Arabian Business Weekly Update 17 November 2004

Emirates Airline has delivered record profits. So why are ticket prices still rising?

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By  Anil Bhoyrul Published  November 17, 2004

Fly high, cost high|~||~||~|Emirates Airline has a lot to be proud about this week. Yet again it has broken its own records for growth and profit. But do Emirates’ passengers have as much to smile about? Probably not. The latest figures released show that net profits for the first six months of this financial year rose a staggering 41% to US$235 million. This is the best for any six-month period in the airline’s history. Operating revenues are at US$2.23 billion, a rise of 42% over the same period. Significantly, the load factor is up 3.5% to 73.3% and passenger volumes are up 25.5% to 6.1 million. Even Emirates SkyCargo is flying high with a 42% rise in business. Which makes it all rather strange that the airline is still raising ticket prices. The increases may be as small as a few dollars on some routes, by they are up all the same. According to chairman Sheikh Ahmad Bin Saaed Al Maktoum, this is necessary to offset the rise in jet fuel prices. Apart from raising ticket prices, he has also ordered a freeze on the hiring of non-operational staff and is looking for other cost savings. Curiously, Emirates Airline didn’t look for any savings when it signed a US$180 million sponsorship deal with Arsenal football club last month. And last June the company announced a US$19 billion order to buy 41 new planes from Airbus, including 21 of the new A380 planes. With Dubai airport forecast to receive more than 60 million passenger annually by 2015, things could hardly look any better for the group. Surely, just for once, Emirates Airline can afford to take a hit on the increased fuel charges rather than pass them on to passengers. After all, there are plenty of other choices around for travellers. ||**||

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