How Are Emirates’ A380s So Profitable?

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Since its first commercial flight in 2007, the Airbus A380 has transported almost 250 million passengers. Currently, 14 air carriers, including Air France, Asiana, British Airways, China Southern, Emirates, Etihad, Korean Air, Hi Fly, Lufthansa, Malaysia Airlines, Qantas, Qatar Airways, Singapore Airlines, and Thai Airways, operate the aircraft on over 300 flights per day.

Emirates and the Airbus A380

Let’s look at a few facts about Emirates’ Airbus A380 fleet. First of all, Emirates has the largest Airbus A380 fleet in the world. It currently operates 108 A380 and has 54 more pending delivery. Emirates’ A380s have flown over 1 billion kilometers and transported 105 million passengers since 2008. At 851 km, Dubai (DXB) to Kuwait (KWI) is Emirates shortest A380 flight, while Dubai (DXB) to Auckland (AKL) is its longest at 14,193 km. As a matter of fact, the Dubai to Auckland route is the fourth longest commercial nonstop flight in the world.

Emirates A380. Photo: Emirates.

Airbus A380 and Profitability

We frequently hear that the A380 is not profitable for its operators due to its high operating cost. According to Airbus, however, “[t]he A380 has the lowest cost per seat of any competing wide-body aircraft.”

So, where is the disconnect? And, how are Emirates’ A380s so profitable?

The operating cost for any given flight is pretty much the same no matter if the aircraft is full, or if there are empty seats. In the airline industry, the cost per available seat mile is a very important measurement. The cost per available seat mile is basically the cost of flying one seat one mile.

It is great to have a low cost per available seat mile; however, an airline must ensure that its flights are near full capacity, or, in other words, have a high load factor to truly take advantage of it.

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Some airlines have indicated that the A380 is simply too big for their operations. They do not have enough demand to justify operating an aircraft with this much capacity on their routes. Emirates, however, has been pretty successful in filling up its A380s.

The Emirates Advantage

Emirates’ focus has been on long-haul flights, and it operates the A380 primarily on long-distance high-traffic routes. The airline connects large cities all over the world via its hub in Dubai. Dubai is the perfect place for stopovers on flights from Europe to Australia and North America to Africa and South Asia due to its central location. Accordingly, it is convenient for the passengers to fly on Emirates if they are traveling between these places. Furthermore, Dubai has become a popular tourist destination in recent years contributing to Emirates’ load factors.

Dubai International Airport. Photo: Dubai International Airport.

Additionally, Emirates has been named “Best Airline in the World” and “Airline of the Year” several times. It provides high-quality service and tickets at reasonably low prices making it a great choice for many passengers.

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There have been allegations that Emirates is able to keep its operating costs low because it receives fuel subsidies from the Government of Dubai. However, these allegations have never been confirmed, and the airline has denied them vehemently.

Overall, it appears that Emirates’ A380s are profitable because they are a great fit for the airline’s business model of moving large numbers of passengers on its long-haul flights.

Why do you think Emirates’ A380s are profitable?

 

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