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01 March 2024

UAE airlines ponder quantum leap

By Frank Kane

The guiding philosophy of the UAE’s dynamic economic growth is contained in the motto: “If you build it, they will come.” The principle is that if you want to attract visitors and the revenue they bring to the country, you have to provide top-class facilities for them.


But you could equally add: “If they come, they will come by airplane.”


The UAE’s geographical location means that to lure the high-rollers from America, Europe and the booming economies of Asia, you have to provide them with international-class air services to get them here to spend their dollars, euros or yen.


That is why the role of Emirates airlines has been so important in the growth of Dubai as a global hub for air travel. From its origins in 1985 with a couple of leased aircraft, the airline has grown into the Middle East’s leading group, and the fastest growing airline in the world.


New routes seem to open almost every month (last week it was Dubai-Los Angeles direct), and aircraft orders are going out thick and fast – Emirates currently has 242 planes on order from Boeing and Airbus, including 58 of the new Airbus A380s, with four expected to be delivered this year.


Moreover, the role of aviation as an international market tool is crucial. The first time a passenger flies on an Emirates plane is their first occasion to sample the country, its culture and the levels of service that can be expected on arrival. It is that vital opportunity to guarantee future brand loyalty – both to the airline and to the country.


No wonder then that Etihad, the other airline based in the UAE capital Abu Dhabi, is adopting a similar form of strategy. But the UAE should also reflect seriously on the problems that might arise from such a competitive race between two airlines in such a geographically small area.


When you add in the other regional airlines – Qatar, Gulf Air, Air Arabia, RAK Air – the risk that the Gulf will be over-supplied with airlines becomes a real possibility.


Etihad seems certain to turn the heat up on this already highly competitive situation with a massive new order for Airbus and Boeing aircraft. James Hogan, the airline’s expansionist-minded chief executive, gave some indication of this last month, when he told journalists that Etihad would order between 50 and 100 new planes later this year.


The gossip in the industry is that already Hogan’s ambitions have been upsized – some now suggest as many as 200 new aircraft could be announced in the order. If so, it will only add to the simmering competition between Emirates and Etihad.


And how long before one of them makes a quantum leap in the global business? All those new planes need new routes to fly.


Emirates has shown the virtue of a patient but determined build-up, adding routes to the network on a regular, consistent basis.


But one of them must see that the next step has to take them into the top flight of the world’s aviation industry. There are airlines in America and Europe that could conceivably become bid potential partners for the Gulf rivals; British Airways, with its invaluable assets of prime transatlantic slots, has long been the rumoured – but denied – target for Emirates.


Maybe instead Etihad will be the one to see the real logic of a deal with BA.