Emirates’ expansion goes for the jugular

The natural tendency during a recession is to batten down the hatches, freeze all spending, and ride out the storm. There is also a school of thought which advocates increasing investments and advertising spend during a recession to increase market share, when customers are looking to change in an effort to obtain better value for their spend.

Quite evidently, Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline is in the latter.

In early January I had written about the phenomenal 400% expansion of Emirates Airline in India, now it appears that Emirates is going for the jugular of its competitors across the globe. At a time when all airlines are cutting back and removing capacity, Emirates recently unveiled plans to grow the number of flights across its network by 14% in 2009. Compare this to the 11% reduction in capacity announced by another world famous and recession beater – Singapore Airlines, just three days ago.

Established in October 1985 with leased aircraft operating flights to Karachi, Pakistan and Mumbai, India, Emirates Airline today directly serves 101 cities in 61 countries. In October 2008, the Emirates dedicated Terminal 3 at Dubai International Airport opened. With a total built-up area of 515,000 sq metres and the capability of handling 43 million passengers annually, the 10-storey concourse was specifically designed with Emirates’ future growth plans in mind.

In 2008, 22 million Emirates passengers passed through Dubai International Airport, an 11% increase on 2007.

This year, Emirates will add 18 new aircraft to its fleet, increasing seating capacity by 14% and enabling it to start new routes as well as increase frequencies on many existing routes. It will also expand cargo capacity by 17%.

The additional frequencies will afford passengers a greater choice of flights, more frequent connections with their target markets and shorter, more convenient connection times.

Emirates already has an all wide-body fleet of 129 aircraft. By the end of the 2008-09 financial year, ending March 31, the fleet will increase to 132, including four superjumbo Airbus A380s. In fiscal 2009-10, the carrier will add a further seven A380s along with 10 Boeing 777-300ERs, one 777-200LR and one Boeing 777F freighter.

Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline and Group, recently said

“The next year is not going to be an easy ride for the airline industry. Emirates has prepared the best we can for the challenges we foresee, but we also see it as a time of opportunity. 2009, with our significant capacity increase, will be a year of consolidation for us, with fewer new routes launched than in previous years.

“Instead, we will concentrate on strengthening our presence on routes where there is a greater demand from our customers. All of our new capacity will be deployed in markets where we see growth potential, particularly Africa and the Middle East.”

Africa and the Middle East are Emirates’ fastest growing markets, recording 17% and 6% growth respectively in the last 12 months.

Emirates recently added a second daily flight to Lagos. It will also introduce services from Dubai to Durban, South Africa on 1st October 2009. The route will be served by a two-class, 278-seat Airbus A330-200 which can also carry up to 14 tonnes of cargo into the port city.

Last month, Emirates announced a vast Middle East expansion plan taking the number of seats in the region to 50,000 on 180 flights a week. Additional services to Amman, Riyadh, Jeddah, Kuwait and Damascus were started recently.

Emirates has added 32 weekly flights to its existing Indian services since November, and now operates 163 weekly flights into 10 Indian gateway cities, almost 400% more than it nearest foreign competitor.

As new aircraft come online, both of Emirates’ newest routes, Los Angeles and San Francisco, launched in October and December and operated by its luxurious Boeing 777-200LRs, will go from thrice weekly to dailies from May. The extra services will add more than 2,000 seats a week to the current 1,600 seats, between the US west coast and Dubai.

Emirates’ strategy is demonstrated very well in Bangalore. The west coast flights enabled Emirates to compete head-on with all the European (British Airways, Air France, Lufthansa) and Asian (Singapore Airlines, Thai Airways, Dragon Air/Cathay Pacific) carriers, for the technology sector dominated traffic of Bangalore, and their need to fly to North America and Europe. From one flight Emirates ramped up to three flights a day. Two of the airline’s current three daily flights are going full, and third is also at very respectable passenger load factors. During this time, almost all the other carriers, cut back on flights, frequencies, and/or aircraft capacity.

On 1st February, Emirates became the first carrier to operate commercial superjumbo Airbus A380 flights into New Zealand with the launch of its Dubai-Sydney-Auckland service. There is increased capacity to Australia with additional daily flights to Brisbane and Melbourne, taking the total number of flights a week to 63 effective 1st February. From 1st May, a third daily service to Sydney operated by its 489-seat Airbus A380 three times a week will be added, in full competition to the A380s operated by Australia’s Qantas and Singapore Airlines.

Plans are also afoot to deploy the A380 superjumbos on Dubai–Seoul and Dubai–Singapore services in November and December respectively.

The first A380 flight between Dubai and Seoul’s Incheon International Airport will depart in November, while the Singapore service will start in December and initially run four times a week.

In Europe, Emirates has already embarked on an expansion programme. In recent months it has commenced double daily flights into Milan, increased Istanbul services to 11 flights a week, increased services on the Larnaca-Malta route to seven times weekly and Nice flights to five times weekly. Second daily services into Moscow and Athens are also planned for March.

Emirates has been recording an annual growth rate of 20 per cent over the last five years. In 2007, with the launch of its Dubai–Sao Paulo service, Emirates became the first, and only airline to fly to six continents non-stop from a single hub.

With the addition of more than 8,635 seats and around 600 tonnes of cargo capacity added to its fleet, Emirates is showing no signs of slowing down, on the contrary, competitors better watch out.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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