Mar 10, 2017

More muffled mutterings about an Emirates-Etihad merger denied

Reports speculating on a merger between the two UAE carriers are missing the bigger changes in aviation facing both

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

An impression of Abu Dhabi’s Midfield Terminal, now under construction

An ultimate merger between Emirates and Etihad has been talked about for around ten years and the latest reports in the German media out of the ITB Travel Show in Berlin have been swept aside by Emirates president Tim Clark.

His interview, rejecting the gossip, comes at the end of this very revealing Bloomberg report by Andrea Rothman.

Much more relevant is what her report conveys about the concerns Emirates has about the rise of low cost long haul airlines, as well as the strategic decisions his successor will have to face in dealing with them, and the consideration of adding a single aisle type to the giant Dubai carrier’s fleets of Airbus A380s and Boeing 777s (including 150 of the forthcoming 777-X series due from 2020).

Clark is very frank about the sudden opportunities that have arisen in the Middle East for single-aisle operations to meet demand from within Arab nations rather than that of connecting traffic using global hubs like those of Dubai or Abu Dhabi, the home of Etihad.

And he has always been frank about the opportunities that will arise from the development of the much larger Al Maktoum or Dubai World Central Airport part way between Dubai and Abu Dhabi.

Although Clark says Emirates is making only a fraction of the money it has made in previous years, it clearly remains a very profitable airline, and one that has seen some rebounding in its fortunes in recent months despite the impact of the US travel bans saga.

The same can’t be said of Etihad, which has pursued a different strategy of building a global network of influence through minority stakes in European, Indian Ocean and India carriers, and of course, in Virgin Australia Holdings. It is clear that the sovereign owners of Etihad want to see rising returns from their aviation investments, something frustrated to some extent by the misfortunes of AirBerlin and Alitalia.

A successor to Tim Clark hasn’t been found, but he has referred to that time being nigh on several occasions in recent months. Much of the speculation about an ultimate merger of the Dubai and Abu Dhabi carriers has come from those with little knowledge of how the federation of absolute monarchies that is the UAE actually works. Until Mr Clark declines to comment on speculation about such a merger it can be taken as read that the notion of a merger isn’t working.  Yet, if not forever.

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8 thoughts on “More muffled mutterings about an Emirates-Etihad merger denied

  1. comet

    Tim Clark says he’s worried about low-cost international carriers.

    So, to differentiate Emirates from the likes of Scoot, Clark decided to stuff 10-across seats into his Boeing 777s, just like Scoot. What will be the difference? At least Singapore Airlines runs its 777s with a more spacious 9-across.

  2. 777 Steve

    Clark has run his course, he’s ordered far too many 380’s and has no where to send them…which is why they are going to KWI and DOH. He gambled that Indian bilaterals would have relaxed by now but they haven’t, so he’s left with too much aeroplane and not enough passengers. As for the narrowbody element, Flydubai whilst a separate entity already fills this space in part and is a reasonable example of a hybrid LCC that appeals to the gulf customers on a budget. The elephant in the room is the continued attrition of flightcrew (as I’ve been saying for a while) and the fact that they aren’t being replaced, creating a self fulfilling cycle of less crew covering more flying leading to further resignations as expats tire of the slave ship employment mentality and return home.

    1. comet

      Video of that FlyDubai 737 exploding in Rostov, Russia – almost a year ago to the day – has turned me off flying with them.
      I wonder if their ticket sales went down after that.

  3. comet

    Etihad has already got into the single isle market. Sometimes on long flights.

    Strangely, Etihad uses the tiny Airbus A319 to fly from Abu Dhabi to Venice, Italy.

    And Etihad’s partnership with Air Berlin doesn’t work too well as a passenger. If you fly from Sydney to Berlin – which is Air Berlin’s main hub – you get put on an Air Berlin A330 all the way from Abu Dhabi to Berlin. What happened to Etihad?

    If you fly from Abu Dhabi into Air Berlin’s second hub, Düsseldorf, Etihad puts you on a 787. Etihad is not using a large aircraft for this, so I don’t think it can be getting very many transfers to Air Berlin.

    You get much better European options with Emirates. If Emirates is “too much aeroplane and not enough passengers,”, then that sounds pretty good as a passenger!

  4. comet

    Sorry to hog this thread, but not many others are commenting.

    I was thinking about how Etihad and Qatar Airways are using single isle jets to get to small southern European cities, like Etihads A319 to Venice, and Qatar’s A319 to Pisa.

    Emirate’s big jet policy must make it harder to service these small cities. Emirates uses an oversized 777 to go to Venice, and has no flights into Pisa. Some of Emirate’s competitors use single isle jets to the former Balkan states.

    So it’s not just Middle Eastern flights that Emirates needs single isle jets. Maybe the opening of Al Maktoum Airport will create the necessary runway capacity to make it worthwhile.

    1. Dan Dair

      I think you’ve got a good point.
      Runway slots at useful times aren’t available to Emirates (or anyone else) at the moment.

      There is a perspective that having only two aircraft types makes for an easy maintenance regime.?

      Presumably, in the future, when Emirates are actually in the market for some single-aisle aircraft, they’ll be looking for a big bunch of the biggest A321 NEO’s available.?
      I can’t imagine they’ll want B737’s…. unless they’re nearly free as a part of a deal to buy even more B777’s,?
      and AFAIK there isn’t another large single aisle aircraft available.?

      Of course, Boeing might actually give their B737’s away to ‘lock-in’ Emirates more closely to Boeing & to prevent Airbus making still further inroads into Boeings’ marketshare.?

    2. Jacob HSR

      Qatar Airways CEO said a few days ago that he will start a “full service” domestic airline in India with 100 jets.

      That domestic airline could probably eventually fly international – why not? That would make things interesting because I mucked around on the GC Mapper website (anyone can) and it shows that if one flies from SYD to LHR directly – DAC or CCU is right under the flight path! Flying via DXB or DOH takes more jet fuel and also has a very long leg (14.5 hours from SYD to DXB).

      1. Dan Dair

        Jacob HSR,
        I’d look at that as being an excellent opportunity for Qatar,
        or any other airline brave-enough to make it happen.
        The whole of Asia, Australia & NZ would be able to hub & spoke into & out of Europe, with a much more balanced pair of flying legs, so consequently less fuel needs to be carried overall & possibly more freight can make-up the weight.?
        I think it would be important that Qatar owned their own dedicated terminal.
        Ensuring a quality passenger experience in their Indian airport would help persuade people to use their offerings.?

        I recently suggested something similar might be utilised by QF.
        Since most of their heavy maintenance is now done offshore, it seemed sensible to me to set-up a hub in somewhere like India, for exactly the reasons you suggested, but also to include a maintenance base, either in house or contracted, to reduce empty ferry flights to zero.
        By taking-up such an option you’re reducing your overall fuel-spend, flying to & from Europe & also flying thousands of kilometers empty to your heavy maintenance base.?

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