With the right vision, Sri Lanka can become an aviation hub

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By 2017-09-14

By Charindra Chandrasena

Emirates Airlines is in its 32nd year of operations in Sri Lanka and last month flew an Airbus A380 commercial flight to Sri Lanka, for the first time in local aviation history. In an interview with Ceylon FT at Emirates headquarters in Dubai, Emirates Senior Vice President, Commercial Operations, West Asia and Indian Ocean, Ahmed Khoory, who has been responsible for the commercial management of 18 stations across the region in Bangladesh, India, the Maldives, Pakistan and Sri Lanka since 2012, spoke of Sri Lanka's potential to become an aviation hub, the importance of a hub airport for an airline and the current state of the global aviation industry.

? What is Emirates' current engagement with the aviation authorities and the Government of Sri Lanka?
A: We have a very good relationship with the airport authorities as well as the Aviation Ministry. Flying the A380 to Colombo was a good example, given that in some countries and airports we have been restricted in terms of flying A380s.

?What were the specific aims of flying the A380 to the Bandaranaike International Airport (BIA)?
A: Colombo for us is a market that connects from Europe as well as the Gulf Cooperation Council (GCC). From Dubai to Europe, we have many A380 operations, for example London – both Gatwick and Heathrow – and Paris. Europe is mainly operated by A380s. We want those who travel out of Colombo to Dubai and beyond, to experience the consistency of a journey on the A380.
We also wanted to test the Airport, test ground handling and test the runway itself and see whether it is compatible with an A380 aircraft. The commercial requirements were satisfactorily met. The aircraft was packed, so for me financially, it was a good result.
?Do you see the A380 being deployed to Sri Lanka by the end of the year?

A: If the situation gets better, if we believe that it is commercially viable to operate this super jumbo aircraft into Colombo, then yes. It's all about how much you make out of each A380 aircraft. If the seat factor matches with what we had on the inaugural flight, then I think it is commercially viable.

But it must also be said that the A380 is not meant for short-haul flights. It is primarily intended for long-haul trips. Financially and in terms of revenue, it will not add much value on a short sector.
?What are Emirates' future plans in connection to Sri Lanka?

A: Nothing immediate but for Emirates, Colombo is a core hub for other operations and we are always open to new opportunities.
?Do you think Colombo has the potential to become an aviation hub, similar to Dubai?
A: Commercially, if we get the rights to fly from Colombo to South East Asian (SEA) destinations such as Bangkok it would be a very good sign. Plus, the runway too is now compatible for bigger aircraft. In terms of the economy, Emirates is adding economic value to the country by operating four daily flights now and bringing massive passenger numbers out of Europe, the US and the Middle East into Colombo and vice versa. We are bringing plenty of cargo as well. Beyond that, in terms of becoming a hub, everything depends on the vision of the Sri Lankan Government.

?In 2008, Emirates was managing SriLankan Airlines and the then Government of Sri Lanka had a fallout, which led to the Emirates' exit from the national carrier. How much of that is seen by the Emirates as particular to that government or does it still reflect badly on the country as a whole?

A: I don't want to go into politics but commercially I think the country has plenty of potential.
?Have you been approached by the Sri Lankan Government to go for a partnership with SriLankan Airlines?
A: I don't know if an approach has been made and we wouldn't turn down a positive proposal from any airline or airport, without due consideration. But there are no plans to partner with any airline or airport at the moment.
?Has Emirates seen any significant growth in traffic into Sri Lanka on its flights?
A: Yes, and I hear there are many resorts and malls being opened and this will bring in more investors into the country along with more tourists. That will help not only Emirates but even other airlines to operate into Colombo.
?Do you see Emirates bringing in high-end tourists in the future?
A: To be very fair, the Premium Class, meaning the First and Business classes is not our expectation; Excluding India, the Premium is not picking up much in West Asia. But now with Sri Lanka opening up more retail and more properties for hospitality business, I am sure more high-end premium class will come in.
?Can you briefly trace the development of Emirates as an airline from its early days and what a growing carrier such as SriLankan Airlines can take from that?

A: I think the President of Emirates, Sir Tim Clark, back in 1986 said, 'I will never compromise on the product. My product has to be the best.' From that time, we felt that our product – even when we went through difficult times – was maintained at the same standard. In 2016, we went through a difficult time, all airlines did, but we never compromised on our product. We maintained the quality of the product and even made it better. We believe that to retain existing customers and attract new customers, we have to maintain the standards of the product or improve them.
?How important a role has Dubai played as a hub in the development of Emirates as an airline, and what can Sri Lanka's aviation industry learn from it?

A: From the start, Emirates and Dubai have grown together. The geo-centricity of Dubai which is at the crossroads of Europe, Africa and Asia, has been at the foundation of Emirates' success in building a global hub for travellers and cargo. From Dubai, we serve about one-third of the world's population within a four-hour flying radius, two-thirds of the world's population within an eight-hour flying radius and almost 90% of the world's population with non-stop flights using the latest ultra-long-range aircraft.
Geography is an important pillar of Dubai's growth story, but it can only go so far without the other essential pieces. Dubai's leadership had a clear vision for the city and they put in place the infrastructure, systems and investments needed to build adestination on a global scale – from world-class airports, seaports, road and metro transport, to financial institutions, tourism infrastructure, housing, education, healthcare and other public systems.
?What are the emerging and evolving trends in the South Asian region?
A: It is growing, especially if we talk about densely populated countries such as India and Pakistan. It is said that if the government provides passports to 15% of India's population, all airplanes in the world will be filled. This region has plenty of potential in the aviation business. Whenever we have a problem in supporting some routes, we go back to high population countries such as India, Pakistan and Bangladesh. The region has potential, the economies are growing and the currencies are becoming much stronger, although that depends on the dollar and other hard currencies. All other indications look positive for West Asian countries to grow.
?Some major airlines have been saying that Emirates was not playing on a level playing field, due to the support it enjoys from the Dubai Government. How do you respond?

A: When you cannot compete, you come up with hundreds of excuses. We have an open balance sheet showing the entire balance sheet from day one to the public and it's all in the media. How can you criticise and say that an airline is being funded by a government? Yes, we took US$ 10 million on day one, on one condition – that this money goes back immediately. We returned the money within the first year itself. Sir Tim Clark has repeatedly made it clear that Emirates Airlines has not been given a penny by the government since 1987.
In fact Emirates has been paying a dividend to the Government of Dubai. So in terms of playing fair, I would say Dubai has been very open and the Government has been very clear in its vision. We have an open skies policy so you bring as much as you can and you also take as much as you can.
?Dubai has an open skies policy, but Emirates is also supported by the government to maintain its position as the leading airline in the region. How can Sri Lanka sign more open skies agreements to encourage tourism and attract international airlines, without negatively impacting its national carrier?
A: To clarify, Emirates is not subsidized by the Government of Dubai in any way, shape or form. We are a profit-driven commercial enterprise that offers superior connectivity across the globe, sparing no detail to ensure a high quality customer experience. In 1985, Emirates received a one-time start-up funding of $10 million from the Government of Dubai; since that time it has received no capital injections, no government loans and no other State financial support.

To answer your question, Dubai is a good example of how 'open skies' can benefit a country's economy and its airlines industry. When the Dubai ruler made the Emirates a tourism destination, friendly policies such as opening up of the skies were espoused. This helped in the growth of the tourism industry. To date more than 150 airlines fly into Dubai creating stiff competition for Emirates, which has helped the Airline improve its service delivery and operational efficiencies.
Any country's promise can be unlocked through the benefits of an open skies policy and in the broader context would benefit the economy and enable mobility.

?In terms of the aviation sector globally, flying is cheaper now than it has ever been. How has that impacted the bottom line of aviation companies?
A: We have seen a drop in yield over the past two years. This is an industry problem, not particular to Emirates. The problem for Emirates is that our products are so expensive to maintain. We spend so much on the product, on the aircraft type, interior type, catering type, even on the entertainment system and all of that has a cost. For me to sell that cheap, of course it would hit the bottom line of the company. I cannot afford to sell too cheap. At the end of the day, we are managing our business and bringing costs down. The good part is that fuel prices have gone down and so have currencies. Everything worked positively for Emirates, but, yes, our product is expensive to maintain.

?What are the upcoming plans for Emirates?
A: We introduced many new destinations last year. We recently introduced Zagreb in Croatia, which is our new route in Europe. It is a very exciting destination for people who want to go beyond Zagreb to other cities that we don't fly to. We've also launched flights to Cambodia recently.

Going forward a lot of new products are coming up. We've launched our new on-board lounge. It's not on all routes at the moment but going forward that will be included in most of the A380s. The lounges in Business Class and First Class have changed in terms of design. We have also introduced a new bar concept on the upper deck of the A380 and that's amazing.

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