Emirates could use Europe hubs to expand in Americas

Dubai’s Emirates airline could expand its route network by using European hubs to fly into North and South American cities, its president said, a move that could anger US carriers which accuse it of competing unfairly through state subsidies.

Emirates is considering plans to open new routes to US cities from Dubai, as well as flying new routes from European airports under “fifth freedom” rights linked to Open Skies agreements with US authorities, Tim Clark told The National newspaper.

Fifth freedom rights allow an airline to fly between foreign countries as a part of services to and from its home country. Emirates already does this with a Milan-to-New York flight that it launched in October 2013.

“Expand further from European hubs into the US? Yes we might do that,” Clark said. “The kind of abuse we’ve been getting might cause us to do it.”
“And after Milan, we can see how profitable it is. If the Danes or the Swedes were to come to us and say ‘we haven’t got enough flights into the US, would you consider it? Yes we might do that.”

An Emirates spokeswoman confirmed that Clark was quoted correctly by The National, an English-language newspaper in the UAE. Clark also said “an awful lot” of people in Europe wanted to fly to the other hemisphere, not just to the US but also to Mexico, South America, the Caribbean and elsewhere.

“We might say to (Delta Air Lines chief executive) Richard Anderson that we’re just going to do what the US government wanted back in 1999, to go trans-Atlantic and trans-Pacific with fifth freedom open skies,” said Clark.

Delta and other US airlines have charged three fast-growing Gulf carriers—Emirates, Abu Dhabi’s Etihad Airways and Qatar Airways – of receiving more than $40bn in unfair subsidies, and the US airlines’ unions have urged their government to halt the Open Skies agreement. The Gulf carriers have dismissed the charges as false.

Fuel savings helped Emirates post a 40% jump in annual profit last week. The airline, one of the world’s largest carriers of international passengers, posted a profit of 4.56bn dirhams ($1.24bn) for the financial year to March 31, up from 3.25bn dirhams from a year earlier.

“We (Emirates) have been very transparent,” chairman and chief executive Sheikh Ahmed bin Saeed al-Maktoum told a news conference on May 7. “Anybody who would look at the numbers would know where the money is coming from and where it is being spent – every penny. I’m giving my people a bonus today, why should I do that if we were losing money and were subsidised?”

Sheikh Ahmed said lower oil prices had saved the airline around 2bn dirhams during the financial year, with fuel constituting 35% of operating costs against 39% in the previous 12 months.

These helped offset 1.7bn dirhams of lost revenue from 80 days of runway maintenance at its Dubai International Airport hub. “Last year, we saw the strong rise of the US dollar against the currencies in many of our key markets,” said Sheikh Ahmed.
The airline’s annual revenue was 88.82bn dirhams, 6.18bn dirhams higher than a year earlier, while costs rose by 4.55bn dirhams over the same period to 82.93bn dirhams.