Skift Senior Aviation Business Editor Brian Sumers writes this column with a critical eye on the important global issues impacting the airline industry, from the middle seat of the last row in economy class to the boardrooms of the world's largest carriers.
We learned this week Emirates President Tim Clark, a lion of the airline industry, plans to retire next year, 35 years after joining a fledgling carrier based in an aviation backwater. When he goes, an era may end, the culmination of a two-decade period when Emirates, Etihad, and Qatar Airways struck fear into European and U.S. rivals, who whined about what they called unfair competition.
U.S. airlines had hoped the Trump Administration, preaching America First, might take Emirates down, using diplomatic levers to place limits on where the airline might fly. But the Trump Administration declined, perhaps because it didn’t need to. The Gulf carriers are becoming less relevant, not because governments have stepped in, but because market forces have intervened. Emirates is not what it was.
Undoubtedly, Clark, now 70, will retire as a visionary, an innovator who shook up the industry with grand ideas, like showers and bars on airplanes, and an economy class that didn’t suck. More importantly, first as head of planning, and later as president, he remade where Emirates flew, leveraging its central global location to connect almost any two cities. There remains no more efficient way to fly between Seattle and Karachi, or from Johannesburg to Hyderabad.
But competitive dynamics change, and the airline Clark will depart next year is not the same one that intimidated European and American U.S. carriers as recently as a couple of years ago.
One major problem: The Emirates’ global hub in Dubai, while still strong, no longer serves the purpose it once did. Increasingly, at least between larger markets, customers no longer need to stop in the Gulf.
Take the journey between San Francisco and New Delhi. United Airlines in 2019 began flying the route with a Boeing 787, allowing business customers in its key hub to comfortably fly to India without stopping in Dubai or Doha or Abu Dhabi. (Yes, Air India flies that route, too, but its product is so subpar it probably isn’t a viable option for the average Facebook or Google executive.)
United for years had airplanes capable of flying between San Francisco and New Delhi, but not cost effectively. The 747 burned too much gas and was too big. The Boeing 777 was smaller and more fuel efficient, but it had many of the same problems.
As aircraft technology improves and route planners become more aggressive, Emirates may further lose its edge. Many passengers today flying from Sydney and Melbourne to Europe still find Emirates as convenient as any airline, because those cities are too far from London and Paris for a nonstop. But what will happen to Emirates if (or when) Qantas figures out how to fly that far?
Even the Emirates’ product advantage is disappearing. It’s fun to mock U.S. airlines, but they’ve closed the gap in premium economy and business class. U.S. carriers have added more comfortable and more private premium seats, and they have upgraded amenities, including lounges and in-flight entertainment. Their service still can’t compare, but how many business travelers want to fly three hours (or more) out of their way so a flight attendant will smile at them and address them as “Mister”?
Most of Emirates’ slow decline is not Clark’s fault. Once other airlines had the cash, it was obvious they would try to catch up. And it has been apparent for several years that, as aircraft technology improved, Emirates’ unique location would no longer mean so much.
I last saw Clark in September during a group interview in a hotel conference room in London, and he seemed worn down. He started his 90-minute briefing with a discussion of all the places in the world he saw weakness, or potential weakness, including the United Kingdom, China, and Argentina. Then he said he feared a backlash against flying because of carbon emissions, before sharing his concerns about the health of the Gulf oil economy. His comments were an interesting departure from what I had been hearing from other airline executives, who had been telling me their business had never been better, aside from a few areas of concern.
A big issue now is the Emirates fleet. Emirates also flies Boeing 777s, but it made its reputation on the biggest double-decker jet, the A380, flying more than five times as many as any other airline. Passengers love the airplane, complimenting its spacious cabins and amenities. But it’s so expensive to operate that a couple of airlines — Singapore Airlines and Air France — have been retiring roughly 12-year-old airplanes, even though they’re basically brand-new by airline standards.
Emirates can do OK with the A380 when it fills it. But with as many as 615 seats on the airplane, that’s easier said than done. Sometimes, it requires heavy discounting.
The A380’s economic disadvantage is why airlines overwhelmingly prefer two smaller long-range airplanes, the 787 and A350. For a long time, Clark defiantly (or stubbornly) stuck with the Airbus A380, believing its advantages outweighed its disadvantages. As a last-ditch effort, Clark tried to persuade Airbus to update the airplane, but with no other airlines interested, Airbus killed the A380 instead. Emirates’ fleet is now dominated by an orphan airplane.
Out of necessity, Emirates changed its position recently. For next-generation jets, the plan is to take some of everything, with A350s, A330s, Boeing 787, and Boeing 777X airplanes expected to come in the 2020s. With the new airplanes, Emirates should be able to better compete, and it may focus on what makes it unique — the ability to connect Europe and North America with secondary cities in Africa, India, Pakistan, and the Middle East.
However, it’s likely the airline’s golden age has passed — that time when Emirates was the way for affluent people to fly from San Francisco to Delhi, or Sydney to London.
When he leaves, Clark will be celebrated for his contributions to aviation, and he deserves the plaudits. He single-handedly changed airlines, creating an impressive global hub where none had existed, while pushing competitors to improve their products. Emirates even spurred two nearby competitors, Etihad and Qatar, who tried, with some success, to imitate what made Emirates so special. (Despite a blockade by neighboring countries, Qatar may be the best positioned of the three, possibly because it never was so enamored by the A380.)
Emirates is not going out of business. It remains a fine airline, with genuine commercial strengths. But the Emirates of the next 20 years is not likely to be the same company Clark helped run so well for the past three decades. With each day, Emirates is losing the competitive advantages other airlines feared.