Saudi Arabia is a high-potential market for Emirates |
Arab News - 14 June, 2012
Emirates Airline, which operates more than 2,500 passenger flights per week from its hub at Dubai International Airport Terminal 3, to 123 destinations in 73 countries, is growing fast.
The airline, which runs with solid direction from its CEO Sheikh Ahmed bin Saeed Al-Maktoum, has always been flying with success.
Ahmed Khoory, senior vice-president, commercial operations, Gulf, Middle East and Iran for Emirates Airline, exclusively spoke to K. T. Abdurabb of Arab News in Dubai on its activities.
Khoory, who launched Jeddah, Riyadh, Dammam offices in early 90s, said Saudi Arabia holds a key position in its regional operations.
Currently, Ahmed is responsible for the commercial management of 16 stations across the Middle East within 12 different countries.
The following are excerpts from the interview:
What is the secret behind the successful growth of Emirates?
There are so many reasons for this. Firstly, we have a solid direction from Sheikh Ahmed bin Saeed Al-Maktoum, CEO and chairman of Emirates. Moreover, Dubai International Airport and Dubai Civil Aviation are managed by top professionals with the most sophisticated tools and infrastructure. In addition to that, Emirates Airline is using modern aircraft like A380 and Boeing 777. As a hub, Dubai International Airport is managed professionally and it is one of the best airports in the world, which is a clear advantage for Emirates Airline. Also, we have a set of best menus that depends upon the movement and route of the aircraft. We offer a robust variety of dining choices. Our chefs design dishes to reflect cuisine from different regions around the globe and prepare them with locally sourced ingredients. We have a multi-award winning in-flight entertainment system too. These elements make Emirates stand out in the business and these are some of our success factors.
How was your performance in 2011?
Look at the network of Emirates. Last year we found an 80 percent booking, which is extremely good. Political unrest in the region, oil price hike, currency fluctuation were some major obstacles. Despite a difficult operating environment, net profits for the airline alone stood at AED 1.5 billion ($ 409 million) in 2011-12. It was a challenging year due to unrest sweeping into the Arab world, which impacted the flight schedule. However, we carried a record 34 million passengers in 2011-2012, which is up eight percent than the previous year.
What is the outlook for 2012?
2012 looks very good and booking forecast is excellent. This time the summer vacation has been divided into two seasons — before Ramadan and after Ramadan. So we expect to yield double the income as many passengers will divide their trips as two instead of one. It is a double dip for us and we expect more traffic after Ramadan till the end of summer vacation. People will combine Ramadan and summer vacation until schools open.
Do you have plans for route and fleet expansion?
Of course, we are expanding rapidly and have already added 8 destinations during this year and three more will be added in the coming months. This year’s expansion is a record for the airline. In January 2012 we added Rio, Buenos Aires and Dublin. In February, we added Lusaka, Harare and Dallas services. In March, we launched Seattle, and in June we started Ho Chi Minh City operation. Barcelona, Lisbon services will be launched next month and we have planned a September operation to Washington.
Regarding fleet expansion, we have made orders worth tens of billions of dollars including around 90 Boeing 777 planes, 73 Airbus A380 super-jumbos, as well as 70 Airbus A350s.
Currently, we have 172 aircraft including 8 cargo carriers. This year we will be adding 36 new aircraft that includes Boeing 777 and A 380s. The new addition will cost around AED 40 billion. Our plan is to add 196 new aircraft by 2018.
Could you talk about your association with Saudi market? Is there any potential to expand your network there in the future?
Saudi Arabia is a huge high-potential market. Emirates began flying to Saudi Arabia in 1989. Currently, we operate three daily flights to Jeddah and two flights to Riyadh, daily to Madina and Dammam. Since the first week of this month we have added four extra flights to Jeddah. Three weekly additional flights to Riyadh will come into effect from August 1.
As there is a huge demand in the Saudi sector, we have added 1,722 extra seats. Now, we provide 15140 seats per week to Saudi Arabia. We have ambitious growth plans for Saudi Arabia and these added frequencies are an integral part of our long-term strategy. Due to the heavy demand we use A-380 flights to Jeddah. Usually, we use A380 flights only for long haul routes.
The domestic growth within Saudi Arabia is staggering. Over 31 percent of all construction projects within the Middle East are in progress within the Kingdom and our capacity increase, will enable Emirates to capitalize on this growth, while supporting the country’s burgeoning economic development. The demand will rocket again when the current construction ends in Makkah.
In terms of business, Saudi Arabia is the center of the GCC. Saudi Arabia was one of the most challenging stations when we started our operations in early 90s. When I was in-charge for the Kingdom operations, we opened offices in Jeddah, Riyadh and Dammam. It was very difficult to build up the business in the beginning, but Jeddah operations picked up quickly because of year-round religious traffic movements. Today, we are one of the popular airlines in the Kingdom. For us, Saudi Arabia is number one in terms of revenue, profit and yield. Because of Jeddah route, other network also makes money. Since Umrah pilgrimages go on for almost full year, pilgrims from different countries want to use the Jeddah route. We have a lot of other profitable routes in Europe and the Far East. We have also invested in the country’s passion for sport through the sponsorship of the Zain Saudi Professional League, in 2011.
Which are your other busiest and most profitable routes in the region?
Iran, Beirut and Kuwait. From these routes, the yield is high as they are closer. Profitable route depends on how the network sells. The GCC yield is very high always because of short distance routes. Short-routes always bring more revenue. We are also making profits from Qatar, Bahrain and Oman routes. The demand is very high in these routes. Currently, we operate four flights per day to Kuwait. Since many Kuwaitis are doing business in Dubai, we are going to add one more flight to Kuwait in August. Doha is also a very busy route as a lot of infrastructure development is going on there. We are going to add our sixth flight to Doha. Due to the unrest in the region, a number of Qataris prefer Dubai as their destination and a lot of Business related trips are also happening in the sector.
How is your airline managing the long-haul routes?
We are specialized in long-haul routes and today we are number one in the world in long-haul routes. Emirates Airline is very strong in the US and South American markets. Due to the demand and success, we are going to open more destinations in Europe and double daily flights to Madrid. The passengers prefer us for long trips because we use A380 and 777 aircraft.
What kind of competition are you facing from budget airlines?
We are totally different from other airlines. Our product and service are unique from other competitors. However, competition will affect, if we lose a customer because of a budget airline, it is a competition. But you have to note that there are five airlines in the UAE and all are doing very well.
What is the latest travel trend? How do you observe it?
The trend of travel still remains. Whether you have AED100 or AED1,000, when the summer comes, you will travel to either short or long destination. As soon as we opened flights to Basra, the flight was full, and while counting revenue versus operating ratio, Basra is one of most profitable routes these days. In short, everybody will travel, whatever be their financial capacity.
What about fuel price hike?
Fuel price hike is an international problem and it affected us also like other airlines. Last year 40 percent of our cost was for fuel.