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The Coronavirus Effect – Emirates Secures Government Support

by Ankur Deo

In addition to the uncertainties surrounding the current pandemic, its effects in the long run and the change it would bring to the aviation industry are still to be seen. According to certain reports, without support from the respective governments, most of the airlines could go bankrupt by as early as May 2020. Not even the largest and the most influential carriers in the world have been able to escape the coronavirus crisis unscathed. Just last week, Emirates announced they were shutting down all routes and shall thus, ground their gargantuan fleet of Boeing 777s and Airbus A380s.

In an attempt to save their flag bearer, Dubai’s government announced on March 30, 2020, it will inject equity into Emirates to keep the airline afloat. Dubai’s Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum said in a statement that:

‘The state-owned airline would get help considering its strategic importance to Dubai and the economy of the United Arab Emirates, as well as the airline’s key role in positioning Dubai as a major international aviation hub.’

Emirates Boeing 777-300ER. ©Airliners.net

The details about the nature and size of the financial support are not yet known. Emirates is the most visible emblem of the city’s transformation over the past decades, starting out with a pair of used aircraft in the 1980s to become an aviation dominator. Emirates has more than 100 Airbus A380s in its fleet, the largest belonging to any airline globally, thereby, making Dubai the busiest airport by traffic and a key transfer hub for global travel. In short, Dubai needs Emirates to live through this international catastrophe.

While many governments have opted to bail-out the respective flag bearers, their problems only seems to have been solved temporarily. With huge uncertainties glooming regarding the length and overall magnitude of the COVID-19 lockdown, we cannot be sure how close or far is the day when aviation would be back to normal. On similar lines, John Strickland, an aviation consultant stated:

‘We don’t know how much demand is going to come back and when’

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The International Air Transport Association (IATA) estimates that the aviation industry may suffer more than $250bn in lost revenue this financial year. While the big three Middle Eastern airlines are all state owned – Emirates, Etihad and Qatar Airways, it would be easy for them to obtain the necessary financial support. On the other hand, life would be much difficult for their privately owned competitors.

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