Emirates Clark on why the business can’t always be a bed of roses

tim clark.JPGEmirates president Tim Clark was at the Aircraft Interiors Expo in Hamburg last week, fresh from the Middle East carrier revealing a five-fold increase in profits for its financial year just ended. During a panel discussion to open the conference, Clark had some pretty interesting things to say about yield development when I asked him how the airline had performed through the economic crisis.

Clark On Yields…

“Like most of the long-haul network carriers we faced decline in the premium business but then, so what? Volumes came from different segments of our market. They paid a little bit less, but then we took out 17% of our cost base so we were able to absorb the decline in the yield,” Clark said. “But we got it back in the course of 09. We pushed the fares up 35% last year between April and December in the light of everyone else going south, air networks being shrunk and aircraft being put on the ground. The view was if we spent 25 years building our brand and investing so heavily in it, let’s test and see if the market was going to be as loyal to us as we thought it was,, and it truly was. In fact we got a lot more coming out from different segments who had hithertoo not been able to travel on us because the price we were charging for the premium offering in the old days was far too high. For example baby boomers in the UK. As soon as the premium fares fell to levels they could afford….that business came to us in large amounts. Our business cabins remained full, albeit we were getting less money, but this is what you have to do in business. You can’t expect it will be a bed of roses all the time. And in the last year we have actually managed to get our yield back to where they were prior to the 145 dollar for oil price in May 2008. We now have pricing about the same as first quarter 08, which is already a good yield. Take the cost out as we have done, and bingo, profits come along as they have done.”

For more on this plus, Clark’s veiws on why the real challenge on interiors lies in getting the product right within the tougher space constraints of the economy cabin, watch our video interview with Clark here.

 

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