Istanbul: Despite high aviation fuel prices in the past few months resulting in some two dozen airlines closing shop worldwide, Dubai-based Emirates Airlines says it is better insulated from such pressures as demand in its neighbourhood, including India, shows steady growth, potentially absorbing an aggressive aircraft induction programme, including 58 of the A380 super jumbos, the first of which launches services to New York in July.
The state-owned airline’s president, Tim Clark, said his firm is seeking a so-called open skies agreement between India and the United Arab Emirates (UAE) to take advantage of some of the most lucrative routes on its network of 99 cities, nearly one-tenth of which are in India.
Flightplan: Emirates Airlines president Tim Clark says the India-UAE capacity can be broadened further, even doubled at the earliest
From 1 July, the airline plans to increase its weekly flights to India from 105 to 132.
The India-West Asia market, growing at 12% for last three years, is expected to be around 10 million passengers annually, yielding $2 billion (Rs8,580 crore) revenue and an average passenger yield of $200.
Dubai alone contributes 40% of this market share, according to an estimate by India’s largest domestic carrier Jet Airways (India) Ltd that launched operations to the region in early January.
“We have such enormous growth in our regional market—Iran, the Middle East itself, Africa, India, China—if you start talking about global recession to the Indian community they say, well, what do you mean by that,” Clark said recently on the sidelines of an annual meeting of the International Air Transport Association, or Iata, a global grouping of aviation and travel firms.
Clark, who heads the flag carrier of one of the world’s leading crude oil producers, spoke to Mint after a session on how the aviation business could manage operations despite high oil prices.
Emirates, the largest carrier in West Asia, has a 116-aircraft fleet, with another 180 on order, each of which is expected to join every month.
The single largest buyer of Airbus A380s, Emirates reported profits of $1.37 billion in 2007-08 compared with $844 million the previous year.
Inspite of criticism that it receives government subsidies, the airline denies receiving any such support.
Despite being challenged by Mumbai-based carrier Jet Airways and India’s state-run National Aviation Co. of India Ltd’s Air India on Gulf routes, and going forward from Kingfisher Airlines Ltd, that is likely to see a further drop in fares on the sector, Emirates plans to increase flights and offer better add-on services such as free hotel stays to passengers.
“For every seat we offer in Delhi there are 10 (people) who want it,” said Clark, who’s been with Emirates since 1985, adding high demand was there on flights to Mumbai, Chennai, Hyderabad, Kochi, and Kozhikode (in Kerala) as well. “We just need more and more and more, because that market has been under-serviced for so long.”
Since the first bilateral agreement between India and UAE in 1985 when the two sides agreed on 2,200 airline seats a week, the numbers have grown to 54,000 weekly seats each side in the current fiscal making it one of the largest such pact with any country.
Between these years, however, only Air India and erstwhile Indian Airlines (both of which have now merged) were allowed to fly to West Asia. That rule was relaxed this year. From 1 January, the civil aviation ministry allowed private Indian carriers to fly West Asian routes. As majority of the seats were exhausted by Air India, bilateral agreements with UAE were negotiated to increase flights and, starting next month, Jet Airways chairman Naresh Goyal said last week in an interview, the airline hopes to service Dubai, Jeddah and Riyadh from multiple Indian cities, pending government permissions.
Clark feels the India-UAE capacity could be broadened further. “My view is we could double it as soon as we could. We got airplanes in there. I see no problem with that and I am sure that Naresh and Vijay Mallya (head of Kingfisher Airlines) would probably say yes, yes, yes because what we do, they get the benefit of that. It’s not just a one-way thing for Emirates,” he said, adding better still the countries should sign up an open skies treaty like the one India has with the US. “It’s pretty much upto the Indian government, they know us, we would love to have an open skies agreement.”
Tarun Shukla was recently in Istanbul as a guest of the International Air Transport Association.