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Emirates Orlando arrival a long-term affair, $2.6 million in potential incentives part of deal

Emirates Orlando arrival a long-term affair, $2.6 million in potential incentives part of deal
Emirates Airline launches daily non-stop service to Orlando on Sept. 1, on its 777-200LR. (provided)

When Emirates Airline met representatives from Orlando International Airport eight years ago at a global routes trade show on the other side of the world, it wasn't immediately clear if the relationship would gel.

But through lengthy negotiations, the depths of an economic recession and a steady rebound of Central Florida's economy, Orlando rose like cream to the top of Emirates' list of second-tier markets in the United States, the company's vice president for U.S. sales told GrowthSpotter.

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With a non-stop daily flight to and from Dubai set to begin this September, Emirates has deemed Central Florida worth at least $260 million a year in operating costs, while likely getting 1 percent, or $2.6 million, of that back in start-up incentives from the airport, per OIA officials.

"Orlando is a market that has huge potential. We're not only talking Orlando, but all of Central Florida with more than 12 million people, including Tampa and Jacksonville," said Emirates' Matthias Schmid.

"If you look at international air lift offered out of Orlando, we think the market is definitely under-served. You have high concentration to Latin America, but if you look at connections to the east there is not much activity. There's British Airways, Virgin Atlantic, Lufthansa, U.S. carriers and that's it, for a city with more than 60 million tourists per year," Schmid said.

Indeed, Emirates has done its due diligence, and that was no small task.

After entry-level talks with OIA back around 2007, Emirates put the airport and market through years of granular research. They dug into international tourist figures for Orlando from key countries that could feed passengers through Dubai, if it made sense to add service, and studied the geopolitical and global economic conditions.

"International air service development is more of a marathon, not a sprint," said Vicki Jaramillo, senior director of marketing and air service development for the Greater Orlando Aviation Authority.

The airport has to look at many factors, including whether the airline has planes that can fly the distance and whether there are treaties allowing carriers to fly to specific countries. In addition, they study demand for the route and where the carrier would be situated at the airport.

Launching an Orlando flight this fall relied as much on Orlando being ready as it did on Emirates having the fleet ready to serve that expansion, Schmid said.

"On our side it was also aircraft related. We are growing so fast, taking delivery this year of 24 new aircraft. And if you fly such long routes, 15 hours from Dubai to Orlando, you need many aircraft dedicated to that route. You need two aircraft or more fully dedicated to that route to operate on a daily basis. So it's not that easy to start on such a long route," Schmid explained.

Emirates begins its service in Orlando Sept. 1 with a Boeing 777-200LR, which will have eight first class seats, 42 business class and 216 economy (266 total). If there's demand, the next logical step up in capacity is the 777-300ER with 354 total seats, Schmid said.

Incentives from the airport for Emirates are still being finalized, both parties said, and are commonplace now in an ever-competitive U.S. market for airports to lure new carriers. Those incentives typically include reduced gate and passenger fees, and pooled marketing money for both parties to promote the new route.

OIA has set aside up to $4 million annually to lure new international business. Schmid declined to confirm what the airline's operating costs would be out of OIA in its first year and the incentive package.

In comparison, Tampa International Airport put together an incentive package of $1.5 million in 2014 to sign German airline Lufthansa, which begins service there this year.

Whatever the cost in incentives for Emirates, OIA thinks it will be worth it to open up the Middle East and Asia with a direct or one-stop flight to Orlando, said Carolyn Fennell, spokeswoman for the Greater Orlando Aviation Authority.

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Will Emirates' service prompt other carriers from those parts of the world to consider Orlando?

"Like any other business I'm sure other carriers will be looking at how it is working," Fennell said.

Emirates began operating in the U.S. in 2004 with one daily flight to New York, and Orlando will now be its 10th gateway in the States.

bmoser@growthspotter.com or (407) 420-5685, and ktalley@growthspotter.com or (407) 420-5176

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