Emirates’ Tim Clark: No A380 or B747 means rising fares in the future

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In November 2022, when Emirates presented its financial results for the first half-year of FY2022-2023, the airline insisted that no new aircraft would be delivered before 2024. In the meantime, the Gulf carrier launched “the biggest-known aircraft retrofit program in modern commercial aviation.”

In an interview for AeroTime, aviation journalist Andreas Spaeth talks to Emirates President Sir Tim Clark about the airline’s fleet strategy for the upcoming year, the future of operating the Airbus A380, and the airline’s relationship with Boeing and other airlines.   

Andreas Spaeth: Does Dubai gain from the football world cup currently taking place in Qatar? 

Tim Clark: It is a good thing for Dubai as a lot of the supporters fly to and through Dubai or take the air shuttles to and from Doha, as many stay here. Dubai has the greatest hotel room inventory outside of Qatar for people going backwards and forwards to Qatar.  

Spaeth: FlyDubai operates the shuttles from Dubai, how is its relationship with Emirates evolving? 

Clark: It’s demonstratively getting closer. With their fleet of Boeing 737MAXs they are able to go to fields we can’t go to with wide-bodies. They are picking off a large number of regional destinations. Gradually we will join together more. I guess we have about 380 destinations altogether, so it’ll become a truly super hub with high frequency destinations served by 737 MAXs at the bottom to A380s at the top, as well as Airbus A350s as they start to arrive in July 2024. 

Spaeth: Do you see Qatar and Qatar Airways somehow following in Emirates’ footsteps? 

Clark: I know we have done the right thing in regards of what we have done with Emirates and, of course, in Dubai. And the testament to that is that the likes of Qatar and others have just emulated what we have done. The government of Qatar obviously believes that Qatar Airways is part of that soft power outreach. 

Spaeth: As is the case with Emirates and the UAE? 

Clark: I don’t think it was intended that way when the UAE established Emirates. It was more about the fact that access had been denied, declined for whatever reasons in the early days, that led to the formation of Emirates by the now ruler of Dubai. But the notion that it was part of a soft-power outreach of Dubai wasn’t part of the game plan then. It has become so now. But then Dubai in itself has become an enormously potent city. When the crown prince of Saudi Arabia announced that he was going to form an airline called RIA based in Riyadh, we were pleased and flattered to hear that he said: “I want an Emirates in Riyadh, but not in 37 years, in just seven years.” I thought that was really nice of him to put us in there, respecting what we do. And also, for wanting to create lots of Dubais in Saudi Arabia. 

Spaeth: So, does all this lead to a tectonic shift in soft power distribution in the Gulf? 

Clark: There is an awful lot going on down there. And it’s even become more interesting because of what’s going on in Saudi Arabia, a lot will happen in the next 10 to 15 years. Which means there will be a lot of economic activities if it goes to plan, the multiplier effect of which will be seen in many areas, but in aviation alone it’s huge. The labor to build all these projects the crown prince announced has to come from somewhere. Dubai is sort of an example of that, 20 years ago we had over a million workers building the city and the artificial islands of the Palms. It’s also a great thing for the aerospace industry what’s going on down there, with RIA announcing all those planes they want and huge airport projects. It is a powerful boost to the regional economies and probably the global economy.  

We have seen how this works in Dubai. When I arrived in 1985, there were about 2.5 million people using the airport, while now prior to the pandemic it was pushing a hundred million. What the Saudis are trying to do is a bit of that. I told our government they shouldn’t worry about it, as there is also a huge opportunity for us, and for all fringe states around Saudi Arabia.  

Will the crown prince do it in the end? I don’t know. I understand there is US$30 billion going into the whole RIA project. We were just given US$10 million when we started. 

Spaeth: Did you coach Tony Douglas, now CEO of RIA and formerly at the helm of Etihad, how to pull it off? 

Clark: No, I think he has learnt. He used to come for lectures to me and called me “doctor”.  He did the right thing with Etihad, unraveled, unbundled it and shrunk it to a potent, high-quality airline becoming profitable just before he left, based on the A350-1000 and the Boeing 787. That was good for the government of Abu Dhabi and allows Etihad to finally stand on its own feet. A good story, really.  

Tony Douglas is fairly measured. He won’t be bamboozled or overpowered by a “get me 150 A380s” kind-of-thing. But there are high expectations of him in Saudi Arabia, mainly on the speed of getting things done. 

Spaeth: Is Emirates also looking for Airbus A350-1000s? 

Clark: We have the A350-1000 on the planning drawing board as a possible additional order. 

Spaeth: Were you as disappointed as others when Boeing CEO Dave Calhoun recently announced there wouldn’t be a new aircraft from Seattle for another decade? 

Clark: If you develop a new airframe, big or small, with inflation running, you are probably talking about a minimum of US$20 billion in spend. They have any number of regulatory approvals to get through to get that done. In the old days, a lot of that was left to Boeing themselves, with the new FAA requirements the whole process will take longer and be more expensive.  

Whatever kind of aircraft they are going to design, the FAA will be breathing down their necks wanting to know every single thing with regards to the architecture, the control systems, the philosophy of the design they want to build. Importantly, they will be introducing new technologies, which is great, but also subject to further and more intense review from the regulator to ensure they are getting it right. 

Spaeth: Are there even any potential foreseeable leaps in technology warranting a new aircraft before the 2030s? 

Clark: There is some quite interesting work going on in the propulsion field, allowing fuel savings of possibly 10 to 15%. These are hugely important developments, but neither Airbus nor Boeing will get involved until they think they can take advantage of this and bring it to the market. We first talked to Boeing about the 777-9 in 2010, and will get our first aircraft in 2025, 15 years later. We got engaged with Airbus about building the A350 in 2003, it came to market finally in 2014. So, the time it takes from the design concept through to delivery and entry into service is now becoming a bigger gap. 

Spaeth: And Boeing also can’t bear these development costs at the moment.  

Clark: They have to restore their balance sheet first and get things like the 787s out of the door and they have a huge backlog of orders. They need to get the MAX10 certified, possibly the MAX7 if they are ever going do it, and they have to get the 777-9 out of the door. The notion that they would undertake a major exercise in establishing what a new airframe would look like, the New Midsize Aircraft (NMA) for instance, if there is an appetite for that, at the time when the airlines have large orders for A321XLRs, A320neos as well as the MAX. These aircraft are the cash cows for the two players. To build the cash back on to the balance sheet and be able to say ‘we now have sufficient financial strength to be able to develop a new airframe’.  

Unfortunately, with such sort of triple-whammy with the pandemic, the stricken nature of airline balance sheets, the risk adversity that is in the boards of airlines at the moment, the war of course in Ukraine, the disequilibrium in the global economy, these do not sit well when you are talking to your board saying, “let’s build a new airframe for 20 billion dollars”. I’m not unsympathetic to that, but I can understand why Boeing reacts as it does. But it is a shame. Mr. Calhoun saying he won’t be building any new airplanes until the mid-2030s is rather sad. 

Spaeth: What is your latest take on the Boeing 777-9 delivery date? 

Clark: We know there was an engine glitch in October. They stopped the test program – not that there was much going on anyway. They dropped the engine, took it to General Electric in Cincinnati, and on December 6, 2022, we will get a heads up on what the problem is. Until then we wait for the results of the breakdown of the engine. Boeing says the test program will commence in the summer of next year, but that depends on what the engine findings are following the most recent glitch. 

In the worst case it’s a design issue and it becomes more complicated. If the engine broke because there was a batch problem with components, it’s possible they will restart the test program in January. The July 2025 delivery date we estimate is something I said, not Boeing. They said they want to deliver by the end of 2024 or first quarter of 2025. I said judging by their performance today, we make that July 2025. And Boeing Commercial CEO Stan Deal agreed. But the aircraft is over five years late and, if it continues to be late, our patience will be truly tested. We have an aging fleet, which needs to be replaced.  

Spaeth: Has your quest to get any manufacturer, especially Airbus, to come up with an A380-size replacement largely fell on deaf ears? 

Clark: My view is that the A380 could be rebuilt using the solutions we now have both in construction and design, aerodynamics, propulsion, application of composites to the extent that you could get 25% better [overall efficiency – ed. note] than today with the existing A380s.  

Airbus agrees, but they say: “You put 50% of the development costs up”.  

I said: “I am an airline, you are the manufacturer, you get on with it. Or you give me 50% so I can run my airline.”  

The A380 uses propulsion that was designed in the 1990s for the 1990s and the early part of the last decade. So, propulsion has gone a long way with more coming. The Ultra Fan, for example. There is a possibility that you get a hugely efficient big player in engines at the top of the inventory requirements of airlines. It is not difficult to calculate what is happening by the mid-2030s, early 2040s if you do not do something, with all the quads gone – the A380s, A340-600s and Boeing 747s. That is why we keep the A380s as long as we can, as there is no other way we can go. But as demand skyrockets and there are no such big aircraft anymore, capacity will fall, fares will rise. 

Spaeth: And it seems demand is huge already now.  

Clark: Yes, our forward bookings and yields are extraordinarily high. The fact is that for every of the six A380 operations we offer out of Heathrow every day; I could put a Boeing 777 next to it and fill it up. Demand is that strong. There was a good place for the A380.  

Perhaps it was a bit over-successful for Emirates, and there was a view among my airline community competitor friends that the fewer A380 there was in the toolbox of airlines like Emirates, the better, because it was outperforming so many of our competitor’s operations. With the A380 out of the mix, it might be better for them all. And there was a belief they couldn’t fill [the aircraft], while we knew we could. If the new airfield at Dubai World Central South had been built at the pace we had wanted it to before the pandemic, then we would have 200 A380s flying. That scared the pants off everybody. I keep saying they should build another one with all the technological advantages. I still believe it’s the way to go. Perhaps when I’ll be long gone, they might listen. 

Spaeth: How many A380s are flying now with Emirates? 

Clark: We had 84 [flying] in mid-November. We have 17 on the ground going through maintenance requirements and we started the retrofit program. So, depending on how quickly all the maintenance providers can put that through, we hope to put them all back in service sometime next year.  

We have 118 A380s at our disposal out of the 123 delivered. We’ve broken off a few [to be used] for gears and other bits and pieces. We sold off quite a lot of parts. We’ll probably initially fly 115 or 116 as we go through the retrofit program, which will finish in the first quarter of 2024, including the Boeing 777s. 

Spaeth: What is the rationale behind your new cooperation with United Airlines, a carrier that used to advocate against Emirates? 

Clark: Some of the carriers that used to oppose us, like Air Canada (ADH2) and United, have now come to us and said: “There is no point hunting you; we must deal with you.”  

I said to them: “we told you so when we were in the midst of Congressional hearings in Washington DC. It makes far more sense to work with us than what you are doing.”  

Someone saw the light and realized what we could bring to their bottom line, significant improvements by the virtue of what we do, without hurting them in their markets after all. They came to us, and we always aspired to have a good US partner. This is mutually beneficial to both carriers, without us entering Star Alliance. We are willing to do business with anybody, irrespective of which alliance affiliation they have. 

Spaeth: What about a Lufthansa (LHAB) (LHA) code share? 

Clark: I wish we had some, I would like to do a few code shares. There are areas where Lufthansa (LHAB) (LHA) doesn’t fly to, not least of which is Australia. There are holes in Lufthansa’s (LHAB) (LHA) network. I think it would work if we could come to some kind of agreement without being overly complex. The fact that many of the founding members of Star Alliance have joined us was probably a difficult pill to swallow in Frankfurt.  

What about a code share with Lufthansa (LHAB) (LHA) from Berlin to Dubai? But Lufthansa (LHAB) (LHA) and their partners from Star Alliance were always introducing layers of complexity that made it almost impossible to activate the model. If they were less demanding we could simply come to an arrangement, bringing value to them and us on a reciprocal basis. Why wouldn’t you do that? It would bring a Lufthansa (LHAB) (LHA) code on the Emirates flight, which is hugely popular in Germany, to multiple points beyond Dubai and to Dubai itself. When Lufthansa CEO Carsten Spohr was working for his pre-predecessor, Wolfgang Mayrhuber, we did explore multiple arrangements, but somehow, they lost interest in that. 

Spaeth: You just turned 73 in November. What about your personal plans? 

Clark: I did not want to leave the business in a mess having spent my life building what it has become. We just had the best half-year in the history of the airline, and we are on the path to the best year in profitability that Emirates ever had.  

But for myself? I don’t know. We will see. When the timing is right and I think the airline is in good shape, once I am satisfied and the team is ready to take it forward, then they don’t need me. The people there have been in a very good stable [here, Clark is referring to the fact that he has guided his team and, effectively, they have come out of his “stable” where they were taught a lot – ed. note] and they’ve learnt the hard way.  

As long as we’ve got that belief in what we can do, how we are going to perform in the next 20 years, then that’s good enough for me. 

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