Confirming that Dubai has sent a request for 50,000 additional airplane seats a week to and from India, Emirates President Tim Clark made it clear that the airline is not dependent on any one particular market.
“We have a very extensive international market, and we are fairly ubiquitous just about everywhere we go,” he said in an exclusive media interaction to which MoneyControl was invited on the sidelines of the CAPA Aviation Summit being held in Delhi.
Edited excerpts:
One of the complaints Indian carriers have against Emirates and other Middle Eastern carriers is that they are taking away fifth and sixth freedom traffic, which should ideally go to Indian carriers. How do you respond to that?
Today 80 percent of the people we bring into India are from overseas (from places that) are not operated to by Indian carriers. But could you get 20 percent? The Indian carriers operate once, two or three times a week so for Indian citizens, given the gap in the capacity, what we have done is filled a capacity need. But we are constrained because we do not have enough to do all that plus the shift of demand for our capacity as Dubai is growing, UAE (United Arab Emirates) is growing, and also the demand from overseas, we cannot wait to double the capacity.
I cannot see why the Indian carriers, particularly Air India, would not be able to move fairly quickly to get a piece of it. And you are still going to need the Gulf carriers, because it cannot do it all.
The demand is so strong out there. With regard to the GDP (Gross Domestic Product) growth and foreign investments in India, when I sit on DP World (an Emirati multinational logistics company based in Dubai) as a non-executive director, I'm looking at India, and I'm looking at great things: infrastructure, ports, transport. All this is telling me that there's such a growth story here, you cannot constrain that by having bilateral restrictions.
Can you give us a figure of how much of all the traffic that you carry from India goes onwards from Dubai on an annual basis?
If we were to be quite honest, in the pandemic and after that the demand for Indian business took us up to our 65,000, probably about 60 or 70 percent of that was just India-Dubai. Now as we stabilise, the question is, and this is something our revenue optimisation algorithms have problems with, what do you give as the inventory because we have been stuck for nine years. Last time we had any seat increase was in 2014.
Given that India is not keen to exchange Air Services bilateral, would you think of picking up an airline in India or setting up an airline in India?
The answer is not to buy or get involved in another carrier. The answer is to try and explain to the government what it is missing. When I talk about $800- 900 million going on (to) a billion dollars, that you are not giving revenue to the Indian carriers and that is where you need to go. That's what we need to spend our time on. Not necessarily buying another Indian carrier.
I would rather persuade the Indian government of the benefits of what is likely to happen and not worry about how it may or may not affect the Indian carriers. When the low-cost carriers came to Dubai, Air India was struggling to fill its aeroplanes. Low-cost carriers have not looked back since. Ask them what their most profitable international operation is. And it's got to be Dubai.
Given this situation what will be your strategy for India?
We will work within what we have. We have only got 65,000 seats, we give 5,000 seats to the Dubai-based carrier flydubai; we are hoping that the Indian government will recognise the power of what we are talking about and that the Indian carriers including Air India will say that this is good for us, if I could persuade the new Air India management.
If you want to liberalise the economy, if you want to expand Air India to become an international carrier, your bilateral regime and thinking has to change. You cannot expect to grow and not allow others to come in on the same basis so you have to have an open skies agreement with most. There is an open skies agreement with the United States. It's wonderful for the Indian airlines. You have very liberal agreements with the SAARC – South Asian Association for Regional Cooperation -- (and ASEAN) countries so they are open skies.
We have a very extensive international market and we are fairly ubiquitous in just about everywhere we go. We will continue to strengthen our operations in many areas in West Asia, India, Pakistan, Sri Lanka, Bangladesh. And if we have aero-political difficulties, we move round them. I have the view that if there is a problem that you cannot deal with by going round them, over or under jump, whatever you have to do, just get on with the job. And if it does not work out for you, move on.
When we entered the business, a part of our model was to really raise the bar with product. That is what we are noted for, and others are now playing catch up, you see our fingerprint just about everywhere.
Emirates will not stop, we have very ambitious plans. We have a new fleet of Airbus 350s coming next year, followed by Boeing 777-9 coming after that (170 aircraft on order, and more coming). The hub in Dubai will continue to grow until we break out of that and have to build a new airport.
It is a pity. I'd like to think that India was so much part of our plan. It is so important when you think of the blue collar, the white collar, all the professional classes that come from India and support what's going on in the UAE, particularly in Dubai, not to be able to accommodate them. That is a big shame.
But I'm sure that there will be realisation hopefully and things will get sorted. And I'd say that any help we can give Air India and its plans…. it's not that they'll ask us, but I've never looked at Air India as a foe or been threatened by it. I don't consider it a threat.
When AI was up for grabs, did you think it would go to the Tatas?
I thought at the time it would have to go to a powerful private conglomerate. Now that could have been the Tatas or others. I liked it because of the Tatas. In my childhood, it struck me that it is a very successful global conglomerate, not just in India, it's got the muscle and the financial power to do what it needs to do.
The debt providers to Air India, presumably with the Tatas behind, it will have no difficulty getting the money that Air India needs. Now we have got the measure of success for Indian aviation.
One thing that worries the Indian side is that when there are bilateral talks, you talk to separate Emirates for bilaterals. Can THE UAE as a whole come for negotiations while doing bilaterals with India?
The strength of the Indian negotiating position is that it comes as one country and can fly from any point to any point on the sectoral basis it chooses. It is not constrained, we are constrained because we can fly to nine points but we do not have the seats to go there. The Indians can fly from anywhere to anywhere in the UAE without any constraint.
That's a huge competitive advantage. And it was one of the things that I talked about in 1985 with the Indian government. It said we can fly, it's our country, we can fly from here, you can only fly from Dubai. And that sectoral negotiation has taken precedence over everything. So if we did a let's say, a UAE bilateral, and there were 165 or 300 flights a week, most of them will come to Dubai.
When will Emirates offer premium economy on the India route?
As soon as we can. I can't tell you when because we have a programme of new aircraft coming in, we will have premium economy. We are trying to retrofit 120 of our aircraft; we have a two-and-a- half year retrofit programme. When they get released to the line, the planners will decide which of the routes these are put on.
We in Dubai have asked for 50,000 seats more per week in each direction going forward. It's simply a linear extrapolation of the rate of growth of capacity and demand for that capacity, based on the years up to the pandemic when we were running at 95 percent seat factors, and then extrapolating that rate of growth. And that's where we reckon we should be at this stage for the benefit of all. Remember, up to a billion dollars of revenue could be in the hands of the Indian carriers.
The following is a sidebar
What memories do you have of Air India?
I remember Air India because I had such a ball as a kid. The crew (was) hugely friendly. And I used to sit on these aeroplanes for days on end as it took three days to go to wherever it was. And I absolutely loved it. They were Super Constellations, really noisy. But I was always up on the flight deck. They brought this little boy and sat me down, and I watched the pilots do their job. And then when the 707 came along, I just thought this is a really good product. I can remember the saris. The food…. the interiors were to die for. I mean, you know you saw these sorts of overhead panels with starlight and air vents and lights coming out like in supercars. Air India was one of those sort of character-forming things, but I loved it and that's the first time I saw flatbeds. The first class was at the back. So you didn't get the engine noise and it had flatbeds. Qantas had them in the late 50s. So you can see how they got it right then.
For a long time we used to go to London, Rome, Cairo, Bahrain, Karachi, Calcutta, Rangoon, Singapore, or you went down on the Qantas route, or you went down a similar route and ended up in Bombay, and then you changed and went on to Madras, Singapore.
