Trouble on the horizon
Anti-competitive claims
Tim Clark had previously extolled the advantages inherent in having a sole owner, noting that Emirates “didn’t have to worry about 200 stakeholders, from hedge funds to ratings agencies; this [allowed] us the ability to focus on operations and performance.” Other airlines maintained, however, that this ownership structure gave Emirates unfair advantages, such as implicit government underwriting of debt issuances and preferential government treatment. The airline refuted both claims, but charges of unfair competition had nevertheless been used by some countries to restrict Emirates’ access to their airports.
Airport congestion
While Emirates was by far the largest airline operator at Dubai Airport, it was not the only one - some 150 airlines carried more than 60 million passengers to and from Dubai, which created congestion on both the runway and in the airport facilities. While Emirates and the airport both used capacity management to maximize landing slots, the airport was undeniably approaching the seams of its current footprint. To compensate, Dubai Airports was constructing a mammoth new airport further out in the desert, “Al Maktoum International at Dubai World Central.” Already home to cargo operations, the airport was expected to eventually relieve Dubai International Airport’s capacity limits and transition to become Dubai’s main airport. Nobody, however, sure how or when Emirates and other airlines serving Dubai International would transfer to the new airport. Should the budget airlines be the first to leave Dubai? Should foreign airlines transfer to the new location? Should Emirates gradually shift its operations base to the new airport, at the risk of disrupting its mega-hub? Only time would tell.
Competitors
Emirates faced no shortage of competition as it expanded to new markets. Flagship carriers in both developed (particularly Europe) and emerging markets (Singapore Airlines, Thai Airways, or Cathay Pacific) were also expanding beyond their regional bases to offer increasing non-stop service to key Asian, European, and American gateways. Other Gulf carriers and Turkish Airlines enjoyed the same geographic advantages as Emirates, and had to varying degrees built operating models that offered a similar range of high-end service offerings. While Emirates welcomed competition on routes and on quality products, its aircraft innovations such as in-flight bars were being heavily copied. Would Emirates remain able to differentiate itself from competitors?
Leadership change
Emirates had benefitted from the consistent leadership style of two visionary leaders since its inception: Sir Maurice Flanagan, who stepped down as president in 2003 and Tim Clark, who had been instrumental in pushing the company to maintain its growth trajectory. As Clark edged toward retirement age, however, no obvious successor had arisen to replace him. When Clark retired, would Emirates be able to continue its rapid growth without its charismatic captain?
Beyond Dubai
As Emirates continued expanding its network to more distant destinations, industry analysts wondered whether the airline should rethink its mega-hub model. Forecasts showed strong continued growth for trans-Pacific routes between Australasia and the Americas, a market that Emirates could enter. The trans-Atlantic market was also a lucrative prize that Emirates had already begun to tap: with its Dubai-Milan-New York flight Emirates had become the top carrier between New York and Milan, a success it could potentially replicate in other large European markets subject to regulatory approval.