Emirates to become largest wide-body carrier by 2015

DUBAI — Emirates, the largest international airline, is set to become the world’s biggest wide-body carrier in 2015 — overtaking Air France-KLM — when passenger traffic to and from the Middle East is expected to reach 140 million.

By Issac John

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Published: Fri 16 Sep 2011, 11:05 PM

Last updated: Tue 7 Apr 2015, 11:06 AM

The Gulf’s two other fast growing carriers — Etihad Airways and Qatar Airways — will also sustain their phenomenal growth rate to figure in the ranks of the global top 20 by 2015, the Boston Consulting Group, or BCG, said on Thursday. Emirates, which currently operates more than 150 aircraft to 110 destinations in 66 countries, is also in a recruitment drive for 4,000 cabin-crew jobs to keep pace with its vibrant expansion that will see the Dubai-based carrier boosting its fleet size to 199 by 2012 and 300 by 2016.

With a new aircraft order worth $68 billion from Boeing and Airbus, Emirates is the largest single customer of Airbus’ A380 superjumbo with 15 units already in service and 75 more on order.

BCG, in its report “Middle Eastern Megacarriers: Gaining Altitude,” said passenger flows to and from the Middle East increased by 45 million passengers over the five-year period from 2005 through 2010, and they are expected to increase by another 45 million passengers over the next five-year period, from 2010 through 2015. Aerospace giant Boeing said in its latest forecast that Middle East carriers are on track to collectively spend $390 billion to acquire 2,340 new aircraft to keep pace with an average 7.1 per cent traffic growth over the next 18 years.

The region, the third fastest-growing in the world in international air traffic after China and South America, will also account for a lion’s share of new orders for long-haul capacity aircraft.

“Thanks to the world’s three fastest-growing carriers — Emirates, Etihad and Qatar Airways — the region is set to boost its long haul capacity by 140,000 seats over the next 18 years, far outstripping projected capacity growth in Europe and Asia,” Michael Warner, director of marketing for Boeing Commercial Airplanes, said.

According to the BCG study, the Middle East has become entrenched as a hub for long-haul travel.

Increases between 2005 and 2015 reflect a compound annual growth rate of 11 per cent. Led by the Middle Eastern megacarriers — Emirates, Qatar Airways, and Etihad — airlines in the region are expected to triple their passenger capacity over the next 20 years, it said.

“Because the Middle Eastern megacarriers have been early developers of the region as an important hub for long-haul routes—and because they enjoy significant cost advantages — they are well positioned to compete aggressively with more financially constrained carriers,” said Rend Stephan, partner and managing director at BCG Middle East.

BCG estimates that Emirates will grow its capacity by nine to 12 per cent annually through 2015 — the specific growth rates will depend on how quickly the airline retires some of its older aircraft — to become the world’s largest operator of wide-body aircraft.

The study pointed out that the Middle Eastern megacarriers share a common challenge as well: the need to manage the pressure that their aggressive expansion plans exert on their margins. Ultimately, Middle Eastern airlines must fill their added seats — either by expanding their networks or by capturing a greater share of their existing markets.

BCG expects Middle Eastern carriers to face competition from full-service legacy airlines, which can leverage their networks and schedule advantages to attract more-profitable business travellers who prefer nonstop flights at business-friendly departure times

There will also be greater regional competition among Emirates, Etihad Airways, and Qatar Airways for connecting traffic to non-hub destinations in the Middle East and for intercontinental travel.

Other challenges include competition from low-cost carriers within the Middle East, such as flydubai and Air Arabia, the emergence of airlines in Turkey, India, and, potentially, China that embrace the same type of advantaged hub business models being used by the Middle Eastern megacarriers; and the possibility that foreign governments will restrict market access or alter pricing regimes. —issacjohn@khaleejtimes.com

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