2015-02-16_10-34-54There is no airline more associated with the A380 than UAE’s Emirates Airline. The biggest A380 customer by an of magnitude, the airline and aircraft are synonymous. Even as Airbus struggles to convince airlines of viability of its flagship, the primary customer of the aircraft marvels how competitors don’t “get it”.   In Emirates’ view the A380 is fundamental to its success and the airline has deployed the aircraft into markets nobody would have thought viable – Manchester and Mauritius are examples.   Any destination of some magnitude can expect to be added to the Emirates network and as soon as it gets market traction, an A380 is potentially in its future. There is no destination that doesn’t want an A380. The volume of passengers that come with it are capable of creating a tsunami of economic impact. Particularly when considering the airline runs A380s at over 75% load factor.

With this backdrop we contacted Emirates to get its views on the A380 and its interest in the A380 as well as its views on the 777-9. The answers below give rise to a new set of ideas Emirates’ competitors need to consider. The airline sees a market without constraint and it will deploy aircraft to ensure its continued growth.

Below are three questions we had for Emirates on the A380 and the 777-9.  The replies are in italics.

  • EK is pushing for the A380neo – what are specific improvements being sought?

Emirates’ pursuit of an improved A380 variant targets the following areas: airframe/wing aerodynamics, aircraft weight reduction and power plant technology. The specific targets/plans for each area of improvement have been shared by Airbus with Emirates on a confidential basis and we are not at liberty to discuss them at this stage.

In the area of power plant, Emirates is keen to see new propulsion technologies currently in development for the 777X, the A320neo and 737MAX programmes being crossed-over onto the A380 platform. The direct impact of such improvements is lower fuel consumption which translates into lower operating costs and enhancement of the aircraft’s payload range characteristics in particular for long haul missions, vital to EK’s business model.

  • How much of the desired economic improvements could be achieved by optimizing A380 seating capacity?

Emirates continually reviews and optimises its interior layouts. Emirates is presently studying new configurations aiming at further cabin optimisations that, on a new A380 variant, are expected to contribute to lower unit costs on a seat basis compared to today’s unit costs. However it is premature to measure these improvements from the cabin interior side vis-à-vis the total package prior to Airbus’ decision.

  • How would having the 777-9 impact the A380 in terms of routes and markets?

The application of the 777-9X and the A380 are deemed complementary in Emirates’ strategy.

While the A380 is suitable for congested hubs and helps EK grow markets in a constrained environments and has a very strong revenue/profit potential as a result of its superior appeal and flexibility; the 777X can complement the A380 operation by providing for structured growth opportunities and smooth transition into the A380, delivering great flexibility across a varied spectrum of missions (short, medium and long haul, challenging airfields) combined with a strong cargo capability to further complement the passenger operation.

Our takeaway from the responses are as follows:

  • Emirates sees the 777-9 as supportive of its A380 fleet, not a replacement. Its commitment to the A380 remains solid. The 777-9 is most likely to replace 777-300ERs.
  • Airbus has been communicating with Emirates on defining what the A380 is going to be. As we reported in our recent report (The A380neo Business Case) Emirates has a highly influential role in the A380neo definition.
  • Emirates will continue to tweak the A380 to optimize its revenue generating so that they can deploy targeted A380s by market. No market is immune from an Emirates A380 – the aircraft’s allows more flexibility than any other aircraft. Emirates can provide a high density version for one market (India) and another lower density version (New York) and both versions will be capable of generating more revenue per square foot than any other aircraft in passenger service.

The Bottom Line

Emirates will remain a force to be reckoned with. Incumbents in any market it enters will experience a substantial competitive shock. Emirates offers an ultra-modern fleet offering optimal economics, with a superior product at an equal or better price point. Consequently, entrenched airline brands will have to either “up their game” or see their market share decline as they compete for customers. As with any product, customers who have the ability to choose will “buy up” to the better product and value proposition.

The fundamental difference between Emirates and other carriers is their focused approach to market development and marketing. With excellent brand identification, aggressive yield management, and a focus on building markets from A330 through 777 to A380 as traffic grows, Emirates has kept its eye on the target – profitable growth. The A380 has been a major contributor to that growth, providing high at lower costs, and will remain an integral element of its successful strategy for the foreseeable future. Deploying an A380neo will further the airline’s goals.

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