Dubai: Emirates has again denied reports that it is in talks with Abu Dhabi’s Etihad around a potential acquisition, saying that it is instead focused on small scale partnerships with local airlines.
The carrier dismissed a Bloomberg News report in September that suggested the pair were discussing a merger, stating there was no truth to the rumour.
While Emirates has rejected speculation around the issue repeatedly for a number of years, the two airlines did sign agreements in January to cooperate in a handful of areas.
One of Emirates’ most senior executives has said that such low-level partnerships are all the airline is interested in. “We can make it very simple, very easy: There’s no truth to the rumour. No truth. And end of story,” said Hubert Frach, the company’s head of commercial operations for the Americas and Europe.
“It’s publicly available news. We have a couple of agreements with them, for instance group security has a memorandum of understanding (MoU), so we look at synergies, but the talk about a merger — there’s not truth in it.”
But could such limited agreements perhaps turn into something bigger?
“Once again, what we’re looking at right now is synergies, small-scale stuff,” Frach said. “We are definitely not on the road to a merger. That is absolutely rumour and I don’t where this came from.”
In a wide-ranging interview on-board Emirates’ inaugural flight to Edinburgh earlier this month, Frach spoke to Gulf News about rising oil prices and the dominant position the long-haul airline had built up in the UK.
On October 1, the Scottish capital became the airline’s eighth destination in the UK. The eight cities receive a total of 19 Emirates flights a day, including 10 to London alone.
“We are growing in the UK, [where] we have a very strong commitment,” Frach said, adding: “The UK is really in the top group of the global markets, pointing to a strong propensity to fly, robust outbound and inbound travel demand, and a healthy mix of business and leisure.”
The executive said Edinburgh was a natural addition to the Dubai carrier’s portfolio in the UK, suggesting that a large asset management community and the growing number of tech companies based in the city would make the route a successful one. “It’s a centre for research and education, and on the other hand you have a rich cultural background, historical sites, the royal mile, Edinburgh Castle,” he said. “There’ll be a very healthy demand, both inbound and outbound, from the business and leisure communities.”
Frach also said that the new destination would be “important” for Emirates’ cargo division, Emirates SkyCargo.
The Boeing 777-300ER, which will fly on the route, can handle around 20 tonnes of cargo per flight.
“I expect it will be full [on each flight]. It will be basically seafood, cars, whiskey, and some oil drilling equipment,” Frach said.
Top of the game
As Emirates has ramped up its focus on the UK as a market, other carriers have been scaling back. Both Virgin and Royal Brunei announced earlier this year that they would be ending their flights between Dubai and London.
Airlines have struggled to compete with Emirates, especially on routes to Europe from Dubai, given the Dubai carrier’s route network and cost structure. Last year, Qantas also announced they would be discontinuing their Dubai-London flights.
With 10 flights to London, most of which are on the giant Airbus A380, many competitors have found it simply too difficult to keep up with Emirates’ frequency and volume.
Other than Emirates, British Airways is the last airline to offer direct flights to London from Dubai.
When asked about the limited number of flights to the British capital, Frach said: “Dubai is still a highly competitive market, it’s an open skies market. Anyone can come and fly and operate services.”
“[Virgin and Royal Brunei] haven’t been really big players because they had a limited offer and supply in that market.”
On how ticket pricing would change to reflect Emirates’ grip on the route, the executive said that he believed the airline was priced very competitively, and offered a top-notch service.
Frach did add, however, that the company always kept an eye on changing market dynamics that might impact tickets prices. “There are a lot of factors driving competitive forces” he said, including the price of oil.
Brent Crude has increased in price by nearly 41 per cent since December 2017, which Frach said the company predicted.
“We anticipated where the fuel price was going. We have seen it before, and we have managed it before. It’s a very cyclical business, and in the 30 years we’ve been in the business, we’ve always managed it.”
“Yes, it’s now above $80, a lot of volatility, so it is a definitely an additional cost burden, a little bit of a headwind for us. We’re monitoring it closely,” he added. “I’m personally very optimistic about it.”