Emirates CEO Tim Clarke
When asked two years ago whether his Emirates airline and discount specialist FlyDubai would join forces, Tim Clark gave a withering look.
If ordered to do so by his bosses in Dubai then he would, Clark said, while making it abundantly clear that the process would be a painful one. Fast forward to the present day and the airlines are not just sister companies but partners — sharing more routes, schedules and costs than ever before.
What’s more, it’s been a resounding success, a reformed Clark said in interviews last month. “Focusing the network according to two carriers playing their role is working well,” he told Bloomberg TV. “We haven’t finished that exercise by any stretch of the imagination.”
To be fair to its president, Emirates hasn’t been in obvious need of help for most of its 33-year lifespan. The carrier evolved from a two-plane outfit into the world’s largest long-haul carrier, using Dubai’s amenable location to connect Europe and the U.S. with Asia, Africa and the rest of the Middle East. Last year, Emirates flew a record 58.8 million passengers from its exclusive terminal at Dubai International Airport, which includes a purpose-built facility for the Airbus SE A380 superjumbo.
But the last two years have been turbulent ones. Oil prices plunged in 2016, disastrous for Middle East travel. Meanwhile, the dollar strengthened and competition has become stiffer, with China seeking to gatecrash the market and carriers such as Ethiopian Airlines Group on the rise. That’s led Emirates’s owners to begin to see how co-operating with low-cost sister airline FlyDubai could be positive for both sides.
In July 2017, the two carriers entered into an expanded code-share agreement intended to prepare the way for rationalizing networks and aligning schedules. There are 83 destinations currently available under the code-share, and that’s set to reach 240 by 2022. Meanwhile, both airlines have been eliminating overlapping routes and “wasteful resources,” Clark said.
There are still 30 destinations served by both Emirates and FlyDubai aircraft, but the partnership has enabled the carriers to reduce overlap. FlyDubai, which solely operates Boeing Co. 737 narrow-bodies, is now the only operator to Multan in Pakistan, for example. In return, the carrier has retreated from routes better suited to its long-haul sibling, including Thai capital Bangkok, Dhaka in Bangladesh and honeymoon favorite the Maldives.
Flydubai will also take on the Dubai-Zagreb route for four months from December to better cope with the traditional drop in demand over the winter.
But despite the increased collaboration, Emirates and FlyDubai aren’t planning a full-blown merger, according to Clark. That’s because their mutual owner doesn’t yet see a need for it.
“It will take a while to figure if this relationship will work, because they are different airlines with different organizational structures and operational diameters,” said Mark Martin, chief executive officer at Dubai-based Martin Consulting LLC, which studies aviation markets. “ We just have to wait and watch.”
In the meantime, the prospect of a blockbuster tie-up between Emirates and unprofitable Abu Dhabi-based Etihad Airways looms large, with Bloomberg News reporting tentative talks in September. Emirates denies there have been takeover talks of any kind and says the pair are exploring only limited collaboration.
Read more: Emirates Is Said to Explore Etihad Deal to Forge Biggest Airline
Operationally, Emirates and FlyDubai reduced the minimum connection time of 120 minutes between their two terminals in Dubai. And starting from December, flights to 10 of FlyDubai’s destinations will operate from Emirates’ Terminal 3 to further speed changeovers.
“Now we have our commercial strategy, our network strategy and our fleet strategy are more synergized,” Clark said. “We think there is a much greater value proposition to the owner.”
Copyright: UMS International Fz LLCTheme