Emirates Eyes U.S., Carriers Set To Restore Iraq Service

Emirates Airlines, one of the world's more profitable airlines and a leading carrier between the Middle East and Europe, next spring plans to inaugurate service to the United States. Combined with a new codeshare relationship with Continental Airlines set to take effect next week, the flights will provide a new business link to the Middle East for many U.S. companies, notably energy firms.

Meanwhile, Emirates and other international airlines stand ready to resume commercial service to Iraq for the first time in 13 years. Security concerns delayed the launch date to this past weekend at the earliest for initial services into Basra, which will ferry in workers and other businesspeople from such firms as Bechtel, Halliburton and other companies with operations in the country. Flights to Baghdad remain on hold.

Dubai-based Emirates Airlines is an anomaly, however, in today's aviation sector. Though it is owned by the Dubai government, it claims to receive neither financial support nor government protection—yet still managed to post impressive profits in the last fiscal year and maintain growth forecasts. Most other carriers, meanwhile, are suffering losses and scaling back their networks.

The carrier's current U.S. expansion plans call for daily Dubai-New York service in April, but it has not yet decided between Newark and New York JFK airports. "We are looking at facilities at both, with the primary factor being ease of use and access for our passengers," said Nigel Page, senior vice president of commercial operations for Europe and North America, noting that only JFK currently can handle Airbus A380s, mega jumbo planes set to arrive in Emirates' fleet by 2006. The carrier also is exploring other U.S. gateways and could begin operations to the West Coast as early as late 2004.

Corporate sales efforts primarily will be driven through the travel management company channel. "We have agreements with all of the major corporate travel chains, including American Express and TQ3, for example," Page said, adding that Emirates is "not startlingly innovative with corporate deals" and generally adheres to models developed by other carriers. Instead, sales efforts often focus on educating accounts about routings and corporate meetings opportunities. "We can set a single, standard meetings fare from all European points, for example, which makes it much easier for corporates to calculate costs."

In the United States, Emirates will work to inform business travelers and corporate accounts about Dubai, a growing regional business center that already has offices for such multinational firms as Ford, DaimlerChrylser, Microsoft and Sun Microsystems, as well as numerous large-chain hotel properties, a new convention center and a modern, international airport. "There is the perception issue among U.S. travelers," Page acknowledged, "but Dubai, in fact, is very safe and very far from Iraq."

A new codeshare relationship with Continental—announced last month and to be launched Sept. 15—also will help raise Emirates' profile in North America.

Continental will place its code on Emirates flights between London Gatwick and Dubai, while Emirates places its code on Continental services between London Gatwick and both Houston and Newark. The partnership also includes reciprocal lounge access and enhancements to frequent flyer programs, which have been linked since August 2000.

"Our longstanding relationship with Emirates has proven particularly beneficial to Continental's customers who have energy-related travel to the Middle East and Indian subcontinent," said Continental senior vice president of corporate development David Grizzle.

Emirates also has frequent flyer program links with Delta, United and British Airways and next month plans to announce a second U.S. codeshare partner.

Despite these ties, Emirates has no designs on joining one of the global airline alliances. "We have been approached by every major alliance you can think of," Page said. "In alliances, you always have a dominant carrier, and we are fiercely proud. By not joining one, we have the flexibility to work with who we want."

Emirates is one of seven airlines to receive permission from the U.S.-led Coalition Provisional Authority in Iraq to begin commercial flights to the southern city of Basra. Once service resumes, the first in more than a decade, business demand will come from multinational firms actively involved in reconstructing the country.

"We have done a number of special reports for clients with business in Iraq, as well as Saudi Arabia, Qatar and Dubai," said IJet Travel Risk Management CEO Bruce McIndoe. "We are way up in that region since the war ended, in terms of number of trips, including people from Bechtel and other construction companies."

Aside from Emirates, other airlines with authority to operate to Basra include British Airways, Gulf Air, LOT Polish, Qatar Airways, Royal Jordanian and SAS. The first services, from LOT and Qatar Airways, were scheduled to begin in the past few weeks but were postponed due to ongoing security concerns.

Baghdad International Airport, meanwhile, is not yet ready to begin commercial operations, though numerous U.S. and foreign flag carriers have lined up to begin service once CPA authorities give the green light. The U.S. Department of Transportation granted Iraq service rights to Northwest Airlines and World Airways for combination passenger and cargo service and to Kalitta Air for all-cargo operations. American, Delta and United airlines already have authority to serve Iraq via codeshare partners. United, for example, told DOT it plans to codeshare on Lufthansa service between Frankfurt and Baghdad and on Austrian Airlines flights from Vienna. KLM Royal Dutch Airlines, which planned to begin Baghdad flights this month, suspended the launch until at least late October. In other Middle East news, British Airways continues its suspension of flights to Saudi Arabia, citing "heightened security concerns in the region."