To play armchair airline CEO for a moment, I can’t wrap my head around why Emirates and FlyDubai don’t merge. Is it just me?
In this post:
The relationship between Emirates & FlyDubai
Emirates and FlyDubai are the two major airlines based in Dubai:
- Emirates operates to destinations around the globe using Airbus A380s and Boeing 777s
- FlyDubai operates mostly to regional destinations (as far west as Europe, and as far east as Asia) using Boeing 737s
Both airlines are owned by the government of Dubai. Going back several years, there was very little cooperation between the two airlines. Coordination between the carriers has increased significantly over the past five years. For example, the airlines now have extensive codeshare agreements, FlyDubai uses Emirates Skywards as its frequent flyer program, and the two airlines even sometimes swap routes seasonally, based on demand.
It’s also worth noting that Emirates is of course known globally for being a full service airline, while FlyDubai is more of a hybrid carrier. The airline has business class on all planes (and has announced a new business class that looks better than anything Emirates offers), and most fare types in economy include complimentary meals.
Emirates & FlyDubai should just merge, already
I’ve wondered about this for years, as it’s a mystery to me. Why don’t Emirates and FlyDubai outright merge? It seems I’m not alone in feeling this way. Back to 2017, Emirates President Tim Clark (who is one of the smartest guys in the industry) essentially hinted at this:
“We are minded to accelerate a greater joining of the hip, of what we do, there’s a lot of work going on there to extract value for the shareholder. We could do things better together than apart.”
While we’ve seen closer cooperation, the airlines have stopped short of a full-on merger. This is different than a merger between Emirates and Etihad, which has been rumored for as long as the airlines have been around, but seems unlikely. That’s because the airlines have different owners (Dubai vs. Abu Dhabi), and there are also politics and prestige at play. But in the case of Emirates and FlyDubai, the airlines have the same owners, yet are largely managed separately.
To be balanced, let’s start by taking a look at some of the benefits of the airlines operating independently:
- FlyDubai staff are on a different pay scale, so there are some savings to be had there
- FlyDubai would need to update its product a bit to get in line with Emirates, by offering free meals and drinks to all passengers
- If Emirates feels the same level of quality can’t necessarily be provided on FlyDubai, the airline could be protecting its brand by trying to keep FlyDubai separate
Now let’s take a look at some of the benefits of the airlines merging and operating as one:
- There would be massive synergies in terms of being on a single Air Operator Certificate, consolidating management positions and central functions, etc.; currently there’s so much unnecessary, duplicate work going on
- There would be huge synergies and value in marketing, since two airlines wouldn’t need to be branded separately anymore, and effort could instead be put into promoting the Emirates brand
- It would eliminate consumer confusion, as most people outside of the region don’t know what FlyDubai is, and might be hesitant to book an itinerary including travel on the airline
- It would allow Emirates to greatly expand its route network, given that there are many destinations Emirates can’t fly to with its large aircraft, both due to airport limitations and demand; for example, Emirates serves significantly fewer destinations than Qatar Airways and Turkish Airlines
- It would allow Emirates to more efficiently utilize its fleet, using aircraft with capacity that’s more closely aligned with demand on a year-round basis; some destinations might be able to support a 777 in summer but only a 737 in winter
- The current system is incredibly inefficient in terms of partnerships, since airlines need to separately establish codeshare agreements with Emirates and FlyDubai, even though the two partnerships serve the same purpose (connectivity out of Dubai)
- Many passengers feel more comfortable booking a connection the whole way through on one airline (like Turkish Airlines, Qatar Airways, etc.), rather than a mixed carrier itinerary, in terms of irregular operations, checking bags, and more
- In the past I could see the argument that Emirates’ fleet was all about being simple and streamlined with just 777s and A380s, but with the airline soon taking delivery of 787s and A350s, that consistency is gone
- FlyDubai has greatly upped its game when it comes to the premium experience; the airline has a solid fully flat business class product in service, and has a new business class suite planned, which beats what Emirates offers in 777 business class
- A lot of airlines would have major issues with a merger in terms of getting unions and work groups to get onboard, but that’s not an issue Gulf carriers face
The precedent is very much there for an integration like this to happen. While slightly different, we’ve also seen SilkAir be folded into Singapore Airlines, Cathay Dragon be folded into Cathay Pacific, and Thai Smile now being folded into Thai Airways. This simply makes sense, as the pros outweigh the cons.
So, why hasn’t it happened? There are only three logical theories I can come up with:
- Maybe Emirates is worried about being able to provide a seamless experience at Dubai International Airport, given that the airlines primarily operate out of different terminals; maybe this merger could happen if/when Dubai World Central Airport becomes Emirates’ home
- Maybe the airlines have slowly been working toward merging, but the pandemic slowed that process down; maybe the airlines think it’s easier to first cooperate closely and then merge, to minimize the amount of work that needs to be done at that point
- Maybe there’s some pride or politics at play that I’m not privy to; on the surface it seems like the airlines would be aligned based on them both being owned by the government of Dubai, but maybe there’s something else going on behind the scenes that complicates this
Bottom line
Emirates and FlyDubai have the same owners, and also have the same goal, which is to connect the world to and through Dubai. It seems to me like it would make perfect sense for the two airlines to finally merge, given the endless benefits to doing so.
With Emirates soon planning on having four aircraft type anyway, adding a fifth aircraft type with significantly different capacity seems like it could be a huge asset, and greatly expand Emirates’ network and connectivity. Interestingly Emirates’ President has been hinting at the possibility of the two airlines merging for many years, but it hasn’t yet happened.
What’s your take on why Emirates and FlyDubai haven’t merged? Do you think it will happen?
Why Delta and United don't merge? they are from the same country!
And both publicly traded. Apples to oranges comparison.
Yeah, but why would they? To me it all kinda makes sense: flydubai is a good “local”, cheaper brand of small planes. Emirates is emirates - global airline of huge planes synonymous with the UAE itself. Serve 2 different purposes and in many ways 2 different markets. I honestly don’t see them gaining anything from the merger. Where they could gain from each other - code-sharing and reciprocity and using the same airport and facilities - they already do.
SQ-Silkair is a slightly different situation.
They moved a bunch of Silkair low yield routes to Scoot instead of SQ.
Makes it also easier to upkeep SQ branding and reputation for the limited number of Silkair routes they got.
EK won’t be able to do that in the same way.
Separating the two never made sense to me. I feel like people living in smaller cities that see a FlyDubai 737 instead of an Emirates plane who don’t know better will not realize that FlyDubai is basically the short-haul narrowbody arm of Emirates, and that when they fly FlyDubai, they’re basically flying on an Emirates 737. This sort of harms Emirates’ brand recognition in those markets. Speaking of which, why are Thai Airways and Thai...
Separating the two never made sense to me. I feel like people living in smaller cities that see a FlyDubai 737 instead of an Emirates plane who don’t know better will not realize that FlyDubai is basically the short-haul narrowbody arm of Emirates, and that when they fly FlyDubai, they’re basically flying on an Emirates 737. This sort of harms Emirates’ brand recognition in those markets. Speaking of which, why are Thai Airways and Thai Smile separate? Why not make all of it Thai Airways?
This comment is the worst aged comment ever regarding Thailand.
Thai Smile will be merged into Thai Airways the way Silk Air was merged into Singapore Airlines and Cathay Dragon/Dragonair into Cathay Pacific.
https://onemileatatime.com/news/thai-smile-merged-thai-airways/
Ghaith Al Ghaith, the CEO of Flydubai worked for many years at Emirates in Commercial, including Pricing and Revenue Management. The former CIO, Ramesh Venkat, worked under Ghaith Al Ghaith at EK for decades.
I don’t know anything specific, but I don’t think that’s a coincidence. These airlines are separate for a reason.
I actually asked that question a while ago in Dubai, when speaking to a pretty senior government person over dinner. He explained (and I have no way to verify it) that while both are owned by the government, the royal family is one of the largest in the world, with many factions, alliances and feuds within it. Emirates is someone's baby, FlyDubai is someone else's way of showing they too can run a business. Not...
I actually asked that question a while ago in Dubai, when speaking to a pretty senior government person over dinner. He explained (and I have no way to verify it) that while both are owned by the government, the royal family is one of the largest in the world, with many factions, alliances and feuds within it. Emirates is someone's baby, FlyDubai is someone else's way of showing they too can run a business. Not sure that's the definition of healthy competition, but its competition of sorts nonetheless.
A merger of the two airlines is a dead topic in the confines of EK. Literally none of the senior/mid level management executives are talking about it, even in whispered tones. The chances are so remote at this time that it's not even at the level of idle gossip or rumours. [crickets]
As for that long-running EK/EY merger fluff: Never. Going. To. Happen. As long as there is a Dubai and as long as there...
A merger of the two airlines is a dead topic in the confines of EK. Literally none of the senior/mid level management executives are talking about it, even in whispered tones. The chances are so remote at this time that it's not even at the level of idle gossip or rumours. [crickets]
As for that long-running EK/EY merger fluff: Never. Going. To. Happen. As long as there is a Dubai and as long as there is an Abu Dhabi, there will be no merged airline. Arab pride is renowned, and Gulf Arab pride is the most elevated of them all. If you know, then you know.
I unequivocally agree with AnonEmiratesFan's opinion. Westerners love and rave about UAE because it mimics the west but in a grander and more opulent style. I view it as an unsustainable western decadence. Social-economic status reigns supreme among the six wealthy gulf states. The native born citizens enjoy " cradle to grave" employment, despite the lack of skills necessary to perform a job.
Sad to say, but it's not like anyone truly gives a crap about that. Same can be said for any large city.
Surely Europe is west and Asia is east if you’re starting in Dubai!
Because logical decision are not a Gulf thing
Everybody knows Americans are bad at Geography. Not surprising.
Why Don’t Emirates & FlyDubai Merge?
As with anything government, somebody will losing money somewhere.
I think there is a middle ground where they can merge but keep separate operations. Maybe rebrand Fly Dubai to "Emirates Express" like wholly owned US airline regional subsidiaries.
Or Emirates Smile
or Emirates Connection.
I have flown both airplanes and lived in the region and I have to imagine a large reason they aren’t consolidated is because FlyDubai can serve as a “laborer” airline. Dubai needs the ability to fly the many people who run their city to home and back and perhaps perceive the emirates customers would not want to share a plane with them. Similar to Air India/Air India Express routes between Dubai and India. There’s a...
I have flown both airplanes and lived in the region and I have to imagine a large reason they aren’t consolidated is because FlyDubai can serve as a “laborer” airline. Dubai needs the ability to fly the many people who run their city to home and back and perhaps perceive the emirates customers would not want to share a plane with them. Similar to Air India/Air India Express routes between Dubai and India. There’s a lot more social hierarchy in the region, and between the different countries, there is an implicit understanding of this, but nobody is going to make a big public fuss about it since they know how repulsive such things can appear in the western world.
Yes, a lot of duplicate efforts, but I don’t anticipate the status quo will change to keep the reputation of emirates as stellar as possible in the region.
These are just guesses, but the three things that immediately jump out to me are:
(1) COSTS - while there's savings to be had, as you alluded to, there's also expenses that would be incurred that might not be the same for separate operations: most noticeably labor, but also others. I'd imagine they've run the numbers, and continue to find that it's not worth it.
(2) BRANDING - I take the opposite perspective, in that...
These are just guesses, but the three things that immediately jump out to me are:
(1) COSTS - while there's savings to be had, as you alluded to, there's also expenses that would be incurred that might not be the same for separate operations: most noticeably labor, but also others. I'd imagine they've run the numbers, and continue to find that it's not worth it.
(2) BRANDING - I take the opposite perspective, in that the branding (for FlyDubai) sorta writes itself... I mean, even if someone's never heard of them until today, it's fairly certain that that person can figure out where they fly to. And as with SQ, I'm guessing EK doesn't want its own reputation for quality/service (whether or not one believes it's deserved) to be diluted by a regional brand that doesn't feature all of its offerings. The likes of flatbeds on newer narrowbodies will help, but won't solve that.
(3) JOBS - lastly, since these are both regional government-owned operations, perhaps being a jobs provider is taken into account? I know the airlines both employ legions of foreign workers, but those are mostly frontline; I'm thinking more along the lines of upper management, which IINM is still primarily Emirati, with a lot of it being familial.
A merger would render quite a few of these positions redundant, but who wants to be the one to tell all the nephews, cousins, etc that they're being let go?