MIAMI — As Emirates Vice President Sales for the USA, Matthias oversees the commercial activities of Emirates in the USA, one of Emirates strategic growth markets.
Before moving into this role in September 2012, Matthias was Vice President Network Passenger Sales Development based at Emirates Headquarters in Dubai, where he was responsible for Global Commercial Strategies and Commercial Systems.
Matthias airline career spans over more than 20 years as he has held numerous managerial and executive positions for different airlines such as Swissair, KLM Royal Dutch Airlines and Emirates Airline.
A Swiss National, born and raised in Zurich, Switzerland, Mr. Schmid holds a Masters Degree in Business Administration and an MBA from Vienna University of Economics and Business Administration. He has worked and lived in six different counties on three continents, and currently resides with his wife in New York.
Emirates is set to launch its first Dubai – Fort Lauderdale flight tomorrow, December 15. While Airways will be covering live this event, we sat to talk with Schmid about the newest route in Emirates network, the role of JetBlue as a feeder of the route, and the rationale behind the new service.
Airways (AW): Thank you for joining us today, Matthias. It’s somewhat obvious, but could you give us some color on why Ft. Lauderdale, as opposed to Miami, was chosen as Emirates’ gateway to South Florida.
Matthias Schmid (MS): This is the key reason because if you would have chosen Miami, we don’t really have the partner there for feed. The case of the partner outsourcing would have been somewhat limited to the local catchment area. Then, if you really look at the geographic location, the whole South Florida region up to West Palm Beach, we think that purely geographically Fort Lauderdale has maybe a little bit better position than Miami International.
I spent a couple of days in Fort Lauderdale with the Chamber of Commerce and local business leaders and from Miami as well. I think a lot of people actually say that Fort Lauderdale is really sometimes the more convenient airport over Miami.
AW: As JetBlue’s international expansion gathers steam, they are really leveraging Fort Lauderdale as their focus city particularly down in the Latin America maybe eventually pushing down in the Southern Cone as well as expanding further into the Caribbean. Talk to us about the feed opportunities there for connecting flow international versus domestic.
MS: There are real opportunities in both. Domestically, we already somehow connect via Boston or via JFK but there are some significant improvements of transfer connecting times. I’ll use an example in Austin. We already have options with JetBlue via Boston or JFK to connect to Austin but via Fort Lauderdale it will now generate the best connectivity. We already see that in the form of bookings that more and more people just think they select the best combination so you might fly, from Richmond to Mumbai via JFK but then on the return you actually have the better connectivity via Fort Lauderdale.
What I’ve seen at the airport during the visit there is from an infrastructure point of view. If you look at the current situation, we’re looking very much forward once Terminal 4 is fully operational. The good thing is the transfer experience is relatively smooth because the airport is not really big. You have to change terminals but they’ve just opened the new connector between Terminal 3 and Terminal 4.
Then the connection of Mumbai International arrival on Emirates through JetBlue will be really, really smooth. I think actually it’s easier than at certain other airports like JFK where you have to take the air train and really have to change terminals from landside.
AW: What role did Ft. Lauderdale’s lower landing fees than those at Miami play in the decision?
MS: I don’t have the figures in front of me but obviously that’s also an advantage. The operational costs are lower there.
AW: Have you found the Broward and Palm Beaches Tourism Committee communities good partners in marketing support for Emirates the airline and Dubai as a destination?
MS: There is a matching marketing program and that’s basically all the entities that you actually mentioned that are working together. It’s an official program that is led by Visit Florida together with the Greater Fort Lauderdale Convention & Visitors Bureau, the county administration, also the airport administration.
So, all these three entities actually contribute to marketing fund provided that the airline matches with the same amount. That is a normal program that’s applicable for every new airline that starts service into Fort Lauderdale.
That money is spent not here in the U.S. but that money is really spent in some of the key source market to ensure that there is awareness from the key source markets and that actually stimulates inbound traffic into Fort Lauderdale. But as Emirates, we’re going to spend significantly more money beyond this joint fund. There would be a heavy focus in the region in traditional and digital advertising and outreach.
AW: Can you expand on how these code shares are performing with JetBlue in Boston and JFK; forward bookings at Fort Lauderdale, so far with Orlando; WestJet up in Canada and finally Alaska in Seattle to some extent?
MS: We’re not part of an alliance so we don’t really code share with any of the big three U.S. carriers. But we do have two strategic partnerships. It was three or technically is still three but out of the three that will soon only two because of the merger between Virgin America and Alaska. Currently, we have strategic partnerships with JetBlue on the east coast and with Virgin America and Alaska on the West Coast.
We’re, by the way, actually very happy about that merger between Alaska and Virgin America because it will help us in Los Angeles where we don’t have the strongest feed. Overall, with JetBlue and Alaska and we definitely expected the same from their side and interestingly enough I just met Scott Lawrence, the Senior Vice President, Airline Planning from JetBlue yesterday in Fort Lauderdale. This is really an absolute strategic partnership. For JetBlue, we are actually their largest partner and we are quite critical to their success as well.
The JetBlue partnership is really focused around Boston and JFK. You see that in our frequencies. In JFK, we fly three times a day and Boston, we fly two times a day and also Seattle where we fly two times a day. The partnership is structured in a way that we have as SPA agreement. We have the reciprocal frequent flyer agreement for both Alaska and JetBlue. With JetBlue we have not only the U.S. to Dubai flights but also from New York to Milan flights.
With Alaska now, we operate a one-sided codeshare so we put the Emirates code on the Alaskan code but not yet the reciprocal codeshare agreement. In addition, all our focus is around Alaska and JetBlue but then whenever there are other opportunities, we obviously take them up as well. One very small example is Sun Country, a smaller airline, which is based Minneapolis. We started a partnership with them about a year ago. We don’t have any code share on Sun Country but we have a very attractive SPA relationship. Since we started in Minneapolis, it is really over becoming one of our new focus areas where we see significant feed via various Emirates’ US gateways.
AW: Are the Twin Cities a possible next gateway for Emirates?
MS: We don’t fly to Minneapolis. As I said, that’s a new account with Sun Country and we see significant very good volume in Minneapolis. We have some connectivity but we’re always evaluating new opportunities.
For example, we have a strategic focus in Las Vegas, Phoenix, and Denver. We have a strategic focus on Denver because we see significant volumes on Alaska from a market like this via Seattle. That has also a quite an impact on our sales approach because we’re going to focus more on these regions and also deploy more resources.
AM: Can you give us a little color about O&D transit traffic in business market? Particularly between JetBlue strongholds like where JetBlue operates a business oriented base: “The Airline with an Airline,” versus leisure-generated markets versus an Orlando/Fort Lauderdale leisure market?
MS: Interestingly enough, I think if you look at O&Ds on the route, we see quite some similarities. Orlando, as you mentioned, that’s a little bit more a leisure market. On that route, we see a higher contribution of revenue or passengers that come from the network feed to Orlando versus what we see from point of sale USA.
Out of Boston, for example, out of JFK, the contribution from the US market on that route is higher than what we get from the network. If we look at O&D, that’s pretty much linked also to the departure and arrival times and what connectivity that we get in Dubai. Orlando has a morning arrival and a morning departure, for example, so we also have quite a good connectivity to African destinations so we see Johannesburg, Cape Town. For example, they are among the top 10 destinations on the Orlando flight. If we have an evening departure, then, typically, we see a little bit less Africa because the connectivity is not that good.
If you look at San Francisco, for example, we are extremely strong in India because that’s really predicated on Silicon Valley to India connections. If you look at Orlando, we see a more balanced mix. Fort Lauderdale, to some extent is driven by the very strong cruise industry so we see a lot Asian and foreign destinations like Jakarta, land Manila, for example. Typical destinations from where cruise company workers commute to and from.
AW: Is there a number you can throw at me? Let’s say this is an example projection or actual numbers on Orlando on either side of Orlando and Dubai, of the differences so that I get the sense of the traffic mix between O&D and connection, how it’s been going one way and then how it’s been going the other and the leisure market Do you guys release that? Can you speak to that in broad terms?
MS: I can give you the indicators. The Orlando route, for example, 60 percent of the total volume is generated from the network, 40 percent of the passengers said flying on the Orlando generated in point of sale. Outbound from Orlando, I would say it is necessary to mix between corporate or leisure business is always a little bit challenging to really differentiate these two segments but I would say, most probably around 40 percent corporate-related and 60 percent is leisure.
On the inbound, there is a higher dominance leisure travel versus corporate travel, obviously, because of all the attractions, all the theme parks, Disney in Orlando but then it’s also a little bit seasonal with some quite very, very strong traffic during the summer seasons especially from the Gulf and Middle East.
AW: Do you expect the similar mix here at Fort Lauderdale?
MS: I think inbound, yes. It’s probably more leisure and outbound, I’d say the leisure contribution might be a little bit higher than what we currently see in Orlando.
Orlando, our first Florida gateway started in September 2015 and has rapidly matured into a very, very successful route. On the day of the first anniversary we upgraded the aircraft from a 777 200LR to a 777 300ER which results in capacity increase of 35%. That again is a testament that it is a very strong route for us.
AW: Are you going to surprise us like in Orlando and kick things off with the Fort Lauderdale’s first arrival ever of an A380?
MS: You know it would be great if we could do that. We have some significant infrastructure limitations at Fort Lauderdale’s airport. It is impossible to park an A380.
In the second part of this interview, Schmid will discuss about the possible future destinations in the United States, the current market dynamics in the Gulf region and the competition with Chinese carriers.