EK’s Richard Jewsbury: Australia and Asia are leading the global recovery in premium traffic

Issues & Trends – November 2010

EK’s Richard Jewsbury: Australia and Asia are leading the global recovery in premium traffic

WITH Australia having weathered the Global Financial Crisis relatively unscathed, yields in this market have returned to satisfactory levels, according to Emirates senior vice president for commercial operations for the Far East and Australasia Richard Jewsbury.

Jewsbury’s comments come just nine months after Emirates’ former Australian vice president Stephen Pearse identified restoration of yield as a priority for the airline (travelBulletin, February).

Jewsbury is obviously pleased with this rapid recovery from the unsustain-ably discounted fare levels of 2009.

“There was a period in 2009 when the world panicked and it got to a point when, even on full flights, airlines couldn’t make any money,” he said.

Nevertheless he remains cautious, pointing to the negative fall-out that would come from a repeat of the “skyrocketing” aviation fuel prices of early 2009.

“We’ve got a good stable platform at the moment and I hope oil stays where it is – that’s my big concern: volatility of fuel prices,” he said.

Emirates does not levy a separate surcharge for fuel price increases. Fuel-related price hikes remain part of the fare so agents have always received commission on them.

This is a contrast to the non-commissionable surcharge imposed by most other carriers although the recent well-publicised Federal Court ruling has effectively endorsed the Emirates approach – that is fuel surcharges are just fare increases under another name and, in the case of IATA fares, airlines should pay commission to IATA agents.

Emirates policy on fuel-related fare hikes is just one aspect of an agent-friendly approach that has boosted the airline’s stocks with travel retailers.

Importantly, the airline has main-tained commission levels against the industry’s steady downward trend of recent years.
Asked if Emirates will continue with current commission levels, Jewsbury said: “There are certainly no plans to change anything at the moment.

“Of course, I’m not going to say never but it’s my belief – and it’s a belief within the airline from (chief executive) Tim Clark down – that agents are an essential part of our business.

“We see them as partners and we want to nurture the relationship with them going forward.”

He was speaking to travelBulletin during a visit to Australia earlier this month for the Melbourne Spring Racing Carnival including the Emirates Melbourne Cup, one of a number of major sponsorships keeping the air-line’s profile high in this market.

Jewsbury reported that a pleasing part of improved yield results has been the rebound in the premium travel market.

“It slowed down last year but it’s definitely coming back this year and Australia and Asia are leading the recovery globally,” he said.

He said it is “a great question” as to whether Emirates will ever look at a premium economy class “but right now we are focused on our current three classes”.

While some other airlines were dropping first class, he said Emirates is continuing to succeed with it because it offers an experience that is a dimension beyond business class with lie-flat seats.

He said first class passengers aboard Emirates A380s, with private suites and showers, had an experience akin to their own private jets.

The airline has decided against splitting up its economy class cabins with a premium section partly because of the complexity involved but “more importantly we have invested heavily in our economy class so that it’s comparable to others’ premium economy”, Jewsbury said.

“Our economy class passengers get new generation Webber seats, 30 kgs luggage allowance, on-demand inflight entertainment with up to 1200 channels and high quality food and beverage service that benchmarks very well against others’ business class offerings.

“Our passengers like and appreciate it so we don’t see the need to put in a premium economy option.”

Meanwhile Jewsbury is unfazed by the increased competition Emirates faces from other Gulf carriers, notably Etihad which has received interim regulatory approval for a strategic alliance with Virgin Blue.

Noting that Emirates’ interline deal with Virgin Blue will continue, Jewsbury said: “Competition is always intense and, if you focus on your competitors too much it will drive you nuts.

“We spend most of our time focusing on our own business, putting the effort into making sure our product is right and our cost base is right.”