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Fri 1 Jun 2007 12:00 AM

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Emirates Airline: We’ve got high hopes

Each week Arabian Business turns the spotlight on a leading company.

Is it true Emirates will soon be the biggest airline in the world?

If you believe a recent study by the Boston Consulting Group (BCG), then yes it could well be true. The report says the airline will triple its capacity over the next eight years through new orders and bigger planes.

So where does it rank among the world's airlines at the moment?

In terms of carrying international traffic it's currently in eighth position with a fleet of 102 aircraft. The long-haul airlines ahead of Emirates in the size-stakes at the moment include Lufthansa, British Airways and Singapore Airlines.

Do you really think it can overtake all these huge companies?

Well, according to BCG, Emirates will "catapult itself ahead of [these] bigger airlines" by 2012 by expanding its fleet with 47 Airbus A380 planes in the next few years. The report also says Emirates enjoys lower labour costs than its Western rivals, with a cost advantage on a par with Asian airlines, and 18 to 21% better than carriers in the West. The report cites a 24-hour flying schedule and Dubai's ideal geographic location as further reasons for the company's success. The European Centre for Aviation Development, a consultancy firm affiliated with German carrier Lufthansa, also cites other reasons for Emirates' ongoing success. Apparently, landing fees in Dubai are nine times cheaper than in Germany.

So basically it's cheaper to run...

In a word, yes. Also, although Emirates pays its cabin crew roughly the same as Lufthansa, income taxes and other fees force the German carrier to spend 28% more per attendant. Furthermore, Emirates finances 21% of aircraft purchases with export credit - only possible if planes are built in another country.

They must be growing pretty fast, then?

To say the least. Last year the company's profits rose 25% to US$844m making it the world's third most profitable airline after British Airways and Singapore Airlines. The carrier's revenue rose 28% to US$8.1bn while it increased its annual passenger traffic by three million to 17.5 million.

That's impressive...

Indeed it is. And, the company looks on target to record even better results for 2007. So far this year, Emirates has added a host of new services to its schedule. Among other new routes to be launched in 2007, it has doubled its service to Beijing, added four additional flights to Johannesburg and, in September, will add Newcastle to its UK destination portfolio.

So what's next for the airline?

If rumours are to be believed, the group could be gearing up to launch its own budget carrier. The group has also been subject to ongoing speculation that it is planning to go public.

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