Saturday, June 19, 2010

Emirates at 90 A380s

On Friday 19 June there were several tweets regarding Emirates purchase of an additional 32 A380s to bring up the total of ordered aircraft to 90. The other issue was how will deal with Emirates recent order and the prospects of mergers between Emirates and Etihad or Etihad and Qatar Airways.

Emirates success so far did not come from luck but was and is the result of well thought strategies and most of all, the efficient implementation of these strategies.

I am not going to try to second guess Emirate's reasoning for their latest order however;

1. Emirates operates into many congested airports and the A380 is the best way to increase its traffic without adding more aircraft. This will reduce the operating cost in the long run.

2. Many countries even those that profess open skies and liberal regimes are protective of their airlines. Last week France rejected additional slots requested by UAE carriers.

3. The aircraft will be delivered by 2017 and hopefully the global recession will be over and traffic would have picked up and financing will be easier to obtain especially if Emirates keeps producing healthy profits.

The Merger buzz was started by Qatar Airways CEO in his remarks at the IATA AGM as reported on ATW (click here for full story.). He asserted that there will only be two carriers in the Gulf and Qatar Airways is one of them, and all others will disappear. The response was, the region's airlines will undergo some consolidation.

Looking at the three big carriers in the region Emirates, Etihad and Qatar Airways they all share a common trait; most of their traffic is transiting traffic through their hubs. However, the UAE carriers have an advantage, a larger population, almost 7 million, as opposed to 1.5 million in Qatar. This provides additional traffic from expatriates and their extended familiestravelling to and from the UAE to their home countries. Further, Dubai and Abu Dhabi are more popular as tourist destinations than Doha. Qatar Airways is in a more vulnerable situation than its two competitors.

Is there going to be mergers between any pair of the three, I don't think so, simply because all three are considered by their governments as an integral part of their development plans.

Will any of them disappear I doubt it, why should they when their catchment area goes way beyond the region to encompass the world. They have become global airlines with networks that span the world.


  1. With regard to the question of a merge in the Middle East airline sector...

    I personally can't imagine any mergers in the short or medium term. The airlines are more of a symbol of the nation, they are to a large extent the public face of the nation. As such, even if the economics of the airline is in question, they will be propped up by the state. Only when the state is in such a dire financial position will the economics of the airline come into question.

  2. Dear Wayne
    I totally agree with you.



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