Emirates Airline, the Middle East's biggest carrier will maintain capacity growth at between nine and 13 per cent through to 2016 and become the largest wide-body operator in the world in that year, according to a new report from the Boston Consulting Group.
The Dubai-based airline is already the second largest airline in terms of wide-body capacity after Air France/KLM and has an all wide-body fleet. Emirates has tripled its capacity and passenger revenues in the past five years.
Exceptional margins
Cash margins at Emirates have fallen from 28 to 23 per cent in that period but the BCN report still found this performance 'exceptional... considering that the decline has occurred during a period of weak growth in overall demand - when cash margins everywhere have been squeezed by reduced business travel'.
BCN pointed out that the investment in new, more fuel-efficient aircraft also brought cost advantages in addition to low airport fees in Dubai and the ability to hire cheaper, younger cabin staff: 'We estimate that delivery of newer, more cost-effective aircraft over the next several years will reduce unit operating costs at Emirates by an additional 12 to 15 per cent below their already-low levels'.
The A380 flagship is also proving very popular with passengers who just find it a better traveling experience and are willing to pay a premium for this aircraft as ArabianMoney discovered last month (click here).
Horrible legacy
The contrast with the outlook for many global legacy carriers could not be more stark. The US and Europe is facing a flat or even depressed economy for years. Airlines are struggling to pay for new planes and are saddled with ageing and costly unionised labor.
This leaves the field open for the Gulf airlines, including Qatar Airways, Etihad, Air Arabia and Fly Dubai which all enjoy similar competitive advantages. They are also closer to China and India where economic growth rates are expected to continue at much higher levels than in the West or Japan.
Emirates Airline will also be a key driver for the growth of its home base Dubai with staff numbers forecast to double from 40,000 to 80,000 by the end of the decade. This is clearly a local success story that will continue to both serve and drive local business forward in the emirate for the rest of this decade.
