Emirates may cut fares to put pressure on Lufthansa, BA
Emirates Airlines says it will slash fares to fill its 500-seat Airbus A380s and put pressure on Air France-KLM (AF) and British Airways.
The airline told Bloomberg that the move would be preferable to cutting routes and flights as oil prices threaten the profitability of some destinations.
Tim Clark, the Dubai-based carrier’s president, said at the Paris Air Show that 43 percent of its daily costs are for fuel.
The decision seems to fly in the face of convention, when cut backs and route closures appear to be the norm as costs mount.
But with Dubai becoming a high-volume, inter-continental travel hub the airline's wide-body fleet will featuring 90 A380 superjumbos with 45,000 seats.
Cutting fares to sell tickets on the 517-seat aircraft will push up the occupancy levels needed to break even.
But the impact of government spending cuts means that the strategy is more likely to succeed than one based on curbing capacity and raising fares, Clark told Bloomberg.
He added that Emirates needs to stimulate demand and get back to pricing levels that are affordable for the customers “while still giving us a margin”.
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