KLM CEO: Emirates can expect more and more reluctance to grant traffic rights


Emirates Airline may face a backlash from more governments unwilling to accommodate the next phase of the Dubai-based carrier’s rapid expansion plan, according to a senior executive at Air France-KLM.

The airline is already embroiled in battling high-profile efforts by Germany and Canada to regulate its fares and capacity.

Emirates can expect “more and more reluctance [by governments] to grant traffic rights,” said Peter Hartman, chief executive of the KLM unit of Air-France-KLM, and a member of the airline’s governing board.

Long-running spats with Australia and India over increasing capacity come amid allegations–all denied–that Emirates receives subsidies and other support from the Dubai authorities that have used the airline to spearhead the diversification of its economy.

Hartman’s comments highlight the unease felt by executives at major airlines over Emirates’ continued growth and profitability. It stunned rivals last month by announcing plans to boost its fleet of Airbus A380s to 90 from 58.

Its phenomenal expansion has created a fourth pillar driving the industry’s future, alongside the three alliances–SkyTeam, Star and Oneworld–that account for more than half of global passenger traffic.

“I wish them lots of luck,” said Hartman in an interview in New York to mark the 10th anniversary of the 13-member SkyTeam grouping, which is led by Air France-KLM and Delta Air Lines Inc.

He also said Emirates faced intensifying competition in key markets such as India as local carriers improved their competitive position.

Major airlines have hitherto been relatively sanguine about the “Emirates effect.”

“They eat more into the smaller carriers more than the larger carriers,” said SkyTeam Chairman Leo van Wijk, a former KLM executive instrumental in pioneering so-called “sixth-freedom” transfer traffic through its Amsterdam hub.

Emirates has acknowledged the existing and potential difficulties it faces in securing permission to launch more flights and accommodate its expanding aircraft fleet.

It has intensified lobbying efforts in Europe, North America and elsewhere. It deliberately announced its latest A380 order at the Berlin Air Show, highlighting the importance of its orders for Airbus jets on European manufacturing jobs.

Emirates already has more than 140 widebody aircraft, with 168 on order and the prospect of more deals being announced at next month’s Farnborough Air Show near London.

The development of longer-range jets has allowed Emirates to develop transfer traffic through Dubai, offering one-stop connections via its hub from more than 100 destinations.

The network strategy mirrors that of the three global alliances, which aim to connect passengers “seamlessly” through their members.

Emirates did toy with joining the Star alliance five years ago, according to people familiar with the situation, but has opted for a go-it-alone policy.

“We see alliances as having significant anti-competitive elements; and Emirates believes our membership in one would be an artificial brake on our own business plans,” said airline President Tim Clark in a speech earlier this year.