Emirates eyes 20% growth amid soaring fuel costs

GROWTH PROJECTIONS: Clark said Emirates expects growth of up to 20% this year and 25% next year. (Supplied)

Dubai's Emirates airline expects to grow 15-20% in 2008-2009 and around 25% in the following year as it takes advantage of booming economic growth in the Gulf, President Tim Clark said on Monday.

His bullish outlook was in sharp contrast to predictions of industry traffic growth of 3.9% this year, according to the International Air Transport Association (IATA).

Clark told newswire Reuters on the sidelines of an IATA conference he expected 15 to 20% growth in available tonne kilometres - the total weight of passengers and cargo multiplied by the distance carried - for the fiscal year 2008-2009.

"It probably steps up more in 2009-2010, probably around 25%," he said, adding growth would be helped by the arrival of the A380 superjumbo jet. Emirates is by far the biggest customer of the world's largest aircraft with 58 ordered.

"We have grown about 20-30% per annum for a long time, our seat factor went up five percentage points last year when we put in a 22% increase in capacity so when we put in more we gain more," Clark said.

Emirates - the largest Arab airline - finished the 2007-2008 fiscal year with a load factor of 80% and Clark said the airline planned to push that figure up in the next few years, perhaps to 82%.

Gulf Arab airlines, most of which are owned by their governments, have been buying billions of dollars' worth of aircraft, capitalising on their location between Europe, East Asia and Africa to expand the region as a hub for international passenger traffic and take market share from rivals such as British Airways and Qantas Airways.

Clark said Emirates was well positioned to weather the global economic slowdown and the crisis that has begun hitting the airline industry, particularly in the US.

"Don't forget the United Arab Emirates and Qatar GDP growth are running at double digits... per annum. There is enormous wealth creation going on there for which it is a two-way benefit, we benefit and we contribute to that," Clark said.

Oil prices have roughly doubled in the last year, putting pressure on airlines which have seen their fuel costs soar. Oil prices hit an all-time high of $135.09 a barrel on May 22.

"I would see it creep to $140 [this year] and then start to come off... my view is that it will go up but then it will come back down again because there will be some rationalisation in the industry," Clark said. "I do not share the $200 view."

As a consequence Emirates, like other airlines, would have to be prudent with costs due to the high oil prices, Clark said.

The expected slowdown in the industry was not pressuring the Dubai airline to trim its aircraft orders or even capacity.

"We have always faced a problem where our capacity never meets our demand. As you can see we grow our seat factors five percent points so unless we increase capacity we are going to be spilling an enormous amount of business," he said.

"As far as we are concerned we have an order stream by and large working and being delivered just about as they said they would be," he said. (Reuters)

Print | Email | Discuss this article |

USER COMMENTS (0 COMMENTS)

POST A COMMENT

CLICK HERE TO POST A COMMENT

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.