Sheikh to U.S. Airlines: Improve So People Choose You

Emirates Sheikh Tells U.S. Airlines to Improve Offering

Emirates Chairman Sheikh Ahmed Bin Saeed Al Maktoum has a simple message for airlines accusing his Dubai-based carrier of taking away their passengers: improve your offering and they’ll come back.

U.S. airlines calling on their government to limit the expansion of Persian Gulf rivals into their home market underestimated the competition when an air-services agreement was signed with the United Arab Emirates in 1999, Sheikh Ahmed said. Instead of turning back time, the likes of American Airlines Group Inc, United Continental Holdings Inc. and Delta Air Inc. should focus on providing a better service, he said.

“Offer the best to the passengers and people will fly with you,” Sheikh Ahmed said in an interview at his office at Dubai International Airport, which overtook London Heathrow as the world’s top hub by international passengers last year. “They don’t mind paying maybe an extra penny to fly if your service is good, at the end of the day it is all about service.”

The U.S. tussle opens a new flank in the global civil aviation industry, which in recent years has gravitated toward the Gulf, where Emirates has leveraged a record number of wide-body jets and Dubai’s position as a crossroads for global flight paths to build the world’s largest international airline in just three decades. Emirates plans to hire 11,000 people over the next year, its ambitions contrasting with shrinking workforces at the likes of Deutsche Lufthansa AG and Air France-KLM Group.

Subsidy Spat

The Dubai-based carrier has ordered 140 A380 superjumbos, by far the largest purchase of the world’s biggest passenger plane, and has more than 50 of the double-decker already in service. In 2013, the last period for which full-year revenue figures are available for Emirates, the company ranked as the world’s sixth-largest airline, behind the three leading U.S. carriers as well as Air France-KLM and Cologne-based Lufthansa.

Emirates has routinely shot back at allegations of state subsidies, with President Tim Clark saying this week that his airline has “always embraced and advocated fair and open competition.” The leaders of American, United and Delta presented a 55-page document to U.S. officials in late January, asking for a review of air treaties with Persian Gulf nations.

Emirates flies to nine U.S. cities -- including Boston and Chicago -- and has carried more than 10 million passengers on U.S. flights since first operating there in 2004.

Risking Jobs

The company is the largest operator of both the Airbus Group NV A380 and the Boeing Co. 777, and placed a record order at the Dubai Air Show in 2013 for the upgraded 777X, which is powered by U.S.-built General Electric Co. engines. While many other airlines use the popular 777 on long routes, Emirates’ service and passenger experience sets it apart, Sheikh Ahmed said.

Besides Emirates, Etihad Airways PJSC and Qatar Airways Ltd. have expanded rapidly in recent years, winning customers with their offer of luxury travel and global connectivity through their Gulf hubs. All three airlines operate the A380 double-decker, which despite being popular with customers has not found its way into the fleets of any U.S. carriers.

“Stopping this business or trying to be very difficult, I’m sure a lot of people in the U.S. or Europe would lose their jobs because why would we take aircraft if you block me, or try to block me, from flying to your points,” Sheikh Ahmed said.

The rise of Emirates has been supported by favorable infrastructure, with Dubai expanding its second hub -- Al Maktoum International Airport -- in a $32 billion project that will ultimately boost capacity to 200 million passengers a year. That contrasts with slot-constrained airports in Europe and the U.S. that are struggling to adapt to growing demand.

Aviation contributed $26.7 billion to Dubai’s economy in 2013, supporting 416,500 jobs, according to a study by Oxford Economics. The sheikdom has made commercial aviation a centerpiece of its effort to refocus the economy away from oil and toward financial services and tourism, though a large group of travelers change plane there without ever visiting.

“The Americans, when they signed the agreement, they insisted on an open-sky policy, and many airlines looked at us at the time as if they’re the giants,” Sheikh Ahmed said. “They never expected that airlines will come out of this part of the world that will challenge them.”

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