Emirates Held Back by Staffing Shortages and Not Enough Planes Into 2023

Travel demand couldn't be better for Emirates, with President Tim Clark describing flights as "full up" as far out as March. But the airline, and broader industry, is struggling to meet the demand amid persistent staffing and aircraft supply chain issues.

“I see a capacity hole," Clark said on the international travel outlook into the new year at the Ultratravel Forum in London on Monday. The airline has roughly 40 aircraft out of service for cabin modifications or due to staffing shortages, he said. And Emirates, one of the largest global connectors, is only hopeful, as Clark put it, that it can have its full fleet up and flying by next summer.

Emirates is not constrained alone. The recovery of airlines around the world is hamstrung by some combination of staffing and aircraft availability. Lufthansa Group CEO Carsten Spohr said at the end of October that the airline industry would not return to the "overcapacities" it saw before the pandemic "anywhere soon," because of the constraints "forced" on it. Executives at Air France-KLM, Delta Air Lines, and United Airlines have all cited similar trends.

And those constraints add costs. Both staffing issues and aircraft delivery delays contribute to inefficiencies at airlines that, on top of high fuel prices, drive up operating expenses. For example, lack of staff or airport constraints can mean a carrier operates aircraft less than it normally would. That lower utilization translates higher unit costs excluding fuel. Clark did not comment on the cost situation at Emirates, which is privately held and does not disclose regular operating data.

Emirates will operate roughly 76 percent of its 2019 passenger capacity in the fourth quarter, according to Diio by Cirium schedules. That is due to rise to 80 percent of four years ago in the March quarter.

Flights, on the other hand, are full as far out as March, Clark said. Now, every flight is not actually full; if one searches Emirates website there are still seats available for sale across a wide array of markets. But his comments indicate robust travel demand continues in a period that many other airline executives have refrained from commenting on: The first quarter.

In Latin America, airline CEOs in October were near uniformly bullish on travel demand through New Years. But most said that, with the current booking window under 60 days, they have little visibility into the March quarter. That view was echoed by some European airline executives during earnings calls at the end of October. Norwegian Air CEO Geir Karlsen said they were prepared to make capacity "amendments" — or reductions — if demand weakened during the first quarter of 2023. Norwegian has already reduced capacity by a quarter compared to the summer per plan.

The global economic outlook makes the situation even more opaque. Some European economies, including Germany and Italy, are forecast to fall into recessions this winter, which could potentially limit travel demand. However, Spohr, whose Lufthansa Group is the most exposed to the German economy, had this to say on October 27: "We don’t see any end of the high yields looking through [the fourth quarter]. And, to take that into [the first quarter], why would it end? There is some optimism there.”

With capacity constrained, Emirates and other airlines are launching new partnerships. A new codeshare with Air Canada, which once fought the Gulf carrier's flights to Canada, launched Tuesday for travel from December 1. The pact gives Emirates deeper access into Canada where it only serves Toronto Pearson. The carrier is placing its code on Air Canada flights to Calgary, Edmonton, Halifax, Montreal, Ottawa and Vancouver.

Later in November, Emirates will launch a new codeshare with another former opponent: United. That pact will extend the Gulf airline's network deeper into the U.S., while United plans to launch new service to Dubai from Newark next year.

And back in the Gulf, budget airlines have made inroads at airports like Dubai during the pandemic. In Dubai, FlyDubai gained about 5 points of seat share at the airport while Emirates lost roughly 9 points from 2019 to 2022, Diio schedules show. Now, that shift may not stick: FlyDubai has grown through the crisis while the recovery of Emirates, as previously noted, has been slowed by numerous issues. FlyDubai, while not part of the Emirates Group, is also owned by the government of Dubai.