As the International Air Transport Association (IATA) expects Middle Eastern carriers to report an $800m net profit in 2019, London to Dubai carriers are battling sky high competition
The heavily trafficked route between London airports and Dubai has been a growing battleground for global carriers in recent years.
The London Heathrow-Dubai route alone was the fourth busiest route in the world and attracted 3.4 million passengers in 2017, according to a RoutesOnline study.
Fierce competition in the skies saw its latest casualty in March this year when Virgin Atlantic, a long-time operator on the route, pulled its once-daily flight between the cities.
It’s now over to Emirates and British Airways to offer non-stop flights between the two cities of London and Dubai
“We’ll be sad to say goodbye to this fantastic city,” said Shai Weiss, chief commercial officer for Virgin Atlantic, as he closed the route after 12 years.
Last year also saw Royal Brunei Airlines launch daily non-stop flights between Brunei and Heathrow from October 28, effectively ceasing its Dubai-London stop-off.
Conversely, Dubai-owned carrier Emirates has picked up speed and is set to ramp up Dubai-London flights to 11 per day across Heathrow, Gatwick and Stansted from July this year.
Abu Dhabi-owned Etihad Airways currently operates 21 flights into Heathrow every week, but plans to add 14 flights per week between London Heathrow and Abu Dhabi this summer.
The current status quo leaves just British Airways holding up UK supply on the route with its three flights to Dubai per day.
Tobias Rueckerl, CEO of London-based Advanced Aviation Consulting (ADAVCO), says that the closure of the Virgin and Royal Brunei routes were driven by unique factors. He says that Royal Brunei altered its London-Dubai route ‘due to new technical possibilities’.
Passengers want flexibility… passengers always opt for frequency and if you only have one daily flight, you have to price it downwards
The CEO tells Arabian Business, “With the appearance of the Boeing 787, there is now the possibility, with the right-sized aircraft, to operate non-stop between London and Bandar Seri Begawan, which offers a clear advantage instead of a one-stop route through Dubai. There is no need to stop to refuel.”
However, the tale of Virgin Atlantic bowing out from the route is a different story, he says.
“London to Dubai is a challenging market for any airline to operate once daily, as Virgin did. Emirates operates 10 daily flights to London, including six to London Heathrow, three to London Gatwick, and one to London Stansted.
Except for the Stansted flight, all the other services are operated by A380s. Etihad also flies its A380s from Heathrow with four flights daily,” says Rueckerl.
“How is it possible for any other airline to compete with that sort of frequency, not to mention the connectivity beyond Dubai? It’s impossible.”
Rueckerl says that Etihad has ramped up its flights to fill the gap left by Virgin and funnel more passengers through Abu Dhabi.
“It’s now over to Emirates and British Airways to offer non-stop flights between the two cities of London and Dubai,” the CEO says.
I think it is viable that Etihad and Emirates will join forces and become one company. It could happen anytime soon
Etihad was not available for comment at the time of writing, however British Airways told Arabian Business that it ‘regularly reviews its extensive global network’ and is currently offering up to 19 flights a week between London and Dubai.
A spokesperson for Emirates Airline tells Arabian Business: “London is a major global destination for both leisure and business travellers and is one of Emirates’ top performing markets, attracting high traffic volumes, not just between Dubai and London, but also from across Emirates network, especially from markets in Asia, Australia and New Zealand.
The UK capital is a leading aviation hub, providing convenient connections for Emirates passengers to the rest of the UK and wider Europe. Emirates provides a strong customer proposition with more choices through a greater range of timings and connections from London to our network of over 150 destinations via Dubai.”
Andrew Charlton, managing director at Switzerland-based Aviation Advocacy, agrees that passengers prefer more frequency and choice on flights, which large capacity airlines, such as Emirates, can provide.
“Passengers want flexibility… passengers always opt for frequency and if you only have one daily flight [like Virgin Atlantic] you have to price it downwards,” Charlton tells Arabian Business.
Emirates further strengthened its network in the UK in 2018, with the launch of its new daily services between Dubai and Stansted airport – located on the outskirts of the capital – and Edinburgh in Scotland. These destinations join its more established routes to Glasgow, Newcastle, Manchester, Birmingham and London Gatwick and Heathrow.
Charlton says that Emirates’ vast networks are effective because they drive passenger flow.
“This demand and capacity means Emirates Airline can price the seats at a lower cost and more profitably because airlines are playing a numbers game,” he says.
Mark D Martin, founder and CEO, Martin Consulting, comments that nearly all flights that originate from the UAE to destinations in the UK, Australia and South Africa are worker and expatriate flights by their intrinsic nature.
“The break up of such travellers mostly originates from Dubai itself, while the balance of connecting passengers are about 40 percent of the total carried/booked load,” says Martin.
“Emirates’ multiple daily flights to multiple destinations clearly does help with offering a better connect for those working and employed in the UAE mostly and, to a marginal extent, those transiting from destinations in Africa and South Africa,” he adds.
Martin says competition on routes between the Gulf and London began during the monopolistic days of Gulf Air in the 1990s and later transitioned over to British Airways and Virgin, to eventually be regained back by Gulf carriers.
He says: “Many of those working in the Middle East have their employment contracts written in a manner where the company provides air travel back home for a month and such air travel is usually on the employer’s account.
This is where the travel deals are usually signed up between the Emirati Sheikh-owned corporates and with Emirates, Etihad, or Fly Dubai,” he says.
“Clearly, the dominance will be with Emirati carriers and Gulf carriers as they take a call with what airline should be chosen.”
However, Martin says the current Gulf carrier dominance doesn’t mean that regional carriers should rest on their laurels.
“When it comes to the leisure traveller market and the business and first class products, European and British Carriers, including their code share partners as part of Star Alliance, One World and SkyTeam, clearly have products that are comparable and notches better than their Middle East counterparts – this is where alliances and seat share agreements play a crucial role,” he says.
Saj Ahmad, analyst, Strategic Aero Research, says he expects Emirates to hold its ground for the near and far future.
“Given Emirates’ dominance out of Dubai, it’s fair to say that they will continue to rule proceedings. With some far superior product offerings versus its rivals, notwithstanding the fact some airlines have exited the London-Dubai market, people are clearly voting with their wallets. The same is true for other EU cities that connect to Dubai.”
Ahmad says that while the dynamic will evolve as the A380 ages and is replaced by the 777X, Emirates’ financial muscle in investment across its business will ensure its dominance, especially against British Airways.
“So while Emirates’ recent financial results show challenges, Emirates will never stand still,” Ahmad says.
Reports of a merger between the two UAE aviation giants said the group would have a combined revenue of $29.3bn.
ADAVCO’s Rueckerl surmised in the future that Etihad and Emirates could merge to become one of the most formidable aviation forces in the world.
“What’s next? I think it is economically viable that Etihad and Emirates will join forces and become one company. It could happen anytime soon,” he predicts.