Emirates' perpetually fresh fleet puts heat on rivals
Boeing CEO James McNerney, second from left, takes part in a news conference in Dubai last November.
TOKYO -- Emirates has been shaking up the global airline industry. In just five years, the cash-rich carrier has doubled its international passenger count, to 44.5 million. One of the keys to its swift ascent: ambitious fleet renewals that fly in the face of industry traditions.
Emirates, which is based in Dubai, United Arab Emirates, currently flies 135 Boeing 777s. That gives the company the world's largest fleet of the long-range, wide-body jetliner.
The airline has also announced plans to purchase 200 of the latest planes to hit the market -- next-generation Boeing 777s and Airbus A380s. The A380 is the world's largest passenger airliner.
Emirates will spend about $99 billion on these planes, which together amount to the largest one-time aircraft procurement in the history of civil aviation. Thierry Antinori, executive vice president and chief commercial officer at Emirates, stresses that the airline's competitiveness lies in its top-of-the-line aircraft.
Normally, airlines depreciate their planes over a period of nearly 20 years, and then keep flying them for another five years on average. The idea is to squeeze every last dollar out of the aircraft. But Emirates has adopted a radically different strategy. Its jets have been in service for an average of six years, compared with the industry average of about 11 years.
The strategy works because of high fuel prices. Even though the latest jets cost as much as $300 million apiece, their better fuel efficiency can offset the big outlay. And newer aircraft make for better passenger experiences, helping Emirates lure customers away from rivals.
Stateside scramble
Major U.S. carriers have taken notice of Emirates' strategy.
United Airlines is rushing to rejuvenate its own fleet. The airline last year ordered 55 midsize aircraft, including Boeing's new 787s. There are also rumors that Delta Air Lines, which tends to prefer older models, will soon place a big order for new aircraft.
These U.S. airlines aim to learn from the mistakes of European airlines.
After the 2008 collapse of U.S. investment bank Lehman Brothers and the onset of the global recession, Middle Eastern airlines quickly expanded their presence in Europe while the Continent's airlines were reeling from the slump in demand. They positioned themselves to snatch passengers flying to North America, Africa and Asia.
Antinori, who was recruited by Emirates from Germany's Lufthansa in 2011, blames European airlines' woes on their failure to renew their fleets.
American carriers are likely keeping all that in mind as Emirates prepares to launch service to Chicago in August. When those flights start, the UAE airline will be flying to a total of nine U.S. cities. Emirates is targeting passengers who currently fly through South Korea's Incheon Airport or Japan's Narita Airport on their way to Southeast Asia; it hopes to convince them to go through Dubai instead.
The Big Two
As the competition between airlines heats up, there is a potential complication: It is becoming increasingly difficult to quickly acquire new planes.
By 2033, there will be demand for some 9,600 midsize and large passenger jets with seating capacities of 230 or more, according to Japan Aircraft Development Corp., a consortium. That would be a 2.6-fold jump from 2013.
Only Boeing and Airbus can supply such large aircraft. Some industry observers say delivery quotas are already filled through 2019.
The tight supply creates a powerful tail wind for the leading aircraft manufacturers. At the same time, big orders can result in big jolts when things do not go according to plan.
This happened to Airbus. Emirates, one of the manufacturer's largest customers, recently decided to cancel a multibillion-dollar order for 70 long-range A350 jets. The cancellation reportedly followed a rethink of the carrier's fleet needs; the announcement sent Airbus' stock plunging.
As global travel demand picks up and competition intensifies, the stakes will only get higher for everyone in the industry.
TOKYO -- Emirates has been shaking up the global airline industry. In just five years, the cash-rich carrier has doubled its international passenger count, to 44.5 million. One of the keys to its swift ascent: ambitious fleet renewals that fly in the face of industry traditions.
Emirates, which is based in Dubai, United Arab Emirates, currently flies 135 Boeing 777s. That gives the company the world's largest fleet of the long-range, wide-body jetliner.
The airline has also announced plans to purchase 200 of the latest planes to hit the market -- next-generation Boeing 777s and Airbus A380s. The A380 is the world's largest passenger airliner.
Emirates will spend about $99 billion on these planes, which together amount to the largest one-time aircraft procurement in the history of civil aviation. Thierry Antinori, executive vice president and chief commercial officer at Emirates, stresses that the airline's competitiveness lies in its top-of-the-line aircraft.
Normally, airlines depreciate their planes over a period of nearly 20 years, and then keep flying them for another five years on average. The idea is to squeeze every last dollar out of the aircraft. But Emirates has adopted a radically different strategy. Its jets have been in service for an average of six years, compared with the industry average of about 11 years.
The strategy works because of high fuel prices. Even though the latest jets cost as much as $300 million apiece, their better fuel efficiency can offset the big outlay. And newer aircraft make for better passenger experiences, helping Emirates lure customers away from rivals.
Stateside scramble
Major U.S. carriers have taken notice of Emirates' strategy.
United Airlines is rushing to rejuvenate its own fleet. The airline last year ordered 55 midsize aircraft, including Boeing's new 787s. There are also rumors that Delta Air Lines, which tends to prefer older models, will soon place a big order for new aircraft.
These U.S. airlines aim to learn from the mistakes of European airlines.
After the 2008 collapse of U.S. investment bank Lehman Brothers and the onset of the global recession, Middle Eastern airlines quickly expanded their presence in Europe while the Continent's airlines were reeling from the slump in demand. They positioned themselves to snatch passengers flying to North America, Africa and Asia.
Antinori, who was recruited by Emirates from Germany's Lufthansa in 2011, blames European airlines' woes on their failure to renew their fleets.
American carriers are likely keeping all that in mind as Emirates prepares to launch service to Chicago in August. When those flights start, the UAE airline will be flying to a total of nine U.S. cities. Emirates is targeting passengers who currently fly through South Korea's Incheon Airport or Japan's Narita Airport on their way to Southeast Asia; it hopes to convince them to go through Dubai instead.
The Big Two
As the competition between airlines heats up, there is a potential complication: It is becoming increasingly difficult to quickly acquire new planes.
By 2033, there will be demand for some 9,600 midsize and large passenger jets with seating capacities of 230 or more, according to Japan Aircraft Development Corp., a consortium. That would be a 2.6-fold jump from 2013.
Only Boeing and Airbus can supply such large aircraft. Some industry observers say delivery quotas are already filled through 2019.
The tight supply creates a powerful tail wind for the leading aircraft manufacturers. At the same time, big orders can result in big jolts when things do not go according to plan.
This happened to Airbus. Emirates, one of the manufacturer's largest customers, recently decided to cancel a multibillion-dollar order for 70 long-range A350 jets. The cancellation reportedly followed a rethink of the carrier's fleet needs; the announcement sent Airbus' stock plunging.
As global travel demand picks up and competition intensifies, the stakes will only get higher for everyone in the industry.
