From Rs. 440 to Global Aviation Dominance: The Unstoppable Rise of Dubai and Emirates Airlines

Emirates Aircraft

You might be surprised to learn that Dubai's transformation began with just Rs 440. In 1937, Dubai was under British control, and like British India, the Indian Rupee was the currency in use. The British recognized Dubai's strategic location as it sat at the crossroads of Europe, Africa, and Asia, making it ideal for travel. British Imperial Airways sought to establish a flying boat base in Dubai's waters, and after signing an agreement with Dubai, long-range Empire flying boats would land in Dubai, refuel, and continue to British India and other parts of Asia. The monthly rent for this base was just Rs 440, which even included the salaries of the guards stationed there. Little did anyone know that, years later, this site would evolve into the world's busiest airport, and Emirates Airlines would rise to compete with the best in the industry.

In the 1950s, Dubai's ruler, Sheikh Rashid Bin Saeed Al Maktoum, foresaw that the oil reserves would only last for 30 to 40 years, and he needed to establish an alternative income source quickly. He observed that the British were using Dubai's location as a stopover for their airlines, yet Dubai was receiving only a nominal rent. With this in mind, the ruler initiated the construction of Dubai Airport in 1959. When Dubai Airport was first launched in 1960, it consisted of just an apron, a small terminal, and a runway, which wasn't even concrete but made by compacting sand. Only small aircraft, like Douglas DC-3, could land on it. After constructing a proper metal runway in 1965, the first jet aircraft to land at Dubai Airport was a Comet from Middle East Airlines. Each year, Dubai's rulers introduced new and advanced facilities at the airport. By 1969, nine airlines were operating from Dubai, offering 20 destinations, and by 1980, Dubai became an international stopover hub for airlines like Air India, Cathay Pacific, Singapore Airlines, and Malaysian Airlines. Previously, all these flights had refueled at Karachi International Airport in Pakistan, but soon Dubai began to attract all that traffic away from Karachi.

At that time, Gulf Air, a Bahraini airline, dominated travel across the Middle East. Traveler from the entire region would first come to Dubai via Gulf Air before continuing their international journeys. In 1980, Sheikh Mohammed Bin Rashid Al Maktoum, then Dubai's Defense Minister, was offered a deal by Gulf Air to make it the official airline of Dubai. In exchange, Gulf Air would receive international flights, and Dubai would gain a 50% stake in the airline. However, Sheikh Mohammed refused the deal. Gulf Air, feeling shortchanged as it brought passengers to Dubai only for them to fly on other international carriers, decided to stop all flights to Dubai. This decision initially hurt Dubai's position as an international stopover hub.

This was the moment when Sheikh Mohammed Bin Rashid Al Maktoum decided to launch Emirates Airline. Turning this vision into reality meant taking on established giants like Gulf Air, British Airways, Singapore Airlines, Lufthansa, Air India, and Pan Am Airways. Starting an airline from scratch was a dauting task. At the time, a Boeing 737 cost $25 million, training pilots, crew, and engineers added significant expenses. Dubai needed at least $60-70 million to start the airline, with no guarantee of success.

However, Sheikh Mohammed played his cards wisely and sought help from Pakistan. Pakistan International Airlines (PIA) leased tow Boeing 737 - 300s to Dubai, and these planes were branded as Emirates, although the pilots, crew, and engineers remained with PIA. The planes operated under the Emirates name, but PIA managed the operations. In return, the Sheikh of Dubai paid PIA $10 million. Emirates' first flight was from Dubai to Karachi on October 25, 1985, followed by destinations like Mumbai, Delhi, Colombo, Oman, and Caira. In its first year, Emirates carried 260,000 passengers, and the initial investment of $10 million was recouped. By 1987, when Emirates purchased it won planes, PIA's aircraft were returned.

In the early 1990s, during the Gulf War, while other airlines ceased operations in the Middle East, Emirates seized the opportunity. In the last 10 days of the Gulf war, Emirates was the only airline operating in the region. Emirates also targeted passengers who usually flew with competitors, offering amenities like personal entertainment systems, luxury cabins, and better dining, which other airlines charged extra for. This opportunity propelled Emirates to new heights, and for royal passengers, Emirates launched the Skywards program. The increasing popularity of Dubai further elevated Emirates' success, and in many ways, Emirates played a crucial role in Dubai's rise to global prominence.

Today, one of the most traveled routes is from Europe to Southeast Asia and Australia. With Europe and Australia about 14,800 kilometers apart, no direct flight can cover such a distance without refueling. Emirates benefits the most on this route as it has made Dubai International Airport its hub. While other airline pays hefty fees for stopovers, Emirates saves costs by using its own hub, offering competitive ticket prices and attracting passengers who often stay in Dubai for a day or two. Additionally, by not filling fuel tanks to capacity, Emirates improves fuel efficiency, saving further on costs.

The success of Emirates is not just due to marketing and excellent service but also a strategic approach that remained hidden from the world for many years. The Airbus A380, the largest commercial jet globally, can accommodate 850 passengers, but most airlines struggle to make a profit with this giant aircraft. Emirates, however, is the exception. The secret? Emirates operates 119 A380s, all of the same model, allowing them to benefit from economies of scale in both purchasing and maintenance. By buying more planes at once, Emirates secured significant discounts. Additionally, Emirates has an in-house unit for maintaining its fleet, ordering spare parts in bulk and saving significantly. In contrast, other airlines, with diverse jet models, rely on third-party operators for maintenance, incurring higher costs.

Today, Emirates is not only the largest operator of the Airbus A380 but also holds the largest fleet of Boeing 777s, with 148 in its collection. Emirates operates 50% of the total Airbus A380 units worldwide and ranks as the fourth-largest airline globally in terms of passenger kilometers and the second largest in terms of freight tonnage kilometers. Since 1998, Emirates has served over four million passengers and transported goods worth 3.5 billion dirhams. Remarkably, it is the only airline in the world that has never posted a loss. With an average annual profit of 260 million dirhams, the credit for this success goes largely to Sheikh Mohammed Bin Rashid Al Maktoum.