By Courtney Trenwith
Dubai’s airline has never been one to stick to the mould, having set multiple new industry standards and repeatedly broken plane order records. Its stunning rise has not only influenced the direction of the emirate’s economy, but helped to reshape the global aviation industry and move 50 million people in one year
No airline has grown at a faster pace in aviation history. In 30 years, Emirates Airline has not only become one of the largest commercial air carriers in the world but it has dramatically influenced the entire global industry.
From breaking plane order records to setting new industry standards, the world has often turned to Dubai to witness yet another astonishing milestone.
Today, Emirates carries about 50 million passengers annually, with a fleet of more than 230 aircraft. Its 140 destinations in more than 80 countries on six continents is continually expanding. Its workforce also is immense, with 75,000 people representing more than 160 nationalities.
Emirates was launched on October 25, 1985, with a Boeing 727-200 flight to Karachi, Pakistan. Chairman Sheikh Ahmed bin Saeed Al Maktoum and Briton Sir Maurice Flanagan had been given two planes and $10m to get the airline off the ground – a figure they would now spend in a split second.
Emirates’ monstrous growth has been illustrated by its multiple record-breaking plane orders. It has the world’s largest fleets of Airbus’ double-decker jet, the A380, (for which it also has a dedicated concourse at its terminal at Dubai International Airport) and Boeing 777 aircraft, and has at times been a lifesaver for both manufacturers, placing multi-billion dollar orders when no one else was buying.
On January 7, 1991, Emirates grounded its fleet for several hours when Iraq invaded nearby Kuwait. But a few months later, the airline moved ahead, ordering seven B777s, with an option for seven more, in a $64.5m deal. It also won a slot at what was then the busiest international airport in the world — London Heathrow (which was overtaken by Dubai International in the past year). The London slot was symbolic of the progress of Emirates, which within six years was carrying 25,000 passengers a week to 23 destinations.
By its 10th birthday, Emirates was flying to 34 locations in the Middle East, Asia and Europe. Soon after, it entered the African market, with flights into Johannesburg, Nairobi and Kenya. The continent would later become one of its greatest opportunities.
Capacity soared a whopping 26 percent in just 12 months in 1998, even before the first of 17 new generation A330-200s were delivered.
Emirates marked the turn of the century by becoming the first customer of Airbus’ industry-changing A380, ordering seven at the Farnborough Air Show. It also booked another six B777-300s, as the industry watched the newcomer sprint ahead.
To accommodate the growth — forecast to only continue — a new $600m terminal at Dubai International dedicated to Emirates, with a capacity for 20 million passengers a year, was announced in 2000. Its first phase opened in October 2008.
To help fill the new terminal, Emirates made a surprise $15bn order for 15 A380s, eight A340-600s, three A330s and 25 B777s, while the rest of the industry was struggling to comprehend the sudden and deep dive in passenger numbers following the September 11, 2001, attacks in the US.
Sheikh Ahmed hinted it would not be the last stunning plane deal, when on November 5, 2001, he insisted air travel would double in the next 15 years, despite difficulties at the time.
“Even today we need larger aircraft, let alone in five years when our first A380 leaves the runway at Dubai,” he was quoted by media as saying at the time.
His prescience proved good business acumen, with Emirates' passenger figures rising 18.3 percent to 6.8 million in 2001, while global passenger levels fell 4 percent.
But there were plenty more significant plane orders to come, including the then-largest deal in civil aviation history – an order for 71 aircraft worth a total $19bn, during the 2003 Paris Air Show. That was followed up a year later with four B777-300ERs and then, in 2005, an additional 42 B777s in a deal worth $9.7bn, the largest Boeing 777 order in history.
Boeing received another $3.3bn in 2006, but the aviation industry, now accustomed to Emirates’ massive growth announcements, was floored again in 2007 when the airline signed contracts for 120 A350s, 11 A380s and 12 Boeing 777-330ERs, worth an estimated $34.9bn.
Emirates continued to expand its fleet on its 25th anniversary, ordering 32 more A380s and 30 additional B777-300ERs.
It beat its Boeing record again in 2011, buying 50 B777-300ER aircraft, worth $18bn. At the 2013 Dubai Air Show — itself now one of the largest aviation events — yet another record-breaking order was made, for 150 B777X aircraft and 50 A380s, worth a combined $91.4bn.
Today, Emirates’ average fleet age of 75 months is half the industry average of 140 months. The airline has advocated for even bigger planes, although they could be some time off with other airlines still preferring slimmer models and the A380 struggling to find buyers other than Emirates.
Emirates’ home base of Dubai has a small population of 9 million people (although about two-thirds are expatriates), but it has harnessed its geographical location to attract passengers from all corners of the world. Two-thirds of the world’s population is within eight hours flight of Dubai and Emirates has built its business plan on a strategic network that connects hundreds of cities via its hub.
Earlier this year, it announced it would launch the world’s longest, non-stop route — 17 hours and 35 minutes — between Dubai and Panama City in Central America, from February 1, 2016.
It also has been at the forefront of passenger in-flight services, from becoming the first airline to install TV screens on the back of all seats, in all classes, in 1992, to providing the first in-flight fax service in 1994 and email and SMS services in 2013.
It is currently spending $20m annually adding WiFi across its fleet, with more than 1 million passengers expected to log on during a flight this year.
Emirates also has helped add new impetus to the aviation profession, with about 400,000 people applying for cabin crew roles each year and about 350 new flight deck crew joining the fleet in 2014-15. The Emirates Flight Training Centre opened in 1995 and the airline now also runs training programmes in Australia and the US.
Its finances also have consistently stood out, with the airline announcing a profit every year except 1985, often at times when other carriers were reeling under the pressure of high oil prices, conflict or declining passenger numbers.
The carrier’s significance in the industry has been felt domestically and internationally, from both economic and political perspectives.
Within Dubai, the aviation sector contributed a total of $26.7bn to the economy in 2013, according to an Oxford Economics analysis, including $10.2bn in tourism revenues. The figure was equivalent to 26.7 percent of the emirate’s gross domestic product (GDP) during the same year and supported 416,500 jobs, or 21 percent of the emirate’s total employment.
The report, commissioned by Emirates Group, found that for every $100 of activity in the Dubai aviation sector, a further $72 of additional value was created in other areas of the economy, as a result of supply chain linkages and employee spending. For every 100 direct jobs in the industry, another 116 were created, in addition to the estimated 157,000 jobs in tourism.
The GDP contribution is expected to grow to 37.5 percent by 2020 and 44.7 percent by 2030, “provided that capacity continues to expand to meet potential”.
Preparations are already being made to transfer the Dubai flag carrier to the emirate’s new Al Maktoum International Airport at Dubai World Central, sometime during the next decade. There, it will likely be able to command a large proportion of the planned 220 million passenger capacity.
As Emirates’ passenger services have grown, so too have related businesses, all of which fall under the Emirates Group umbrella, headed by Sheikh Ahmed. Ground handling, cargo, travel, and flight catering services are handled by dnata, which has grown from a business of five staff in 1959 to become one of the world’s largest air services providers, with operations in more than 60 countries.
Emirates SkyCargo is now the world’s largest international cargo airline in terms of freight tonne-kilometres flown (FTKM). It carried 2.4 million tonnes of cargo during the last financial year, contributing 15 percent of Emirates’ transport revenue.
Catering also has ballooned to 46.6 million meals, contributing to record revenues of $545m.
The airline’s growth also has, of course, be synonymous with the expansion of Dubai International Airport, which was inaugurated in 1960 by Sheikh Rashid Bin Saeed Al Maktoum, the then-ruler of Dubai. The airport now has three terminals (one of which is dedicated to low-cost carrier flydubai and another to all foreign carriers).
Emirates also contributes to the economies of its destination countries, some with particularly acute impacts.
The airline claims its operations supported 85,100 jobs in the European Union in 2013-14, and contributed $7.7bn to total EU GDP. In addition, its orders for Airbus aircraft sustained 41,000 jobs at the manufacturer’s French base, equivalent to a $3.8bn impact on GDP during the same year.
In the US, Emirates says its operations contribute more $2.8bn of economic value each year, while its Boeing 777 order book, worth more $90bn, supports at least 400,000 American jobs.
The airline argued in its 2014-15 annual report that its direct connections to European and American cities had an additional ripple effect by enhancing business connectivity and opportunities.
These figures have been particularly called upon during the recent 'open skies' debate between the three largest US airlines and Gulf carriers Emirates, Abu Dhabi-based Etihad and Qatar Airways. American Airlines, United Airlines and Delta Air Lines have accused the Gulf carriers of receiving $40bn worth of anti-competitive government subsidies. In particular, they accuse Emirates of receiving at least $6bn in subsidies from the Dubai government and benefitting from another $6bn worth of “discounts” for services from various Dubai entities, including dnata (in the form of cheaper services), ENOC (cheaper fuel) and Dubai International Airport (cheaper fees).
The accusations were serious enough to see Emirates’ president, Sir Tim Clark, travel to Washington to personally refute them. He argued Emirates had been financially transparent and, having repaid all loans provided to it by the Dubai government during its initial set-up, the company had paid out almost $4bn in dividends to its shareholders and another $1bn in staff bonuses in the past two decades.
He criticised the US airlines’ white paper as consisting of “a series of demonstrably inaccurate assertions, outright distortions, and legal misinterpretations of the open skies agreement”.
The debate is ongoing, with the US government yet to make a decision on the demands for it to reconsider the open skies policy between the US and the UAE and Qatar.
Dubai’s aviation industry has been built on a policy of open skies and Emirates, among other companies, has often publicly called for governments to lift protection of their aviation industries, particularly in Canada and India, where Emirates has pinpointed enormous potential.
At the same time, Emirates has avoided the large global alliances — Oneworld, Star Alliance and SkyTeam — preferring to forge ahead with its rapid growth single-handedly. Although, it swayed from this unilateral approach in 2013 when an historic bilateral agreement with Qantas came into force on March 31, with the Australian flag carrier relocating its Singapore hub to Dubai. The partnership did not start off as well as the companies would have liked, with Qantas soon announcing its largest ever loss. Clark conceded in March 2014 that Qantas’ financial woes “hasn’t helped” the alliance, but earlier this year, the partnership was extended to include codeshare on flights operated by Qantas’ domestic airline, Jetstar.
With existing and potential customers in all corners of the globe, Emirates has used sponsorship of major sporting events to increase its worldwide profile. With one of the largest sponsorship budgets of any airline, Emirates spends hundreds of millions of dollars annually supporting events and teams across football, Formula One, rugby, cricket, tennis, golf and horse racing.
From buying shirt sponsorship rights to some of the world’s most successful teams, the airline also has naming rights for Arsenal’s home ground, now called Emirates Stadium, and Lions Super XV Rugby team’s home ground in Johannesburg, now called Emirates Airline Park.
All of these sponsorships led to Emirates being named the world’s most valuable airline brand, with an estimated value of $6.6bn, in Brand Finance’s 2015 Global 500 report.
From its humble beginnings 30 years ago, there is no mistaking Emirates has taken off. Already travelling at jet speed, even the sky is no limit.For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
An amazing achievement! Congratulations!
THE CROWN JEWEL OF DUBAI
Congratulations, Emirates Airlines! Happy to mention here that I was one of the first passengers on their first flight to Gatwick Airport many years ago. I travelled on Emirates many times more around the globe when I was in Dubai. Back then it was the best aircraft and more so now. Keep it up!
Congratulations. You are the best. I enjoyed my trip to Dubai recently
Emirate Airline is the pivot through which all other commercial and tourism activities of the United Arab Emirate rotates. I salute the management team.