Emirates Favor Luxury In Era Of Cuts

March 29, 2005

ON THE ROAD

Emirates Favors Luxury in an Era of Cuts

By JOE SHARKEY

EATTLE, March 25 – Why is this man smiling? He runs an airline, for Pete’s sake.

In fact, Sheik Ahmed bin Saeed Al-Maktoum, the chairman of the Dubai-based Emirates Group, which owns Emirates airline, has reason to be feeling optimistic, unlike his colleagues in the United States at least, where some major airlines are starting to see themselves as dinosaurs lurching toward the tar pits.

Emirates, which began its first service in the United States last June with flights between New York and Dubai, makes money. For the 2004 fiscal year, the airline reported a 73.5 percent increase in profit, to $429 million, on $3.6 billion in revenue. For the 2005 fiscal year ending this month, the airline has said it anticipates about a 25 percent increase in profit, despite soaring oil prices.

Emirates, which says it is not subsidized by its owner, the government of Dubai, is also on a $28 billion buying binge for big airplanes. While airlines in the United States have desperately retired big planes to the aviation boneyards in the deserts of the Southwest, Emirates has gobbled up new long-range airliners from both of the major manufacturers, Boeing and Airbus, and brought them home to the desert of Dubai. As quickly as they can be delivered, the planes are being put into service on a network that now encompasses 77 destinations in 54 countries.

Sheik Ahmed came to Seattle, Boeing’s headquarters, to buy another couple of new planes: two 777-300ER’s, the first of 10 of that long-range model due for delivery to Emirates this year, and the initial installment of a total of 30 to be delivered by 2007.

Emirates, which began operations with two planes in 1985 and which expects to take delivery of one new long-range jet each month for the next six years, is also a major customer for Airbus’s A340 aircraft, and it was the initial customer for the ultra-long-range A340-500 aircraft in late 2003. It has the biggest order by far – 45 planes – for the superjumbo 450-to-850-seat Airbus A380 double-decker aircraft, which is still in development and will start joining its fleet next year.

International air travel demand is expected to increase robustly for the foreseeable future, and more American business travelers than ever are finding themselves contemplating longer trips to more faraway places. Increasingly, major airlines – including financially struggling domestic giants like AMR’s American, UAL’s United and Northwest – are having to compete with well-heeled international carriers like Emirates. As competition grows, so does the length of some flights. Last summer, Singapore Airlines started the world’s longest nonstop, 181/2 hours between Singapore and New York.

For Emirates, as for its top-level competitors like Singapore, Cathay Pacific, British Airways and others, the real race in long-haul travel is largely a competition for onboard service, whatever the marginal differences in fares.

Since its inception, Emirates has deliberately marketed itself to travelers who like to fly in comfort, wherever they are sitting.

"We are very much focused on the high-yield passenger," Sheik Ahmed said during an interview at a downtown hotel after a ceremony at Boeing for the delivery of the new planes. Still, like its top-niche foreign competitors, and unlike most airlines in the United States, Emirates has spent money on roomier coach cabins with premium amenities like in-seat video monitors.

"We are not ignoring the back of the aircraft because that is one part of the business that is not affected by any crisis," Sheik Ahmed said. "Even though they pay less, those people are very determined to travel. Whenever there’s a crisis, the first things you will see hit are first class and business class travel. So that’s why we try to focus on providing good service in all three classes, including economy. It costs us more, but we win loyalty."

Emirates planned to start nonstop service to San Francisco and Houston this year, but that has been delayed because of the turmoil in oil prices. This year, he said, the airline will concentrate more on its service between New York and Dubai, probably adding a second daily flight.

As international competition grows and more foreign airlines join the fray, long-haul carriers are locked in escalating battles that often turn on service. It never ends, said Sheik Ahmed, who said that he believed that the demand for the most expensive seats – like the current walk-up round-trip fare of $9,828 for a first-class seat between New York and Dubai – continues to grow strongly.

Not many years ago, British Airways shook up premium service when it introduced seats that folded down flat into beds. Competitors quickly matched the move. Next came in-flight entertainment systems that now routinely offer hundreds of on-demand choices on personal monitors.

"It’s always something," said Sheik Ahmed. On the New York-to-Dubai route, for example, Emirates now offers private cabins in first class. With doors.

"You can have complete isolation," Sheik Ahmed said. "When you want to have a meal, you have room service. You pick up your phone and order whatever you want on the menu."

What about the A380, with a huge capacity that conjures up the probability that at least some airlines will turn them into cattle cars? Emirates is already committed to the configuration and design for its initial batch of A380s, which will carry fewer than 500 passengers in three classes.

The major first-class innovation will be a cabin with a shower. "A full shower, with space for dressing," Sheik Ahmed said.

Are any competitors planning to top that?

"Not so far," he said.

On the Road appears each Tuesday. E-mail: jsharkey@nytimes.com

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