Dubai As fuel prices continue to play havoc with airlines across the world, Emirates remains optimistic and firm about its future growth strategy, according to Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group. In an interview with Gulf News during the Dubai Airshow, he expressed his optimism about financing options for Emirates' future aircraft deliveries as airlines across the globe grapple with the issue. Emirates opened the airshow with a whopping $26 billion order for 70 Boeing 777-300 ER aircraft (including 50 firm orders and 20 options), adding to its future growth and expansion. With massive route expansion lined up in the future, the Arab world's biggest carrier expects its fleet to reach around 280 planes by 2020.
Gulf News: With so much volatility in oil prices what is Emirates' fuel hedging status?
Shaikh Ahmad bin Saeed Al Maktoum: Oil is a very touchy subject. For us [Emirates] today it accounts for around 43 per cent of our total costs — direct to the bottom line. Last year, it accounted for around 28 per cent. Few years ago, when fuel prices were much lower, it was only around 12 to 14 per cent. So that's something which we cannot control.
As for hedging, it's good and bad. It's very difficult to know what the price will be but as an airline, we always like to see oil prices in the range of $70-$80 a barrel. But people will still continue to fly. We have seen oil prices touch even $149 a barrel — though it didn't stay there too long.
You might see this year as being one of the most expensive years [for airlines] in terms of oil prices staying nearly above $120.
Is Emirates currently hedged? If so, at what price?
We have many options but I don't talk about our certain strategies.
Have you changed your strategy after the first-half drop in your profits this year?
From a strategy point of view, of buying more aircraft, going with our big strategy, that hasn't changed. You saw us buying more Boeing 777s earlier this week worth $26 billion. So our strategy hasn't changed in terms of more aircraft joining the fleet and opening new routes. On tactical methods, our commercial people continue to maintain their budget and sales effort. That's not changed.
European banks have been asked to take a 50 per cent cut on Greek debt, which means their capability to finance aircraft from airlines such as Emirates is now going to be limited. So what alternative options are you looking at to finance your future aircraft deliveries?
If you look around the world, many banks are liquid enough. I don't have an issue so far when it comes to financing aircraft. I think banks would always be looking at investing money at the end of the day in whichever sector is good.
For Emirates, between now and August 2012, everything is sorted out. I have a good reserve within the company — of $4 billion. So I don't see any problem [with financing]. From experience, we have never had an issue in the last 25 years — and in all these years we have gone through many hurdles.
So will we see Emirates issuing a sukuk, for instance, as one of the financing alternatives?
That could be one option. We did something like that a few years ago. So that option is open. Conventional bonds and export credit are other such options.
Some of the European carriers complain that Emirates doesn't have to pay taxes. Do you feel they try to interfere with you by asking airport authorities to not offer you any slots?
If I don't pay taxes here, they too don't pay taxes for doing business here. All different kinds of companies operate here and they also do not pay taxes. Even people living here don't pay taxes. So it's not my company's case alone.
Some time back ICD (Investment Corporation of Dubai) paid off a bond using dividends from Emirates. Do you think you will continue to give lifelines to government-related entities?
Emirates is owned by the government through ICD at the end of the day. I have been paying dividends for a number of years so that will always continue. As an owner, they have the right to claim the dividend from the airline. It's up to them after that as to what they use that money for. But we, as a company, will pay it. We can't tell them where and how to use the money.
Have you reached any accord with the Canadian government on the bilateral?
Nothing yet. We will always talk to them and see when it would be possible to increase our flights to Canada from three a week to a daily and onwards to a double-daily frequency and so on.
I will always remain positive as I am sure it would benefit both countries. However, it's very difficult to say how soon that would happen… We will leave that to the politicians. As for me, I would be most happy to see it happen in the shortest time possible.
What are your views on the European Union's emissions trading scheme (ETS) as Emirates, just like all other airlines, will need to start paying the carbon tax starting January 2012?
If we look at what has happened with Europe, it's going to bring about a big change in a lot of countries in Europe. I believe that the Dutch and Belgians have delayed it for another year or so. So we might actually see people flying in Europe to those destinations where the ETS is not being implemented. It would be a big promotion for those airports. To us, at the end of the day, whatever costs get added will come to the airline. The airline will have to then add it to your [passenger's] ticket. It would have to be passed on to passengers eventually — for every airline. I don't think there is an airline in the world which will be bearing this cost by itself, as they won't be able to run a successful business.
With all the expansion and new aircraft coming in, what are your hiring plans in the coming 12 months?
In this year itself, we needed to hire around 4,000 people. We are in the process of doing so. Also, we have been given a go-ahead to put up an academy at Al Maktoum International airport for training pilots. It should be ready by 2012.
How many planes are you going to retire during the course of the (financial) year?
I don't have a figure for exactly how many but it won't be many.
Do you think you have over-ordered the aircraft for the region? A lot of people are sceptical about Emirates' huge orders and also of other airlines in the region ordering huge number of planes. What do you have to say?
It's not their problem. It's going to be my problem. I think they should review their own plans. I remember I was asked last year why I am buying all these aircraft. I said they are very expensive. It's not like buying cars and putting them in the garage and you can use them once a day. For planes, you must have a work plan for them, have rights and so on.
The easy part is to buy an aircraft and negotiate a deal. We also have to think about how much we go through in terms of the bilateral, negotiating rights and all of that, besides all the logistics that come with it, such as hiring the people, training them, accommodating them and so on.
So it's not as simple as a lot of people think. We will continue to grow and we should be growing forever.
Does Emirates need to free some capacity for flydubai in India for it to get more rights into the country?
No, flydubai needs to negotiate to get more seats. I [as Emirates] cannot afford to free capacity. I would prefer getting more than really freeing the capacity to somebody else. We [Gulf carriers] are fully utilising our capacity into India but the Indian carriers are not fully utilising their capacity to here.
Do you see any room for consolidation in the airlines industry in this region?
I don't think so.
Long journey started in 1985
Dubai: Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman Chairman and Chief Executive of Emirates airline and Group, 58, is the son of the late Ruler of Dubai, Shaikh Saeed Bin Maktoum Al Maktoum. He is also the younger brother of the late Ruler of Dubai, Shaikh Rashid Bin Saeed Al Maktoum, and the uncle of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. He is a graduate of the University of Denver.
Shaikh Ahmad belongs to the generation of young and influential Emiratis who are building the bridge between Dubai's traditional past and its future in the century ahead.
He embarked on his journey in the aviation industry in 1985 when he was appointed President of Dubai Civil Aviation and became Chairman of Emirates airline upon the company's establishment.
His vision from the outset was to transform Dubai into a major aviation hub.
In pursuit of this goal, he has made it his mission to promote Dubai worldwide as a sophisticated, cosmopolitan city, and a preferred place for business and leisure.
One of the most successful leaders, Shaikh Ahmad also holds several other portfolios with the Government of Dubai including Chairman of the Dubai Supreme Fiscal Committee and chairman of Dubai World — which underwent a complex restructuring process. He is Deputy Chairman of the Dubai Executive Council, which formulates policies and strategies for the Emirate of Dubai.
He almost single-handedly steered Emirates as the world's biggest carrier of international passengers and a force to reckon with. Today aviation supports $22 billion of economic activity and 250,000 jobs. That is equal to 28 per cent of GDP and 19 per cent of employment.
The Dubai Civil Aviation Authority is a governing body which oversees the activities of Dubai International Airport, Dubai Cargo Village, Dubai Duty Free, Dubai International Hotel and the Dubai Aviation Club. He is also Chairman of the Dubai Airport Free Zone Authority, Chairman of the Supreme Committee of the Dubai Shopping Festival and Dubai Summer Surprises, Director of Dubai Golf and Chairman of Alliance Insurance Co., Dubai International Marine Club, the British University in Dubai and the Dubai Power and Energy Committee.
Shaikh Ahmad's efforts have been recognised by several organisations. Among recent accolades, he was named one of the top tourism personalities in 2003, 2004 and 2005 by Focus, a major German business magazine.
He was also declared Middle East Person of the Year in 2001 by Travel Agent magazine for his outstanding achievements in promoting Dubai as the gateway to the Middle East; and most recently he was named "Aviation Entrepreneur of the Year 2007" by Airport Journal.
Chronicle on UAE aviation released
Dubai: Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group, released at the Dubai Airshow 2011 a book chronicling the history of civil aviation in Dubai and offering rare insights into development programmes that will make Dubai the world's aviation hub by 2020.
From the Creek to the Skies - Civil Aviation in Dubai, History and Future 1937-2020 was authored by Ghassan Amhaz, Media Relations Manager at Dubai Airports.
Divided into 26 chapters the book is essentially an updated English version of Amhaz's first book that was also released by Shaikh Ahmad last March as part of the commemoration of the 50th anniversary of Dubai International.
Shaikh Ahmad said: "What sets this book apart from other similar works is that while it addresses the need to chronicle the history of the development of the air transport industry in Dubai, it also adds a human touch, an element of nostalgia, through anecdotes and testimonies from individuals who have witnessed these developments at close range and contributed to making Dubai an icon that is hard to emulate."
Author Amhaz said: "This book's uniqueness lies in its candid interviews with more than 50 entrepreneurs and industry pioneers who not only witnessed this success story first-hand over the decades, but were very much a part of it.
"I would like to believe that I have been successful in offering new insights about various aspects of society, politics, the economy, and particularly the aviation sector in Dubai."