Emirates has been finding itself seemingly under attack from all sides, amid geopolitical shocks, travel restrictions and the rising threat of terrorism. Declining demand in key markets has hurt its business, as the airline endures its first serious crisis since birth.
Amid the realisation that its no longer one of the “new boys”, three decades after its creation, Emirates is examining a bold change of course in its fleet and network strategy.
“You have to take what comes at you,” says the airline’s long-standing chief, Tim Clark. “We’ve had 31 very good years. We’re going through a tough patch at the moment – actually beyond our control.”
So the Dubai carrier is scrutinising all previous business assumptions, including the logic of having a sister airline competing head to-head on short- and medium-haul routes. It is also facing up to the notion – dare we say it – that it is a bit old-fashioned in its thinking.
That’s a fact not lost on Clark: “Compared to the new breed of business model, I’m afraid we are slightly legacy in our approach,” he says. “And that is the death knell for people like me. So we have to adapt our business model to what is going on out there.”
One certain change is its relationship with Dubai’s low-cost airline, Flydubai. Both airlines are owned by the government, and the increasing amount of head-to-head competition must stop, the carrier insists.
So what Clark describes as “a closer-knit working of the two airlines” could in fact see the two become one – he is not ruling anything out.
Such a move would make sense. It’s how Emirates’ two local rivals operate. And the competitive landscape – as well as the trading conditions – have changed dramatically since Flydubai was conceived a decade ago. If the logic of Emirates having an all-widebody fleet is beginning to look fuzzy, then the idea of a sister airline competing on a third of its routes is distinctly unpalatable now.
Clark admits that the Emirates widebody-only business model happened more by accident than design. It was a quirk of the 1980s operating environment that the airline hatched into. Without access to regional markets, it set off building its network with a fleet of Airbus widebodies, and later Boeings.
A merger – if that is what it is – with Flydubai would create a mega-carrier in the region operating a fleet of 300-plus aircraft seating from 170 to over 600 passengers. It is an opportunity it cannot ignore.