Monday, Nov 21, 2005

Emirates, the Dubai-based airline, on Sunday placed a firm order for 42 Boeing 777 long-haul aircraft, to support its rapid growth towards becoming the world's biggest long-haul airline around the end of the decade.

With Sunday's contract Emirates, which is owned by the government of Dubai, has outstanding firm orders for 132 wide-bodied aircraft, an order book alone which is bigger than the existing long-haul fleets of leading carriers such as British Airways, Germany's Lufthansa, United Airlines of the US or Singapore Airlines.

It currently operates an all wide-bodied fleet of 83 aircraft to more than 75 cities in 54 countries.

Emirates' pace of expansion is fuelling growing concerns both in Australia and Europe about the competitive threat posed by a number of state-owned carriers in the Middle East, including Qatar Airways and Etihad, the Abu Dhabi-based airline, which have placed some of the biggest-ever orders for long-haul aircraft from both Airbus and Boeing.

Margaret Jackson, chairman of Qantas, the Australian flag carrier, which is lobbying the Australian government hard to limit the granting of additional traffic rights to Emirates, escalated the war of words earlier this month by saying that "to suggest that Emirates is competing on similar terms as commercially-run airlines like Qantas is, quite frankly, fiction."

She said that Emirates was 100 per cent owned by the government of Dubai and that government ownership provided a sovereign risk rating that allowed the airline to carry debt levels far higher than could be sustained by publicly-listed carriers such as Qantas. It paid no corporation tax in Dubai, she said, and its chairman was a member of the ruling family and head of the Dubai department of civil aviation, which also ran Dubai airport.

In response Emirates said that Qantas was "one of the world's most anti-competitive airlines." It said Emirates was not subsidised and operated as a "fully open, audited and commercial international business."

Qantas's concern is that Emirates will draw increasing volumes of traffic out of Australia to feed through its Dubai hub into its expanding network into Europe. In Europe, Air France in particular has voiced similar fears about the impact of Emirates' expansion on its traffic flows.

Tim Clark, president of the airline, said on Sunday in an interview with the Financial Times that the carrier's passenger traffic, measured by revenue passenger kilometres, was growing at 25-30 per cent a year.

Emirates expected to carry around 13m passengers in the current financial year to March 2006, and this would more than double to 32-33m by 2013.

The airline said that Sunday's order for 42 Boeing 777s was worth $9.7bn at list prices before heavy discounts. The aircraft are for delivery between 2007 and 2013.

Including the latest Boeing deal the airline has aircraft on order valued at $37.4bn at list prices, which already includes 45 555-seat Airbus A380 superjumbos, the largest passenger aircraft ever built. Mr Clark said the airline was due to take delivery of its first A380 in April, 2007.

Sheikh Ahmed bin Saeed Al-Maktoum, Emirates chairman, said that global air travel demand had been "resilient" with particularly strong growth in Asia and the Middle East region. Dubai was seeking to develop, he said, as "the world's aviation hub of choice."

Dubai airport, which will handle 26m passengers this year and is growing at 14 per cent per year is being expanded to a capacity for up to 75m passengers a year beyond 2009, which could be filled by 2013-14, said Mr Clark.

The government of Dubai presented a master plan at the Dubai airshow on Sunday for a new airport at Jebel Ali, which could eventually have six runways and a capacity to handle 147m passengers a year.

The Boeing order includes 10 777-200LRs, the world's longest range commercial passenger jet, which recently broke the world distance record for a commercial airliner, and which Emirates will use to open new non-stop routes such as Dubai to the US west coast.

Emirates has also ordered 24 larger capacity 777-300ERs and eight 777 freighters.

Mr Clark said that Emirates had decided to "wait longer" before placing an order for medium capacity aircraft to replace and add to its existing Airbus A330-200s.

Boeing and Airbus are competing fiercely for the order with new aircraft in a contest pitting the Boeing 787 Dreamliner, due to make its first commercial flight in 2008, against the Airbus A350, which is due into service in 2010.

Eventually the aircraft chosen would be "the workhorse" of the Emirates fleet, said Mr Clark, but the airline believed the two aircraft makers still had "more work to do" to develop the aircraft to meet its needs.

"Why rush?" said Mr Clark, "we are taking stock and waiting for the one that suits us."

Kevin Done, Aerospace Correspondent

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