16 October, 2006

Emirates will be World's Biggest Airline

Emirates Airline Logo

Last month, German Wirtschaftswoche featured a very good analysis
about the prospects of Emirates Airline. For all non-German-speaking readers, I've picked the highlights for you:

Gary Chapman, director of finances and human resources at Emirates Group:
"We will grow both our total revenue and the number of our passengers at 20 percent annually for the next 10 years."

Let's do the math: (1.2)^10 = 6.19: By 2016, Emirates will be more than six times as big as it is now - provided Chapman is right, of course. But, you may ask, how big is Emirates now? Because, well, six times nothing is still nothing, right? Not so fast: With total revenues at 6.3 billion US-dollars, Emirates already ranks 19th worldwide. Compared to 26 billion dollars of Air France-KLM, currently the world's biggest airline (in terms of total revenues), this doesn't look bad at all. Especially when you consider that Emirates grows at a much faster rate than the biggies - while beeing much more profitable, too. The article quotes analysts from Swiss-based bank USB:
in 2010 Emirates will be the biggest long-distance airline in the world and in 2015 the biggest airline overall.

More interesting stuff from the article:

  • Emirates won't go public any time soon. It's CEO, Tim Clark, proudly declares that their cash reserves are so high that they could even fly for half a year without charging a single passenger.

  • The airline won't join a flight alliance like Star Alliance - because they think this would hinder their growth.

  • Over the next five years, Emirates will invest more than 500 million euros in sports sponsoring.

  • Within ten years, Emirates will connect its homebase Dubai with every major city in the world.

  • Unlike its competitors, Emirates only uses big airlines, which translates into better comfort.

  • Their cost-structure is similar to low-cost airlines: flat hierarchies, relatively low salaries (at least when compared to their European and American competitors).

  • Last, but not least, they are located in Dubai, which means low or non-existent taxes and cheap kerosene.

All in all: Tough times are coming for Emirates' competitors! And golden times for Dubai: Some of the passengers that are routed through the city by Emirates will always stay in the City, contributing to it's meteoric rise. By the way: Dubai is currently constructing the biggest airport in the world.


Tim Newman said...

Tough times are coming for Emirates' competitors!

They've been having it tough for years, as the airline industry is as cutthroat as can be.

However, Emirates will need to ensure its customer service keeps pace with its phenomenal growth, something it has let slip in the past few years. Retention of staff is extremely hard, due to the fact that they recruit young inexperienced personnel en masse bu do nothing to keep them once they have got a few years under their belts.

If Emirates manage its customer services well, it will be a force to be reckoned with. But as with Chelsea football club, any business run from the pockets of a wealthy benefactor as opposed to along normal business lines is a force to be reckoned with. Long may such stupidity continue, for the benefit of us all.

Slagothor said...

Emirates are constrained by one tiny, inconvenient fact: all of their flights have to begin or end in Dubai, and there is a finite number of people who want to come to, or transit through, Dubai.

Maybe the number of people coming to Dubai will multiply sixfold in ten years, and maybe Emirates will capture all of that traffic. We'll see. I reserve the right to maintain some skepticism.

Don't forget that Etihad is also expanding as fast as it can, so a lot of Abu Dhabians who previously had to use Emirates to fly to South Africa, Australia, New York, etc, will soon be able to do so using Etihad, and not having to go through the Dubai airport is a huge plus for ADer's.

Anonymous said...

Could you add the another point to that list ... "Emirates also happens to have the most expensive tickets for any given destinations"

secretdubai said...

in 2010 Emirates will be the biggest long-distance airline in the world and in 2015 the biggest airline overall.

Not if Hogan and his heroes have their way...

Anonymous said...

I loved the part about Emirates getting "cheap kerosene".

That sure explains why their fuel surcharge increases every 4 months due to rising costs

Anonymous said...

I do like the 777. I'm debating whether to fly JFK-HAM. I'd prefer the 777 to the 767 that I lately have been doing across the pond. Any plans for JFK-FRA? I've never been to HAM, as FRA is closer to where I want to be.

I like the food and the seating, and I fly coach. The planes are more crowded with more inexperienced flyers, so that has to be factored into the overall experience, I suppose.

PAul said...

I have tried using Emirates for trips to and from Europe from Singapore .
I gave up after 4 flights , as all 4 flights were late , especially the connecting flights .
Also I do not like the Airbus seat layout ( except A380 with SIA ), and find Dubai airport very disappointing and grounded.

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