Dubai-based Emirates is looking to open up markets in Africa and develop a customer loyalty programme before entering a major expansion phase with the arrival of the first of seven B777 aircraft.
The ambitious Middle Eastern carrier is currently looking at a number of African destinations, including South Africa, Kenya and the Seychelles and hopes to start at least one of the routes within the next six months, says Shoaib Khoory, Emirates general manager UK & Ireland.
Despite a planned three year period of consolidation up to the end of 1995, the carrier has continued to expand its network giving it a compound annual growth rate of 30 per cent since startup in 1985, says managing director Maurice Flanagan. This growth has not affected the carrier's profitability record: chairman Sheikh Ahmed Bin Saeed Al Maktoum expects net income for the year to March 1994 of $24.5 million, up 88 per cent over last year. The carrier looks set to continue its enviable profit performance, with current yields up 4.5 per cent.
On top of adding three regional destinations since 1993, Emirates has brought both Nice and Larnaca online, switched its London operation from Gatwick to Heathrow and subsequently relaunched a daily flight to London's second airport. The carrier will also launch a twice weekly Ho Chi Minh City service from June - the 35th destination on Emirates' network.
Despite total reliance on international traffic, mainly through its Dubai hub, the carrier has perhaps surprisingly shirked recent marketing trends. The frequent flyer programme band wagon has steered clear of the Gulf, until now, but with rival Gulf Air close to launching a loyalty programme Emirates looks set to follow. Khoory says the FFP's parameters are not fixed yet but believes it will be launched this year.
Moreover, alliances other than straight commercial agreements remain out of favour at Emirates. After ending the block seat arrangement with Cyprus Airways to launch its own Larnaca service, the carrier's only partner on scheduled services is United. 'I don't like alliances, involving [instruments] like equity swaps, because they are set in concrete. That makes you very vulnerable to things you can't control,' says Flanagan.
On the cargo side, which accounts for 15 per cent of Emirates' total revenues, the carrier started a joint Amsterdam-Dubai-Singapore service last August with KLM. Flanagan says he is also in cooperation talks with a Russian cargo operator.
To support the current level of route development and cover the phase out of its two B727s, the carrier is taking delivery of two leased A-310s in early 1995. These aircraft are likely to be the last addition to the fleet before the first B777 arrives in March 1996.
Flanagan says the carrier is currently looking at export credit-backed financing and operating leases for the B777s and has already made a presentation to the US Exim bank. The carrier aims to start reducing its debt:equity ratio of 80:20 during 1995 and needs some $1 billion for aircraft financing up to 1997.
Source: Airline Business
