Budget airline Eurowings expects strong demand for new Dubai routes, CEO says

Lufthansa subsidiary Eurowings expects to fill about 97 per cent of its initial flights to Dubai from Berlin and Stuttgart starting in October, leveraging its first-mover advantage on the new non-stop services, its chief executive said.

Advanced bookings for November and December are also looking “very strong”, Eurowings' boss Jens Bischof told The National ahead of the first service.

Eurowings will operate flights two times a week from Stuttgart Airport and four times a week from Berlin Brandenburg airport to Dubai International Airport non-stop starting on October 29 and October 30, respectively.

“The first few flights are almost sold out, we talk about almost 97 per cent load factors, so this is really very promising … I'm very satisfied that as of Day 1, we're going to see some very nice and full loads on our planes,” Mr Bischof said.

An Airbus A320 Neo aircraft is operating the new Dubai service.

“We believe that demand is going to be very strong and I'm very confident that we will reach our economic targets very early, because typically, it takes a while until a new route becomes profitable, but I'm very confident it might happen a lot faster.”

Eurowings, which marked 30 years of operations in 2023, currently flies to more than 100 destinations in 50 countries with an all-Airbus fleet of A319s and the classic and Neo versions of the A320 and A321 single-aisle jets.

It operates from five bases in Germany including Hamburg, Dusseldorf, Cologne, Stuttgart and Berlin. Its additional five bases in Europe include Mallorca, Prague, Stockholm, Salzburg and Gratz in Austria.

This month, Emirates, the world's biggest long-haul airline, reiterated its long-standing interest in serving Berlin, which would require an expanded air service agreement between the UAE and Germany.

The Dubai airline's executives met with the mayor of Berlin Franziska Giffey to discuss “Berlin’s potential for more international long-haul connectivity”.

Lufthansa-owned Eurowings said the move to commence its Berlin-Dubai service was motivated by the introduction of the A320 Neo to its fleet, which provides a longer range.

“We see that people today, both leisure and business travellers, are price-sensitive and all want to have non-stop services, especially as the aviation industry post-pandemic encountered a lot of operational challenges with baggage and connecting times … so we're very keen to utilise this possibility. It's not about a defence strategy against Emirates,” Mr Bischof said.

“Non-stop has high value these days, [being] price sensitive is top of the customers' minds these days and our rationale was not a defence strategy but rather using our new technology [and] latest aircraft with more range to serve a market which is underserved. That is now allowed by the A320 Neo.”

Eurowings parent Lufthansa serves Dubai from both its hubs in Frankfurt and Munich, as well as via Zurich on Swiss.

While the airline does not operate the full-service model, it considers its prices and departure and arrival times as the main selling points for the two non-stop routes, Mr Bischof said.

One-way tickets on Economy class from Dubai to Stuttgart start from Dh719 ($196) and Dh879 to Berlin.

More Middle East routes under consideration

The introduction of the A320 Neo to Eurowings' fleet will open more possibilities for the airline in the Middle East. It is currently considering Egypt's capital as one option.

“We're certainly looking at Cairo, as an example. It is something which is on our radar and certainly the A320 Neo would allow us a very efficient operation into Egypt,” Mr Bischof said.

“There's no fixed date yet, but it's in the planning stage.”

Eurowings serves the Red Sea coastal city of Marsa Alam and the beach resort town of Hurghada in Egypt as well as Erbil in Iraq.

The success of its Dubai service could also raise the potential for further expansion in the Gulf.

“If Dubai really comes across as [being] as promising as described, then there is certainly also an appetite to grow our presence in the Gulf region but there are no firm plans yet.”

Israel-Gaza war impact

The airline had planned to fly to Tel Aviv from its base in Dusseldorf as part of a new addition to its winter schedule, but this was put on hold due to the outbreak of the Israel-Gaza war that has raged on for three weeks.

“We’re looking very closely with a lot of disappointment these days into cities like Tel Aviv,” Mr Bischof said.

“We were planning to start the Tel Aviv service as of the beginning of the winter schedule but due to the devastating development, it's not happening right now, so we have postponed it until further notice.

“We believe that as soon as the situation hopefully calms down in that region, we will be able to start that route very fast.”

Overall, airlines have recorded plummeting travel demand to Israel, with forward bookings falling by 187 per cent between October 7 and October 19 compared to the same period last year, according to data by travel analysis company ForwardKeys.

Eurowings also temporarily suspended its service from Dusseldorf to Beirut due to the war and will resume once it is safe to do so, Mr Bischof said.

Global airlines are facing a challenging end to the year, with cost of living pressures, higher interest rates, currency swings and the Israel-Gaza war as well as the closure of airspace over Ukraine.

“The eruption of war in the Middle East on October 7 added around 3 per cent to 4 per cent to the oil price. Going forward, it is unclear how this situation will evolve,” the International Air Transport Association said.

To mitigate oil price volatility on financial performance, airlines can use more fuel-efficient aircraft.

“Nonetheless, in a highly uncertain environment, these price and volatility trends mean that fuel costs will continue to present challenges to the financial health of the industry going forward,” Iata said.

Winter travel outlook

Despite the uncertainty, Eurowings is optimistic about travel demand during the upcoming winter season.

“So far we have been successful to at least pass on the majority of these additional costs to the customer and certainly also buffered the rest through very strategic and intelligent hedging,” Mr Bischof said.

“We do not see, despite the higher ticket prices, a real effect on the demand side,” he said, noting that people are keen on air travel after two years of pandemic-induced lockdowns.

“We are still seeing very solid demand and the economics are still in good order and they work well … you will probably see that in the reporting coming up for the third quarter and certainly also for the entire year of 2023,” he said.

The Lufthansa Group is scheduled to post its third quarter financial results next month.

Looking ahead at 2024, the forward bookings are “equally positive” and “that is what makes me stay optimistic”, the Eurowings chief said.

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