Noting that Emirates has shown a profit in every year of its existence except the second since its founding in 1985, Flanagan said the airline today has 100 aircraft on its order book, worth some $30 billion in list prices. “We have grown in capacity from Day 1 at an annual average of more than 25 per cent and plan to do so for many years,” he commented.
He characterised Emirates as “not a very big airline, 14th in order of size according to Air Transport World, but moving up fast and operating only big aircraft,” and pointed out that Emirates’ net profit for the six months to September 30, 2004 increased by 41 per cent over the same period in 2003 to a record $236 million. (Emirates’ financial year runs from April 1-March 30.)
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Sheikh Ahmed ... ‘the A380 is |
With $30 billion worth of aircraft on order, Emirates not only continues to be the leading airline in the region but, according to a recent research published by the UBS Bank, is likely to become the “Airline of the Earth” in the next decade. In this independent report, UBS Bank highlights the fact that Emirates has ordered 45 A380 super jumbos, almost three times as many as the next largest Airbus customer for this double-decker.
The success of Emirates, which has made a profit for the past 19 years and is now the third most profitable carrier in the world, has highlighted the quality of aviation in the Arab world once considered the bottom of the Premier League. In fact, Emirates has encouraged the start-up of three new Gulf airlines – Qatar Airways, Etihad Airways and Air Arabia – two of which have ordered similar aircraft to Emirates and almost mirror the early days of the Dubai-based airline.
The Gulf, therefore, becomes a unique centre of world aviation with probably more airports and more airlines than any other such region, size- and population-wise, on the globe. Today, Emirates has a fleet of 73 wide-bodied aircraft and a network of 78 destinations. Not only is it the biggest vendor of the A380, but from mid-March it has started receiving the first of 27 Boeing 777-300ER making it one of the largest operators of 777s. By late 2007, Emirates will have a total of 51 Boeing 777s with a list price of $105 billion. By 2012, Emirates will then have had the delivery of 100 more aircraft than today.
Emirates’ productivity has been 66 per cent greater than the average for all Iata airlines, largely because of healthy operating costs. (Emirates’ costs of 8.5 cents per seat mile, exclusive of its freighter operation, were significantly lower that those of Continental, American Airlines, United Airlines and Delta, which ranged between 9.7 cents and 12.1 cents per seat mile.)
What’s more, with 45 aircraft on firm order, Emirates is the world’s largest customer of the A380 aircraft. Emirates’ orders for the super jumbo amount to a full third of all orders received by Airbus for the new aircraft, from more than a dozen of the world’s airlines. With a combined value of almost $15 billion at list price, this is a huge investment by Emirates and an unmistakable sign of its commitment to the product and its belief in it as a key element of its future fleet.
Over a 20-year history of rapid growth, Emirates has learned that the greatest impediment to its development is not in customer demand but in the number of seats it can offer. The result is an A380 order book that will make Emirates the world’s largest operator of the new aircraft for at least the first decade from its launch.
“I am very proud that Emirates was the first airline to sign for the A380 – and that today we are its largest customer, with 45 of them on order. I am also pleased that we are the launch customer for the freighter version of the A380,” said Emirates Group chairman, Sheikh Ahmed bin Saeed Al Maktoum in Toulouse, France during a ceremony to unveil the A380 super jumbo.
“The A380 is an ambitious aircraft that meets our ambitious growth strategy,” he added. “Every single one of the A380s we have ordered has been carefully planned for and supports present and future network needs. It will play a significant part in our expansion in a way that no other aircraft could.”
Indeed, this aircraft is a key element not just in Emirates’ future growth but in that of the airline industry in general. Air travel is forecast to double in the next 14 years. There are continued constraints on traffic rights and the availability of landing slots – and, therefore, large capacity aircraft will be vital to airlines’ need to meet the increasing passenger demand. What’s more, the A380 will give airlines some of the lowest seat costs in the industry and will be an impressive people carrier, while offering more, not less, passenger comfort and amenities. Sheikh Ahmed sums it up by saying, “The A380 is the future of air travel.”