Emirates president, Sir Tim Clark, shares his forecast and thoughts on what lies ahead for himself, Dubai’s airline and the aviation sector at large.
01. You’re one of the most highly regarded executives in the aviation sector. What impact do you feel you’ve had on the aviation industry during your time as president of Emirates?
When I go back to the early part of the new millennium, when I took this role, I had been part of a team that had established a business model in the late ‘80s and through the ‘90s, which turned out to be one of the most disruptive business models, given the landscape in which it was introduced. And I was part of the original team there that executed, designed that and built it. So when I became president, it was a question really of scaling that business model. It had been so successful. And I guess I have, since I’ve been in this role, continued to grow the business significantly and successfully, but always remaining focused on that business model. So if anything, the effect that that had on the aviation industry during the course of the growth of the Emirates was pretty profound. It wasn’t one of the only disruptive business models, of course. The other one was the advent of the low-cost operations that swept through the planet at about the same time as we did. So I think we kind of revolutionised long-haul travel and brought real flesh to those business models. And hitherto they hadn’t been particularly successful. And that’s what we did basically. And we continued to be, up until the pandemic, very successful.
02. The growth certainly has been profound up until now. During your tenure, which global airline has or still does concern you most or do you most respect?
I don’t want to seem arrogant about this, but we were so focused on getting our business model right and successful. And we realised as we were developing this that, as I used to say to my team, we would look back in the wake of the ship to see them far behind us. It wasn’t a question of being concerned about a particular airline. In fact, we were hugely flattered that so many airlines decided to emulate what we are doing. It was more about how we had to deal with some of the activities of these airlines when they worked together to try and slow us or stop us, particularly in the United States. So that caused a certain amount of concern. We had to deal with it and I believe we did that quite successfully. Any one particular airline that I had a lot of respect for; I guess in the early years when we were looking at designing the business model I alluded to earlier, I was looking at the likes of KLM, Singapore Airlines. They were formidable in these international hub-and-spoke operations. So I learned quite a lot from what they did. Singapore Airlines, of course, was only a couple of years before us. So we grew at about the same time, at the same pace. But they were very successful at what they did. And we liked the way they executed the brand proposition in the markets that they were serving. So, yes, it was quite good … the rest I wasn’t too concerned about.
03. You’ve obviously postponed your retirement once. When it eventually does come, do you think you’ll find it tough to step back, given the situation that the industry and also the business is currently in? Is that going to be hard?
Well, it presupposes that the business can’t continue without me. Of course it can. And of course, I will keep an interest in it because this business is a hobby to me. I am one of these lucky people where I’ve actually been doing my hobby rather than actually doing a job that I don’t like doing. So I would naturally be interested in what’s going on in the aviation world. And I guess there will be times when I come back into it, but not in an executive role, where I could impart some advice as to what perhaps could go on, whether it be into the business itself or to governmental entities that need a little bit of help in their own formulation of aviation policies, those kind of things. As long as I’m alive and kicking, I can do it I think. So I’m not too concerned about stepping out of the industry. Goodness me, there are younger people who need the chance to do it.
04. We can assume that 2021 will be quite a crucial point in Emirates’ evolution. What would be your main piece of advice to your successor?
Again, the successor, if it’s going to be somebody like me who thinks like me, I would say stay focused on the business model, navigate your way through this, we’re nowhere near through, but we will get through it. And I see no reason why the successful model that we’ve executed in hugely difficult times shouldn’t be as good in the future, as it has been today. And it’s extremely important that Dubai, which to a large extent relies on people coming into the city, has a very strong aviation sector, and particularly has a very strong airline or two airlines now to do the job. So I would say to them, stay focused on that. Treat this is as a global disruption. We’ve had a few of those, but not quite as bad. We’ll get through it and people will start traveling again.
05. What’s been Emirates’ darkest hour since the outbreak of the pandemic?
I guess it’s got to be the grounding of the passenger fleet for the best part of two months. That’s what we do and if you if we can’t operate then it’s hugely difficult. But of course, we did start very quickly in terms of getting the cargo operation going. Then we slipped passengers on as best we could. We’ve got our 777 fleet working fairly hard now. But goodness me, if you deprive any industry of its primary source of income, whether it be automotive, banking, or whatever, it’s always going to be dark. But we have a pretty upbeat can-do attitude. This is the worst crisis we have faced, but it’s certainly not the only one we’ve faced. And that’s why I know we got through the ones in the past and why we’ll get through this.
06. Is there anything that you would have done differently? How well do you feel the airline has dealt with the crisis?
I don’t think we could have done anything other than what we have done. So much was out of our control and today remains out of our control. Countries opening and closing borders, changing rules, regulations, trying to keep up with that. And actually, to have got 151 777s flying meaningfully has certainly arrested the cash outflow that we were agonising over about six or seven months ago. So, no, I think the team, as I knew they would, stepped up and as soon as they saw the opportunity, they grabbed it and got going again at a time when we were having to downsize the workforce, which was hugely difficult for us. We’ve never done that before. Nevertheless, the airline continued to operate and does well at the moment.
07. How do you see the future of Emirates Airline unfolding then in the wake of the pandemic in terms of fleet, network and workforce size, for example?
If this pandemic works its way through 2021, and I think that is all contingent upon the vaccine and its efficacy and also the success in the logistical element of distribution to the countries it needs to go to, I can see demand returning at pace. Others will disagree with me. And there has been a real move to suggest that the airline industry will never be the same again. I do not subscribe to that view at all. I think that people will continue to travel in all the segments. Some segments may be weaker than others in the short term, but eventually, it’ll come back. What does that mean? There is absolutely no reason why our network should not be restored to its former glory with the fleet as it is. On top of that I see the opportunities that we have for the expansion of the network that we had planned … and that allows us to reactivate the A380 fleet.
08. Does the return of the network also suggest a return to profitability in the near future as well?
Most definitely. It has to. We’re not used to making losses at all. This is a disaster for us in the first half-year. But of course, what could we do? We’ve got 350, 400 million dollar aeroplanes sitting on the ground, 115 of those. And you have to make the payments and our debt providers and all the people involved in providing the funds that we borrowed to do that are not particularly helpful when it comes to moratoriums. Some do, but it’s been quite difficult. So we’ve had to meet our obligations. So as soon as we get those dealt with and we get the fleet flying and get cash coming back into the business the way it used to, then we will become profitable, I would think, fairly quickly. Let’s assume that fuel remains in or around the 40, 50 dollar mark, I see no reason why we shouldn’t get back to some kind of profitability fairly quickly.
09. In terms of the main changes you see as a result of the pandemic, how do you view those in the aviation sector?
I don’t subscribe to the view that is going to be a step-change, a quantum change in the way people go about their business when it comes to flying, OK. The airline industry was carrying over four billion people a year. I think that’ll go back to its former glory sooner than other people are thinking. I hope that’s the case. I think by 2023, we will see the restoration of the old levels and a recapture of the growth that had been going on to that point. That assumes, of course, that the pandemic is dealt with meaningfully and the dissemination of the vaccine and its efficacy remains as good as people are told it’s going to be. So why then should we not recapture what we were doing before? Why should there be fundamental changes to business models? It doesn’t have to be like that.
10. What’s the one thing that you want to see happen in the aviation industry to improve it over the next couple of years?
One of my concerns has always been the need to disintermediarise the business. There are too many entities that have grown with the business and they have become hugely profitable on the back of our business when our profitability, certainly in the airline industry, hasn’t been particularly stunning. It is important that people who come after me focus on eliminating the need to rely on intermediaries who are always there to seemingly help you out. So you really need to concentrate. And that’s something we’ve done in Emirates, focus on our own destiny and our own business model. Control of everything that we do within the global markets is done by us and where we have to go to third parties where we don’t have choice, we must do that. But progressively we need to improve the profitability by eliminating third parties who dilute and compromise that.
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