Emirate Airline’s commercial operations boss Richard Vaughan has warned travellers to grab cheap airfares while they can, claiming that prices have fallen to unsustainable levels.
Vaughan’s comments come just days after Australian airline Qantas slashed its profit forecast by 80% and sacked 1750 workers. All airlines have around the world have been forced to slash fares by up to 50% in a bid to keep planes flying at reasonable capacity.
“I think this latest bout of discounting is not sustainable in the long term. If it was, weren’t all airlines charging their price before?” Vaughan told SmartCompany.
He says that while the market has softened substantially in recent months, Emirates will push ahead with plans to expand, adding new routes in Africa and increasing capacity on Asian and Australian routes.
“We’ve got 17 new aircraft arriving this year and we’ve got work for them.”
But Vaughan says Emirates will not participate in the industry rationalisation that most commentators believe will take place as airline profits fall further. While plunging airline share prices should mean bargains emerge in the next few months, Vaughan wants nothing to do with them.
“I am trying to think of a bargain around the world. I think they are few and far between, if any,” he says.
“We don’t want alliances, we’re not interested in purchasing other airlines. We will be operating on our own, and that’s the way to success.”
Vaughan has also hit back at suggestions from Qantas chief Alan Joyce that government-owned airlines such as Emirates were better positioned to ride out the downturn because of government support.
“We’re government owned, but the owner expects a dividend every year and there’s no financial support, whatever Alan Joyce tells you. And we pay full tote odds for our fuel.”
Vaughan believes the ultimate recovery depends on one thing – the banks.
“The world can’t exist as it does at the moment with the lack of action by banks. It’s got to turn around, and we’ll be ready.”
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
