Gulf aviation will continue to grow despite global challenges

Emirates

The past year has been one of accelerated recovery for aviation as most markets dropped coronavirus pandemic restrictions on international travel.

Travel demand bounced back with a vengeance. At Emirates, we had foreseen this and planned for it. We had a head start on recruitment and had our aircraft and operations lined up, ready to serve this demand. We were ready, Dubai was ready.

It wasn’t the same story across the global aviation ecosystem, though. Many were caught off guard by the rapid resurgence of travel demand. Workforce shortages, infrastructure strain, and supply chain challenges kept making headlines throughout the year.

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In some pockets of the world Emirates hasn’t been able to restore capacity as quickly, or as smoothly as we’d have liked.

Having said that, let’s keep in mind that aviation players spent two-plus years coping with dynamic pandemic policies, shifting focus to air cargo operations, recalibrating costs and staffing levels, and from around Q2 of 2022, everyone in the chain had to U-turn and unwind everything to return to “normal operations”.

Overall, I think we’ve done well as an industry. A significant portion of international air transport capacity has been restored relatively quickly, while ensuring safety isn’t compromised.

Global aviation challenges in 2023

There are a lot of forecasts around inflation, high energy prices and the strong US dollar, driven in part by the war in Europe and supply-side challenges. These factors do impact the cost of business and could potentially dampen consumer confidence and travel spend.

Like everyone else, Emirates is keeping a close eye on costs and working closely with our suppliers. We’re also ensuring that we continue to attract and retain customers, by offering value for money and great travel experiences.

Broadly, I’m optimistic that seat loads and demand for international travel will hold strong going into 2023. There’s still pent-up travel demand, and capacity isn’t back to pre-pandemic levels yet.

Plus, there are signs that China, the last major consumer market, is finally re-opening, which will also drive demand. For aviation, the theme of recovery will continue in 2023.

There are other long-term challenges that we need to start tackling now as an industry, to be future fit. These require combined efforts from all aviation stakeholders, and massive investments.

For instance, modernising airport infrastructure and air navigation systems, developing new aircraft and engines to replace ageing fleets and improve environmental performance, developing viable supply chains for sustainable aviation fuels, using advanced technologies to improve customer experience and business efficiencies, and so on.

Will there be a global recession?

Many economists expect a recession, or at least, that 2023 will be tough for economies, businesses, and consumers.

I’m an optimist. No matter what, there will always be bright spots and opportunities somewhere. For instance, when Covid brought air travel to a standstill, air cargo boomed, and Emirates rapidly deployed capacity to serve that demand.

Some markets will manage inflation and shocks more ably than others. The highs and lows of currencies, interest rates and energy prices will hurt some, and will benefit some.

Emirates’ network is global, and our business model enables us to adjust quickly to make sure we are in the right markets with the right product mix and offer. In addition, we have the advantage of being based in Dubai.

Dubai and the UAE’s progressive policies, investments and overall stability are a potent force which will continue attracting businesses, tourists, and trade flows in 2023 and beyond.

Emirates

Outlook for Gulf aviation

Gulf aviation is not immune to global forces, but I believe it will continue to grow in 2023.

Within a four-to-eight hour flying radius of the UAE, there are many promising economies with young and mobile populations.

The air transport market in our region is not yet saturated and there’s plenty of potential yet to be tapped. I can see, for example, the benefit of more intra-region collaboration – like the codeshare arrangement that Emirates recently signed with Gulf Air.

Saudi Arabia is making massive investments in its tourism and aviation industry, including launching a new airline and building a new mega airport.

Across the border, Qatar will be looking to capitalise on the infrastructure it built for the World Cup. And in the UAE, transport and tourism will remain key enablers for the country’s ambitious economic plans.

As the saying goes, a rising tide lifts all boats. The increased investments and development activity in Gulf markets will have a positive knock-on effect in the region, generating more opportunities for Emirates and other aviation players.

Emirates’ 2023 plans

We are working hard to get all our aircraft back into the air, and to bring our capacity and global network back to pre-pandemic levels.

We’re also excited to activate and ramp up our partnerships, including with United Airlines and Air Canada, and will look at ways to strengthen Emirates’ network and the connectivity that we offer to customers.

On the product front, we will continue to introduce initiatives that enhance and differentiate the Emirates experience.

In November 2022, we began a massive $2 billion cabin refresh and retrofit programme for 120 of our existing aircraft. The first of these newly refurbished aircraft will roll out of Emirates Engineering Centre and enter service in January.

It will ensure our customers keep “flying better” with Emirates and have more access to our latest products like the extremely popular Emirates Premium Economy seats.

We are recruiting pilots, crew, and other roles across our business to ensure we have the right resources to support our operations, and future growth. In 2024, we’ll start receiving delivery of the Airbus A350s – a new aircraft type to our fleet mix.

Preparations are well underway to ensure a smooth entry into service, from training to product development. We’ve already completed the cabin design work, with the first Emirates A350 aircraft expected to go into production in early 2023. More details will be unveiled as we get closer to our A350 service launch.

Sir Tim Clark is president of Emirates