QANTAS TIE-UP
Flush with the success of its Qantas tie-up, Clark is conscious that Emirates can benefit from working with competitors, “but if you start taking them down in their back yard, it’s difficult”, he says.
Qatar Airways is focused on expanding across its already expansive network, which now covers the six continents. “We still see gaps which Qatar Airways will be able to fulfil,” says Al Baker.
The decision to launch Philadelphia services was inspired by its alliance membership, as this is a hub of US Airways, which is Oneworld-bound if the American merger comes off.
Qatar is also branching out locally with a wholly-owned Saudi Arabian domestic airline which should be ready for launch by early 2015, initially flying Airbus single-aisle aircraft acquired via its parent, says Al Baker. The airline will be “a 100% Qatari-owned company” run by senior management recruited from outside Qatar Airways.
Oman Air is tempering its expansion plans around its role as a national airline, rather than a predominantly hub-and-spoke operation like its bigger neighbours. “We are a network carrier, but we’re not trying to get to 100 aircraft in three years’ time,” says Pearce.
“We have 30 aircraft and 20 more on order. We have a roll-out of older aircraft, so that will take us to a net total of 44 aircraft by 2018. But we have a major fleet programme review under way and we are aiming to expand the fleet to 50 aircraft by 2017, with further growth beyond that to 2022,”
Pearce is working to turn around the losses at Oman Air, but is convinced that the airline needs to expand to be profitable. “We certainly wound our losses down in 2012, but we’ve got a long way to go – we need a bigger fleet and continue to make efficiencies and get our seat factors and yield up,” he says.
Etihad meanwhile carried 10 million passengers in 2012, but Hogan is guarded on any growth forecast for this year. “We brought in 15 aircraft last year, so we’ve seen growth in passengers, ASKs, cargo ATKs and revenue,” he says. “What’s important is we’re getting the load factor and the RASK that we’re targeting.”
Etihad currently serves 94 cities with a fleet of 80 aircraft, including freighters, and is looking to add destinations in “all parts of the world”, says Hogan. “We’ve just gone into Latin America [Sao Paulo]. There will be more flying announced shortly into the USA and more European flying. We’re building frequency in Southeast Asia and into China and into India,” he says.
And after steering the carrier to a first, albeit small, profit in 2011, Hogan is confident Etihad Airways will remain in the black for a third successive year: “And it will be better than last year,” he says. Net profit rose by 200% to $42 million last year (its fiscal year runs to the calendar year), while revenue was up 17% to $4.8 billion.
Emirates is adding more destinations within the “3,000-mile arena” from Dubai and upgauging to the A380 on existing points such as Barcelona, Brisbane and Los Angeles. It has more African points coming, including Guinea’s capital Conakry, Dakar and the reintroduction of Tripoli.
The Dubai carrier now serves seven points in the USA, says Clark, “and we’re always interested in more, but whenever we speak about that [Delta chief executive] Richard Anderson goes running to the state department saying ‘this is not fair’”.
Clark describes Emirates’ expansion as “a story of explosive growth”. The airline carried over 39 million passengers during its last fiscal year, and traffic is rising at up to 20% annually.
And this growth continues, he says.
“By the end of 2013 we will have opened 25 new points and taken on 40 additional aircraft,” although Clark adds that Emirates plans to only add a net four aircraft in 2014, as it will retire 14 A330/A340s and take delivery of 18 A380s and 777s.
Emirates’ growth and the strong recovery of Dubai as a trading and leisure destination is putting pressure on the current airport (DXB), despite an ongoing expansion programme designed to enable the airport handle more than 90 million passengers by 2020. Clark says that the airport is handling “62-63 million” passengers a year now and growing at 15%, which means it is very likely to surpass that 2020 traffic projection during 2016.
“By August 2016, at the current rate of growth DXB will be at 97 million passengers, of which Emirates will be about 45 million,” he says. “The maths tells us that compounded [we’ll reach the target] four years earlier than we thought we would. So Emirates is busy working on stand choreography in the peaks to maximise the most efficient use of the real estate.”
DUBAI'S NEW AIRPORT
The all-new airport south of the city, dubbed Dubai World Central (DWC), will take up the load to relieve the pressure on DXB by handling cargo flights and new entrants. “With some smart planning of the operation, we can take DXB up to about 100-105 million passengers. At the same time, DWC could grow to 15 million or so by 2020 within the existing terminal, so the SP [strategic plan] 2020 has an amalgam of the two fields, and we could get to 120 million,” says Clark.
He adds that with Abu Dhabi’s capacity set to rise from around 2017 with the opening of its mid-field terminal complex, “for a bit, it might take the heat” off Dubai’s airports.
The long-term solution for Dubai is “to build the big one at DWC”, says Clark, referring to the proposed six runway/160 million passenger complex (see box).
“I think the government will take that decision fairly soon,” he says, adding that this huge hub would eventually become home to Emirates “through a modular approach”.
Over in Doha, Qatar Airways has already squeezed every ounce out of the existing airport and is ready for its overdue move to all-new airport HIA next year. The transfer was delayed from 2013 due to late completion and contractual issues with the developer. Al Baker declines to specify when exactly the move will happen, saying that only that it will be “as soon as we have concluded all our issues with the contractors who are defaulting in delivering the airport to us”.
Its ongoing double-digit expansion saw Qatar Airways carry 17.2 million passengers in its last fiscal year (to March 2013), and this is expected to rise a further 13% to 19.5 million this year.
“The biggest challenge is not getting enough aircraft on time,” says Al Baker. “We have a fleet of 129 aircraft and are taking one every 12 days on average. We should have 200 aircraft in less than three years, maybe earlier.”
The new aircraft are all being used for growth, as plans to begin replacing older aircraft were affected by delivery delays. “We were supposed to [begin a roll-over] if Boeing had given us the aircraft on time. The roll-over will not begin for another two years, because we are so short of aircraft that A330s and A340s that were supposed to be phased out are going for a cabin refit,” says Al Baker.
