CEO Interview: Emirates Airline Make it Happen Attitude
Emirates Airline President Tim Clark talks about the airline's innovative view of connectivity.
Has the uncertain global economic environment affected Emirates’ strategy at all?
The underlying strategy of Emirates has been the same since day one. We concentrate on our own operations, connecting cities, continents, and people with the best service available.
While product and service remain our priority, we have had to increase our focus on manipulating our network and fleet to adjust to changing world markets. For example, in recent years we have witnessed a significant move from west to east, something we have been able to adapt to quickly, given our centrally located hub in Dubai.
There is no doubt, however, that airlines around the globe are fighting to stay afloat in these harsh economic conditions. The industry is faltering under the weight of debilitating fuel costs and sluggish economies. Unfortunately, less financially robust carriers will find it difficult to survive any further hikes in oil price. Fuel accounts for nearly 45% of our overall costs and remains our number one expenditure. We can’t manipulate the global oil price, so we must simply adjust, keeping a watchful eye on our costs for the foreseeable future.
What other challenges do you face in your planned expansion?
To expand we need new aircraft, something we have planned for, with 232 aircraft on our order books. We also need government-approved access to these markets, often the most challenging aspect of any new route launch. Third, we need to see market demand. Fortunately, in this aspect, we have incredibly skilled planners and analysts at Emirates who see links in demand, untraditional city pairs, of which others are not aware.
We already know where we want to fly and where these new destinations sit within our 10- and 20-year, long-term plans. The order of when we plan to launch these destinations may shift slightly from time to time depending on market conditions, but the premise remains the same. We serve markets where there is already strong demand or ones that have demand that we are certain we can stimulate.
Connecting secondary cities that are underserved by traditional carriers has been a key aspect of our success throughout the years. There are many examples of cities in Europe, Asia and Australasia where we identified gaps in the markets and moved quickly to capitalize on the opportunities these gaps presented.
Will airspace issues affect you at all? What changes do you need to optimize flights to/from Dubai?
A review of United Arab Emirates (UAE) airspace is necessary to facilitate Emirates’ growth and will need to be changed in several ways.
It is important that the flow patterns in and out of Dubai are optimized. While we do not want to have aircraft in “hold”, we realize holding may be necessary at certain times. In that case, there needs to be a repositioning of the holding patterns for Dubai and consideration given to moving these holding patterns to be under the control of Dubai air traffic control. They are currently controlled by the UAE Centre in Abu Dhabi. Additionally, new approach and departure procedures based on Performance Based Navigation, which makes the most efficient use of the modern avionics installed on the Emirates fleet, should be introduced.
Moreover, “Flexible Use of Airspace,” based on the US and European model, needs to be introduced with the cooperation of the UAE military. This allows the civilian and military authorities to work together to free up airspace and allow it to be used by airlines and the military at the same time. The concept is well-founded and best practice in other areas of the world should set the standard for flexible use of airspace here in the UAE.
But the UAE cannot introduce all the required airspace changes by itself. The UAE is bound by airspace controlled by Oman, Bahrain, Saudi Arabia, and Iran. It is important that there is a collaborative review and dialog with all of these states to increase the flow throughout the Gulf region, and particularly in and out of Dubai. The UAE cannot make unilateral changes without the agreement of these other countries. Bringing the regulators and governments of these countries together is the only real way of getting the redesign that is required here in Dubai.
How will you utilize the two airports—Dubai International Airport and Dubai World Central?
Emirates will not split its passenger operations by operating out of two airports. We plan to move the entire passenger fleet to Dubai World Central around 2025. Our SkyCargo freighters will move to the new airport before the passenger aircraft, but we are still evaluating the timing based on the airport buildout, so don’t have a confirmed date.
Can the Middle East market sustain a number of global airlines and hubs?
The Middle East can, and has, sustained several global airlines and hubs. This question continues to dominate headlines, despite Emirates, Etihad, and Qatar Airways all reporting consistent growth.
We firmly believe that competition is good for the industry and even better for the consumer. Giving passengers a choice of airline keeps us on our toes. Working harder to win a customer’s patronage ensures that we stay nimble enough to capture changing market sentiment, shifting our sales and marketing strategy when necessary and introducing new products that set us apart.
Will we ever see true liberalization in aviation?
Emirates has always been a firm believer in aviation liberalization. The UAE has Open Sky agreements with many countries around the world and has always advocated the incredible benefit that these types of agreements bring to local economies. They stimulate economic development and drive growth—key to any market’s future.
True liberalization can only be achieved with the support of local-market governments; a support system that is gaining momentum in some regions and stalling in others.
We fully support aviation liberalization and we will continue to advocate for liberalization for the benefit of all international carriers and the passengers we collectively serve.
Can you tell us more about your views on alliances? Do you really believe they are anti-competitive?
Emirates has never had any interest in being part of an alliance and, frankly, one has to wonder whether we are seeing the beginning of the end of these alliances.
Recent evidence suggests the ability of the major alliances to act as the glue bonding together the multiple carriers within these alliances is weakening. We only have to examine the history of US aviation over the past three years to see how the structure of the alliances has changed significantly. The United-Continental merger saw Continental leave SkyTeam and join Star Alliance. In fact, Continental has disappeared altogether.
Have governments got the balance wrong between the carrot and the stick when it comes to the environment?
While we understand the need for punitive actions to ensure compliance, we believe the European Union is taking the wrong approach with its Emissions Trading Scheme (EU ETS). The EU plan is extra-territorial and therefore would illegally punish airlines for their emissions even when flying outside of EU airspace. We agree with the majority view that any emissions plan must be a sector-wide, global solution.
Emirates will be subject to the EU ETS for all of its 30,000 annual flights to/from Europe. Our current estimates indicate that our compliance costs will be more than $13.2 million (EUR10 million) in 2012 and hundreds of millions of dollars over the first nine years of the program through 2020.
Emirates is very active in corporate responsibility. Can airlines do more in this area to help achieve a sustainable future?
As an airline serving customers in 72 countries we strive to be a leader in global sustainability. One central pillar of our corporate responsibility initiatives is our environmental sustainability program, which focuses on fuel efficiency.
The Emirates Foundation, the aim of which is to improve the lives of those around us, also plays a role. We encourage all airlines to do the same.
Will becoming a global lifestyle brand take focus away from airline operations?
Emirates’ recently launched global brand platform and direction, “Hello Tomorrow”, is just part of the evolution of our brand. It is about inspiring people to greet tomorrow’s unlimited potential today. Becoming a global lifestyle brand won’t take away focus from our operations – in fact it will enhance them by allowing us to connect with individuals who are looking and living for new experiences, and sharing these experiences.
Today’s consumer demands engagement and empowerment from brands. They are not content to be talked at—but want to engage and have meaningful conversations with brands. Through this new integrated communications platform, Emirates will have a more open line of communication with our customers, understanding their hopes, dreams and aspirations, and enabling them to embrace the unlimited possibility of the future.
What role will social media play in your strategy to build the Emirates brand?
Social media is one channel in our communication mix. The role it will play at Emirates is to increase its overall brand awareness, improve brand standing and favorability, and ultimately drive purchase through greater affinity.
In our plan to become a top global lifestyle brand, we will utilize social media to engage the Emirates brand with a wider audience and become relevant to them. Our strategy with social media is to connect with our passengers and advocates beyond the travel experience, through “always on” engagement that builds greater brand loyalty and adds business value. Therefore, the engagement will be focused around topics they’ll find inspiring and engaging.
Our social media engagement will look at improving the advocacy of our target groups, enhance and protect our reputation, and build stronger relationships through interaction to encourage them to become Emirates fans.
Finally, how would you characterize your management style?
The success of Emirates is the result of our corporate culture of innovation and a pioneering spirit, combined with a “make it happen” attitude that is shared throughout the organization at all levels. Working with bright, talented people who are not afraid to take calculated risks makes my job easy.
For more information, visit www.emirates.com