Emirates-Airbus deal unravels, Qatar increases routes and First Class fades

Drama unfolded at the Dubai Air Show last week, when instead of formally announcing a follow-on contract with Airbus, Emirates proceeded to award a $15 billion deal to arch-rival Boeing Co. The switch has sent ripples across the aviation industry, showing the importance of proper scenario planning in account-dependent industries faced with such uncertainty.

At the heart of the turnabout was concern at Emirates about the commitment of Airbus to carry on developing the A380, with the carrier loath to place on order only to see the program terminated a few years later, leaving it as the biggest operator of a dead-end model.

Airbus needed the deal to boost the superjumbo backlog and keep production ticking over, but could it be trusted to carry on investing in the 550-seat jet in the hope that much-needed orders from beyond the Gulf would somehow materialise?
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At the beginning of November, Singapore Airlines Ltd. announced the world’s most luxurious, fully-enclosed first-class seat. Just ten days later, Dubai-based Emirates Airline Ltd. sought to outdo the Southeast Asian giant with its own first-class suite.

First-class cabins have been shrinking for two decades at least, under pressure from an increasingly competitive, price-focused global airline industry and the changing demographics of flying. Those trends are only set to accelerate. The latest luxury suites may look futuristic, but it’s not clear that first class has a future at all.

Despite the hype around its new first-class suite, even Singapore Airlines is reducing the number of suites in its fleet by 50 percent, while boosting the number of business-class seats by 10 percent and — on 11 planes — by 30 percent. Likewise, even as Emirates touts its own hyper-luxury suites, it only plans to offer six of them on barely nine planes by the end of 2019 — less than 4 percent of its fleet.

As global aviation becomes more competitive, and greater numbers of passengers in developing regions take their first flights, the pressure to keep prices down will only increase.

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Qatar Airways has announced that it will increase daily frequencies to the Scandinavian capitals of Stockholm and Oslo, alongside the Italian cities of Milan and Rome.

Due to an increase in demand to key European destinations, especially from the Asia Pacific region, flights to Rome, Milan and Stockholm will increase to 17 per week from Doha’s Hamad International Airport, while the airline is planning to increase Oslo flights from seven to 10 frequencies per week. This may pose threats to competitors who will need to reassess their route ownership and profitability through various scenario planning initiatives.

The award-winning airline has also announced that double daily flights to the Russian capital Moscow will increase to three times daily from 14 December, just five days before Qatar Airways’ inaugural daily flight to the Russian city of St. Petersburg. The additional frequency to Moscow will be operated by an Airbus A320 aircraft.

The national carrier of the State of Qatar currently serves double daily flights to Moscow’s Domodedovo Airport, Stockholm’s Arlanda Airport, Milan’s Malpensa Airport and Rome’s Fiumicino Airport with a mix of Boeing B787, Airbus A330 and Airbus A321 aircraft. With a seamless stopover at the five-star hub of the airline, Hamad International Airport, European travellers can reach mor than 150 business and leisure destinations across six continents with the airline’s young fleet.

In addition to the frequency increases to Moscow, Stockholm, Oslo, Rome and Milan, Qatar Airways recently announced additional daily non-stop flights to Kyiv, Prague, Warsaw and Helsinki due to a significant increase in passenger demand.

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