Last week, Emirates Airlines announced a $16bn deal to buy 20 Airbus A380s, with an option for 16 more at a later date. The order is a big win for the carrier – especially considering that this figure is the list price; Emirates must have received steep discounts to secure a deal of this size and importance. And it’s giving the A380 a whole new lease of life, which could prove to be the gift that keeps on giving.
Tempted by the prospect of similar discounts, British Airways has emerged as a candidate to add to its A380 fleet. Chinese airlines have also expressed an interest, if some of the plane’s four million parts can be produced locally – which Airbus is willing to do. And last week Malaysian Airlines said a trial service taking pilgrims to Saudi Arabia on its A380s has been successful enough for it to consider spinning the model off into a new group; a plan that has surely caught the ears of other airlines looking to boost revenues.
Airbus’ sales chief, and arguably the most successful aircraft salesman ever, John Leahy, is confident he can win “at least one more order this year,” as he told Bloomberg TV last week. If he does, Emirates wins even bigger. The key point of contention in Emirates’ negotiations with the European manufacturer was to keep the programme running for a decade at minimum. Emirates won that argument, and more sales to other airlines guarantee production for even longer.
Saj Ahmad, chief analyst at Strategic Aero Research, is less gung-ho than Leahy, and doesn’t believe Airbus will attract further substantial orders. Even if he’s right then Emirates still wins, as that would ensure the continuation of its “biggest and grandest” proposition. Passengers enjoy flying in the A380, and will continue to do so given Emirates’ customer pitch to “upgrade your airline”. And if other carriers adopt the superjumbo, Emirates still has far more of them, flying to more destinations than anyone else, and thus able to capture any incipient demand.
One problem the A380 faced is that it was built in response to congested airspaces and runways across the world. More A380s in the skies solves the capacity-constraint issue in the short-term, but airports will need to develop their infrastructure to accommodate an increase in superjumbo flight frequencies. Some will want to do so just to lure more of the aircraft away from other hubs. Once again, Emirates carries more passengers on the A380 than anyone in the world, and would be able to secure first mover advantage at any airport that wants additional passengers filing through its gates.
If airports aren’t able to modernise fast enough, Emirates has the partnership with Flydubai to rely on. The budget carrier’s narrowbody fleet will grow exponentially following an order for 225 Boeing 737 Maxs at last November’s Dubai Airshow. Both airlines will soon operate out of a new hub at Dubai World Central, and by feeding into each other, are sure to reach any destination faster and with more strength at the back than any would be competitor.
The bottom line is, the way Emirates is positioned in the region, it is hard to see it lose, whatever the competition.
For all the latest business 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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.