The Battle for Australia’s Skies

Emirates, Etihad Airways and Qatar Airways step up investment to grab market share

Gulf airlines have developed significant ties to Australia over the past two decades, and their recent push to capture additional share of that market has had far-reaching consequences across the industry.

Etihad Airways and Emirates Airlines currently operate a combined 119 weekly flights between the UAE and Australia. Emirates, which has 84 weekly flights to Adelaide and Brisbane (twice daily) and Melbourne, Perth and Sydney (three times daily), is now the largest foreign carrier operating to Australia.  Etihad has 35 weekly flights to Sydney (twice daily) Brisbane, Perth and Melbourne. From August, however, flights to Melbourne will increase to twice daily; and from June flights from Abu Dhabi to Perth will fly direct, no longer stopping in Singapore.

“Australia was a natural growth opportunity. Many European airlines pulled out from Australia before Emirates even arrived”

“It is certainly a key market for the airline,” says Peter Baumgartner, Etihad’s chief commercial officer. 

A journey time of 20 hours between Australia and Europe means the trip must be flown in two legs. Traditionally, passengers connected in a Southeast Asian hub such as Singapore or Hong Kong. But after European airlines started to withdraw from the Australian market, Gulf airlines saw the potential to fill the gap, according to Will Horton, Middle East analyst at the Centre for Aviation, a global aviation research firm based in Sydney.

“Australia was a natural growth opportunity,” Horton says. “Many European airlines pulled out from Australia before Emirates even arrived. Fares were high and there was an opportunity to increase travel propensity. Australians love to travel, and their annual leave and salaries are generous.”

Emirates started flying to Australia in 1996, followed by Etihad in 2007 and Qatar Airways in 2009.

Emirates focused on growing its Australia business in late 2012 and 2013 culminating in a partnership with Qantas, Australia’s largest domestic and international airline. This terminated the long-standing agreement between British Airways and Qantas.

“Our alliance with Qantas has made Dubai the hub for their European flights, which in turn has benefitted customers,” says Sheikh Majid Al-Mualla, divisional senior vice president at the commercial operations centre for Emirates. “Combined, Emirates and Qantas operate 98 weekly services, which enable Australian travellers to connect to more than 77 cities in the Middle East, Africa and Europe, and also open up Qantas’ Australian network of over 55 cities.”

Emirates will increase its UAE-Australia capacity by 3 per cent in 2015, according to Horton.

Tim Clark, Emirates’ president, has nevertheless been reported as saying that the airline may eventually operate 100 weekly flights to Australia.

Etihad, meanwhile, has embarked on its own growth spurt, and is on track to increase capacity on Australian routes by 31 per cent this year, Horton says. This is likely to propel it into the top 10 list of largest foreign carriers, up from 12th position currently. Growth has been helped by its equity alliance with Virgin Australia and will be helped still further with the launch of A380 flights to Melbourne some time in 2016.    

The two carriers are also demonstrating their commitment to the Australian market by putting their newest and fanciest jets on those routes.

By May, five of Emirates’ 12 daily flights will operate with the A380.Etihad will also start flying an A380 to Sydney in June.

The increase in the number of flights has resulted in a sharp rise in the number of Australian tourists coming to the UAE. Visitors from Australia grew more than any other market in 2013, up 39 per cent to 269,000 in 2013 from the previous year, according to Dubai’s Department of Tourism and Commerce Marketing. However, the Australian dollar’s recent decline against the US dollar makes outbound travel less appealing for Australians.

Cargo space has also expanded, helping food exporters in Australia. As many as 10,000 carcasses arrive daily in aircraft flying to the GCC, according to Gerard Seeber, Consul General and Senior Trade Commissioner for the Middle East and North Africa at the Australian Consulate General in Dubai. 

Both airlines have also helped raise awareness of their brands by coming significant sponsors of sporting and cultural events Australia. Since 1996, Emirates has invested more than A$100 million in arts, community and sports sponsorships, including some of the biggest events on the calendar such as the Australian Open and the Australian PGA Championship. Etihad sponsorships include Melbourne City Football Club and the Etihad Stadium in Melbourne.

“Enhanced awareness has definitely brought commercial benefits,” says Emirates’ Al-Mualla. “And we have seen our operations grow in many countries after the sponsorship of a big event.”