Dubai: It took the UK government 188 days to give UAE airlines an ‘amber’ signal from ‘red’ – will it take just as long to shift from amber to ‘green’? Because airlines’ prospects on one of the busiest routes in the world will depend on the speed of switching to green.
But aviation industry sources are not too hopeful that UK will speed up the process after dilly-dallying on even the amber decision. “It wouldn’t happen in the next few weeks since the UAE was only recently removed from its highly controversial red list after 188 days,” said Linus Benjamin Bauer, Managing Director at Bauer Aviation Advisory.
Indeed, the UAE had pressed UK authorities to remove the country from the red-list for quite some time before the decision was made. It was in April that the red tag was applied to travelers from the UAE to the UK, which meant mandatory full quarantining.
With amber, passengers who have received both doses of the COVID-19 vaccine in the UK, the US or Europe will no longer have to quarantine on arrival in Britain. The move to lift quarantine restrictions for vaccinated UK citizens returning from amber list countries “will have a significantly positive and immediate impact on the UAE-UK travel corridor in the upcoming weeks,” said Bauer.
Back to peak
When UK and UAE set up a travel corridor last year, travel zoomed within a matter of weeks, propelling the Dubai-London to the busiest in the world.
“The surge from people desperate to travel between the UAE and the UK to see families, planning kids’ return for the upcoming school term, as well as postponed leisure or business trips could be the foundation for a return to peak 2020 levels in the fourth quarter of 2021 and first quarter of 2022,” said Bauer.
An immediate lift
The decision to ease curbs on passengers from UAE is a sizeable boost to airlines. Emirates and Etihad rely heavily on international connectivity and the opening up of key markets such as UK and India, both of which are now returning to near full services.
“These carriers must deal with a combination of about 50 uncontrollable variables, of which will all extend beyond their control,” said Bauer. “To combat this, wider collaboration between airlines, airports and linked stakeholders in the UAE and the UK must be considered as essential.”
The UK has been one of UAE airlines’ premium markets, with a high proportion of business and first class passengers. “Airlines are struggling to fill business and First Class seats with Business travelers during the pandemic – and may continue to struggle to do so for the next two years,” said Bauer. “Hence, airlines have dropped the price difference between Economy and First Class in an attempt to get any extra revenue from passengers during these challenging times.”
This probably inspired Emirates to launch a brand-new ‘Premium Economy’ class last year. The airline’s new offering met with instant success and, during an event in February, Emirates President Tim Clark said passengers had been “clamoring to get into them (premium economy seats)”.
“The launch of the Premium Economy class product on their A380s could help them boosting the overall sales of premium seats in the upcoming few months,” said Bauer. “From a business point of view, Emirates’ new class also plays a vital role in its recovery in the long-term.”
The premium economy class generates 2.3 times higher revenues than its production – leading to highest marginal returns across all cabin classes for Emirates. “By targeting comfort-seeking VFR (visiting friends and relatives) and leisure travelers, the premium economy product could become a value-added product,” said Bauer. “It will be an important revenue stream and a strategic mechanism to improve yields on routes between Dubai and London in the long-term.”