Emirates is gearing for strong growth in the Middle East, India, China and Africa as it maintains its organic expansion model rather than chase acquisitions, the airline's president said yesterday.
Tim Clark is one of the few airline chief executives to offer an upbeat outlook for the aviation industry. "It's amazing how robust this market is and at the moment things are still looking pretty good. It's a question of making the aircraft work harder."
Part of this optimism is based on growth in the Middle East, Africa, China and India. "For every seat we have into Delhi there are 10 people that want it. It's the same for Mumbai, Chennai and Calicut… you name it. These markets have been underserved for so long, while economy-wise it's one of the powerhouses of the world.
"There will be 54,000 seats going to and from India everyday from the middle of next year and they will be full. In my view, the carriers could double this."
Clark indicated Emirates would continue with its organic growth model rather than making acquisitions to expand. Emirates is targeting 20 per cent growth in 2008, but Clark admits it may fall short amid the worsening economic climate in Europe and the US.
He also believes the low-cost carrier market will survive record oil prices, although some budget operators will fail and others will consolidate. However, the failure of the business class-only carrier Silverjet shows "the business model outside the mainstream carriers is very risky. The end of this summer will be a critical juncture for airlines. From September, we will begin to see the real impact of fuel price increases," he said.
Clark ruled out reducing passenger routes, but warned cargo flights may need revising, with high prices driving 'just in time' manufacturers to instead use shipping to transport their goods from the manufacturing hubs of Asia to the United States.
"The air cargo industry is under huge pressure. The days of 'just in time' inventories that drove air cargo growth in the 1990s are changing," he said.
Terminal 3 – The most advanced
Dubai International Airport's Terminal 3 will be among the most advanced in the world when it opens in autumn this year, Clark said. "In the next five years we will see some world-class airports opening in the Middle East that will be the envy of a lot of countries. It will push the bar up further."
Clark would not comment on the timing of Emirates' IPO, saying it is up to the Dubai Government as shareholder to decide.