Emirates, Flydubai alliance set to soak up idle capacity, open new routes

Both airlines will continue to be managed independently

LONDON: Emirates and Flydubai have confirmed plans to integrate key operations as they respond to tough competition among global airlines.

The tie-up means that the pair can mop up excess capacity on both of their networks as a global glut of planes forces fares lower. Both airlines will continue to be managed independently, but will leverage each other’s network to scale up their operations and accelerate growth, Emirates said.

“When Emirates goes to plan its network, it can now consider Flydubai’s all737 fleet. That is a much smaller aircraft than Emirates’ wide-body fleet,” said Will Horton, a senior analyst at Capa — Centre for Aviation. “That gives new options in terms of destinations, flights per destination and balancing aircraft supply to demand at a particular time.”

The partnership goes beyond code-sharing and will include network integration as well as the coordination of scheduling.

The two airlines also plan to develop their hub at Dubai International Airport, aligning their systems and operations.

Emirates operates a wide-body fleet of 259 aircraft, flying to 157 destinations (including 16 cargo-only points) while Flydubai has 58 new-generation Boeing 737 aircraft flying to 95 destinations. The current combined network comprises 216 unique destination points.

By 2022, the combined network of Emirates and Flydubai is expected to reach 240 destinations, served by a combined fleet of 380 aircraft.

They said they were also working on a number of initiatives spanning commercial, network planning, airport operations, customer journey, and frequent-flyer program alignment.

The first enhanced code-sharing arrangements are set to be rolled out in the last quarter of 2017.

“Both airlines have grown independently and successfully over the years, and this new partnership will unlock the immense value that the complementary models of both companies can bring to consumers, each airline, and to Dubai,” said Sheikh Ahmed bin Saeed Al-Maktoum, chairman and chief executive of Emirates Group and chairman of Flydubai.

Further details will be communicated as they become available.

The price of global air travel was about 10 percent cheaper in the first quarter of 2017 than a year ago after adjusting for inflation, according to data from the International Air Transport Association (IATA).

That has hurt airlines based in countries with dollar pegs because of the continued strength of the greenback, which has helped many rival European carriers offer more competitive fares.

IATA says that in seasonally adjusted terms, international traffic through the Middle East has been tracking sideways since the start of the year.

As the competitive environment heats up, Gulf carriers are being forced to take a closer look at their cost structures to fend off fare-slashing by rivals. Aggressive fare discounting by competitors, a slowing economy at home and regional instability have hit both airlines.

The tie up between Emirates and Flydubai means they can make better use of idle planes while also improving the connectivity they can offer clients. But it also improves its competitive position alongside Etihad Airways and Qatar Airways by adding narrow-body planes to deploy on some routes.

“Etihad, Qatar and Turkish operate narrow-body aircraft. For a nearly direct comparison, Etihad and Qatar have been able to reach destinations Emirates cannot because it does not have smaller aircraft,” added Horton.