Emirates Airline battles low-cost competitors

After dramatic expansion in recent years, Emirates Airline now finds itself under the gun to compete with numerous companies offering cut-rate flight fares in the region.

Emirates is now competing with Chinese carriers that are flooding the market with cheap fares and other low-cost alternatives, including French, British and Norwegian airlines.

Rival airlines are also using single-aisle planes for cheaper flight operations while Emirates is limited to wide-body planes like the new Airbus models.

Some of the other challenges the airline faces includes a strong U.S. dollar and some weakness in markets, according to a recent report in Reuters.

“The way people travel, their decisions for traveling, the amount of money they're prepared to pay, new entrants coming to market, long-range single aisles, it's all changing," Tim Clark, president of Emirates Airline, said.

One of the airline’s strategies is to scale back hiring processes. Reports show 1,000 staffers have left the airline this year. The airline has not made a concerted effort to fill those jobs.

Leaders are talking about “stripping out costs” in order to compete and reconsidering a plan to acquire Boeing 787 and Airbus A350 models.

Emirates may also implement new fees for the ability to select seats in economy class.

“They've been ambitiously expanding for a long time,” Ken Smith, an economics professor at Millersville University, told the Gulf News Journal, adding that big legacy airlines now face unanticipated challenges from companies offering cheap fares.

As for Norwegian airlines, Smith said U.S. carriers are also having trouble with this competitor, with some even lobbying to block Norwegian from certain key flight paths.

Smith called the Emirates expansion “unsustainable” in the long run and suggested the company could diversify with a no-frills spinoff service to compete with the low-cost competitors, echoing recent reports that Emirates Airline is looking at a plan to create a new premium economy class.

Smith also said the Emirates Airline “big airplane” strategy is a vulnerable, noting that the Airbus planes need a certain capacity to be cost-effective.