Global air travel to rise by mid-2010 - Emirates

FLYING LOW: In May, Emirates had reported a 72 percent drop in annual net profit.(Getty Images)

The surge in global stock markets and signs of returning consumer confidence suggest global demand for air travel could pick up by mid-2010, the president of Emirates airline said on Monday.

Tim Clark, who has held his post since 2003, said that barring another stock market crash or evidence of a deepening recession, consumer spending is likely to return by next year - a trend that would benefit global carriers.

"On the basis of what we see looking ahead, I think we'll be OK," Clark told Reuters. "I think things will start to come back in the summer of next year."

Clark's comments represent a sharp turnaround from his outlook earlier this year.

In June, he told Reuters on the sidelines of a Kuala Lumpur aviation conference that "every day is a fire-fight" and said the Dubai-based airline had cut fares by 30 percent to drum up demand.

In May, Emirates had reported a 72 percent drop in annual net profit.

But now, after a stronger-than-expected performance this summer, Clark's outlook has improved.

Emirates has raised fares about 22 percent since June, without any slip in load factors. Passenger traffic is more than 20 percent higher this summer than last year. Higher fares have helped the carrier edge toward profitability, Clark said.

"I feel a little bit guilty for allowing fares to fall as low as they did because clearly the market would have supported higher fares," Clark said.

He is quick to note that it could take more time for airlines to see a full recovery of demand, echoing comments from industry group, the International Air Transport Association. Last week, IATA said a recovery in air traffic was under way, but would likely be volatile and weak.

In response to shrinking profits, Emirates slowed its capacity growth. The carrier is currently the single largest customer of Boeing  777 model and a major Airbus buyer as well.

Clark said he was "not sure" if the carrier would buy any planes at the Dubai Airshow slated for November. Emirates currently has $52bn-worth of planes on order, excluding options.

"At the moment, we're just coping with what we've got," Clark said. "That's not to say that in the next year we shouldn't do anything."

Clark sees enormous pent-up demand for travel, especially from travelers flying to the United States. Eventually, Emirates expects to add other US destinations, including San Francisco, where service could begin as early as 2011.

"We're in a deep recession and we're 20 percent up," Clark said. "What's it going to do next summer if there is a return to normalcy?" (Reuters)

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READERS' COMMENTS

Dear Mr. President
Posted by John, Dubai, UAE on Wednesday 2 September 2009 at 13:06 UAE time

If you read the Wall Street wires you will see a very different one from that painted by the Emirates president. Lurching into September with stock prices way ahead of any real economic fundamentals it would appear the skies are far from turbulence-free. Yet we read about hiking fares and claims passenger numbers are way up. This begs the question, who is actually telling the truth? How heavily-discounted were all those extra-20-per cent seats sold, in spite of the sticker price being 22 clicks up? Emirates has a long way to go before it is taken seriously when it talks finances because of its government ownership.

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