“We’re not giving in to doom and gloom”

Like all airlines, Emirates is taking several measures to deal with short term conditions, but Mike Simon, director of corporate communications, insists that key long term strategic goals remain the same.

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By  David Ingham Published  November 7, 2001

Dealing with the short term|~||~||~|There’s no avoiding the fact that airlines around the world have been affected in the wake of September 11. Here in the Middle East, ailing Gulf Air has confirmed a number of measures, including voluntary redundancies and reduction of services, that it’s taking to cut costs in the wake of falling passenger numbers.

Kuwait Airways Corporation said it would cancel some flights to London between October 28 and November 25. Similarly, some flights to Bombay and Delhi have also been reduced.

International airlines servicing the Middle East have also reviewed their operations. According to several people who regularly use the airline, Malaysia Airlines has stopped services to the UAE. Air France was also reviewing its Paris-Damascus and Paris-Amman routes.

Emirates, arguably the Gulf’s leading international airline, is also taking steps of its own to deal with current conditions. But Mike Simon, corporate communications director, insists that Emirates is not succumbing to doom and gloom, and is keeping an eye firmly on its long term goals.

“It would be wrong and arrogant to suggest that we can survive as we are whilst others have not,” Simon told Arabian Business. “But it would also be equally wrong to believe that there’s going to be a constant, long term decline in passenger traffic.”

Immediate cost control measures include the reduction of flights to certain destinations, although there had not, at the time of writing, been the complete suspension of any routes. There is also a company-wide directive to cut costs wherever possible, even in ways as simple as switching off lights and using equipment and supplies more efficiently.

“What we have done is look at all our costs and expenditures and looked at creative ways of cutting costs,” explains Simon. “Each department throughout the company is looking at all sorts of ways.”
||**||Bringing back the business traveller|~||~||~|
Redundancies do, however, appear to have been ruled out, although cabin crew might be finding themselves flying a lot less than previously. Simon also pledges that on board service won’t be reduced to save money and, whilst not saying ‘no’ altogether, he clearly doesn’t fancy being dragged into a price war. “I don’t think cutting fares will make people travel, people have to be reassured that it’s safe to travel, secure to travel and that they won’t have too much inconvenience when they travel,” Simon says.

That last comment applies particularly to the business travel market. Whilst not giving exact figures, Simon says overall seat occupancy rates are currently around the mid sixties compared to a seasonal average of the high seventies. What those figures don’t show, however, is a big drop in business travel, a crucial market segment since margins per passenger are so much higher.

Business travel had already been on the slide as a result of economic slowdown in the West. September 11 has exacerbated the situation.
Whilst any significant rise in business travel will inevitably depend on the return of economic prosperity and passenger confidence, Emirates is doing what it can. It says it has continued to improve and will carry on improving the quality of business travel. “How to get business travelers back is a problem we’re all facing at the same time,” says Simon.

One area that Emirates Airlines will be looking to develop is regional travel. It is, after all, much easier to try to convince someone in Saudi Arabia to travel to Dubai. When Arabian Business met Simon, the company was in the initial stages of planning an appropriate marketing campaign. “Traffic doesn’t come if you sit and wait for it,” he says. “We feel there has to be positive marketing of the product.”
||**||15 million visitors annually by 2010|~||~||~|
Short term conditions, therefore, are clearly challenging but Simon says that two key elements of Emirates’ long term strategy remain firmly in place. Emirates still intends to begin direct flights to the USA, possibly in mid-2003, and its fleet expansion plans remain in place. (Editor's note: shortly after this interview, Emirates announced its massive $15 billion fleet expansion programme.)

Emirates says it hasn’t been discouraged by Delta’s decision to suspend its Dubai-New York flight. “It was a natural move for them to stop serving some of their international routes, but we hope they will come back into Dubai,” says Simon. “We have not changed our plans to fly to the States.”

Nor has Emirates cancelled any plane orders, and that includes the A380, Airbus’s forthcoming ‘super jumbo’, which can hold 565 people. The wisdom of taking on such huge airliners has been questioned many times, not least by Airbus rival Boeing

But Simon says that the A380 remains a perfect way to reduce per seat costs and deal with a dearth of available landing slots worldwide. It would undoubtedly be a vehicle for any future Dubai-USA route. “For an airline like Emirates, to be able to bring in more people on one plane is very important,” explains Simon.

So far, the company has declared an interest in the idea of Boeing’s planned ‘Sonic Cruiser’, but it awaits further details on the economics. The Sonic Cruiser aims to shift passengers at near Concorde speeds, but profitably and at a lower cost per passenger.

The overall message therefore seems to be that yes, there are short term problems facing the industry, but the airline is addressing them and will get over them. Long term, Emirates’ goal remains the same: to play its part in reaching Dubai’s target of 15 million visitors per year by 2010. “We feel we can do it and we feel we’re on track to do it,” says Simon.||**||

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