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- [00:02]
A
I'm Jon Ostrower, editor in chief of the Air Current.
- [00:04]
B
I'm Brian Summers. I write the Airline Observer. You're listening to the Air show, the podcast where we talk about what goes on in the business of the sky. John and I are back from New York where we interviewed aviation royalty Emirates president Sir Tim Clark. And while wearing tuxedos, John and I gleaned some tidbits on the state of the global aviation industry at the annual Wings Club Gala. I think there were three main topics. First, spirit and the real possibility that it may liquidate. Second, some grumbling about the A321XLR from planners who say that airplane cannot fly as far as Airbus promised. And third, well, engines, John. I felt like we couldn't walk three feet without some aviation luminary complaining about either engineering engine reliability or their onerous engine maintenance contract. It doesn't seem to be getting any better out there. As one person put it to both of us, in what other industry does a manufacturer sell you something that doesn't work as promised and then charge you more to fix it?
- [01:15]
A
Yeah, it was a really lovely evening and much hand wringing about engines, of course. Really some great feedback on a piece that we had in the Air Current that we published just week last, the week before. Effectively, airlines find themselves in that customer satisfying combination of having a product that is not as good as before and also more expensive. We'll dive into the nuances of the engine business in an episode real soon. Well, that's good.
- [01:38]
B
I think people want the gossip today. I know many of our listeners. They want to know if we spoke to Karsten Spoor. We did not. Although, John, you and I got about 15ft away from him and we discussed whether we should introduce ourselves again. And then we decided against it. Maybe next year. But we did interview Sir Tim Clark, who built Emirates from nothing into a big deal over the last 40 years. He gets a lot of accolades, but not everyone in this industry likes him. Something that Clark alluded to in his speech when he won the lifetime achievement award at the Wings Club Gala. But I guess when you disrupt an entire industry, you. You do make some enemies.
- [02:22]
A
Yes, he has and continues to have a remarkable career. We were happy to sit down for an interview with Sir Tim Clark before the event, and we're excited to share it as today's episode. We talked about engine reliability and Boeing and why the A380 fizzled, as you'll hear. But I started by asking him about the very early days at Emirates and how his Career there began.
- [02:41]
C
They were looking for somebody to be what they call their head of airline planning. Part of a group of 10 people. There's head of engineering, head of in flight services and everything else. So I came across and set to planning what I thought would be the airline that they wanted us to prepare. It didn't quite work out that way, not personally, but the, the way the airline started was inhibited by the reluctance of the owner states of Gulf Air to allow us to fly to their cities, which was just about everywhere, which was.
- [03:18]
A blow because we intended to start on a regional basis and obviously with Bahrain, Doha, Kuwait, Saudi Arabia, Muscat even wanted to go via Abu Dhabi, but they weren't minded to let us fly. So with a bit between my teeth, I said, right, let's go for the long haul and do it now.
- [03:44]
But to do this we have to do certain things, which is what we did, whether it be the defining the, the operating model.
- [03:54]
That had to be done fairly carefully and then how we go to execute the operating model. And we followed that and as you know, we went from that and scaled on the basis of that original model, which has worked so well for us for so long now. 40 years, sir.
- [04:13]
B
Tim, I want to follow up on that question a little bit and we will ask you nuts and bolts questions soon about things like engines and airframes. But in addition to building an airline, that transportation company, you also built a brand that people know and a lot of people love here in the United States. I would say that at this point we have three premium airlines. One of them, we'll let the listeners figure out which one that is. Doesn't seem to really believe in the idea of brand building. And yet you're putting the Emirates name on lots of things in the world. There's going to be an NBA tournament pretty soon. I just read a report that you're spending maybe 30 million euros a year on AC Milan sponsorship to put the name on the jerseys. When did you realize that you weren't just selling transportation, but you were selling an idea of travel? How can you even evaluate whether all this advertising and marketing budget is worth it?
- [05:08]
C
Okay, going back to the point I made earlier about the facets of the operating model, the business plan, whatever you like to call it, part of that was to punch above our weight.
- [05:20]
By the time we had 10 aircraft, by the very late 80s, people began to think that we were much bigger than we were. That was one of the facets of it. It was a tool of expansion. We didn't go out to make a brand, a global brand, because at that stage we weren't. But what the marketing aspect of our business model was and became was not lost on us in the early days. So creating a service delivery, a product in flight and for me, when I was looking at all of that, what was I looking at? Mediocrity. Much of that is still there today as many of the many carriers you've talked about suddenly realize that they've got away with it for too long as they commoditize their business and forgot actually what people and humans require and what they want to do. And as the world became wealthier, whether you like it or not, the propensity to afford higher airfares was not lost on. But at the time we wanted to take, as you rightly said earlier, we were coming from a relatively small, very unknown city with an airline that had absolutely no prospects in the eyes of a few to go anywhere. Many of many of the people that we were not, say, up against but were working in the region with thought we'd never make it. So in that business model, you will see it's still in my desk at work, the need to extend our brand, create a brand so that we can reach well beyond the network that we were designing before we actually got there. That was a clear and plan that we knew was expensive. We looked at the marketing budget of Singapore Airlines, for instance, in the mid-80s and they were spending about 2 to 4% of their income on marketing, where most carriers were spending about half a percent. It was always the first one to become a casualty of recession or whatever. We looked at that, we said if we're going to do this properly, we've got to be up there with sq. Sq. A model not dissimilar to ours. Small nations geographically not as well positioned as we are with a very small domestic population, but they punched above their weight. They brought lots of aeroplane, part of the Singapore government's outreach and putting Singapore on the map. The government of Dubai wasn't minded to do that, but certainly for people like me were realizing that if we were going to do this, certain things had to be the usp, the differentiator between others that we competed with in a minuscule manner because we're up against them. Pan Am was still flying boa, not boa. So BA was flying air and a lot of the state carriers which have now privatized Lufthansa, Air France, etc, didn't happen until the late 90s were fairly dominant in their own way.
- [08:21]
But we could see the weakness of the networks. We could see the way people were traveling and wanted to travel and couldn't. And we could see what we would have to do to break the mold. If you see, and getting back to your question about brand, to make people look at us, to think about us, to be aware of us, we had to do more than just sit on our hands and hope that it was going to come to us. So we really had to be out there. We knew what we were doing and where we wanted to go, when we wanted to do it with the tools that we were convincing the manufacturers to buy. These had to be very special aeroplanes, equipped and designed internally by us, not by them. So all the design work that we did was with a view to that original operating model. We have to separate ourselves from the herd. We have to separate ourselves from the herd of mediocrity. If you look back in the 80s and type of aircraft that was flying in those DC10s, 747s, Tristars.
- [09:27]
You name it, they had caravels still flying, they had mercures still flying, they had all sorts of hotspots. And some of the old British aircraft, the VC10, et cetera, were still flying. And when I looked at that ragtag Bobtail Compendium of Product, 50s, 60s, 70s Design and Execution, I knew that if we could get our friends in the manufacturing business to build an aeroplane, or rather take the existing airplanes and leave the internal side to us, don't get involved. And that was part and parcel of trying to. And we couldn't achieve the status we did with our brand reach without coming up with the goods. The aspirations that we created had to be met, the expectations had to be met. So it was systemic, it had to be all orchestrated very carefully, coming at the right time, doing the right thing and getting the sweet spot absolutely ripe.
- [10:30]
A
There's a lot to talk about there, but I wanted to get your sense of.
- [10:35]
What was the first aircraft that you feel like. Emirates really was able to put its mark on either at Boeing or Airbus, in terms of what the performance or cabin or some facet of the airplane that you feel like you were able to steer.
- [10:49]
C
Well, the 777, in its early days, we were one of the launch customers. We were looking at something to replace the 600Rs and the 310s. We had managed to persuade Airbus to shift a few things around. We had done a lot of cabin work, etc. But they weren't at that stage really ready to do as much as we wanted. This is interesting though.
- [11:16]
Until the 340500 came along.
- [11:20]
And we were very, very keen up our operating model. Going back to what I said back in the mid-80s was an airline that could reach 16, 17 hour missions without stopping.
- [11:34]
And everybody thought, certainly they thought I was barking mad because who would fly an airplane for 16 hours? They must be mad. People want to get off and walk around, etc. I said think on, think like that, that's really good. But actually if you can design a cabin which allows people to do all sorts of things given the distances they have to travel, you have to start thinking very carefully about seat design in all classes. You have to think about the cabin itself, the interior architecture, the lighting, the airflows where you position. I remember ripping out all the ducting and everything in the, in the cabin of the three of the, of the Airbus line and so drop the ceiling said take all that out and push it to the sides. And people said well why would we do that? The engineers won't let us. Mark my words, I need the crown. I need the crown for height. And there's nothing to stop you moving your ducks, your MEP as we call it in building and all your conduits to the side of the aircraft and all the other bits and pieces that gave me a lot more space to do things that I wanted to. As you know, the first class suite appeared on the 340 500, the area I was working on the N 1998. Pity I didn't take a patent on that, especially with the doors, because everybody's putting doors in first and businesses or if I had a patent on every door that's being produced, I wouldn't be here talking to you. But anyway, Boeing were already a little bit ahead of Airbus on that. So when I saw the go along the mock up of the 777 said bingo, bingo, this is it. But your crown needs to come out. I need to. And they say we go again. Right. So we, we started with them and, and started redesigning the cabin as well. So getting back to it, it was probably Airbus Boeing in the first instance. But Airbus as we.
- [13:26]
And we started buying large numbers of airplanes. I won't talk about the 380 until later. They realized that we were one, very serious about what we needed to do, two, that a lot of the work that we were doing with regard to the requirements of the aircraft and the way we were doing things like cabins could cross pollinate their product portfolio. As I said, my fingerprints seem to be just about everywhere now, because I see some of the work we did in the early 90s, 2000s now in their order book. Fair enough. That's good for the industry. It's good for everybody, frankly. Now the manufacturers, both the OEMs, the airframe manufacturers and the seat manufacturers. Here he comes again. What is he going to say now?
- [14:13]
But we were very, very persistent and every time they accommodated what we need, we bought large numbers of them. As a result of that, as our brand strengthened and our profitabilities were getting more and more and more, much to the chagrin of so many of our competitors, that they started to reluctantly follow the lead and they started to do so. So the work we did in the 90s with regard to seat design, primarily in the economy cabin, I'm doing another load of work which I'm doing on a new seat for economy which will watch how that'll be picked up.
- [14:53]
Cross pollinated. The whole industry, everybody benefited from it. And you, you, you see some of the designs. I remember working with Lars Anderson on the 777. I said, Lars, I need bigger windows. He said, you can't have bigger windows. We've got a good Lars, I've got to have bigger windows, make bigger windows. Okay, so they made bigger windows. I said, lars is not flying where you need. All right, we'll put winglets on it, whatever, you know, all the bits and pieces. But it was great fun. I have to say personally, it was just wonderful to go around and be somebody who could actually, if they listened to you and they trusted you and important if your order book came along behind them. So he said, if you do this, we'll buy 50 ship sets of seats. Thank you very much. But that was all part of the original business plan. We've got to use.
- [15:46]
The strength of the business as it gets stronger to transform the way people thought about designing and building and the primarily what the customer was actually going to be faced with and enjoy or not.
- [16:00]
A
You have had tremendous success with the 380 as the obviously the largest operator with, you know, you've had more than 115 flying right now. I want to help our listeners Understand why the A380 works for Emirates and how you deploy it at really both a granular tactical level, but also the bigger strategic vision for Dubai.
- [16:25]
C
Once we tested, by the mid-90s, when the 777 came to us latterly the 340500 for the Archa long range mission, we knew it worked. If it was working as well as it was the sweet spot that I Talked about going after markets were ignored, going after connectivity, going after route networks which were straight line and very simple and much, much shorter than going from Accra to Beijing over Paris or London or Frankfurt, whatever, with long stops, long waits between flights, get there one stop, etc. So the whole notion of creating a hub and eventually a super hub became non linear because once we reached our critical mass, which was probably achieved in about the second half of the last decade, we knew that plugging in more and more and more of bigger and bigger aircraft and then connected them to multiple destinations banked in the same time period as that, we knew that we would be able to feed any of these at any time in our scheduled banks. Just open the doors and if I can get 100 destinations feeding my banks in the cross flow and you take 5 or 10 or 15, you run out of seats very quickly. That's exactly where we are today. So we have, as we layer on more and more and more, the 380 becomes the heavy lifter. It was the 380 and the numbers we bought and the building of this super hub, which is a true international super hub, I do not believe there is one in the world apart from what our friends in Gatto are trying to do as well, which is basically emulate that kind of thing because it works. And the more you do, the greater the ability to bring your economics to the margin. And then beyond that, it's really easy, easy running. So the scalability of that model is unstoppable. Think about that. It's a model that outperformed all the other models that you might see in London, Frankfurt, Paris, Sydney.
- [18:49]
New York, Los Angeles. The primary, your big three over here, well outperformed all of those, as you can see by our results. They've just gone nuclear, frankly. And that's because we have that wonderful machine at 15 hours a day we fly those things. And that's herculean for an aircraft of that size, given the moving parts and try and maintain it.
- [19:13]
B
Sir. Tim, My expertise on this podcast and otherwise tends to be the commercial aspect of the business. John usually handles everything that's maintenance related airframe engines. But I have this problem right now. I know a problem is big in the airline industry when the commercial people complain about it to me. And all I hear about right now is I hate my engines. I pay too much for engine costs and maintenance. This has to get fixed. And again, that's a weird thing for me to hear as somebody who covers that part of the industry. How bad is this situation with Engine makers and then how do you fix it?
- [19:54]
C
Interesting that you said the commercial people are asking that because it means they're not perhaps concentrating what they should be concentrating on. It's for the engineers.
- [20:02]
B
Well, they want their airplanes, let's put it that way.
- [20:04]
C
That's right. The C suite needs to really take care of that kind of thing. Now the, the, the engine issue, yes, we have quite a serious issue.
- [20:14]
Quite why this has happened. People say Covid and supply chain etc, etc. But there was evidence of plot loss before COVID.
- [20:24]
There was evidence of quality control, there was evidence of.
- [20:30]
Misdesign in many respects there is evidence of chasing technology for the sake of it in the hope that they would get fuel reduction, specific fuel on the engine, sacrificing too much, forgetting that fuel consumption is very important to all of us. We know that. But for me, If I've got 140 departures in four hours, all of them Y bodies, I need reliability as much as I need and some cases more than fuel economy. I'd rather have a 99.5 dispatch reliability. So what was happening was that the beginnings of this flakiness were starting to appear before COVID Covid didn't help. But I said I've had enough of people telling me about supply chain because it's five years since COVID Over five years since COVID started and it's, we should be on that now. But there are issues with. We know about RTX on the single aisle, we know the 320s lying around and 737s which have problems with those engines. Airbus have got lots of whitetails sitting around. Well, not whitetails, they're all spoken for, but no engines on them.
- [21:43]
Our friends in Rolls and GE are behind the game with regard to the spares they need to keep our engines on wing. This isn't about new engines, it's about existing engines being unmaintainable because the spares aren't there. So this is where your commercial people will say if an airline is compromised in its ability to meet its production targets because propulsion isn't up for it, they're going to moan, yes, because they can't sell the inventory. And it's not lost on the people that hedge head roles or whatever how to solve it.
- [22:19]
For me, you know, I, I look back at the huge amount of M and A that went on in the 90s and the 2000s in the belief that they could consolidate. Take Saffron for instance. They could go from engine manufacturing, CFM and all that kind of thing. Right. The Way through galleys and seats and toilets and variable frequency generators and APUs and gear and all that kind of thing. I'm thinking, and what did it look like on paper when you look to this unconsolidated aerospace industry, many of which were okay, but it's a question of how they were managed. Many of them were small, some were medium sized and they honestly believed that unless they were consolidated into the greater whole good, then they would not survive. And that's anathema to my thinking, certainly. If anybody says to me that the airline wouldn't survive because we were too small, think again and watch and learn. Because thumb is there's a storm coming. But these people were subsumed into these heavily consolidated industries. And to be quite honest, I don't think the governance of those industries in the multifaceted nature of what they do is what it should be. And they need to divest and they have to reconsolidate on a smaller entity to increase their capability of reaching the, the kind of targets that we need in our business. You know, I'm feeling fairly vocal in the industry with regard to the ability of the OEMs and the supply chain to get their act together.
- [23:57]
There's no excuses. We've got to say there are no excuses anymore. It's no good telling me it's okay, Tim, we're on it. We're looking at it like a proverbial mirror. I need you to do it and get it done because I have to get this done. I've got a job to do. I need you. If I could get rid of all of you and do it myself, I would, I promise you. Already I'm starting manufacturing, manufacturing in Dubai.
- [24:19]
Because some of the stuff that we, we need primarily in cabin and all the other bits and pieces and some of the avionics, some of the.
- [24:28]
The component parts of the airframe we're doing ourselves now, upgrading our engine overhaul capability big time. I don't care what it costs. We will do that because we've got a new fleet coming in and I can't rely on the OEMs to actually do what they should be doing until there is clear evidence of that in place.
- [24:48]
B
John then asks Clark about Boeing. We'll be right back with his revealing answer after the break.
- [24:55]
D
Hey guys. Doo hop.
- [24:57]
A
Okay, I'm hopping now.
- [24:59]
B
What?
- [24:59]
D
You know Doo Hop, the company that makes it easy for airlines to sell service and deliver seamless connected journeys for Travelers, airlines and OTAs.
- [25:07]
B
Yeah, I know Doo Hop, but aren't they just a metasearch site like Kayak or Google Flights?
- [25:12]
D
No, no, there's so much more than that now. Do hop powers booking systems for airlines that want to expand their offerings? Think about flight connections by EasyJet or Transavia SmartConnect.
- [25:22]
B
Okay, but why does EasyJet need a metasearch site? It can sell its own flights without any help. You'd hope. If not, things are way worse than I thought there.
- [25:32]
D
This is far from just a metasearch site. This is about building connectivity beyond their own NETWORKS. Through DOOHOP, EasyJet can actually sell you a ticket to Prague. From LA, you'll just fly Norse Atlantic to Gatwick and then connect to EasyJet two hours later.
- [25:46]
A
How does that even work? These airlines don't even have an interline agreement. Two hours, I have to reclaim my bags, check in again, and all that seems like a huge risk and hassle.
- [25:55]
D
This is where Doo Hop works its magic. With Connecture, Doo Hop can guarantee to get travelers to their final destination, just as it'd be required on a single ticket Interline. And with the upcoming bag connect, it can even transfer the checked bags for you. The traveler just pays once to buy this ticket via a duhop powered site and all is well.
- [26:13]
B
This is amazing. Does it work everywhere? Can I finally connect from Frontier to Aeroflot?
- [26:19]
D
Um, no, not everywhere. But the reach is broad and growing all the time. There are 20 airlines that are live, but more than 100 in the partner ecosystem. And it's not just airlines. They even power multimodal partnerships like Air France and sbb. The Swiss rail system.
- [26:34]
A
This sounds good, but why is it better than a traditional interline agreement?
- [26:37]
D
This is super simple and very flexible. Doohop can roll out a solution in weeks and they have plug and play integrations that require almost no IT help. Apparently Hawaiian Airlines holds the record. It was 18 hours from them reaching out to the system going live. And they can work with NDC offers and orders too.
- [26:54]
B
Whoa. That's incredible. If I worked at an airline, I'd.
- [26:57]
D
Be interested to learn more about Doo Hop and what it can do for your airline. Go to do hop.com and we're back as promised.
- [27:05]
A
Here's what I asked Sir Tim Clark last week about Boeing. I want to ask about Boeing. I remember a interview that you and I did back in. It was March of 2021 actually, so it was still solid. Covid. This is pre vaccines. People were not back at it at that point and we were talking about the state of Boeing. And I'm going to quote you to you if that's okay. You said, quote, the wake up call of the MAX was something that told them that all was not right. If you think that you're going to get away with it by making cosmetic changes and they will write me as they did. We've done all this, this, this, this and this. You're not getting it. You're not getting it. Four and a half years later, are they getting it?
- [27:52]
C
They got it. As far as the MAX was concerned. And we know the history of the last four years. It hasn't been a nice one.
- [28:02]
As they've unraveled and done all the bits of deep dives that they've, they've wanted to do, or rather they've been forced to do. And every layer has caused consternation and surprise as they've gone down right the way through. So again, this is a well documented thing, John. What I saw at the time was a reflection. The way I'd observed Boeing go through the 90s.
- [28:28]
And the thing that of course worried me was, as I probably told you, was the way the 777 was hijacked from the normal run of the mill operations in a very, very sophisticated aircraft with new airframe technology, new composites, new propulsion, new electrical systems and new aerodynamics. And to do what they did, which was, you know, part out many of that to other suppliers on the 787, on the 787 who had never built anything like that before, they kept the wing, thank God, but, but everything else was going all over the show. And this was in the belief that they would save money. And I believe that was the beginnings of the evidence that the strength of balance sheet was beginning to transcend anything and everything. My view of course, as you know, is if you hit the sweet spot in your operating model, the financial metrics take care of themselves. Don't come along and say I need to double my ebitda. Well, how and why would you want to do that if you haven't hit the sweet spot? It's very simple. But they went down that path. So now we have a Boeing which is chastened, mortified by what happened. Under many layers of new management, hopefully this log, the Kelly and Stephanie have lasted longer than their predecessors. Of course they are asking the right questions, which is important to us. They're doing, as far as we can see, what they should be doing.
- [29:58]
The whole world was turned on its head as a result of what happened. And so the way the company interacts with the agencies that are external to Boeing, whether it be the faa, whether it be Congress, whether it be the media or whatever.
- [30:14]
Has caused them to, I think, knock themselves down, deconstruct and reconstruct. I've always said you lost your workforce. I'm a great believer in workforce. And if you lose your workforce, they'll lose you. And they lost the workforce when they took the 787 abroad. Immediately there was industrial labor issues. Well, you know, if you treat your labor badly, they're not going to be very friendly towards you. And so you get this thing, people laid off, brain were bought on again, et cetera, et cetera. For me, there's no way. If you're doing the right thing, you're producing aircraft that people want and you're innovating and providing new aircraft that people want. Your workforce is content and steady. You never have to lay anybody off. You're going to deal with the peaks and troughs in the airline business. It is endemic in what we do, but you're smarter about how you go about that. Technology's taking care of a lot of that.
- [31:11]
B
So there's another thing that commercial people will tell me at other airlines.
- [31:18]
Except for your airline, they don't like the A380. And I mean they really don't like the A380. Ben Smith @ Air France KLM was the first thing he did was get rid of it. There are other airlines that tell me privately it just doesn't work for them. The unit costs aren't that good to begin with. And if you don't fill it, God help us. A lot of these airlines only have 10 to 15 aircraft. I know you've done it well at Dubai. Did other airlines mess up in the way that they used that airplane? How come it didn't work? How come it didn't catch on beyond your.
- [31:54]
C
Airline?
- [31:56]
How long have you got?
- [31:59]
If you look at the way onto the first question, which was Ben Smith grounds his Air France. Ask what Gata said. Remember Akbar, Worst mistake ever. Never got a fly. Ground them. Tony Douglas, Singapore Airlines, Qantas, Carsten, Lufthansa. What did they say about it never going to fly again? Now they're all going flat out, full up. Okay, remember what I said about the tidal wave post Covid, which nobody would believe, but it happened so quickly that they had to activate and actually it has a renewed lease of life, which is why I'm on the mission to try and persuade either side to build a bigger aeroplane. Something else. Why didn't it actually work for them? Because they bought too few of them. Secondly, if you look at the way they designed the interior of the airplane, and I'm not being disingenuous to some of the people who came with the Air France 380, which resembled a DC10 inside, or some of the other European carriers who came up with BA bought more and they're using them smartly today. And I believe they're all full. I can't believe they're losing money on that. Given the yields that we've got and fuel price at the level it is, that aeroplane is really singing because of the yields that we're all getting and the fuel as it is. But it's such an efficient aeroplane and this is what people don't get, partly because we have so many of them, they have so few of them. But one of the problems that Ben had with his fleet was that trying to feed them into the banks at 7, 8, 9 o' clock in the morning in Charles de Gaulle was almost impossible. He didn't have the gates to it. His terminals weren't capable of handling that number of people. When you've got that number of 380s feeding in, we could have 5,380s on the ground at one point in time, the airport facilities are going to be able to take it above wing and below wing and shift that business with an hour 15 minimum connecting time. If you're not geared to that and it clutters up your whole scheduling program, rather rid them because you've only got 15, it's not difficult. But if you've got 121 that we had, we've now got 116, you can't just say, well, we've got to ground them. But importantly, post Covid, it came into its own. And this is the paradox of the argument with regard to the useful lives and why they don't work for so many carriers. I think we, we design the interiors well, they are still the most sought out after aircraft that we know, not only in our fleet but in the world today. People go out of their way to take convoluted routes, to fly on the 380 rather than go on smaller aircraft with multiple stops or whatever. So the. So why didn't they make it work? They brought too few of them. They didn't really know how to do it, how to employ them. The American carriers weren't having anything to do with it anyway, because this was the. In those days, it was the weapon in the armory of Emirates. So you need to stop using them because that allows them to go to Airbus to build more and more and more if we buy them. So none of them bought the.
- [35:06]
B
Airplane. You're serious about that? You think the US Airlines were trying to dissuade other carriers from buying the.
- [35:11]
C
Airplane? In the, in the time of the, what I call the rift.
- [35:16]
There was a clear mandate. The Star Group do not buy the 380.
- [35:22]
Because it gives immense power to them. If we don't buy, eventually its demise will come about. And in truth, that's what happened. If the US carries, who could say to me, you can fly from Los Angeles to Tokyo with the 380 with a United, American or Delta and not make money? I don't think so. Really. Or go from Los Angeles to Sydney and given the legs that we. We. You know, I remember Tom Williams who was director of Programs of the A380 in the early days. He said, Tim, this airplane was never meant to go more than 13 hours. How come you've got it flying to Auckland, which is 17? I said, Magic, magic.
- [36:00]
We stripped out a lot of things from the airplane, took weight out, etc. He said, this is amazing. You mean you can carry 460 passengers from Auckland to Dubai? It's full going the other way, yeah. He said, well, we never designed it to do that. I think that was a loss on a lot of them and you need to look at their own personal circumstances. Many of these carriers were in severe financial difficulties at the time. The notion that you would buy a list price in those days, $450 million airplane was anathema to their boards. If you look at the 208, 209 financial crisis, what happened then? If you look at the 98, 98 financial crisis, 203, the Gulf wars, etc, etc. There was a great deal of nervousness, fragility in the governance models of the entities that we competed against, which frankly, the more I heard about it, keep it going because as long as they lose their nerve, lose the plot, gives us the ability to.
- [36:57]
A
Move. So last December you introduced to your A350 and it was delayed a bit. On top of everything, I'm really curious your reflections on the introduction of the airplane. How is it working out for you but also relative to what you learned between 2008 and introducing your last all new aircraft type, the 380 and the 350 and how you are thinking about those lessons for introducing 777X which obviously is a common type rating. But I'm curious, how's the 350 working out for you right.
- [37:27]
C
Now? The 350 is actually a, a really good airplane like the Dreamliner is. Okay. How you manufacture it is your problem. Okay. Remember that they design brilliant airplanes both sides of the Atlantic. I've never got any complaints about that. We never have airplanes that have got high levels of drag. We don't have rogue airplanes coming with 7, 8% differentials on, on their performance, whatever. Now we get them really, really good. That eight, seven, as I've always said, is one of the best they've designed. That wing is to die for. The mass that went into getting that right should be in Harvard, mit, as a textbook of how to deal with aerodynamics in the 21st century. But it's production that gives them the problem. The whole business I talked about earlier, the way the supply chain was feeding them, the way the quality gate into plant was being dealt with and the quality out of gate onto the completed airframe, which popped up as it has done many times on the 350. Not one has been on time. And they've rescheduled because they can't get their supply chain in line. And we still get silliness in the way the aircraft is performing at flight test just before delivery to us. And it shocks and stuns them. In fairness. And every time I've got a contracted delivery day, it's going to be moved then, sorry, we've had to push it two weeks, push it three weeks, push it. It goes on and on and.
- [38:48]
B
On. Earlier in this podcast, you teased us a little bit. You spoke about something that airline executives rarely speak about. You actually talked about economy class. Usually when I hear about economy class, people will just say it's kind of a low margin thing that you have on the airplane. It's all premium, premium, premium. Are you really going to rethink what's in economy class? And can you give us a little bit more about what you're planning for.
- [39:15]
C
Rethinking? What I'm saying is for the same reason that we went back into the seat manufacturing business in the 90s, early 90s. And I think we did a very good job in, in the redesign with the manufacturers of what those seats. Those seats are still there today. The, the difference is that the, the seat for our ultra long range missions.
- [39:38]
Has got to be more comfortable. We've never gone back to that. The premium is going through burning hoops every 10 minutes and everybody's on the premium game.
- [39:49]
Okay? We've never got away from it. Others have trashed first class. They say there's no first class demand. It's so bad and they've taken a long time to improve the business class seats. But as you rightly say, economy is left. Don't forget 75%, 70% of our passenger loads are economy. Without doing too much we can make their lives a lot more comfortable particularly on the long haul without too much weight gain, without too much expense. You've just got to be thinking slightly out of the box which I've been doing with some of the manufacturers more recently.
- [40:26]
And you've seen people like Air New Zealand do their, their kind of three three seat thing. But that's not what I mean. It's actually the seat itself could be much more comfortable.
- [40:38]
It could be. I won't say what I'm going to do with.
- [40:42]
B
It. But no, we'd like to.
- [40:43]
C
Know. But no we can't because as soon as I do everybody listening to this and all the others will say what's he up to now? Because in the end watch and see and when it comes out then you'll be able to. We're not going to patent it, you know, it's for the good of all really just say we can actually. Although the manufacturer might choose to do that. You may think so. I'm not too bothered about that. If you have to make money from patents then you shouldn't be in the airline business. But. But the. The seat needs attention. We can do a lot better. Why technology is helping us the understanding of the human body with regard to the ergonomics of long haul flight. We know a lot more about then that we did then.
- [41:26]
So the things like wraparound sound much better. TV systems with Starlink bringing in wonderful things you can do all sorts of things with screen sizes on that are adapted for that. So if you rethink the whole all the moving parts of a seat in economy you can actually do a lot better than you're doing today. It's just that nobody's really got around to think about it because our friends over here. It's a commodity. You commoditize your inventory. After all the airline community has really got some very good yields now. Much higher than it had prior to Covid. We have the affordability to make their lives better and share some of the loot. Put it back, invest into the fleet. You takes me back to brand. Your first question. This is all part of the brand growth. The trust in what you do, the value for money that you provide, the range of products that you provide, the interest, the fun of flying on ultra long range missions. I've never lost Sight of economy never will because it is so important to what we do. And if you, if you provide a better deal for them without doing too much. The trick about this redesign is that hopefully it's smart enough to make sure that you don't face huge amounts of weight gain and cost. If you get that right, you've hit the sweet.
- [42:44]
A
Spot. The world spends a lot of time talking about your airplanes, your product past your experience. 20% of your income comes from cargo and it's not, I think, a well understood or appreciated part of the business. Integral part of the business. Phenomenally important. You during COVID it was the lifeblood of what kept this industry going. Obviously we had a significant contraction in sea traffic in the Red Sea because of Houthi rebels, ships being attacked and the role of air cargo picking up for making sure that goods got to market. How do you see that part of your business progressing relative to global instability, but also whether it's us or Chinese overwatch of the seas and you're in your own role in providing that lift that flies over all of.
- [43:30]
C
That. Yeah, we will. Look.
- [43:35]
You'Ve got to hunt for this business. You got to know where the business really don't worry about the politics of it all business moves one way or the other and you've got to know where it's going to. You mentioned the hoodies, of course. Well, in the short window of opportunity that provided we cleaned up okay freighters every service. But of course once the just in time inventory adjusted to an extra two weeks of going around the Cape of Good Hope, albeit a little bit more expensive, they do it so you get a, you get that disequilibrium going into equilibrium so your loads start to fall off a little bit as the supply chain adjusts to that. So and of course there was a glut of shipping. Remember a lot of vessels doing nothing. As soon as you introduce two weeks of extra shipping time, that that glut gets taken up fairly quickly, whether it be crew, tankerage or just the bulk carriers or whatever all these affect. And in our business since we've been in Emirates, this is ebbed and flowed for all sorts of reasons. We talk about geopolitical, whatever it may be, insurrections, wars, we've had a lot of those recently and complete shutdown shipping, etc etc.
- [44:47]
We're hardened to it. We'll find a way. They expect us to do that. Our brand is strong enough. People believe that if there's going to be a way, Emirates will find it, stay with them, give them the business, they'll carry it for you. And we've done that ever since. It's always been one of that business model tenants was we want cargo to be a significant contributor of income and eventually profitability to the bottom line. So we developed it, we worked on. We're now probably the largest, if you look at with what we've got and the belly hole capacity we have largest cargo carrier in the world. So. And if we ignored it, that would be really silly. When you're going into China, you're going to Africa, you're going to South America is a bit of an ass because it's such a long haul and you can't really carry that much. But Africa is ready to rock and roll. We haven't touched the surface of that yet. We'll.
- [45:40]
B
See.
- [45:45]
You've been listening to the Air Show. If you have suggestions or questions for us, or if you're interested in sponsoring the podcast, go to our website, theairshowpodcast.com to get in.
- [45:55]
A
Touch. The Air Show Podcast is produced and edited by Sarah Fay. Special thanks to Nick M. Nevis, who recorded our interview with Sir Tim Clark in New York City. Our theme music is by Joshua Mosher. Thanks for listening and we'll be back soon.