Emirates Staggering Growth Is Now Slowing Down

Dubai based Emirates, the largest long haul airline in the world, has seen a year of slower growth than they’ve been used to. Despite this, their president Tim Clark is positive about the future, and ‘satisfied’ with their performance.

Emirates A380
Emirates are seeing their growth slowing. Photo: Pixabay

According to Reuters, Emirates have not found the last year easy. President Tim Clark has said that political tensions in the local area and elsewhere have contributed to a slowing of their growth. Speaking during the Arabian Travel Market in Dubai, Clark is quoted as saying:

“We’ve managed to come ahead with positive results, although it’s not as good as it has been in the past,”

Unfavorable currency moves and geopolitical tensions are thought to have continued to a poorer overall performance. However, Clark remains positive and say he is satisfied with performance given the challenges the airline has faced.

Slowing down of growth in the Middle East

Middle East airlines in general have seen a slowing down of their growth due to the collapse in oil prices and a subsequent weakening of consumer demand. The stock market fell by 13% and real estate has dropped 15% over the past four years.

Dubai airport
Dubai Airport has seen a slowing down of passenger growth. Photo: ahisgett via Flickr

Despite the oil price rebounding to the current $70 a barrel, demand for air travel has failed to pick up, and the high prices are serving to only squeeze airline’s margins even more. Clark himself said that a level of around $50 – $60 a barrel would be the ideal level for both airlines and the local economy.

Dubai International Airport reported a decline in passenger traffic growth. Although the sheer numbers were up on the previous year, the increase was far less than it once was. According to CNBC, the airport handled 89.1m passengers last year, a rise of just 1% over 2017 and short of its 90.3m passenger target.

Positive full year results

The state owned airline has had some tough challenges to face over the past year of operation. Their first half profits sagged 86% to their lowest levels for a decade. Back in November, Emirates warned that the second half would likely be no better thanks to uncertain political and economic situations around the world.

Clark expects results to be ‘positive’. Photo: Pixabay

Despite this, Clark is confident that their full year results will be ‘positive’, although not as good as in previous years. The airline is due to announce full year results on May 9th.

Knocking down the network

As the world’s biggest long haul carrier, Emirates has had their fair share of challenges to face. Most notably, they pulled out of ordering any more A380 superjumbos, which presents an issue for their ‘megahub’ strategy.

Instead of the A380, Emirates placed orders for 70 A330neo and A350 jets. While these smaller aircraft offer fuel savings, they also carry less passengers, forcing Emirates to rethink their hub and spoke model.

Emirates a380
The airline needs to think about a future without the A380. Photo: Pixabay

As part of the shake up, they’ve been ‘knocking down the network’ to develop optimum routes for both the airline and their nation. As reported by Bloomberg, Clark says that the exercise has taken them nine months already, but that they are nearing the end of the process.

In the meantime, we’re seeing plenty of action from the Dubai based carrier. From removing premium drinks to refurbishing aircraft, it’s clear that Clark has a strong vision for the future of the airline.