A380 detour won’t derail Emirates’ long-term plans

Dubai Air Show » 2005
December 7, 2006, 5:04 AM

Exactly 20 years old this past October 25, Emirates Airline expects to continue its prolific growth of the past two decades by taking delivery of an average of one new aircraft a month until 2012, more than doubling its present fleet of 81 airplanes. Unfortunately for Emirates, Airbus has ensured that not all will go exactly as planned, as delivery of the first of 45 A380 super-jumbos on firm order slips by up to six months past the originally agreed- upon October 2006. The airline declined to say whether or not it has demanded compensation from the European airframe builder, but the delay could affect plans for major route expansion, especially into the fast-growing Chinese market.

In September the airline saw its fleet top 80 aircraft when it took delivery of its fifth Boeing 777-300ER from its firm order for 30. The delivery represents part of a $30 billion fleet expansion program that will see Emirates receive 92 aircraft over the next seven years.

According to Emirates Airline president Tim Clark, the airline’s fleet will reach 100 by the end of next year. The carrier started operations in October 1985 with a Boeing 737 and an Airbus A300B4, both leased, serving the Indian cities of Karachi, Bombay and Delhi.

17 Years of Profits

“Since then we have grown by more than 20 percent annually and have been profitable for the last 17 years,” Clark told Aviation International News. “We operate one of the world’s most modern fleets, with an average aircraft age of only 55 months.”

Clark said that the carrier’s financial performance (see box) more than supports its ambitious expansion plans. He predicted that Emirates will achieve better results this year than it did in 2004 despite the negative impact of the Asian tsunami and the high rise in fuel prices.

“Our growth rate is often criticized as astronomical,” Clark said. “Though slightly flattened, this will continue over the next 10 to 12 years, by which time we will have around 140 widebody aircraft.

The present rate of delivery will slow because of the lack of physical space to put the aircraft. We expect to fly around 30 million passengers in the next seven or eight years.”

Despite fears of overcapacity in the Gulf region with increased competition from Qatar Airways and Abu Dhabi-based Etihad Airways, Emirates announced the largest order in commercial aviation history at the 2003 Paris Air Show, where it added 71 new Airbus and Boeing aircraft list-priced at $19 billion to its order total. The deal included a firm order for 21 Airbus A380-800s and lease arrangements on two more. Its present commitment for 45 A380s makes it the super-jumbo’s largest customer.

At the same time Emirates ordered two ultra-long range A340-600s and leased two more, and became the launch customer for the larger A340-600 Higher Gross Weight version with a firm order for 18. The carrier also announced new leases for 26 Boeing 777-300ERs.

Then, at the July 2004 Farnborough airshow, Emirates added four more Boeing 777-300ERs and optioned nine more. Last December it ordered three Airbus A310-300 passenger planes for conversion into freighters.

Since January 2004 the airline has launched services to 10 new destinations, including the Seychelles, Seoul and Alexandria, Egypt. However, this year it has postponed plans to fly a new route to Geneva.

Emirates has vigorously prepared for growth of the Chinese market and plans to serve as one of the major international carriers for the 2008 Beijing Olympic Games and the Shanghai World Expo two years later. Meanwhile, the China National Travel Administration reports that almost 29 million Chinese went overseas in 2004, a figure it expects to rise to 40 million this year. And China already ranks as one of the United Arab Emirates’ biggest trading partners.

Emirates’s strategy for China manifested itself for the first time in April, when the airline launched its inaugural service to the Chinese mainland–a nonstop A340-300 route from Dubai to Shanghai. On Feb. 1, 2006, the carrier will begin a new nonstop route from Dubai to Beijing, also with an A340-300. It also has increased services to Hong Kong with A330s and B777s and flies a cargo-only route to Dalian. It says it wants to expand beyond the large Chinese cities to second-tier cities but hasn’t revealed specifics.

Aside from the A380, other new airplanes under consideration include the new midsize Airbus A350 and Boeing 787. Last month it took delivery of the last of 10 A340-500s that it had ordered.  

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