Emirates’ Tim Clark fears ‘gathering storm’ as he hints at exit

The company's president, 67, said low-cost carriers are targeting the long-haul routes that make up Emirates' business model.

Mr Clark was speaking at the ITB tourism fair in Berlin. Fabrizio Bensch / Reuters
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The Emirates president, Tim Clark, said the world’s biggest long-haul airline faces a “gathering storm” as a new generation of low-cost carriers targets the intercontinental routes around which it has built its business.

Emirates sees threats across all markets from rivals spanning Norwegian Air Shuttle to the Scoot unit of Singapore Airlines, Mr Clark said on Thursday in Berlin. The carrier may also need to establish a short-haul fleet as Middle East nations that it has struggled to serve begin to open up, he said, while cautioning that the decision will be one for his successor.

“The dynamic is changing in the Middle East with regards to access to new markets,” the executive said in Berlin, where travel industry executives have gathered for the ITB tourism fair.

“Our business model was set in the late 1980s, when access was denied to us by many places in the region.”

Mr Clark, 67, who has run Emirates since 2003, said that while he sees no immediate switch away from an all-wide-body fleet, “others coming behind may take a different view”. He said it would be “remiss” of him to commit to a particular plan and that “business doesn’t stop when I go”.

Emirates has established itself as the world’s biggest carrier serving international routes by transforming Dubai into a transfer hub for flights between the Americas and Europe and Asia-Pacific, the Middle East and Africa.

While Norwegian Air has focused its long-haul efforts chiefly on transatlantic flights, it also has a hub in Bangkok, while Scoot plans to begin flights to Europe this summer starting with a service to Athens – a city that is also part of the Emirates network – in June.

“At the back end of ‘90s I did a paper on long-haul low-cost,” Mr Clark said. “Everyone laughed at me, but what I predicted then has finally started to happen. We have players in all arenas – Europe, America, Asia. It’s a gathering storm.”

The executive said that the situation is being complicated by the response of established network carriers such as the British Airways owner IAG, which plans to start lower-cost flights using Airbus A330 wide-body jets, initially out of Barcelona, and Lufthansa’s Eurowings arm, which is expanding as fast in long-haul routes as it is on intra-European services.

After a “few years of instabil­ity,” increasing demand for intercontinental services should be sufficient to support much of the expansion “as the pie grows,” Mr Clark said.

Low-cost carriers specialising in short-haul routes are also likely to play a bigger role in linking up with long-haul operators, he said. Ryanair already plans to provide feeder traffic to Norwegian.

Political and socioeconomic upheavals have created an environment in which running a global airline has become increasingly challenging, Mr Clark said. While a decade ago a major carrier might have faced disruptive events a couple of times a year, “the pace of change is accelerating and quite destabilising”.

* Bloomberg


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