Aviation’s New Centre of Gravity

In early 2012, Tim Clark and I began discussing the potential for a partnership between Emirates – the Dubai-based airline he leads – and Qantas. We met at Emirates’ Wolgan Valley hotel in the Blue Mountains outside Sydney, a World Heritage region that feels a million miles from Australia’s biggest city.

The contrast with the melting pot of Dubai International Airport – where we met a few months later to finalise the partnership – could not have been greater. But Dubai’s role as an aviation hub was one of the catalysts for those early discussions in the Blue Mountains.

Until the late 20th century, aviation was Atlantic-centric, dominated by the big airlines and airports in Europe and North America, plus a handful of strong players in Asia. This status quo has been shaken up by the rise of Asia Pacific economies. The International Air Transport Association expects the region to record an extra 1.8 billion passenger trips by 2034, compared with 2014, lifting its share of global traffic to 42 per cent – or a total market size of 2.9 billion people.

Today the Arabian Gulf is at the centre of the aviation world, ideally located as a hub between East and West and within an eight-hour flight of three quarters of the global population. According to the Boston Consulting Group, Gulf airports can participate in 60 per cent of inter-regional traffic flows, compared with 45 per cent for Chinese hubs and 30 per cent for South East Asian hubs. And of the Gulf hubs, Dubai is by far the most important, with confirmation recently that it took over from Heathrow as the world’s busiest international airport in 2014.

The reorientation of the aviation industry has been confronting for long-established airlines and the airports they operate from. But it also presents an opportunity – to open up new markets, form new partnerships and deliver service in a smarter and more efficient way.

The decision to partner with Emirates ended a long tradition of Qantas flying to Europe via East Asia, dating back to a joint venture with Britain’s Imperial Airways in the 1930s. These routes had served us well. However, it was clear in 2012 that the world had changed and the time was right to update the ‘Kangaroo Route’ for the realities of aviation today. In March 2013, we launched the partnership and moved Qantas’ hub for flights to London from Singapore to Dubai.

Inevitably, there was resistance to the change. Some observers predicted that the shift to Dubai would lead to the decline of Qantas internationally. There were claims that Australians would be reluctant to fly through the Middle East.

In fact, the number of Australians visiting Dubai rose almost 40 per cent in the first year of the partnership and the route is hugely popular with our customers. The Dubai hub has been a cornerstone for the turnaround of our international business, which is profitable again and growing in markets such as North America, Japan and South America. And we are now able to focus on East Asia – the biggest growth market of all – as a destination in its own right, rather than a stopover on the way to Europe.

Aviation’s Asia-Pacific century has only just begun. A glance at Airbus’ Future Journeys report confirms that the changes to come will be bigger than those we’ve seen already. Yet in many ways, as Dubai shows, the transition is already well underway.

For Qantas, the Emirates partnership, centred on the Dubai hub, is the right model for the way people travel today – and the way they will increasingly travel in future.