Dnata is 65, but its globetrotting is just getting started

September 24, 2024, 3:56 AM

Dnata provides ground handling and cargo services, as well as catering, ramping and more

Profit has trebled for Emirates division
Contracts in Europe, Americas and more
Growth potential in Western airports

Dnata began life 65 years ago as a small travel agency in Dubai. Today it is the airport services arm of Emirates Group, operating in over 30 countries and planning to expand to even more.

This month, it signed ground handling contracts with Royal Jordanian Airlines at John F Kennedy airport in New York and EasyJet at Zurich airport.

In August, Dnata clinched a partnership to provide Thai Airways with catering services in Milan for the carrier’s new daily flight to Bangkok and expanded its ground support fleet at São Paulo International Airport in Brazil.

This “aggressive expansion” builds on its experience running operations at the world’s busiest airport, Dubai International, according to Linus Bauer of Bauer Aviation Advisory.

Bauer says the company’s experience in ground handling, cargo, catering and travel services “positions it to bring a high level of operational efficiency and innovation to Western airports, which often face challenges in terms of ageing infrastructure, technology gaps and increasingly demanding customer service expectations”.

In recent months Dnata has also sealed deals for catering services to British Airways at Newark and ITA Airways at Los Angeles and San Francisco, ramp services to Brazil’s Azul Airlines at Orlando, and comprehensive ground handling services to Air India at Zurich.

Dnata servicing a Lufthansa plane in Singapore. Chief executive Steve Allen says the company sees potential in Asia

Dnata’s chief executive, Steve Allen, says: “We do see potential in markets beyond our current footprint, particularly in South America, Middle East and Asia.”

The company secured more than 120 contracts last year across its airport services and catering and retail divisions, according to Allen, who says Dnata’s international operations in six continents now make up 75 percent of total revenue.

“Most recently, we have added Germany and Zanzibar to our network through strategic investments.”

“Our recent investments include the opening of new, state-of-the-art cargo facilities in Belgium, the UK, Pakistan and Canada. This financial year, we will open two additional advanced cargo centres in Iraq and the Netherlands.”

In May Dnata reported a profit of AED1.4 billion ($387 million at the time). That is more than three times the AED331 million profit the company logged the previous year.

Saj Ahmad, chief analyst at StrategicAero Research, says: “What Dnata is doing is putting itself out there so it doesn’t need to seek the opportunities. It wants airports to come to it. Dnata spreading across the US is a testament to that.”

Ahmad says one of the most promising regions for the company’s future growth is Latin America, where Emirates is also poised for expansion.

“In the next five years, hopefully, Emirates will get the longer-range 777X aircraft and will be able to fly directly to Latin America,” he says. “One of its most popular routes now is routed into Mexico through Barcelona.”

China and India are other large markets full of potential, but protectionist policies of varying degrees make it harder for outside players to take hold.

In Western aviation markets, Dnata is going head-to-head with industry giants Swissport and Menzies Aviation.

However, Bauer says Dnata’s reputation and ties with Emirates "give it strategic leverage. The company’s ability to bundle services and scale across markets is likely a significant competitive edge”.

Dubai’s plans to develop the world’s largest airport on the site of Al Maktoum International might give Dnata further room to experiment with new technologies in aviation – and use that expertise to beat the competition, according to sources.

Asked by local media whether an initial public offering is part of Dnata's growth plans, Allen said the financials could be ready “reasonably fast” but that such a decision would be in the hands of the “bosses” at Emirates Group.

Ahmad says: “There’s an argument that Dnata could be spun off, or partially privatised. But I don’t see the need. It literally prints money for the Dubai government, like Emirates – why would you want to jeopardise something that works really well just to go toward Westernised standards?”