Emirates Keeps Profiting from Dubai’s Hub Power

 - November 5, 2012, 9:20 AM
Situated at the axis of the world’s fastest growing population centers, Dubai International Airport allows Emirates Airline to connect virtually any two points on the globe. (Photo: Dubai International Airport)

Dubai’s importance as a hub for carrier Emirates Airline continues to increase, along with its proportion of connections to total traffic. Connecting passengers now account for 70 percent of all traffic into and out of Dubai, Emirates reported last month. For example, on September 5, the airline’s Dubai-Glasgow flight, EK27, attracted passengers from 39 points on the globe, from Accra and Cape Town in Africa, Christchurch in New Zealand, and Tokyo and Seoul in Asia. Every time Emirates adds a destination, the power of the hub grows almost exponentially, and the airline plans to serve 114 destinations by the end of 2012. By 2020 it hopes to serve 150.

Emirates calculates that, today, 5.7 billion people live within eight hours of Dubai, and estimates that figure will rise to 7.0 billion in 2030.

By then, the world’s fastest-growing populations will reside in Africa, the Middle East and Central and South Asia, increasing 48 percent, 36 percent and 25 percent, respectively, according to population experts. Conversely, they say, Europe’s population will fall by 1 percent, while China grows by 8 percent, the Americas by 17 percent and the Asia Pacific region by 20 percent. In short, Dubai lies at the axis of the world’s population explosion.

“That creates several opportunities. The pie is growing all the time,” said Jochen Hoesch, the airline’s senior manager, fleet planning and research.

Emirates estimates that by 2030 some 87 so-called aviation mega-cities–each representing more than 10,000 daily long-haul passengers–will dot the globe. The airline now serves some 20 destinations with its A380s, and with a total of 65 still on order, it sees an abundance of new lucrative routes.

High fuel costs represent a hurdle, accounting for 58 percent of cash operating costs. “A $1 change to jet-fuel cost [adds] $59 million to our cost base,” Hoesch said. As a result, the company is “talking to the Russians” about opening polar routes.

Today, Emirates lays claim as the world’s largest international network carrier, and has underlined its determination to eschew strategic alliances in favor of tactical commercial cooperation. “There is a lot more third- and fourth-freedom traffic,” said Hoesch. “An alliance can be limiting.” Nevertheless, Emirates recently signed a 10-year code-share frequent-flyer partnership with Qantas that will see the two jointly offer 98 weekly flights from Australia to Dubai, including four daily A380 flights. Of seven daily A380 flights from London Heathrow, Emirates will provide five and Qantas two under the new arrangement.