Emirates the long haul carrier known for its luxury
services, has set new standards for the way we
travel. In it's 2019-2020 financial year, 56
million passengers and almost 2.5 million metric
tons of cargo flew on Emirates to over 80
countries. But like airlines everywhere, the
carrier has been battered by the coronavirus
pandemic.
Covid-19 was especially devastating to airlines like
Emirates.
When we had to ground the airline for two months,
that's unprecedented in certainly my long career in
this business, never seen anything like it. And it
was a psychological blow actually just as well as
what's a physical blow.
Covid brought Emirates to a standstill.
In November 2010, Emirates group announced half year
net losses of three point eight billion dollars.
To keep passengers safe and on board, Emirates
requires face covering for it's passengers and
crew, conducts on site rapid covid tests for
fliers, and allows travelers in economy class to
purchase the adjacent seat on their flight.
And will Emirates, with its network of over 140
destinations and its fleet of wide bodied aircraft,
be able to bounce back from the economic fallout
pummeling the airline industry?
Emirates got its start in Dubai in the mid 1980s.
With a dwindling supply of oil, and the Iran-Iraq
war impacting its shipping container business, in
1985, Dubai authorities launched Emirates Airline.
The carrier's maiden journey took place on a leased
Pakistan International Airlines Boeing 737 flying
from Dubai to Karachi.
Four years later, Emirates was traveling to over a
dozen destinations.
But it was cheap credit of the early 2000s, rising
oil prices, and an ambitious new ruler Sheikh
Mohammed bin Rashid Al Maktoum, that helped
transform the airline and the city.
And the goal was to transform Dubai into what it'd
been seeking to be for decades a link between east
and west, a place where people would stop over, but
also a place that people would stay as they began
to heavily invest into their tourism sector and
create the monuments that we now know, like the
Burj Khalifa, the Palm Jumeirah.
All of those were linked to the Emirates Airlines
strategy of getting as many people onto those
planes as possible in as short of a time as
possible.
By the early 2000s, Emirates boasted travel to more
than four dozen international destinations,
including London, Paris and Melbourne, Australia.
And it was flying to hotspots most European and
American carriers deemed too dangerous.
When I lived there, terminal two was kind of the
death terminal because that was a place that would
fly to Mogadishu, Kabul, Baghdad, Beirut.
They are willing to service places that other
airlines considered too risky.
And that's part of what Emirates Airlines tries to
do. It tries to go into places that others don't.
What Emirates realized was that as the capabilities
of aircraft were developing, not only were they
able to carry more people and cargo, but the range
was extended and Emirates realized that they could
turn Dubai into a super hub.
And while the airline industry was seeing growth
from low cost carriers like Ryanair and EasyJet,
Emirates was beefing up its cabin.
In 1992, Emirates became the first airline to
install a video entertainment system on all its
seatbacks. In 2008, it introduced the onboard
lounge for its Airbus A380 passengers.
And in 2017 debuted the world's first fully
enclosed first class private suite.
So since our inception, we have been focusing on
impeccable services and amenities throughout the
entire passenger journey.
Since our start in 1985 as well we've continued to
set the pace for innovation, luxury within the
travel industry.
I would describe Emirates as what they like to call
accessible luxury.
They want the image of luxury.
They want their airlines to look spick and span.
They want everybody to be taken care of as though
they're first class while offering fares that are
affordable for some of those developing world
customers that they're trying to seek.
Like its regional rivals, Abu Dhabi's Etihad Airways
and Qatar Airways, Emirates benefits from having a
well-funded government owner and a desirable
geographic location.
Dubai Airport is located just eight hours from two
thirds of the world's population.
Emirates is linked to Dubai's core identity.
It's part of one of its most successful brands.
And the royal family has put its full political and
economic capital into maintaining the Emirates
image as an affordable luxury airliner.
So we'll see them around for a long time.
Covid-19 has had a devastating impact on airlines
around the world, according to the International
Air Transport Association, global passenger traffic
plummeted 60 percent in 2020 to one point eight
billion travelers. Worldwide airlines in 2020 lost
118 billion dollars.
And it brought airlines to a complete standstill.
Overall, global demand fell as much as 95 percent.
It's since rebounded, but it's still far below
where it had been. Depending on the country, it's
somewhere between 30 percent and about 45 percent
of pre covid levels.
In March 2020, Emirates temporarily suspended nearly
all of its passenger flights to and from the UAE,
except for repatriation flights to about a dozen
countries. That drop in passenger traffic led to
the company's first loss in its 30 year history.
In November 2020, the Emirates group announced half
year net losses of three point eight billion
dollars. And according to analysts, Emirates, with
its ultra long haul flights, may have a harder time
moving back to profitability than many of its
competitors.
Everything that made Emirates to be so distinctive
is basically what is working against them right
now.
This is the kind of travel that almost immediately
stopped. People were worried about getting the
disease. People were worried about spreading the
disease. People were worried about catching the
disease and being in another country.
And according to analysts, long haul carriers like
Emirates face a number of difficulties, including a
drop in international business travel and a laundry
list of worldwide covid-19 travel restrictions.
What company wanted to send their employees abroad
to another country, send them to a country that's
10 plus hours away?
That demand dried up pretty much overnight by
covid.
You also have the issue that your crew and your
passengers are coming from many different
countries. So trying to understand when you are
basically checking somebody, if that person with
that particular passport is allowed to enter in a
given country is becoming a nightmare.
Another issue for the airline, unlike many of its
U.S. and European counterparts, Emirates doesn't
have a local domestic market to fall back on.
There's virtually no intra emirate flights.
There's no Abu Dhabi to Ras Al Khaimah flights that
Emirates can move into the way the domestic
carriers say in the United States or throughout
Europe were able to still move it within their own
national borders, even as the the lockdown's were
kicking in.
An additional problem for Emirates, according to
analysts, is the makeup of its fleet.
While many carriers have already transitioned to
smaller, more fuel efficient planes, Emirates
remains the world's largest operator of the Airbus
A380. The Emirates Airbus A380 can seat over 600
passengers and has a range of roughly 9000 miles.
Airbus announced an end to its A380 program in 2019
due to a lack of orders.
Of course, the aircraft aren't completely full and
therefore we are able to socially distance people
on flights, keep the crew well protected with all
the PPE that they're wearing and still doing good
standard service. And that's worked across the
whole network.
So if you have a hub, you have to have many
feeders, many routes that go to Dubai and then they
go out of Dubai.
The principle is not new.
Any airline has done that, but they did it at a
massive level to a level that nobody basically has
done it.
Emirates did, however, find some relief in cargo.
While the airline had a well-established
distribution network in place prior to the
pandemic, In April 2020 facing a surge in demand
for PPE, it stuffed cargo on seats in economy class
and in overhead bins.
It also removed economy class seats from passenger
planes, essentially converting them into cargo
planes.
At the beginning of the pandemic, we were focusing
more on the cargo side and cargo has proved to be
our sort of
surviving line, if I must say, because it has
helped us to mitigate whatever risks and losses
that we had earlier.
According to the UN's World Tourism Organization,
global tourism suffered its worst year on record in
2020, with international arrivals dropping by 74
percent. Most experts don't expect to see a return
to pre pandemic levels happening before 2023 or
perhaps later.
It's a major disruption, probably the worst we've
ever had. But goodness me, we have the wherewithal
to try and get ourselves through it and get going
again as soon as possible.
And I believe that demand will return to pre covid
levels sooner than everybody else is thinking that
they will.
In May 2020, Emirates announced 2019-2020 revenue of
twenty five billion dollars, six percent less than
the year earlier. Passenger revenue made up eighty
three point one percent of revenue.
Cargo made up twelve point three percent and non
transport services made a four point one percent.
Excess baggage made up the remainder.
So it's the mass tourism, the millions of people
that they want to be ferrying back and forth, which
that's going to have to wait for the vaccine in a
lot of places it'll have to wait for people to feel
confident enough to spend money on things like
tourism, for Emirates to take advantage of that.
While it waits for those tourist numbers to ramp up.
Emirates is also hoping to capitalize on the global
demand for vaccines.
In October 2020 Emirates, announced it was setting
up the world's largest dedicated airside hub for
covid-19 vaccines at its cargo terminal.
The airline also said it was working with major
pharmaceutical companies, including Pfizer, to
transport vaccines around the world.
It is a very high yielding thing that has been
attractive to airlines and they have been building
up facilities over the past few years so that they
can have a bigger slice of that business.
Certainly at the moment we're working on trying to
move this Pfizer vaccine in specially designed
containers on our planes, in our holds, and in the
cabins, and keeping them at that level through the
distribution point. So we have the chillers, we
have the freezers, we have the logistical control
for the airline to get these vaccines into multiple
parts of the world where others can do that.
By February 2021, Emirates had delivered millions of
vaccine doses to Egypt, South Africa, and Latin
America from manufacturing hubs in India and
elsewhere. And once the pandemic subsides, Emirates
is hoping Dubai continues to emerge as a major
tourist destination.
In March 2021, Dubai launched its vision for 2040,
which includes a 400 percent increase in public
beach areas and a commitment that 60 percent of
Dubai's areas will be nature reserves.
The growth of Emirates and the growth of Dubai are
interlinked with one another.
Dubai wouldn't be where it is without Emirates, and
Emirates has really turned Dubai into a global
business and leisure hub.
Emirates is part of the brand and it is very much
part of the core national strategy.
So in that sense, nothing short of the end of
Dubai. We'll see the end of Emirates.
Emirates is linked to the royal family in a very
big way. That is an advantage because they are too
big to fail.
And more than anything, Emirates is hoping for a
speedy return for international travel demand to
saying it will serve all of its one hundred and
forty three destinations by the summer of 2021.