The Aviators

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(Left to right) Unlike Sheikh Ahmed of Emirates and Etihad’s James Hogan, Qatar Airways CEO Al Baker is doubtful of the future of first class travel.

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Both Emirates Airlines and Etihad Airways are investing heavily to upgrade their first-class cabins on the promise of increasing demand.

Last week's Arabian Travel Market saw the great and the good of the region's travel and tourism chiefs meet to unveil their plans for the future. Arabian Business spoke exclusively to the heads of three of the Gulf's leading carriers, to assess the sector's short and long term prospects in the wake of the economic downturn. Reporting team: Tom Arnold, Alex Delmar-Morgan and Kat Slowe.

It is the first day of the Arabian Travel Market, the region's biggest tourism exhibition and a whirlwind of announcements, press conferences and sales patter. Sheikh Ahmed Bin Saeed Al Maktoum, chairman and CEO of Emirates Airlines and Group, has just faced a barrage of questions from the world's media on the future of the A380 ‘superjumbo'.

In the face of unrelenting pressure, he remains adamant that Emirates, which has made a larger order of A380s than any other carrier in the world, is planning to take delivery of 58 475-seat aircraft on schedule by 2012. It is only afterwards, as he speaks to Arabian Business, that he looks further into the future, and his stance softens.

"[Years] 2009, 2010, 2011 are on schedule, but after that we will have to review it," he admits. "We have just received one A380, which means we are on five, and this year we are still receiving 17 aircraft in total, compared to last year when we received 23."

The A380 had been heralded by Airbus as the palace of the skies, and Emirates has led the way in delivering the ultimate in luxury at 30,000 feet. On the carrier's maiden A380 flight from Hamburg to Dubai last August, passengers in first class were treated to onboard shower spas, giant televisions, and private lounge areas.

It's an approach that extends beyond the runway, too. Sheikh Ahmed has recently signed a contract to partner with Marriott International on Emirates Group's 1,614-room twin-tower hotel and apartment property in Dubai. The luxury property will be one of the most exclusive in the emirate, operated under the top-of-the-line JW Marriott Marquis brand.

"If we look at the diameter of where we are working from, there are two billion people," Sheikh Ahmed says. "The population of the world is increasing and more people are travelling, and we want to make this part of the world more attractive to come [to]."

At the same forum, just two rooms away, Etihad Airways CEO James Hogan is another high flyer with luxury travel on his mind. He has just unveiled the UAE national carrier's latest designs for its first class cabins, accommodating 12 individual suites, each featuring 80.5 inch fully-flat beds with built-in massagers and personal mini bars. No expense is spared on the $70m revamp, which even includes luxury leather upholstery by the same designer who kits out the interiors of Ferrari sports cars.

And while Etihad will take delivery of the first of 10 A380s from 2012 onwards, Hogan's efforts are presently devoted to the refitting of Etihad's 45-strong current fleet, as well as the seven non-A380 new arrivals to the fleet scheduled during the remainder of 2009. The carrier placed orders worth $43bn last year for up to 205 aircraft, due to arrive between 2012 and 2020.

"The new suite that we unveiled today is all about redefining luxury," he says. "It's about introducing a product which we believe is the most luxurious product in the world in aviation moving forward."

The first aircraft to carry the first class cabin will be a new Airbus A340-600, which is due to enter service at the end of August. Etihad expects the full roll-out of the new suites across its fleet to be completed by the end of 2010.

With competition fierce amongst airlines battling it out to attract a shrinking number of premium flyers, Hogan tells Arabian Business that Etihad's first class cabin refit is crucial to ensure the carrier is top of the queue when demand returns.

"You could ask, in these tough times, why we are investing in such a product," he concedes. "But we've a track record at Etihad of bucking the trend, and of looking at ways that we can innovate while simultaneously hitting our numbers.

"Going into this crisis our confidence was very strong which gives us the strength to roll out this programme," he continues bullishly. "Coming out of this recession we are confident we are well positioned."

Middle East governments and airlines, primarily in the Gulf Arab region, have so far invested approximately $50bn in aviation infrastructure and $178bn on aircraft in a bid to transform the region into a transportation hub, according to the International Air Transport Association (IATA).

Not all carrier chiefs, however, are so sure that first class is the future. Akbar Al Baker, chairman of Qatar Airways, insists that rather than concentrate on trappings for the super-rich, carriers should be looking to the more reasonably priced business and premium class seats to boost their bottom lines.

"The future of the carrier industry is in business class and in premium economy class," Al Baker tells Arabian Business.

"We plan very well and two years ago we made a decision to remove first class from most of our aircraft, if not all of our aircraft, and we were right to do so," the CEO continues. "In today's conditions businesses that used to allow their executives to travel first class are now travelling in business. And we are the winner because our business class is always full."

The airline has already moved decisively in this direction, announcing in April that it was stripping out the luxury onboard lounges on its planes to make room for more economy class seats. From this September, the additional seats will boost capacity on each aircraft from 216 to 256 economy seats.

And moving even further down the price scale, Al Baker reveals that the airline also has a low-cost carrier action plan, including a test plane, that it can put into place within three months should the budget arm of the industry start to threaten sales.

"If we find low cost is becoming a threat, in 90 days Qatar Airways can launch a competitive product. We are completely prepared, and we already have a test plane that is flying about under the guise of a full service aircraft," he says.

It is this flexibility that Al Baker hopes will enable Qatar Airways to pursue an aggressive expansion plan.

At the ATM, the carrier announced that it will start flying to six new destinations in the next 10 months, including routes to Goa and Amristar in India, Sydney and Melbourne and two other, as yet unnamed, cities in Europe.

"I am not satisfied with six destinations - we will keep on expanding our flights," reveals Al Baker, adding that Qatar Airway's fleet will grow to over 110 planes by 2013, from around 68 now, and will increase its routes to 120 in five years from its current 84 destinations.

"Whatever is happening around the world will not affect our growth plans. We are committed and remain committed to growth and all our expansion is pressing ahead on schedule," Al Baker says firmly, noting that in the long term, Qatar Airways has placed orders for more than 200 aircraft worth a combined $40bn.

Back at Emirates, while Sheikh Ahmed has launched low-cost carrier flydubai, which will operate routes from June, he insists he has no plans to follow Qatar Airways by moving away from the luxury lure of first class cabins.

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