Search form

Last updated: 31 min 25 sec ago

You are here

Columns

Emirates and the A380 are a perfect match — but nothing lasts for ever

The word “synergy” is much overused in the business world, but if ever there was a textbook example of the principle it is the relationship between Emirates and the European aircraft manufacturer Airbus.
Last week, amid much fanfare, the two partners held a top-level unveiling in Germany of the 100th A380 plane bought by the Dubai airline. From zero in 2008 to 100 now, at a list price in the region of $400 million each, Emirates has made massive investments in the plane.
The huge aircraft, which can carry more than 500 passengers, has helped make Emirates one of the biggest airlines in the world and Dubai the busiest airport for international passengers.
The A380 can even be seen as an instrument of globalization — another much overused word — opening up destinations to transport passengers on routes that would have been unimaginable a little over a decade ago. More than any other single factor, the “south-south” trade corridor linking eastern Asia with Africa and Latin America is a product of Emirates’ A380 routes.
For Airbus, the benefits have been equally striking. Quite simply, the A380 — which required massive capital investment by the pan-European consortium that owns the company — would probably have been ditched by now had it not been for Emirates. The European manufacturer would be struggling even harder to keep up with its great American rival Boeing without Emirates’ business.
Roughly half of the A380s in the world carry the Emirates livery, and that number could rise significantly in the next few weeks if new orders — hinted at during the ceremony in Hamburg — are confirmed at next week’s Dubai Airshow.
Emirates’ spectacular growth would not have been possible without the A380; the plane would probably not still be in production — in Toulouse in France and the Finkenwerder plant outside Hamburg — without Emirates’ massive order book.
But now analysts are questioning whether the European-Emirati symbiosis in aviation has had its day. There have been big shifts in global aviation patterns, and a new regard for environmental standards, which some believe are making the A380 less likely to be the first choice for airlines, including Emirates, in the future.
If new fuel-efficient aircraft can fly passengers around the world at lower unit cost, why go for the big four-engine monsters of Airbus? If new technological advances can increase aircraft range to enable planes to fly efficiently from Europe to Asia Pacific non-stop, why bother with the stopover in Dubai?
There are valid answers to both questions. A full A380 still makes sound commercial sense for the operator, and Airbus has been smart in making later versions of the plane more fuel efficient. The fall in the cost of aviation fuel also helps.

If new fuel-efficient aircraft can fly passengers around the world at lower unit cost, why go for the big four-engine monsters of Airbus?

Frank Kane

Likewise, Emirates and Dubai have been shrewd in their marketing of the airport and the emirate. Increasingly, passengers from India, for example, like to shop in Dubai’s excellent duty-free facilities, or enjoy a few days at the city’s luxury hotels, before boarding their A380 for onward trans-Atlantic flight. Emirates’ A380 is a key part of the Dubai tourism brand.
Dubai’s strategy as the most successful of the “super connector” hubs of the Middle East is most likely secure, especially with the new Dubai World Central airport — which will be the biggest in the world — under construction. This will allow Emirates to get more slots for smaller aircraft than the A380 at the new super-hub.
But whether it will continue to be served by the A380 a decade from now is a moot question. The plane is still lauded for its onboard facilities and the extravagant luxury of its premium sections, but the reality is that it is a 20-year-old design and will soon begin to look its age, however good the cabin refits.
Emirates — keen to restore its financial edge after a sharp profits fall last year — is aware of this, and while the plane is and will remain its mainstay for the next few years, the airline is conscious that it must not put all its eggs in the A380 basket. It has been canny enough to keep Boeing happy at the same time as Airbus, and actually flies more of the US company’s 777s than A380s.
In the future, new versions of the 777 will probably be top of the Emirates shopping list, especially the 777X, a viable fuel-efficient alternative to the A380. Boeing is talking about a stretched version of the plane as well, which may just fit the bill for Emirates. Airbus’s A350 may also begin to look more attractive.
The A380 has been the perfect partner for Emirates’ expansion, and will continue to be a key component of its operations and its marketing for some years to come. But all good things must eventually come to an end. 
• Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai