Skift Take

Tim Clark has been in the aviation business for nearly 50 years so when he talks, people take notice. He said this week he's bullish that vaccines will be effective against the Omicron variant, but added the next month will reveal whether that is true. Even so, global demand is "hugely resilient," he pointed out.

Emirates President Tim Clark sees its aviation hub business model as central to the airline’s future despite the damage the COVID-19 pandemic has wrought upon parts of the travel industry.

As one of the world’s biggest long-haul carriers, Emirates has over the past 35 years transformed Dubai into a major gateway for international travellers and a tourism hub.

Global demand remains “hugely resilient” despite the pandemic and such crises can increase market segmentation as happened in the wake of the 2008 global financial crisis and the September 11 attacks on the United States in 2001, Clark said.

“That’s probably not what people are saying out there. But I can tell you that is the fact for Emirates. It’s so, each time we have a global trauma, it creates new segments for us,” he said in an interview for the Reuters Next.

“And this includes the corporate segments, which everybody says that are over now … We have never shared that view.”

Clark said he expected Emirates to continue with the hub model and for it to grow “at pace beyond the pandemic.”

“Well, you could never say never. But as long as I’m here, that’s not going to happen (rethinking the model),” he said.

“It gives enormous economic power to the countries and they benefit from that from the private sector to the state which takes its share of the cake through the taxation regimes that are imposed,” Clark added.

‘Uptick Mode’

The aviation industry was hoping to emerge from the COVID-19 pandemic after intensive vaccination campaigns in developed countries, but the new Omicron variant has clouded hopes of recovery as it threatens the December travel season.

Clark said Emirates was working on the basis that the new variant could be dealt with effectively by vaccines, but added that the next few weeks would prove critical.

“We are in what I would call the uptick mode, but … there could be various concerns coming up at any time, and we need to adjust our schedules accordingly,” he said.

Emirates was planning to deploy a further 60 A380s in response to improving demand, on top of the 47 in operation, but Clark said those plans would depend on the new variant.

Emirates is the largest customer of the Airbus A380 superjumbo, whose production is ending due to low sales.

“The 380s have driven the profitability of Emirates since they came,” Clark said, describing them as “astronomically” good for an airport.

He said while the airline community had been deeply traumatised and adopted a risk-averse approach to aircraft acquisitions, dropping large aircraft would “inhibit the ability of airports” by reducing the flow of travellers. “The most important thing to do is resolve the cash situation going forward. So that means offloading the debt they (airlines) have taken and strengthen the balance sheets,” he said.

Governments have pumped billions of dollars into airlines during the coronavirus pandemic and state-owned Emirates has received around $3.8 billion in equity injections from Dubai, including $2 billion disclosed last year.

Clark said he does not expect further government support over the next year so long as the new variant does not cause too much disruption.

To watch the Reuters Next conference please register here https://reutersevents.com/events/next/ (Reporting by Aziz El Yaakoubi; Editing by Alexander Smith)

This article was written by Aziz El Yaakoubi from Reuters and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to [email protected].

November 16, 2022
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Tags: airlines, dubai, emirates airlines