Emirates could cut Africa flights in face of economic challenges

Monday, 24 October 2016 00:01 - - {{hitsCtrl.values.hits}}

DUBAI (Reuters): Emirates airline could reduce the frequency of flights to Africa or cut routes entirely if current economic and financial challenges on the continent continue, the company’s President said last week.

Emirates has expanded rapidly in Africa to benefit from increased demand that accompanied growing links between the Middle East and the continent, as well as cater to passengers flying to and from Asia.

However, airlines flying to Nigeria have started to refuel abroad because jet fuel supplies have become more scarce and expensive as the West African nation contends with a shortage of hard currency. Emirates has started refuelling its daily Abuja-bound flight in Accra, Ghana, a spokesman said last month, having already cut its twice-daily flights to Lagos and Abuja to only one.

“In certain African countries, the currencies have really gone down, so we’re reflecting on a number of these to look at where it’s just not worth us travelling,” Emirates President Tim Clark said on the sidelines of an International Air Transport Association event.

He didn’t mention specific countries.

The US dollar-nair exchange rate has risen by 53% this year, with the Nigerian currency’s decline spurred by investor worries over a slump in oil revenues. The South African rand, meanwhile, has lost 9.3% against the dollar.

Clark also said that Emirates is considering introducing fees for some services as it continues to take a hit from the strength of the US dollar against currencies including Britain’s Brexit-challenged pound, the Indian rupee and the Australian dollar.

“We have major differences, being dollar-denominated, in what we collect and what we represent in our financial statements,” he said.

Ahead of the release of the airline’s results in a few weeks, Clark said the first half of its financial year had been tough compared with last year.

The airline introduced fees this month for passengers who want to select their seats in advance on economy class fares and Clark said the airline could consider introducing other charges on some services, such as fees for additional bags, “where there’s a value proposition, rather than a penalty”.

He added that Emirates’ load factor – a measure of capacity utilisation – for the rest of 2016 and 2017 would probably be in the mid-70s to low-80s in percentage terms, though there would be some peaks and troughs.