Sir Tim Clark has been at the heart of building Emirates from a two-plane fleet based at a dusty Dubai airfield to a global aviation empire. Here, in an exclusive interview with the Business Herald, Clark talks prices, the profitability of its flagship plane, his future and the new face of the airline.
After five decades in the airline business, Sir Tim Clark has seen it all. The president of Emirates has been at the centre of an airline revolution, largely because he accurately forecast global trends.
But there’s one post-pandemic phenomenon that has him surprised, not that he’s at all bothered by it: even with high prices, passenger demand continues to defy gravity.
“Fares are nowhere near the levels that they used to be, we all know that. But the elasticity of pricing is inverted,” he says during an interview in his sprawling ninth-floor office overlooking Dubai Airport.
“Dare I say it, the higher the price, the greater the demand.”
The airline has enjoyed a spectacular turnaround from unprecedented losses during the pandemic to a record US$2.9 billion ($4.7b) profit as air travel has rebounded from the depths of Covid-19.
Clark says the recovery in demand was easy to forecast – he got his airline ready for it - but when airfares will return to where they were in 2019 is harder to pick.
“We are in a position of transitional disequilibrium,” he says. “And as long as we are in that, it’s very difficult to say what is likely to happen.”
Airfares have climbed around the world, including in this country, where Stats NZ figures show they were up 17 per cent in the year to March. Last week, Emirates planes operating two services a day from New Zealand to Dubai were running at more than 90 per cent full. Planes are also packed throughout its network, during what is an extemely busy northern summer.
“Demand is very strong. That’s enabling us to generate the cash that we need to do all the bits and pieces going forward.”
Emirates has been the biggest international airline in the world, and is now flying to 140 destinations with 259 passenger planes, including close to 90 Airbus A380s, the airline’s flagship aircraft. When it’s full, the A380 is a “potent” profit machine, he says, and responsible for the biggest part of the airline’s financial turnaround during the last year.
The “bits and pieces” Clark mentions includes a US$2b refit of seats on older planes – where the airline has copped criticism for premium seats not being of consistent standard – and preparing for an order of up to 150 widebody aircraft to take Emirates through the 2030s.
Clark says airlines are facing a degree of profiteering by suppliers, who have recently seen inflation rates slow, and now fall in many countries.
“We’ve had real problems with supply chain, we’ve had real problems with our costs every day. Caterers, ground handlers, airports, fuel come at us with not single-digit [increases] — they’re coming out with 20 to 30 per cent increases.”
Clark says he’s “not pleading victim”, but the whole cost equation has been turned on its head.
‘Trust us - this will come back’
Clark has shaped aero-politics, helped by being one of the airline industry’s most compelling storytellers. He’s regularly mobbed by reporters when he turns up at aviation events and conferences.
He says supply chain issues, manufacturing bottlenecks and costs imposed on airlines are now holding Emirates back. During Covid-19, other parts of the aviation system were too cautious.
“Into the end of 2020 and at the beginning of 2021, when we said this: ‘trust us, this will come back with a vengeance’,” says Clark.
“The longer the cork stays in the water, the greater the velocity and height it’ll come out. But of course, a lot of people including the manufacturers and the aviation community didn’t believe that.”
Clark, who is 73, started his airline career with British Caledonian as a check-in agent in 1972. He was part of the Emirates founding team in 1985, helping to create an airline funded with US$10m from Dubai’s rulers, mapped out on a blank sheet of paper, which first flew with planes from Pakistan International Airlines.
Retirement is looming, once he can extract himself from the airline’s massive Dubai HQ, across the road from the airport.
He has worked through the big crises of the past 50 years and was confident of a bounce-back even in the grim days of March 2020, when Emirates, which only flies international routes, was briefly forced to ground its entire fleet.
“You’re in the hands of a lot of people I call the naysayers of old, who wouldn’t recruit, wouldn’t believe that things would come back. As we say, ‘you remember the 2008/9 crisis? You remember the 1998 crisis? You remember the ash cloud? You remember 9/11?‘,” he says.
“Do you know what happened after that? Surge, surge, surge, an unbelievable restoration of business.” And Emirates gained an advantage from those who said during the pandemic that corporate travel was over.
“I said: ‘Good, keep saying that — that’s what I want you to say’. They have never been so wrong.”
The airline has always aimed at the premium market, where yields are highest, and its first- and business-class cabins are aimed at high-end leisure travellers as well as corporates.
“Business returned with vengeance — frankly, all our cabins are so full.”
That brings him back to prices, the lure for airlines waiting on the sidelines. Clark says the longhaul capacity Emirates competes with is still about 75 per cent of pre-pandemic levels.
”If investors and airline managers see a hole in the market, they will move to fill it,” he says. “They’ve seen the profitability of airlines, (which are forecast by industry group IATA to top $22b this year), exceed all expectations, and new entrants will come along, or old players will re-enter the scene.
“So you’ll get what I call equilibrium restoration.”
That could take from the end of this year through to 2027-28 as airlines struggle to get planes, new and used.
While Emirates, like other airlines, is not getting new planes as quickly as it would like, it has taken another path to some. “A lot of airlines re-entered the game by cutting, cutting, cutting, cutting — we went completely the other way.”
That means new products on the ground, including new limousines and lounges, introducing dine-on-demand and unlimited caviar in first class.
Taking on the planemakers
Like other airlines, Emirates is waiting in the queue for new aircraft and Clark is not happy. The natural tension between planemakers and their customers — airlines — has been exacerbated by the pandemic.
Emirates has on order 115 Boeing 777X aircraft, with its buying power driving the programme. But the scheduled 2020 delivery is running more than five years late.
“Boeing has had a very bumpy ride over the last 10 years. And for them to deliver aircraft so late is not like Boeing,” he says. Airbus A350s, which will allow Emirates to grow in the Americas, are also coming into the fleet with 50 planes on order for now, but the European planemaker has also been hit with some supply chain problems.
“But we have a global duopoly on our hands and if we can’t do one, we have to go to the other, and when you go to the other, they’re also clogged up with their order books. We need Boeing to get this aeroplane to us, after all, we initiated the whole thing in the first place.”
He also says the plane makers have been reluctant to spend the billions of dollars needed for research and development (R&D) to make flying more efficient. Boeing’s 737MAX was based on 1960s technology and the Airbus A320 family was first developed in the 1980s.
‘‘Where is the R&D going into new aircraft design? Where is the R&D going into propulsion?’'
On the move towards sustainability, he says the airline industry is not good at telling what is a ‘’good story.’'
Hundreds of millions of dollars was being spent by airlines on the push towards greener flying but they needed the support of fuel companies to start producing Sustainable Aviation Fuel (SAF) to begin to replace the 550 million tonnes of fossil fuel the industry burns a year. At present SAF, seen as the only viable alternative for long haul flying, fuels just 0.1 per cent of flights.
‘’The elephant in the room is fuel. We’re trying everything around the way aircraft are manufactured, the type of materials that are being used, the way we operate the aircraft.’'
He said Emirates and other airlines were prepared to pay more for green fuel but it wasn’t available despite ‘‘lip service’' about the production of SAF.
‘’We’ll use it but we can’t because it isn’t there.’'
Clark, a crusader for liberalisation of aviation, is also worried about governments taxing them more in the name of sustainability. Passengers would end up paying.
‘’If governments are minded to start extracting more taxation for some spurious reasons to do with climate change then of course you get more of this layering on - fares are going to be compromised.
Emirates’ existing 777-300ERs are “wonderful planes”, but the working life of some is being extended beyond what Emirates has accepted in the past.
“After all, many of the carrier American carriers are still flying with 30- to 35-year-old airplanes, something we’ve never done in the past, but needs must until we get a degree of confidence in equilibrium.”
It costs between US$10m and US$12m to refurbish a plane, and if by chance Boeing is able to deliver on commitments, that would allow Emirates to convert some aircraft into freighters or have spare planes on the ground, something the airline avoids at the moment.
Clark is also keen to build more resilience into his airline by stocking up on spares.
“The mantra within the Emirates group is that we need to take control of our destiny and not be in the hands of third parties. We don’t build aeroplanes — we can’t do that — but we can store spare parts,” he says.
“I’d rather the comfort of overcooking the inventory that we hold for the support of the aircraft, than worry about just-in-time economics and drawing down the inventory as and when you need it, because we’ve learned some lessons from that.”
Future of the A380
Emirates ordered the Airbus A380 in 2000, got its first plane in 2008 and its 123rd in 2021. That was the final aircraft after the planemaker ended the double-decker programme due to weak demand.
The four-engine, 560-tonne plane didn’t work for most airlines, but for Emirates with its Dubai hub-and-spoke model, it has proven a winner. Clark is a lively raconteur at any time, and one sure way to spark him up even further is to talk A380s.
“It remains the most popular aircraft I’ve ever seen in my career, and a large part of the profitability that we are generating is produced by the aeroplane,” he says. Even into its third decade of flying, it is immensely popular with passengers because of the space on board — especially in premium cabins.
By early next year, the airline will be operating about 95 of its superjumbos, which still draw a crowd.
“I came out of Birmingham the other day. We reintroduced the 380 — I was minding my own business and looked out the window and saw at least 200 people at the perimeter fence with cameras.”
The same happened in Glasgow when Emirates took the big plane back. It was the day that Scottish First Minister Nicola Sturgeon resigned.
“I’m not sure what got greater coverage, our arrival or her resignation, but half of Glasgow turned out to see this thing come in.” In Dubai last week, he said he didn’t share the views of many of his peer group chief executives who “bang on” about how uneconomic the plane is and how it needs to be trashed.
“I simply say that when we fly that with 617 people, the equivalent is two and a half 787s, and when you do the maths in terms of whatever metric you choose, you’ll find that the 380 at that level is lower [fuel burn per passenger] than these new fuel-efficient planes to carry the same load.”
They are also very popular with the airports — one flight of a big plane doesn’t clog up infrastructure as much as multiple flights of smaller planes, and there are “600 people emptying their pockets” at airport shops.
“When it’s full, with the fare levels we’ve got at the moment, it’s very, very potent.”
But good things must end. For Emirates, the A380s will be in the fleet until 2032 or so before being replaced by other widebodies, he says.
Several of the decommissioned aircraft have already been broken down and recycled for parts and souvenirs — including the first A380 delivered, A6-EDA, which flew the first commercial flight from Dubai to New York on August 1, 2008, when the Herald got a first-hand look at Clark’s ability to inform and entertain the media pack in the onboard lounge, which he was the driving force in getting built.
Even though the end is in sight for the A380s, the airline is not only refitting cabins — adding premium economy to most of its fleet as part of the US$2b programme — but also building up its capability to overhaul them in–house.
Into Cruz mode
Emirates has dozens of global sports sponsorships, including Emirates Team NZ, as part of its “soft outreach” to attract passengers.
More direct is Emirates’ ambassador programme, using a famous face to promote the brand. Pre-Covid, it had Jennifer Aniston on board as it highlighted the difference between the product on board US airlines and its own, at a time when there was a bitter feud between them. The US carriers claimed Emirates was benefiting from big state subsidies, the Dubai carrier pushed back with a 388‑page rebuttal.
“This was [to] deal with the American onslaught,” says Clark. “We needed somebody like that who was so successful and it proved the point that celebs that are admired and liked, working with us on our fleet to portray what we are and how we do it was a great idea.”
The airline has now chosen Spanish actress Penelope Cruz for her wide appeal across different countries. “She fits the bill, a lovely lady, I’ve met her. She’s very photogenic, she’s a face that’s well-known.”
Cruz radiated friendship and panache. Each of the new TV spots being rolled out this northern summer was directed by Robert Stromberg, a double Oscar-winning Hollywood director.
The short ads show Cruz sampling all the exclusive luxuries that Emirates first- and business-class customers experience, from a crafted beverage in the A380 onboard lounge, to an indulgent shower in the first-class spa, cheering a football game shown on live TV, to relishing generous helpings of luxury caviar. In other spots, she enjoys the spacious seats in Emirates’ new premium economy class.
“We’re not afraid of spending a lot of money on portraying and advertising our wares,” says Clark. “These celebs don’t come cheap.”
There are also the “painful and very expensive” production costs. “Not least of which, you’ve got to have aircraft parked on the ground so they can get on board. But it’s really worth it.”
Clark’s own future
It’s the question he expects and is well prepared for. Given he said in 2019 that he would leave the following year — then stayed on to steer the airline through the pandemic — what is Clark’s new thinking on retirement?
“Well, I’m still here. What I’m trying to do is reshape the strategy, reshape the fleet, network. I’m trying to get the organisation into place,” he says.
“It’s up to the ownership and the chairman [Sheikh Ahmed bin Saeed Al Maktoum] to decide how they want succession to be, they have a number of options which are in front of them. I’ll leave it to them.”
He says there is a realisation “that the growing antiquity” among some of the management is something that has to be dealt with sooner or later.
“I have been banging that mantra for over 10 years but, paradoxically, the more successful you become, the more likely they are to retain you as long as possible.”
He says that unlike Western countries, in the Middle East there is a tendency to keep executives who have delivered.
“If we were in a completely disastrous situation, then it’s probably time to go.”
Clark is trying to ensure the airline will thrive against growing threats from increasingly ambitious airlines in Saudi Arabia, Turkey and India.
“I’m hoping to organise the business to get, not necessarily on a war footing, but deal with everything coming at us. The ironies of the aspirants [is they] have our business model, believing that ‘if they [Emirates] can do it, we can’.”
Clark — who was awarded a knighthood in 2014 for services to British business and aviation — says his next step could be as an adviser to the airline’s owner, the Dubai Government.
He’s taking a holiday cruise with his extended family this month.
But last week it was business as usual for Clark, who starts work around 6.30 in the morning. That’s when he gets a bird’s eye view of the massive Emirates tails on the ramp near Terminal 3 as a big wave of traffic, mainly from Asia and the Pacific, arrives and then departs.
As the most influential airline boss of his generation, Clark is paid to be a big-picture thinker. But the self-confessed plane geek can’t resist plugging into the details and keeping in touch with operations teams.
“I still keep an eye on the build-up of departure movements and if there’s a problem where it starts to slow down, they generally get a phone call.”
Grant Bradley has worked at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
The Herald travelled to Dubai courtesy of Emirates.