Emirates rides out the ‘perfect storm’

With recent capacity expansions into the China and India markets alongside record

“The coming year will not be easy, all carriers will have to refine their operating practices and airlines operating fuel ineffi cient aircraft will not survive,” said the ordinarily sanguine Ram Menen, divisional senior VP for Emirates Sky- Cargo addressing a meeting of nearly 100 of Emirates’ cargo station-managers recently.

“We’re not the prophets of doom,” Menen tells Payload at an interview in Shanghai. “We are just acknowledging that there could be doom – and in a doom situation you shouldn’t get lost in the darkness, because if you do, you lose it. It’s survival of the fi ttest at thisstage,” he adds.How well a carrier will do in the downturns depends on how efficient it was during the market highs, he says. “It’s a rollercoaster, it’s cyclical and these challenges are very similar to what we have gone through several times before, it’s just that the intensity of the challenges that we face this time are more severe and simultaneous. Call it the perfect storm.”

It’s the perfect storm he says, because of the confl uence of four key economic factors: Th e US sub-prime crisis, recordhigh oil prices, global economic slowdown and a weak US dollar.

“You’ve got these four things coming at you at the same time, but the worst challenge of them all is clearly the fuel prices. I’m convinced now that the psychological barrier of US$150 per barrel of oil will be breached within the next three or four weeks,” Menen says.

Will the situation sustain, “no” says the Emirates cargo chief fi rmly, but how long is the real question, “and that is what we have to manage.”

“My own feeling is that within 12- 16 months the industry needs to start seeing some upward trends. I think we have lost about three years. Whatever we have forecast in early 2007, push it back about three years. It is a serious impactboth in terms of time and growth.