Bloomberg News

Emirates Adds U.S. Routes to Revive Challenge Halted by 9/11

September 28, 2011

(Updates with Clark’s comments on possible auctions of Virgin Atlantic, BMI starting in 22nd paragraph.)

Sept. 28 (Bloomberg) -- Emirates, the biggest international airline, will add flights to Seattle and Dallas in a revival of plans to establish a major route network to the world’s largest economy that it shelved after the 2001 terror attacks.

Emirates will begin daily services from Dubai to Dallas starting Feb. 2 and to Seattle from March 1 and may add U.S. cities including Atlanta, Boston, Chicago, Detroit, Philadelphia and Washington, President Tim Clark said today in an interview.

Passenger numbers at Emirates have surged fivefold in a decade, making it the world No. 1 by international traffic. Hubs in Paris, Frankfurt and London are already under pressure as the carrier diverts long-haul passengers through Dubai, and Clark said the U.S. market could be targeted using Airbus SAS’s A380 superjumbo, of which it has 90 on order offering 45,000 seats.

“We’ve always had fairly ambitious plans for the U.S. and this is part of that,” Clark said by phone from Dubai. “It’s an immense market. There will be more to come, including increased frequencies and bigger planes. We have ideas for the East Coast, the north-south axis in the center and for the west.”

Emirates will also open its own first- and business-class lounge in San Francisco in November, having previously shared a United Airlines facility, and is looking at code-shares which would allow it to sell tickets beyond U.S. gateways, Clark said.

U.S. ‘Noise’

Emirates currently serves New York, Houston, Los Angeles and San Francisco, so that the two new routes and those under consideration would triple the number of U.S. destinations. The carrier had originally planned to operate 20 Airbus A340s to the U.S. about 10 years ago, but dropped the strategy following the Sept. 11 attacks on New York and Washington, Clark said.

“We’ll hear an increasing amount of noise from the U.S. carriers,” said Chris Tarry, an independent aviation analyst who has followed the industry for almost three decades. “There are always a lot of comments when Emirates goes into new markets and I don’t expect the U.S. to be any different.”

American customers flying from Seattle and Dallas will be able to connect with flights to destinations across the Middle East, Asia, India and Africa via Dubai, Emirates said in a statement. Services will initially be operated using Boeing Co. 777s, of which Emirates has the biggest fleet, though there’s potential to shift those and other U.S. routes to A380 operation as deliveries of the double-decker accelerate, Clark said.

A380-Capable

While the airline has taken delivery of only six planes in the past nine months, it has 52 due in the next 18 months or so and is accelerating network expansion accordingly, the executive said. Including Dallas and Seattle, nine new routes are being added between Nov. 1 and March 1.

“The A380 will be an option for all U.S. operations post- 2013, when the plane will have a higher takeoff weight, so that routes such as Dubai-Los Angeles become a distinct possibility,” he said. “And most U.S. airports are A380- capable or will be.”

While travelers from the U.S. West Coast are likely to prefer more direct trans-Pacific flights to East Asia, hubbing from there via Dubai will be competitive to destinations including India, Sri Lanka, Iran, Pakistan and Bangladesh, as well as to the wider Middle East and East Africa, Clark said.

The Emirates model of operating three waves of departures from Dubai also cuts the gap between flights, so the “elapsed time” may be shorter than the distance suggests, he said.

“As the emerging-market economies around Dubai expand, particularly India, they could really pick up business,” said Nick Cunningham at research company Agency Partners in London.

New Orders

The overlap with routes served by U.S. carriers may not be so great, Clark said, though the expansion may hurt their allies in global airline alliances. Emirates is looking at partners for code-sharing beyond its U.S. destinations after Continental Airlines scrapped a pact when joining the Star group in 2009.

Emirates is comfortable adding routes even as economies slow, Clark said, predicting that “demand for air travel will continue to grow over the long term in spite of the many challenges the industry faces,” and adding that it may announce further aircraft orders at the Dubai Air Show in November.

Chairman Sheikh Ahmed bin Saeed al-Maktoum was “reflecting a wish that we’d like to do more” when he said yesterday in Dubai that Emirates could add to its backlog, Clark said.

Filling Gaps

The airline needs more planes to accelerate the retirement of older jets amid high fuel prices, and also to offer services to less busy destinations, making use of gaps between the waves of high activity, the executive said.

Models being examined include Airbus’s new A350 and extended-range versions of the 777, Clark said, adding that Emirates is also seeking an update from the U.S. company on its plans for a “next-generation” update of the same model.

While more A380 superjumbos would likewise be welcome, Clark said, the size of the fleet is effectively restricted by handling limitations at Dubai International Airport.

Emirates is in discussion with Airbus over the implications of likely delays to the A350-1000 variant as the plane is given extra thrust, the executive said, adding that he’d have liked the jet to have gone ahead according to original plans.

He added that there’s no reason to expect first examples of the baseline A350-900 to meet weight and specifications, given problems with other recent jetliner models.

Sufficient Slots

Clark said Emirates’s already-strong position in Britain means it has no interest in bidding for BMI, which Deutsche Lufthansa AG may sell, or Virgin Atlantic Airways Ltd., for which Richard Branson has said he’s seeking a new investor.

Emirates operates five daily services to London Heathrow, the main hub for BMI and Virgin, and could easily add capacity by switching to an all-A380 service -- from two of the flights at present -- without a need for more operating slots, he said.

One extra Heathrow frequency is being contemplated, Clark said, but any more than that would upset the Emirates model of funneling passengers from the U.K. provinces via Dubai on direct flights from Birmingham, Glasgow, Manchester and Newcastle and away from an airport that’s the main hub for British Airways.

Clark said he expects BA parent International Consolidated Airlines Group SA to step up its interest in any Heathrow slots that are available after Chief Officer Willie Walsh snapped up six daily pairs for an undisclosed sum from BMI last week.

“If I was Mr. Walsh I would grab the lot,” he said.

--Editors: Chad Thomas, Chris Reiter.

To contact the reporters on this story: Chris Jasper in London at cjasper@bloomberg.net; Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus