ATW Editor's Blog

World Cup, Emirates and world dominance

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Heck, I so wanted to see the US soccer team (that’s football in real-speak) get through to the FIFA World Cup quarter finals. But none of us get what we want or deserve all the time, and bravo to Jurgen Klinsmann’s team for giving us electrifying entertainment until they bowed to the Belgians and the inevitable.

So what has this to do with airlines? Well, every 2014 World Cup match I’ve watched so far has a common thread. It’s big, it’s red, it’s everywhere and it says “Fly Emirates.com”. All round the massive and impressive Brazilian stadiums; at every opening whistle, fierce strike, dastardly foul, yellow card, penalty-finale… there it is again, Fly Emirates.com!

I have no idea what Emirates paid for such high-profile and dominant exposure, but it tells you something that the next closest in World Cup sponsorship prominence appears to be McDonalds (yeah – every one of those athletes on the field got there because he super-sized his Big Mac and fries): and the airline industry knows all too well where it sits on profitability versus McDonalds. Indeed, IATA DG and CEO Tony Tyler likes to remind us regularly that the average airline’s profit-per-passenger would just about stretch to the cost of a Happy Meal.

So, the obvious question is just how does Emirates afford such huge sponsorship deals, at the World Cup and elsewhere, and remain profitable? Other major airlines are achieving decent profits thanks to sharp management, cost-cutting and highly disciplined capacity constraints, but none are buying the numbers of aircraft Emirates is or dishing out the amount of marketing and promotion dollars that Emirates appears to spend.

Of course, I’m not the first person to question Emirates’ seemingly bottomless funds. But this is an airline that has signed up for 140 A380s – something beyond the reach of any other airline in the world to the tune of 100+ - and on the back of such deals knows it then has the leverage to walk away from other commitments – aka the now-dead A350 deal – scot-free or thereabouts.

Baronship in the airline world is nothing new. Think of Juan Trippe, or for that matter Herb Kelleher. Both held enormous sway over their favored manufacturer and both sucked up market share; Pan Am over the Atlantic and Southwest in the US domestic market. But Emirates’ market reach is global and 140 A380s and 300+ 777s looks like world dominance ambition. At the World Cup in Brazil, that seems to be the marketing message. The real question is; who is funding that message and how?

Discuss this Blog Entry 5

on Jul 4, 2014

Karen I ask myself this question over and over - it is amazing to me how Emirates is able to do what they do. Dubai, in my opinion, is a modern-day Egypt, built on the backs of slaves (well almost slaves, people from India, Pakistan, Bangladesh, etc., paid very little, stuffed in little rooms eight together). The only way they can be doing this is access to cheap labour and free money. That's it. There's absolutely no other way. As you said, it defies reality.

on Jul 4, 2014

UrbaneGent. Thank you for the comment. I have it on very good authority from others in high places in the airline community that careful investigation of Emirates' accounts show no large marketing expenditures of the type one would expect to see with their soccer ( football!) sponsorships alone. Maybe Tim can shed some light on their marketing magic?
K

on Jul 12, 2014

UrbanGent. Your comments are 'Racist' to say the least..are not Mexicans and other South Americans treated the same way in the US ? And Shame on you Karen for agreeing with him. Why don't you ask Tim for EK's accounts instead of circulating rumours ? Have you checked what percentage of a typical US Airline company's revenue is paid out to its Senior Management ?

on Aug 15, 2014

This is poor journalism, based on rumors. How can a reputable specialized newsfeed have a key editor come up with sentences like: "I have it on very good authority from others in high places in the airline community" ??? Emirates Group publishes its accounts and good airlines analysts like CAPA regularly write about they advantages (labour cost, taxes, geographical position, airport). Can ATW respect our membership fee and come up with better detailed articles on explanations instead of this kind of non sense?

on Aug 15, 2014

This is my blog; we share opinions in our blogs and we are clear about the separation of opinionated columns and blogs versus the straight news reporting. We produce excellent news across all our ATW products and they researched and written to the highest journalistic standards.

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