2016 a ‘tough’ year, says Emirates’ Tim Clark as Europe and Africa weigh on Dubai carrier

Emirates is continuing its fleet deliveries as scheduled, but says consumer demand for this year 'is not there yet'.

Emirates is continuing its fleet deliveries as scheduled, but says consumer demand for this year ‘is not there yet’. Ali Haider / EPA

Emirates is feeling the effects of a global slowdown and this year will prove to be a particularly challenging one, according to its president.

“It’s tough [compared with last year],” said Tim Clark, referring to the first half of the year, at an International Air Transport Association (Iata) event in Dubai. “We are working on it.”

Air traffic demand “is all about consumer confidence”, he said. “I remain confident, [we will] get to some sort of equilibrium in oil and other issues and things will get ahead, but perhaps not at the pace it used to be.”

Overcapacity and the economic slowdown, however, are hurting the aviation industry as demand growth remains slow.

“Emirates, similar to all airlines, has suffered reduced demand in oil markets plus the broader implications of security threats and political uncertainties,” said John Strickland, an analyst at JLS Consulting in London.

The slowdown does not seem to be coming in the way of Emirates’ fleet expansion. “Fleet [and deliveries] remain as is,” Mr Clark said. “We have 44 aircraft coming between end of this month and December 2018.” Emirates will take delivery of its 117th A380 aircraft in December next year. It currently has 84 of the aircraft in its fleet of 233.

The Emirates executive touched on a range of issues that have an impact on its global operations, including the security situation in Europe following terror attacks in Brussels and Paris, and the impact of the United Kingdom’s referendum vote to leave the European Union.

“We remain optimistic,” he said. “Perhaps [it’s] not as good as it used to be but [it] will be in two to three years [provided there are no further geopolitical issues in Europe].”

The outbound market from the UAE was not affected by Brexit, he said.

“There were more concerns about security [in Europe] and there were concerns about what was going on in Turkey,” Mr Clark said. “And this affected our demand for the outbound business. It was not as bad as I thought it would be, but certainly reflected in the westerly flows from here.”

The Dubai carrier has also made some cuts to its frequencies in Africa, Mr Clark said, adding that more cities and frequencies may be cut. The airline has cut its twice-daily flights to the Nigerian cities of Lagos and Abuja to once daily from July because of a hard currency shortage that is forcing airlines to refuel in neighbouring countries.

Trading conditions on the continent are volatile, with many external factors at play, said Mr Strickland of JLS Consulting. “Emirates has significant capacity in Africa, so it is not surprising that it sees the need to reduce its exposure at the present time.”

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Update: a day later, the airline has suspended its service to Abuja starting October 30. __________

Meanwhile, Iata on Tuesday said that the Middle East market is expected to grow by 5 per cent a year to 414 million passengers in 2035, up from 156 million last year. Within the Middle East, the UAE, Qatar and Saudi Arabia are expected to report a growth of 6.3 per cent, 4.7 per cent and 4.1 per cent respectively.

In 2035, the total number of air passengers is expected to increase to 7.2 billion globally, up from 3.8 billion estimated this year, a 3.7 per cent a year growth rate, according to Iata.

The demand growth is expected to come from China, which Iata said would replace the US as the world’s largest aviation market in terms of traffic, by around 2029. India would rise to the third place, displacing the UK the same year.

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