Emirates will shift aircraft to destinations in Malaysia, Oceania and Africa as the airline scrambles for alternatives after eliminating 25 weekly flights to the U.S. in the fallout from President Donald Trump’s travel restrictions.
Planes on U.S. routes usually fly more than 80 percent full in the summer season but are now “percentage points” less than that, hurting the flights’ profitability, Emirates President Tim Clark said in an interview at company headquarters in Dubai. The airliners might be redeployed to markets ranging from countries in the Pacific to Africa and Europe, he said.
Emirates can reinstate the capacity if the U.S. relaxes H-1B work visa and general entry rules, helping traffic, Clark said. “Unintended consequences need to be dealt with by the U.S.,” as it’s also losing out on “pretty robust and powerful spending” capacity of families making leisure visits from the Middle East, he said.
The state-owned carrier outlined plans Wednesday to scale back capacity as of May on five of the 12 U.S. routes it serves, citing the country’s tightening visa restrictions and a ban on carrying personal electronics from some locations, including Emirates’ Dubai hub. The capacity cutbacks mark an unusual move for an airline that in recent years was known for huge plane orders to add flights and routes across its network, which currently comprises 155 destinations.
The flight reductions are also a sign that Emirates is backing down from an ambitious expansion that Clark was pushing in defiance of U.S. competitors’ efforts to fend off Persian Gulf airlines from their home market. Chief Commercial Officer Thierry Antinori outlined plans in 2013 to serve 15 U.S. cities by 2018, and Clark predicted three years ago that the market would become one of Emirates’ three largest sources of revenue.
Emirates’ traffic growth rates have already been fading. The carrier posted its first annual revenue decline in a decade for the 12 months ended March 2016, and sales since then have been hurt by lower oil prices reducing Middle East business travel as well as terrorism attacks in western Europe, Turkey and North Africa that have discouraged tourism. Deena Kamel Yousef, Bloomberg