Sir Tim Clark, President of Emirates, has questioned in a webinar the viability of operating a low-cost, long-haul model. Although the Middle East has a relatively small number of coronavirus cases, global airlines like Emirates have significantly been affected. With an all widebody fleet comprising of B777s and A380s, it is doubtful that the airline will see considerable demand in the coming years. Hence, the only sustainable method might be to attract passengers at lower prices.
What should be considered?
Emirates has, for a long time, been considered a premium global airline. The airline has proved its dominance by emphasizing on a hub and spoke method of operations. It has taken full advantage of the geographical position of Dubai and connected high demand markets like India-USA, Australia-UK, and Europe-South East Asia. In the pre-coronavirus period, Emirates could rely on an all widebody fleet; however, in the current scenario, demand might not be enough for that.
The spread of coronavirus has affected the airline industry in several ways. Passengers have lost confidence, and non-necessary travel like tourism has come to a standstill. Even if we expect a vaccine by the end of this year, it is unlikely that we will see an apparent demand in the coming years. This is specifically because of the change in passenger mindset and their reluctance towards taking connecting flights.
Switching to a low-cost model might be beneficial in terms of passenger demand, but there are a lot of things to take into consideration. Emirates is a premium airline, known for its high-end services and luxurious aircraft seats. Changing their method of operations might mean that the brand value of airline will depreciate in the global market. Additionally, its fleet will have to undergo a change in its seat layout, meaning additional costs for the airline.
In a webinar with Aviation Week, Sir Tim Clark emphasized on other factors that could affect Emirates’ decision. He said:
“Long haul-low cost…it’s something that we’ve been looking at for some time. Much will depend on what the fuel does, much will depend on the price points of those, much will depend on what the competition does and the reaction to that.”
There might be hope
Despite the ongoing crisis, Sir Tim Clark has said that he is optimistic about the business. Although coronavirus is an unprecedented situation, he is confident that the humankind, has and will continue to travel. He added:
“The resilience of mankind and its aspirations are quite incredible. I can see many, many benefits, and what we’ve all experienced in what we’re doing now, and the accelerated need to continue to communicate.”
Besides, the current technology is much more equipped to handle crises like coronavirus. Advancements in route forecasting, network planning, and fleet management can be utilized to make the most of available demand. In the case of Emirates, its fleet, assisted by sophisticated software, gives them an enormous capability.
Do you think Emirates can fly as a low-cost airline? Let us know in the comments.