Emirates Air Game
Emirates Air game-changing growth splurge rattles rivals
June 25, 2010, 4:16pm
Emirates, the biggest international airline, is rattling rivals in Europe and Asia with a growth splurge that may be as game-changing for long-haul carriers as the expansion of Ryanair Holdings Plc and Southwest Airlines Co.
The 25-year-old company is building up a fleet of 90 Airbus SAS A380 aircraft with 45,000 seats and operating costs the manufacturer says are 12 percent lower than Boeing Co.’s latest 747. That poses a threat to European carriers that specialize in the same long-distance transfer traffic, British Airways Plc Chief Executive Office Willie Walsh said in an interview.
Emirates’ latest order for 32 A380s worth $11 billion, announced this month, will give it 70 more superjumbos than any other airline, funneling price-sensitive passengers through its Dubai hub in a challenge to network carriers including Deutsche Lufthansa AG, Air France-KLM Group and Singapore Airlines Ltd. Competitors say the company is benefiting from government ownership and that they can’t compete with its purchasing power.
“It’s a miracle that Emirates already has more intercontinental seats than Air France and British Airways combined,” said Wolfgang Mayrhuber, CEO of Cologne, Germany- based Lufthansa. “It took us 40 years to get 30 747s in the air in one of the biggest global economies, so one must assume that this is an investment for the world.”
Emirates ranked only 24th among international airlines as recently as 2000, putting it on a par with Sabena SA, the state- owned Belgian carrier that went bust a year later.
In the intervening period the Gulf carrier has increased traffic sixfold, overtaking Lufthansa last year to become the biggest carrier for international flights. British Airways, ranked top in 2000, has suffered a 5 percent drop and stands fourth. The International Air Transport Association counts Air France and KLM as separate airlines.
“We always planned to grow, we were just never able to put our finger on how quickly,” Maurice Flanagan, the founding CEO at Emirates in 1985 and currently executive chairman, said in an interview. “Now we’re short of capacity all the time.”
Rivals should follow the Emirates example in buying more large planes to reduce expenses per head, the executive said. (Bloomberg)
http://www.mb.com.ph/articles/263739/emirates-air-gamechanging-growth-splurge-rattles-rivals