Saturday, December 5, 2020

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'The airline industry is clearly in trouble'
November 2020 1325

In conversation with Emirates Airline President, Tim Clark, TTN hears the likely outcome of the pandemic on airlines and the journey Emirates took this year to survive.

"The airline industry is clearly in trouble," he says, adding airlines are either resorting to the debt market or to their governments for bailouts. "It’s not surprising – it’s an unsustainable business model when there are no passengers on board the aeroplanes. This is a highly capital-intensive industry – we have enormous fixed costs.

"I know many airlines have gone. What is surprising to me is that many of them are still here. If this continues, there will be some more going bust. There are some airlines that shouldn’t be here, pandemic or no pandemic – it is pointless trying to keep those alive," says the industry veteran.

 

"The can-do ethos in Emirates was not to take this lying down, not to sit idly by"

 

"I think a lot of airlines believe that in the winter of this year, the pandemic would be behind us. There are some carriers who will not be able to sustain – more of them in the private sector, which don’t have recourse to government bailouts – although some governments are recognising that they even need to help the private ones.

"But if we are having the same discussion this time next year, I don’t know how many airlines will be around. Difficult one to say – but not many," laments the Emirates President.

Speaking of his own experience as the head of a major Middle East airline, he says as an international long-haul carrier, it was an impossible situation to have all the markets shut down during the pandemic. "The effect has been quite devastating, but we are no different to anybody else.

"I guess that the can-do ethos in Emirates was not to take this lying down, not to sit idly by; we were seriously looking at getting the fleet activated as quickly as possible. The problem child for us at the time was the A380, but we are optimistic that it is going to be sorted in the course of 2021.

"In the short term, we took a major bashing. The financials were hit very badly but we have restored the income stream probably to about 15 to 20 per cent to where it was before. We took a lot of costs out of the business as every airline has done. We are cautiously optimistic," he said.

Late last month, Emirates managed to reclaim 104 out of some 175 destinations it was flying to prior to the pandemic. Sir Tim throws light on the journey. "We have a fleet of Boeing 777-300 ERs, which are hugely potent freighters. So, we rapidly deployed those to meet the cargo demands, which had been severely crippled for a number of reasons, not the least of which is that international carriage had disappeared as airlines stopped operating.

"The cargo business was left high and dry, so we activated the fleet early on in late March, converted many of the aircraft into all-freighter operations. As countries that were completely locked down started opening in late April and early May, we started repatriating people. The government in Dubai gave us the permission to start repatriation charters but we also used this opportunity to start the all-freight movement and gradually, the freight imperative drove the activation of a large number of our fleet.

"As many as 100 Boeing 777-300 ERs plus our freighter fleet were operating cargo and the yields were very strong, stronger than they’ve ever been, demand was very high and by slipping in passengers on the upper deck we were able to improve significantly economics of the whole operation. With our network expanding into Africa, Europe, Asia and to an extent South America and North America, we were able to move passengers on to them.

"It was the freight imperative that allowed us to open up and the more countries began to relax the rules - where we can, we move fairly quickly and try to optimise the revenue on the fleet.

"As freight picks up even more, as it will do when the vaccine comes out, we will be there to respond as quickly as we have done in the past," concludes Sir Tim on a positive note.

 

By Rashi Sen







Digital Edition




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