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DUBAI, HUB IN THE MIDDLE EAST

Emirates director Tim Clark sometimes has a nightmare in which Airbus cancels the A3XX project. For Dubai-based Emirates, the first airline to place a firm order for five passenger and two freight versions of the super jumbo and already planning to increase its order to eight passenger jets, this would be a catastrophe. "We really need this aircraft. Without the A3XX things will be very difficult," Clark explains. "In fact we would have preferred it if Airbus had launched the 700-seat version first rather than the 550-seater which is currently on offer." The demand for many destinations already exceeds the supply of seats, even though with four Boeing 777-300's Emirates operates one of the biggest aircraft available. On the Dubai-Bangkok route average utilisation is an almost unheard of 92%, and capacity utilisation on the routes to London (80%) and Frankfurt (77%) is also extremely high. "We won't have any problem filling the A3XX," Clark declares confidently. On the other hand the facilities currently under discussion, such as a bar, restaurant, bedrooms or a fitness centre, he believes are unrealistic. "If the airlines installed all that luxury, they would go bankrupt." He admits that Emirates is actually planning to install 582 seats rather than the maximum of 555 recommended by Airbus. "We will be offering a very sophisticated design in First Class and Business Class, but current expectations among the general public are somewhat off the mark. The manufacturer has created a false impression - even Virgin Atlantic has decided not to install the underfloor bedrooms."

It is hard to believe that an ambitious airline from a small country which does not lie on any of the major traffic flows in global air transport and which did not even exist 16 years ago should be on the point of leaving its mark in aviation history as launch customer for the biggest aircraft ever built. While other, much larger and longer established airlines are still dithering as to whether operating the ultra-large aircraft could ever be profitable, there is no stopping Emirates, which currently has 31 aircraft. "We have been expanding at the rate of around 20% a year for ten years," says Clark. In the last business year Emirates carried almost 5 million passengers, and in eight years numbers are expected to have already reached the 12 million mark. "By 2008 we plan to be operating ten A3XX's, and another five by 2015."

Dubai airport is growing just as rapidly as the local airline, even though some years ago people were predicting that it would become less important to the region rather than more: since the improved range Boeing 747-400 developed into the backbone of longhaul fleets ten years ago airlines have been able to dispense with the stopover on the Persian Gulf that had previously been necessary on the routes from Europe to south-east Asia. But the new aircraft did not the seal the fate of Dubai, and the most important airport in the United Arab Emirates is today one of the most rapidly expanding airports in the world. Nor is this simply for technical reasons such as the need to refuel, but due to the great appeal of the city and region especially to tourists. "Our geographic position offers a surprising potential - we are right in the middle between London, which is 5500 kilometres away, and Singapore, 5800 kilometres away, while Africa in the south and the CIS states in the north provide much of our passenger volume. A billion people live within a radius of 1600 kilometres from Dubai."

Whereas in 1986 this desert metropolis airport still handled only 3.7 million passengers, by 1998 this had risen to 9.7 million and it is expected that 12 million passengers will have passed through the airport in 2000. A full 15 per cent growth was achieved in the first six months of 2000 alone, with just under 6 million passengers. A similar trend has developed as regards the numbers of tourists in a city which has a population of 675,000: over 3 million visitors come to the Persian Gulf every year, among them 105,000 Germans in 1999, an increase of 53% over the previous year. In Dubai the catchphrase is "Anything goes", for both the airline and the airport belong to the ruling Al-Maktoum family. "What is good for the airport and good for the airline is also good for the country," says Sheikh Ahmed bin Saeed Al-Maktoum, head of the Emirates Group and also UAE air minister. "It is important that Dubai should have attractive and unrestricted growth opportunities. We have a very determined government here which has given the tourism business a kick start," explains Tim Clark.

Dubai operates an "open skies" air transport policy: every airline of the world is allowed to land here and pick up passengers - a freedom which is only seldom enjoyed by Emirates in return. "In 1999 we had 92 airlines here. This year the figure is 100, and we are expecting a lot more. We are very aggressive in our marketing," says Nada Kadri from the airport's Marketing department. 45% of the traffic is handled by Emirates, which works closely with the airport in its promotion activities. The duty free shop, for which Dubai has always been renowned and whose floorspace was quadrupled in April 2000 with the opening of the Sheikh Rashid Terminal complex, also plays a very important role. "A lot of passengers fly to Dubai solely because of the duty-free shopping," says Nada Kadri, "but the prices are also tax-free in the city so that the difference between the prices there and in the airport is not very big." But this has no effect at all on the inclination to buy at the airport - on the contrary, duty-free sales are enjoying record business as well. In October 2000 alone, sales totalled around DM 45 million ($21 million), as much as had been sold in a whole year back in 1984. The grand shopping centre, which is split over a number of businesses, clocks up sales of around DM 400 million ($180 million) per year, so that all in all it contributes the lion's share of the considerable profits of the airport.

Dubai would not be Dubai if there were not already plans for even bigger buildings on the drawing board. Already at the end of 2002 a mirror image of the existing building is to be erected on the other side of the tower. This is due to open in 2005 and will make the airport even vaster physically than it is today - the Sheikh Rashid Terminal is 800 metres long, and the route through the tunnel from the old building in which passengers check in is on top of this. Sheikh Ahmed expects his airport to be handling 40 million passengers in 2020, which will make it one of the top airports in the world. There are already plans for the period after that - to build a new airport in Jebel Ali, 45km to the north of Dubai near the free port.

Emirates plans to grow from within, rather than forming alliances, as is customary these days. "Our independence is worth a lot to us. It means we can do things our way," says Clark. "Airlines which think they could not survive without an alliance should leave the business and move into manufacturing bricks! We work with all the alliances on a bilateral basis, and if they insist on exclusivity in their partners, that is their problem." This attitude is supported not only by the substantial resources of the ruling family, but also by "a home market with high yields in the Emirates". 50% of Emirates' passengers come from the region. 23% of all passengers from the Middle East already use Dubai. Air freight business, which accounts for 15 to 20% of turnover, is also very important at Emirates.

On longhaul routes, Dubai will soon become the first choice if Emirates can offer non-stop flights to the USA, Canada, South America and Australia for the first time. With the new longhaul Airbus A340-500, New York, Los Angeles, San Francisco (a 17-hour flight), Sydney, Melbourne and Buenos Aires will be integrated into the network from 2002. In the mid-1990s the Bahrain airline Gulf Air also attempted a non-stop flight to New York, but failed mainly due to a shortage of feeder flights. But Tim Clark is optimistic. "We will have 18 feeder flights from all the destinations to the east of here. Even in Singapore we will be picking up passengers bound for New York."

The service to Germany has already been strengthened: from the start of the summer schedule Emirates will be adding its third destination in Germany to its route network - Düsseldorf. There will be daily flights from the Rhine to Dubai in the A310, until the last A300-600's and A310's are retired from the fleet in March 2002. "The German market is very important to us. It has not had the service it should have up to now," says Clark. "We are also looking into Hamburg as a possible destination. From this spring we will be switching from the A310 to the new A330 on the daily Munich flight, which is already a big success." As well as the daily Frankfurt route there is also a twice weekly codeshare service with Sri Lankan Airways (in which Emirates owns 40%) from Berlin-Schönefeld to Dubai. "50% of German customers only fly to Dubai, while the other half change planes there," explains Henry Hasselbarth, head of north European operations for Emirates.

Meanwhile other European airlines have massively stepped up their services to Dubai: Lufthansa now operates a morning flight to Frankfurt three times a week on top of its daily night flight to Europe, putting it in a significantly better position to compete with Emirates. Since the winter schedule started, holiday airline Condor has also been flying once a week to Dubai, but its flights are handled in the charter Terminal 2, which does not offer anything like the luxury of the main building. Swissair also has daily flights, British Airways even twice daily, while Air France offers 27 weekly departures, including freight flights, to France.

On the other hand Emirates is up against a number of legal hurdles in its attempts to expand in France. "We are only allowed to land three times a week in Paris, even though there would be enough business to warrant two flights a day, so we are having to divert to Nice," Clark complains. Then there are problems in Italy as well: the government there insists on an intermediate stop in Milan on flights to Rome. Again, the free competition policy promoted by Dubai has not caught on throughout the Gulf region. "We would be happy to fly a lot more frequently to Saudi Arabia, but the Saudis are just as restrictive as the Indians. The spirit of change is slowly gathering pace, but if any restrictions should get in the way of our expanding in the future, then they will be legal hurdles."

From page 22 of FLUG REVUE 2/2001