INDUSTRY / COMPETITION

Emirates orders 32 more A380s, grows A380 fleet to 90 aircraft

Dubai-based Emirates has signed a deal to buy 32 additional A380 aircraft in an order with a list price of USD11.5 billion. This brings the airline’s total A380 order to 90 aircrafts, nearly 40 percent of worldwide orders for the superjumbo. Emirates president Tim Clark said that all 90 A380s will be operating at the same time in the future, as “The first A380 aircraft we ordered will be retired from the fleet in 2020, and the last of this order will be delivered in 2017.” 

The central location of the Gulf Region on the world map lets aircraft access almost every destination non-stop, as 85 percent of the world’s population is located within a 8,500 km range from the Gulf. Governments in the region have been developing their carriers over the past decades to help diversify their economies and reduce dependence on oil revenues. The so-called ‘Gulf Gullivers’ are increasingly redirecting passenger flows from Europe, Asia and the Americas through their hubs, making them serious competitors for established airlines.
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Gulf Gullivers keep expanding amidst global downturn

The rise and rise of Emirates (Dubai), Etihad (Abu Dhabi) and Qatar Airways has been well documented. These so-called ‘Gulf Gullivers’ have placed multi billion-dollar aircraft orders, expanding their airports and developing their tourism infrastructure, with the aim to  turn the geographically ideally situated Gulf region into the world’s aviation hub. Some of the ingredients of their model: high frequencies to major urban destinations, target large metropolitan areas without direct connections (for example, Manchester, Birmingham in the UK, Düsseldorf, Hamburg in Germany) so passengers can bypass busy hubs in their region and transfer at the carrier’s 24/7 Gulf hubs, and large investments in their premium services.

The past year, major airlines in Europe, North-America, and Asia-Pacific have put their brakes on fleet expansion amid significant drops in passenger volumes and yields. Nevertheless, Emirates, Etihad Airways and Qatar Airways have continued their aggressive fleet and network growth, introducing more than 30 new widebodies between them during 2009. Middle East airlines saw passenger grow 11.2 percent in 2009 according to IATA. By contrast, passenger demand dropped 5 percent in Europe and 5.6 percent in the Norh America, as well as in Asia Pacific. And plans remain bullish: With a new wave of aircraft coming, most notably Emirates and Qatar Airways are now turning their attention to other European metropolitan catchment areas and to Japan.
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10 trend predictions for 2010

Looking forward to what will be another challenging year for the airline industry, here are 10 quote that sum up what’s on the horizon for 2010. From increased awareness of security to legacy-low cost convergence, the real-time web and business as unusual.

1. The State of the Airline Industry. “Following a decline of 4.1% in 2009, passenger traffic is expected to grow by 4.5% in 2010. A total of 2.28 billion people are expected to fly in 2010. Industry revenues are expected to rise 4.9% to USD478 billion in 2010. However, revenues remain 11% below the peak of USD535 billion in 2008 and 6% below 2007 when passenger traffic was at similar levels to what is expected in 2010. Airlines will remain firmly in the red in 2010 with USD5.6 billion in losses. In 2009, passenger yields plummeted by 12% (the world’s airlines will lose USD11.0 billion in 2009) […] and are not expected to improve. This is being driven by two factors: excess capacity in the market and reduced corporate travel budgets. […] For 2010, some key statistics are moving in the right direction. Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs by 1.3%. But fuel costs are rising and yields are a continuing disaster. […] The industry is structurally out of balance. The precipitous fall in yields will likely never be fully recovered” (IATA Industrial Forecast 2010).
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9 airline quotes for 2009

 

As 2009 has come to an end, here’s our take on some of the most interesting quotes of the past year. Together they give a nice indication of the major trends currently shaping in the airline industry. Happy New Year!

1. Customer Experience. “They [legacy carriers] basically should get out a clean white sheet of paper and start again. Most of them are beyond repair. They got far too big and have management groups that don’t care about customer service. The experience the traveling public gets on those other carriers is pretty dire. […] If I was them, I’d start a new airline. I just don’t see how they can rescue their current airlines.” – Virgin CEO Richard Branson on what legacy carriers could learn from Virgin America (in Advertising Age).

2. The New Normal. BA’s CEO, Willie Walsh, recently observed a “structural shift” was occurring, noting “it may be that demand in the highest-yielding, fully-flexible premium business market will never recover to the levels we were seeing in 2007. […] That is a sobering message for all traditional airlines. Premium travel has been central to the viability of their business model for a very long time”. – What to do with a broken airline model? (Centre for Pacific Aviation). 
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