If whirled up in Dubai's crisis, Emirates may set a lower course

If Emirates airline is caught in the Dubai debt crisis, it may force the carrier to moderate its expansion, which could hurt aircraft manufacturers like Boeing and Airbus, as it has placed orders worth $55 billion with them.
And, it will enthuse rivals in a key market like India. Emirates is the largest and most aggressive foreign carrier out of India. Travel agents believe any impact on Emirates could help other carriers operating out of India — Air-India, Lufthansa, British Airways, KLM-Air France and Singapore Airlines.
Average yields have fallen 20 per cent since March this year, as businesses curbed travel to cope with the downturn. If Emirates is forced to cut capacity on Indian routes, it will improve occupancy for other airlines, and eventually, improve yields.
As mentioned, Emirates, has $55 billion of orders with the two manufacturers; two weeks earlier, it had actually said it might take over orders its rivals are looking to delay or cancel (Boeing 777s or Airbus 330s). It is also the biggest customer for the A380 super-jumbo and has booked 58 of these.
But Dubai’s airline has emerged as a potential pawn in the city-state’s scramble for financial stability. Experts say the airline’s future could be determined by Dubai’s sister emirate, Abu Dhabi, which could demand ownership of the company for bailing out its neighbour if the troubles at Dubai World worsen. Emirates is owned by the Investment Corporation of Dubai, which is controlled by the Dubai government.
06/12/09 Ranju Sarkar/Business Standard

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Categories: Foreign Dec 2009