The noose tightens?

[Dune]

Seems the "anti middle east carrier" syndrome is spreading. Canada, Korea, France, Germany, ...............

It will be interesting to see how Emirates (and the others) deals with this over the next few years. I see continued political opposition from established markets thereby forcing EK into undeveloped markets.

Not a show stopper but it does put additional cost pressures upon the company to open up new markets over increasing frequency to established markets. Obviously that means the A-380 will eventually take over all the large established routes (assuming they are "slot" restricted and not "seat" restricted) and move the B-777/A330/340 increasing into the secondary routes.



AEA's Schulte-Strathaus says rise of Gulf carriers threatens global aviation order

By Perry Flint | January 24, 2011


Emirates Airline, Qatar Airways and Etihad represent a new kind of competitive threat that is incompatible with the existing world aviation order and that probably needs to be dealt with through ICAO, Assn. of European Airlines Secretary General Ulrich Schulte-Strathaus said last week in Washington.Schulte-Strathaus told the International Aviation Club that the trio of Persian Gulf-based carriers "are owned by their respective governments and operated as an instrument of national strategy—if 'national' is the right word within this regional rivalry—and they are integrated vertically across commerce, tourism and foreign policy." For their state owners, Schulte-Strathaus said, "The airlines are just a part—a tool—of this vertically integrated economic chain," and they are "being driven by a policy which is not compatible with that of the US and Europe, or I suspect, Australia, China, Japan, Canada, Mexico, Brazil, Chile, Korea and so on."

He stated that the three "have more widebody seats on order than the entire US industry has in its current fleet … 425 brand new long-haul aircraft in the next five years." And they will fly "everywhere," he said, before asking: "Does it make sense for airlines and travelers worldwide if three carriers—two of which have never made a profit—collectively commit $100 billion to transforming the aviation map of the world?"

After stating that limiting market access is the wrong approach, he proposed that ICAO could become a WTO of the air, negotiating "a mechanism to deal with capacity dumping in the field of aviation." Schulte-Strathaus acknowledged "it has been quite a while since anyone in the airline industry mentioned capacity dumping as an issue ... But, the specter of an airline as part of a government vertically integrated design operating to all corners of the world forces us to reconsider the issue."

In a wide-ranging speech, he also expressed skepticism that the EU Emissions Trading Scheme will actually benefit the environment and provided examples of how it may distort competition among airlines, arguing instead for an "open" global solution. He also criticized the "regulatory monster called the Denied Boarding Compensation Regulation." Noting that airlines were held financially responsible for accommodating passengers owing to the volcanic-ash related airspace closures last April, he said that if "airlines are to be held accountable for unpredictable events like volcanic ash—which they should not be—then airports should be held accountable for predictable events like snow and ice."


German airline enters fray, bolsters Ottawa’s stand against UAE

Jane Taber

Globe and Mail Update
Posted on Wednesday, January 19, 2011 3:04PM EST

A dispute not unlike the one between Canada and the United Arab Emirates over additional landing rights is being played out now in Europe with Lufthansa wanting to keep a Persian Gulf airline in check.

This latest spat between the German airline and the Dubai-based Emirates has not gone unnoticed here in Canada, prompting a senior Air Canada official to note the Conservative government has some company.

Air Canada chief operating officer Duncan Dee said the German airline’s bid serves “as further confirmation that Canada was not only correct in what it did but also that it is not alone in wanting to ensure fair access to air rights.”

According to multiple news reports Lufthansa has been successful in having Emirates denied landing positions at Berlin’s new airport, which is to open in June of next year. Lufthansa argues that the Dubai fleet’s access to German airports has led to “unequal” air traffic between Germany and the UAE. (Emirates flies to four airports in Germany compared to one destination in Dubai for Lufthansa.)

The imbroglio in Canada, meanwhile, just won’t go away. Last week, Liberal foreign affairs critic Bob Rae visited the UAE to meet with officials and take his own read of the dispute. He thinks a deal can be worked out, with any new landing slots be phased in over time.

His visit raised eyebrows in the Prime Minister’s Office, where Harper officials were worried that the opposition MP was involving himself – and not in a good way – in Canadian foreign policy.

The relationship between the Canadian and UAE governments is poor right now. In retaliation for refusing the landing rights, the Gulf state has banned the Canadian military from using Camp Mirage, a staging base for Afghanistan that will cost Ottawa about $300-million to relocate. In addition, the UAE has slapped expensive visas on Canadians visiting the country.

But the Harper government has said that “tens of thousands of jobs” of Canadian workers would be at stake if it allowed additional landing rights to Emirates and another UAE airline, Etihad Airways.

In a blog post, Mr. Rae charged the Conservatives were protectionist and playing favourites with Air Canada. “It is surely an ironic twist that the old Reform Party and Stephen Harper have become advocates of closed skies and pure and simple protectionism,” Mr. Rae wrote. “Canadian public policy on Air Canada and open skies needs to be clarified.”

Mr. Dee, meanwhile, took exception to the Rae blog comments, saying that the Liberal MP should be “speaking up for the hundreds of thousands of Canadians whose livelihoods depend directly or indirectly on a strong and vibrant Air Canada and Canadian airline industry.”

Elsewhere, Emirates has been denied additional landing rights in Paris by the French government. And South Korea has also refused the airline new slots.

[Dune]

Some interesting insights from a Canadian Journalist:

Emirates' airline hopes on wing and prayer

KANDAHAR, Afghanistan — An opinion piece written by Sultan Sooud Al Qassemi about Canada's quarrel with the UAE over landing rights that appeared in the January 20 edition of the Globe and Mail is seriously misleading in several respects.

The article states that "hundreds of injured Canadian troops were given free medical care in the UAE before being airlifted home." This figure has deeply puzzled Canadian military and medical people in Kandahar and in Canada. The correct figure is not "hundreds." It is zero.

All of Canada's war injured from Kandahar have been treated at NATO hospitals and clinics in Afghanistan. Those requiring greater medical care have been transported in special flying hospitals by the U.S. Air Force to an American medical hospital in Germany where Canada has a small detachment of medical personnel. From there, when they were well enough to travel, these patients returned home.

But it is true that over the past eight years some of the soldiers that had been based at Canada's former logistical base in the UAE (Camp Mirage) were treated in that country when they became ill or were injured while loading and unloading aircraft or while maintaining transport aircraft.

Citing the BBC as a source, the sultan states that the UAE has also been the only Arab country conducting "full-scale operations" in Afghanistan. I'm not quite know what is meant by that term. Not one soldier from the UAE has been killed in Afghanistan, according to statistics kept by iCasualties.org. The only Arab soldier to die was a Jordanian. The same website states that 154 Canadians have died in Afghanistan.

The UAE does have a few fancy Apache attack helicopters based in Afghanistan. A standing joke among NATO air force crews is that they are rolled out of their hangars every morning to be polished and then they are rolled back in again. The general consensus is that these choppers almost never actually fly anywhere.

Whatever the UAE's military commitment to Afghanistan has cost, it is surely only a fraction of what Canada has spent here. By the end of this year Ottawa will have spent as much as $18 billion on the war on terror in Afghanistan, according to the parliamentary budget office.

Emirates Airlines and Etihad Airways, which are the UAE's two national carriers, have said that their requests for more access to Canadian airspace have been seriously overstated by the Canadian side. What they say they had sought were daily flights to Toronto and as many as six flights a week to Calgary and Vancouver.

So, it is somewhat confusing when the sultan's article cites a study by Emirates Airlines and the British Columbia Transportation Ministry that highlighted the benefits of the proposed increase in flights between both nations based on "275,000 annual passengers." To fly that many passengers would require at least two fully-loaded Emirates Airlines Boeing 777 jumbo jets a day between Dubai and Vancouver, not several flights a week.

This reference begs the question: What number of landing slots has the UAE actually been seeking from Canada?

As for the supposed economic benefits for both countries, the writer claims that they would run into the many hundreds of millions of dollars every year if additional landing rights were granted. Chamber of commerce types touting potential business benefits are often prone to gross exaggeration. From what I have seen on the flights that I have taken on Emirates Airlines between Dubai and Toronto, about 95 cent of the passengers were not Emiratis or Canadians or business types, but Indians and Pakistanis — mostly of modest means — intent of visiting kin, with a few Jordanian and Lebanese families also part of this mix.

The sultan cites U.S.-UAE trade figures which indicate that business between the two countries has tripled to $12.7 billion since Emirates Airlines began flying to New York in 2004. This data may be accurate, but my guess is that most of that increase has been the result of the U.S.-led war on terror. Much of the logistical support for the wars in Iraq and, especially, Afghanistan flows through the UAE. For example, virtually all of the food eaten by U.S. (and Canadian) troops in Afghanistan is bought around the Middle East and elsewhere and then gathered in Dubai and flown from there to here.

Trade statistics with the UAE are often misleading because so much of it involves "crossdecking" goods that were made elsewhere and are going elsewhere. The UAE imports finished goods and food, and exports virtually nothing made there, because almost nothing is made there. And many of those doing this work, or who have jobs in the construction and service industries, are cheap labour: South Asians, Filipinos, Africans and Egyptians who are never granted rights to permanently live there, let alone citizenship.

Sultan Al Qassemi also states that "the UAE has employed the same proactive approach with Canada that it has with other nations with regards to trade and tourism promotion when Etihad and Emirates launched direct flights to Toronto back in 2005 and 2007 respectively. Six years later, no Canadian airline has taken advantage of this growing market."

This is correct. Left unsaid is that the UAE has much greater access to the aviation markets in New Zealand and Australia for several years and not one carrier from those countries flies to the UAE, either. There is also a gross imbalance in flights from the UAE to Europe, with the two UAE carriers flying far more flights than European carriers do. Ditto for the U.S., where the difference is about a dozen flights a day by UAE carriers compared to two or three by American carriers.

The reasons for this are clear. Western carriers cannot compete against UAE carriers because they have generally had easier access to more generous credit arrangements to purchase aircraft, and employ cabin crew and ground crew including mechanics from Third World countries who are paid a fraction of what western airline workers get.

The other crucial factor that explains why so few western carriers can compete against carriers from the UAE in Dubai or Abu Dhabi is that the western carriers do not have direct access through Dubai to passengers from other Arab countries, or from the sub-continent, who make up the great majority of passengers for Emirates and Etihad. This is especially true for traffic bound for Canada and the U.S.

Canada is not the only country that has serious reservations about the UAE's aviation plans. Air carriers from Britain, France, the Netherlands and Germany have been up in arms for some time over demands by the UAE for even more traffic rights. The Koreans, too, are furious over the UAE's demands for more landing slots.

Germany has already had enough. It has just said no to Emirates Airlines' request for landing rights in Berlin and Stuttgart, sending the CEO of Emirates into a tizzy.

If readers were to check European web sites, such as Luchtzak Aviation, that follow the business closely, they would find experts there lauding Canada's stance and demanding that their countries follow Canada's lead.

As for the 27,000 Canadian expatriates that the article states are living in the UAE, at a guess about 1,000 of them work for Emirates Airlines and Etihad Airways as pilots. A relatively small number of those Canadians work in the oil industry, banking and telecoms. Most of the rest of the Canadian passport holders are of Indian and Pakistani descent who conduct most if not all of their business with the subcontinent, not with Canada.

Nevertheless, the sultan makes some good points. It is absolutely true that the UAE's ambassador to Canada has tried to see Foreign Affairs Minister Lawrence Cannon for several years but has been unable to do so. Such behaviour by Cannon is totally unacceptable and has been deeply frustrating to Canadian diplomats working on many international files. They say the minister often seems barely interested in his portfolio and only wants to meet envoys who represent a small group of Canada's traditional allies.

Al Qassemi is also right about the UAE being a huge regional business hub and banking centre. But with so much business being conducted electronically today, and with neighbouring countries such as Bahrain and Qatar keen to provide similar services — to say nothing of economic powerhouses such as Singapore, Hong Kong and Shanghai — it is hardly an absolute necessity for Canadian businesses to establish themselves in the UAE.

The UAE's colossal global ambitions for its two airlines are understandable. It is blessed to lie between Asia and Europe and North America. Because of this it can provide one-stop service for travelers from Auckland, Brisbane, Peshawar or Hyderabad on their way to Newcastle, Toronto or San Francisco. But the great majority of the millions of passengers carried by the UAE's two carriers do not have any links to that country — which only has a little more than one million citizens — beyond the airplane tickets they have purchased. At the same time, airlines in the countries they are traveling to and from do not get any of their money.

The sheikdom's particular anger with Canada is also understandable. Emirates and Etihad have more than 200 wide-body jets on order and must find places to land them or they will be out tens of billions of dollars. That explains why it has been trying so loudly to get Canada to reverse its position.

If Ottawa maintains its principled stance, even more western countries may follow its lead, as Germany just has. That would be a nightmare for the tiny Gulf state's declared ambition to rule the skies.

[Panama Jack]

Some interesting articles, Dune; thanks for posting them. I believe that being denied additional traffic rights may have been a contingency not considered in the airlines' growth and general business strategy.

[pool]

Very interesting indeed. It is understandable to a certain extent. It is just a bit ironic, if we go back some years, when PanAm, TWA, BA, Lufthansa and Air France flooded the whole world with their superior capacity. Everything was in nice harmony for the West back then. It is not only the airline industry, but the whole global trade that experiences a shift of power to the south. The defense mechanism through restrictive politics is therefore an understandable reaction. Are the new kids on the block 'unfair', to use the most repeated word in this struggle? Through today's lens maybe yes, if we consider a wider time frame though, it might appear not entirely. It will be for the historians to judge in another couple of decades.

Interesting times ahead. I am pretty sure that this cold economical war will escalate before IATA, ICAO, WTO and other bodies will be able to contain it. Very soon I see some important cancellations of orders of new aircraft. That might soothe the airline lobbyists, but for the broader economy it could also spark controversy. The manufacturing industry and with it many unions (workers and voters) will see their interests harmed and curtailed. They will want to keep their orders and jobs and the regional politicians will counterweigh heavily the national ones.

What will then prevail? The interest of a industry that in many parts of the world has itself been widely protected and subsidized by their governments, all though crying foul today if others do it. Or the broader, globalized industry who basically does not care who uses their end product. Time will tell. The only thing that is for sure, is that enacting of protectionism is maybe the worst first step to balance power. This has been proven over and over AND is by the way still the Achilles heel of the mentioned countries in their own backyard, politically and economically. Maybe the West should start there and not with the almost only truly globalized industry of those countries.

If I was in charge at EK, which is the main target until Qatar has more ammunition, I would cancel a respectable order of A350ies. This model is still far away from delivery, but has already sucked up a huge amount of taxpayers subsidies. This would send a strong signal to negotiate and not just trying to eliminate a competitor with measures that were previously ousted by the same protagonists.

And then wait and see what develops.

[single chime]

Pool, I don't think they can afford to drop any orders of newer ac. If they do, they will fall way behind on the order book which would make them less competitive in the future. Fuel prices are on the rise again so you need a replacement for the 330s.

[GoreTex]

If I was in charge at EK, I would pay their pilots more!

[nolimitholdem]

Dune,

Thanks for posting that article. Could you reference the publication and the author? It's brilliant. It fills in a lot of the gaps left by the partial-truths being spouted surrounding the whole issue.

[sheikmyarse]

When you seed wind you harvest a storm

[nolimitholdem]

Never mind, should have Googled it in the first place. It seems the author is well-positioned to speak with some credibility to the issues, especially the claims about the UAE "treating wounded soldiers" and being "on the frontline".

Probably because...he's actually there.

About the author:

Matthew Fisher has spent far more time in Afghanistan than any other Canadian journalist. He is embedded with Canadian forces in Kandahar, living and working in tents at NATO’s huge logistical base at Kandahar Airfield. He regularly blogs on Canada’s first war in half a century — both serious and offbeat aspects of the mission and the war — from Kabul and Kandahar, with trips deep into the field in southern Afghanistan to experience firsthand the joys and sorrows of Canada’s young fighting men and women.

Link to the above quoted article:

Emirates Airline Hopes on Wing and a Prayer (http://communities.canada.com/shareit/blogs/canada-at-war/archive/2011/01/21/emirates-airline-hopes-on-wing-and-prayer.aspx)

[MrMachfivepointfive]

If I was in charge at EK, I would pay their pilots more!

I think the people in charge of EK will rather pay Boeing and Airbus more to design the pilot out of the aircraft.

[pool]

Pool, I don't think they can afford to drop any orders of newer ac. If they do, they will fall way behind on the order book which would make them less competitive in the future.

Sounds logic, but what to do with the new shiny jets if you can't fly to the desired destinations?
You can haul to Dubai as many people from the subcontinent as possible, they don't want to stay there, they want to go West. However the West does not want EK to do the major part of transporting, so EK will probably not be ready to buy as many jets. Eventually the subcontinental airlines will step in and not only buy A320neo's, but some long-haul models and will start flying more intensively to the West. The same countries and companies will be unhappy again and extend protectionism.
Finally they will have to either soak up the orders with taxpayers money (not making enough profit to finance them) to serve the passenger demand and the aircraft production lines. Or the offer will diminish as a result of this protectionism/regulation.

This might not even be a bad thing, in view of the problems 'pollution' and 'migration'. But it would certainly not have been the intent of the protectionist fraction.

It's trivial.

[troff]

Air India will never take over the world. Have you flown in their airspace? Dealt with their controllers? Been to their airports? Seen how they run? It's chaos! Madness!

[411A]

If low costs were the main factor, then Air India would be the biggest and most successful airline in the world


Air India is certainly not a low cost airline, in fact, considering the funds that are sidetracted to various government employees, it's costs are very high indeed.:ooh:

[Schibulsky]

I think we are comparing different scenarios here:
When the likes of PanAm started connecting the world there was an international need for transport as other nations were not developed in aviation.
During the developing of aviation in the last centuries, nations indeed opened their airspace to foreign carriers on a reciprocal base, that means nations opened their local markets to other airlines so both nations/airlines profit from that.
That also lead to airline alliances providing a global network of routes.
Now we have the players in the UAE profiting from their good location between the markets, offering very good one-stop connections between these.
The UAE carriers are not providing a real destination in return, they are just operating a hub, basically leeching from different markets without offering an own substantial market in return.
So why should other nations play along?
Just because Ranjidh from Kerala doesn't like to stop in BOM and in FRA or LHR on his way to Bimmingm?
They are protecting not only their airlines, it's also about the social achievements and the overall situation of their economy...and YES I know it's NOT all honky dory in these nations!

You see what the multi national corporations are doing with local markets worldwide, flooding it with their products and destroying local competitors.
It was possible with the help of corrupt gouvernments in these countries and it is still a common practice for them to sell out their countries wealth and markets, "protection" of their citizens is not high up on their priority list.
And again, I definitely condemn that!
But why should this happen again in aviation?
And keep in mind, once the UAE carriers are controlling and dominating the airline market...they will control not only the price of a ticket but also the price for a pilot! So think twice what you cheer for...:E

[GoreTex]

spot on schibulsky

[Marooned]

Interesting stuff indeed.

When aircraft developed with increased range, places like Gander were overflown and wilted away. As LR/ULR types increase the range capabilities of national airlines, from their own hubs, Dubai will be left to the same fate and it's location will no longer be relevant.

[salmasue]

really interesting articles

[MrMachfivepointfive]

When aircraft developed with increased range, places like Gander were overflown and wilted away.

Not the same thing. Gander and Shannon were refueling stops only. Never hubs. The ergonomics of a hub as a destination multiplier are quite hard to beat.

[Marooned]

M 5.5: Point taken.

[falconeasydriver]

Schibulsky, GoreTex et all, you guys are making interesting points..but I can't help thinking that your wider view (context) is certainly not on the agenda with respect to Canada, the fatherland, and a few other places besides who are now making noises about the unfairness they face in their competitive fight against EK (lets be honest, the goat and EY are bit players at the moment)
Protectionism in its various forms has done little other than delay innovation and evolution in the marketplace, it is a useful tool to delay, but it will only ever delay the inevitable.
EK's geographic and structural cost advantages aren't going away anytime soon, moreover the airlines' commercial department (inspite of the usual line pilot grumbles) continue to put bums on seats, cargo in holds and make the airline fantastically profitable.
Despite what others think, my view is that the only way to effectively compete against the likes of EK requires a competitor to play to their strengths. For EU carriers that means innovation innovation innovation, Air NZ IMHO (although in a different hemisphere) are a good example of what can be done with a little bit of lateral thinking.
Governments can and will continue to put artifical trade barriers in place to protect what they see as strategic industries etc...but the reality is the market will decide on its course.
Look at the traffic now choosing AMS instead of LHR, or using SEA instead of YVR.
Lastly with respect to Pan Am, Schibulsky, most countries had little choice given the persona of Mr Tripp and his tacit approval from the US state department, it was 10% about industry development, and 90% spreading US influence:ok:

[Trader]

If protectionism is bad (and I agree that to some extent it is) then let the UAE open ITS borders to competition!!! But then they couldn't let Etisalat and the other big local companies compete now could they. Let them remove the requirement for local ownership.

What the UAE want is free trade in one single market that they have an advantage in.

Next we can talk about the OPEC cartel - a concept that is illegal in most of the world.

There is so much more going on then just the airline industry.

[The SSK]

‘Boeing jobs in Canada’ and ‘Airbus jobs in Germany’ is a red herring.

At a certain point in the future there will be ‘n’ million longhaul passengers in the world, and half (give or take) will be carried on an Airbus and the other half on a Boeing. The nationality of the operator has nothing to do with the numbers.

But the number of German jobs generated by a Lufthansa A380 over its lifetime is far, far more than for an Emirates/Etihad aircraft.

[jethrotull]

Just because Ranjidh from Kerala doesn't like to stop in BOM and in FRA or LHR on his way to Bimmingm?
Schibulsky capture the whole business case of these ME airlines.

The growth of the ME airlines is of great interest to me as i come from India. I won't dwell on the point of view expressed by pilots on this forum, as it vacillates between Fear (of loosing the oppurtunity from market consolidation) and ecstacy (kid in candy shop; pilots in shinning a/cs/airlines). The statement of BALPAs exec on the strike threat by BA cc captures the pilots mindset Mr McAuslan also hinted at a degree of class war in the inter-union row. 'Because pilots are allegedly posh and well paid, we're easy whipping boys,' he said.


Now, back to the above quote. It very clearly highlights, in those few words, that the base of the whole ME airlines revolves around the Indian market.
This market undoubtedly is huge and constitutes over 30% of traffic for EK & QR. Bear in mind as one of the articles posted in this thread mentions that the 27,000 canadians in UAE include 26000 of Indian and Pak origin, so the local market which offer the break even loads for these airlines are also heavily skwed in favour of the Indian diaspora.
Additionally, a quick review of BA or LH annual report highlights that this market again makes up over 10% of the revenue (not only traffic) and is 2nd only to the USA market.

At the start of EKs business plans (which as we all know was due to the ego clash between Shk Mo and the baharinis over GF) it was evident that India was underserved for its huge expatriate population living in UK/USA and ME. MF was a ex-BA manager based in India for a short while, he had a better understanding of this economics. And this is basically the strength of the business plan. However using this breakeven load the ME airlines have now moved to other markets like the Kangroo route or EU-China/SE-asia.

The achillies heel of the ME airlines might just be this very market - India.

Whilst it was all good till such time as the Indian economy was growing in the last decade, the Govt Of India-GOI, preferred the likes of EK creating the necessary connectivity to India whilst the GOI concentrated on more important infrastructure and poverty allievation related issues. Now these infra projects are nearly 50%-60% complete in the 1st phase of their devlp plan. The GOI realises to generate revenue from these invst they have to support the domestic airlines. Besides the large population of young graduates (lets not discuss their quality, as loads are in the CITY, NHS, IT in EU) that come into the jobs market need to be accomodated too.
Another area of threat that these ME airlines are creating presently for the GOI and if not chkd by them, subsequently will be for the EU nations, is the creation of huge business infrastructure revolving around financial markets. DXB, DOH, AUH and BAH between them have more commercial real estate avail than the whole of LON, FRA, PARIS or AMS. This unparalled infrastructure is a threat to India's business outsourcing industry and finance sector, which constitutes a large % of the non-agri GDP. Any breakdown in law n order or health epidemic in India will see a large exodus of these businesses to these centres in the ME. Most of the Multi-national co based in india would love to move to these centres with their 'trolley dollies infested expat life-style, not to mention the failed trolley dolly single mother sallies from the west'.

Going forward we can see that as the Indian economy gets matured and moves from an emerging towards an emerged economy. The airlines in India show improved performance. The maturity in the management is evident from the increase in more indians on the board of these airlines. Surprise surprise many of whom are ex-ME Airlines veterans. Indigo, the airline that placed an order for 180 a/cs has Riyaz Peermohammed on its board as the CFO. He was responsible for arranging EKs finances for the first large order placed in 2001. JET and SPICE are owned by very shrewed businessmen who are politically very well connected. EK will see a large number of Indian middle managers retiring soon, these guys are the main HANDS-ON personnel at the COAL FACE, not your beer drinking cockney or paddy Executives.
With airlines in India offering nearly 80% of the emoullments to the Indian airline staff, ME airlines will find seeking manpower from its traditional and only trustworthy market more difficult in the years to come.

Now EK with its business model has hit a point of diminished returns as far as the Indian market is concerned. Ideally it would like to have a A321 size a/c operating every hour to major metros with a A330 inbetween at peak hours. DEL is the only airport which is A380 capable, DEL commercially has a limited pax traffic, its present growth is on the back of GOI invst in CWG and the DEL airport. Its actually the West and South of India that offers the most growth. EK needs to get its A380s there failling which, the airlines from India will mount a hourly operation to DXB from various cities in India.

This will result is a large % of the P2P traffic that doesn't need to hub at DXB being poached by these airlines. The increase in P2P traffic from India's non-metro airports (T2-T3) will cause greater discomfort to ME airlines than the non-availability of landing slots in EU/N-USA. Flydubai was created with this scenario in mind, multiple flts from India to SHJ/RAK/MCT/DOH will dent the breakeven load factor. More non-stop LH and MH destinations will result is further erosion of connecting traffic too, all leading to disintermediation.

The present GOI is facing a long list of charges concerning ''Looting the exchequer''. DXB is notorious in India for being a haven for smugglers and black money hoarders. To add to DXB woes, EMAAR and ETISALAT are named as beneficiaries in 2 of the most debated scandals. In this enviournment EKs PR agents will find the going hard to get more billaterals from India.

The noose has been tightening.....................disintermediation is taking place because of the airlines from India.

[halas]

Interesting point of view Jethro.

First point. The often quoted saying..."Dubai is the best city in India" is a very poignant one. A very big market in it's own right, including the mafia and drug lords. However it does include the very large lower middle and lower class workers there as well. (Not my description, but those who run the show there)

Second point. Even with the growth of Indian domiciled airlines, they can never compete with the gulf carriers in offering "one stop" to anywhere that the majority of punters want. Nor can they compete on a cost per pax mile basis on a similar A to B fare.

Third point. Not too many of the Indian carriers have joined an alliance. These can be the death nell or saviour to any emerging airline in a very competitive market.

Fourth point. EK have a very strong, yet individual frequent flyer program. These vehicles of brand loyalty are a big revenue earner. This alone keeps many competitors away from lucrative markets.

So even if many governments try to deter the encroachment of the gulf carriers, the establishment of current agreements will only solidify the airlines growth by simply increasing the size of the aircraft.

On another point of aircraft orders: Many aircraft are due for retirement. Flew EWI the other day and it has 60,000 hours on it! So l see the increase in capacity only from trading in the older 772's and 332's for newer 300ER's.

halas

[jethrotull]

Cheers Halas,


First point. The often quoted saying..."Dubai is the best city in India" is a very poignant one. A very big market in it's own right, including the mafia and drug lords. However it does include the very large lower middle and lower class workers there as well. (Not my description, but those who run the show there)

India has traditional ties with the ME. Kerala, which feeds the max numbers in the 2 classes you mention, has been trading with the ME for over 500yrs. Islam entered South-India thru kerala and there is a large community in Kerala called ''MAPALE'S'' The Arab traders would have a family here in Kerala which turned into this community.
By the way, all/most of the ruling families in ME have been educated and have very close trusted aides from Kerala.
Since i digress, India is a very interesting phenomenon if you had to study it impassionately (without your glam glasses), it is a fascinating evidence in modern human civilisation. Most of the western world is at war with Islamic fundus, there are over 250m of its followers there. Green is the new mantra of the west, the 5 elements of nature (Earth, wind, fire, space and water) are invoked in every Hindu (80% of India) ritual. The reason i mention this, was to highlight the prejudice prevalent on this particular forum towards India and Indians, with due respect there was no requirement to mention about the spread of the Indian classes. Shk Ahmed has been on record in ''Airline business'' eulogising the role of Indians, infact he was looking down on the Abra at the Indian loaders and traders from his office at the Old Dnata bld whilst he mentioned this, as was stated in the interview.

Second point. Even with the growth of Indian domiciled airlines, they can never compete with the gulf carriers in offering "one stop" to anywhere that the majority of punters want. Nor can they compete on a cost per pax mile basis on a similar A to B fare.
All things being equal, yes possibly, however as we know now with the demise of DXB WORLD, NAKHEEL and many such projects, the numbers never added up. The CASM for Indian airlines can be calculated as most of the inputs are freely accessible for analysts to crunch. However in the case of EK,QR the burden or subsidies will never be known. Doesn't it ever beg you guys this Q, If EK was SOOOO profitable why haven't they liqudated part of the asset to the many creditors. Or why have the creditors taken a hair-cut when there was this shinning jewel in the debtors assets ? They obviously can't open the books without the fear of the world knowing this jewel is just as fake as the other assetts now rapidly eroding off the Jumeira coast. DXB and EK have been on record breaking spending spree for the last 10yrs. They need to consolidate this spend, however with QR nibbling away at its feet it cannot and has to be on this continous growth cycle which adds to its burden of costs. Worldwide there is a recession, the next 10yrs is going to be hard globally but these mavericks will have to continue spending or perish. You know the outcome.
You cannot analyse the growth of EK in isolation to the global economy. The last 20yrs of global exuberance is evident right from Rio, florida, dublin, costa del sol to dxb, and now soon Shanghai, as property prices plummet, and why do they plummet, because it was all smoke and mirrors. There were punters and there were punters, many are cooling heels in DXB prison or are mowing lawns, if not already renounced the world to embrace buddhism. EK and for that matter the LCCs in EU (easyjet, ryanair) have profited from this excess liquidity sloshing around. EZY announced its 1st half-yearly losses after a steady run of profits, MoL fears drop in earnings in the next financial yr.
The travellers going fwd will be more bread n butter crowd seeking a low cost quick turn around from the traditional job centres to domestic markets i.e. FRA/CDG/LHR-BOM,DEL,AMD,HYD,BLR,MAA. A daily non-stop between these centres will see thrifty indians go for the dom airlines staffed with next door sheila, rather than a snotty single-sally from essex. The dom economy doing well, local airlines are offering attractive FFM to those with this preferrance, more reasons for going dom.

Third point. Not too many of the Indian carriers have joined an alliance. These can be the death nell or saviour to any emerging airline in a very competitive market.
The growth of the ME airlines has made it amply clear to the whole world where the market ( To put it in cockney ''Oiyee, Whoze d daydee'') is. Airlines in India have the upper hand and will play their cards delligently. Global economy is moving to the East of India. Most alliances offer value only to the west, do the math.

EK is operating LH and ULH a/c on short turn arounds, the cycle costs vs hrs add to the depreciation of these aircrafts. As mentioned earlier we'll only come to know once the forensic accountants go thru the books.........

[Desertbannanas]

One of the best and most intelligent debate runs on this issue in my opinion! Some great posts.

Pool, regarding the "buying AC" issue, I don't think you are looking at it from all sides. Possession of a run of AC orders is in itself an investment that in most cases is profitable regardless if you actually need the AC or not. It's not like if you don't use the AC you thow 100mil down the tubes. In fact quite the opposite. Slots can be sold closer to production date for far more than origionally purchased, and barring that, leasing companies like GE and others will snap them up. The only thing you need to have to have a run of production is $$$, and that is what the ME carriers have a big advantage in with its state funded investment corporation footing the bill. Other airlines that are not state funded (like Air Canada or lufthansa) have to raise this money other ways, like through loans and share dilution plans and have a greatly reduced capacity to purchase such production runs. Thi risk is receiving the run at a time when no one wants the product, and ordering on the scale EKEY did could bankrupt most Airlines. But then we know why they had the courage and therby ADVANTGE to place such orders don't we..... Because it's all backstopped by the State, and any loss will only be shrugged off like a lost bet at the race track.

[pool]

Desertbananas

All nice and true, although it's only half the truth.

Sure enough you can trade aircraft slots, but if your business is hubbing passengers around, it is not necessarily in your business plan and it is a one timer, therefore not sustained income over several years.

One other argument bugs me more though. We keep on reading how desperately broke the Emirate of Dubai is, how its state-owned companies have billions of debts, but at the same time we keep on hearing how profoundly EK is subsidized by the Emirate, how wrong Price, Waterhouse and Coopers were in their audit and verdict saying EK's business model is profit making and not subsidized. And now we keep on hearing how any of the looming huge losses would be shrugged off by a so called bankrupt Emirate.
What is it now?

One more thing regarding trade: You can only sell what you produce, and this in respect of how much you can produce. If you're rich in natural resources, good for you, you can sell that. If not, you might provide services. If you're a small country, you can only sell so much, if you're a big country, you can flood the markets. Another factor is location. Some countries can use it for one advantage, another country for a different one. Most bigger countries have the additional advantage of being able to provide both, resources and services, and both to a huge amount, sometimes paired with a location advantage.
If every big country, i.e. Canada, wants a equal share back for anything another one provides and sells, you logically eliminate smaller ones. That's why the WTO, FTA and others came in, to provide some chances for the smaller.

The actual row is a good example where a smaller country suddenly sells more and better products. The hypocritical side is, that others cry foul and cite the location advantage. They never complained about their own size/location/resources advantage before, they took this for granted.

[Schibulsky]

We keep on reading how desperately broke the Emirate of Dubai is, how its state-owned companies have billions of debts, but at the same time we keep on hearing how profoundly EK is subsidized by the Emirate, how wrong Price, Waterhouse and Coopers were in their audit and verdict saying EK's business model is profit making and not subsidized. And now we keep on hearing how any of the looming huge losses would be shrugged off by a so called bankrupt Emirate.
What is it now?
It's actually all of the above...we can consider the Emirate of Dubai as a holding company. If one of their companies is making some loss, the others will cover for that. That's the reason why this years huge EK profit will be used to cover the losses for e.g. Dubai Inc. (Profit share anybody? :()
And the "DXB holding" itself is subsidized through the financial help/guarantees from AUH.

I think there is a slight flaw in the small/big country argument.
A big country also has more domestic demand, that means it can generally only export the surplus. And it's all relative, if a small country sells his (compared to the big country) small production, they sell 100% of their goods and that's compared to the size/population a good outcome. But that is all theory anyway cause the WTO does not take the different abilities in regard to technology and amount of own natural resources into consideration.
The WTO generally tries to equalize the unequal. It does not work!
The WTO tries to break down the import duty barriers but still allows a LOT of subsidizing, again that's a disadvantage for the developing nations who would normally use these duties to build up their economy. A big disadvantage for developing nations is also the influence of the multinational corporations and national chambers of commerce (mainly US and EU) on the decisions of the WTO. All together a clever scheme of the industrial nations to cement their control over the worlds market.

The UAE (IMHO not a developing nation, due to their "oily" background) is very clever to take advantage of these rules while disregarding the other rules, like providing access to their own market, Trader made a very valid point:ok:

I am a general critic of globalization...just because it does NOT lead to fair trade!
The cards are marked for the big players, so the consumers, small farmers and competitors in developing nations pay the price...but who is able and willing to change it?!

A good read about this is Michel Chossudvsky's (Not my uncle;)) book: "Global brutally. The uncontrolled world trade, the poverty, the war."

Sorry for the slight drift...

[jethrotull]

@pool, Sounds logic, but what to do with the new shiny jets if you can't fly to the desired destinations?

Well since desertbananas raised this point of yours.

Back in 2003, i had met a very senior person from AIRBUS marketing. The topic of discussion was about EKs huge orders. He claimed then as are the many posters doing now, that EK is leveraging DXB position being at the cross routes of the global economy.

I contradicted his point to say you could throw a dart at any dozen pts within an hrs travel time of DXB and claim the same. So will all or some of these cities emulate EK, he knew they cannot simply because the HUB airport/city has to feed a minimum of 40% of the traffic. Which in the case of LHR/FRA/CDG is possible but AMS struggles. And without the finance and trade base of these EU cities none of the ME countries could pull that off, we know now what is the state of DFC.

With ref to the huge orders placed by EK i stated then, bear in mind this was Nov 2003, ''DXB will next form a LEASING CO''. To which this Airbus exec strongly asserted they will not.
Guess what Lo Behold 2005 DAE was formed.

It was simply apparent to me, if EK cannot pick-up the pax from India, next they will LEASE them airplanes to the airlines in India and rest of the world.

Airbus has gone too far in courting EK in its battle against Boeing, SQ had sold its fleet of A340-300 to Boeing in 2002/3 in exchange for B77Ws. Airbus desperately needed a partner airline in Asia, and where did those A340-300s end up............EK.

Now the issue here is the EIS of the B787. If the a/c enters svc this year and airlines in India manage to get it in the next 12mnths, its bye bye A380, AI & 9W will fragment the traffic beyond capture.

[Dune]

It’s quite a refreshing change to see such a civilized discussion on Pprune!

It is obvious the UAE carriers benefit in a number of well discussed areas over other carriers (strategic location, no unions, etc, etc). Since EK is the oldest and most established I will refer to them but the same comments will also apply to EY.

In my mind the 2 biggest factors to EK’s success are:

1) Its direct backing by the government of Dubai which over the years has allowed it to purchase huge quantities of a/c at reduced costs. This has always given it a competitive advantage in terms of having the “right tools for the job” easily at hand and being able to develop markets whereas most public airlines need to prove to their board of directors/shareholders that the market is already developed enough to justify the purchase of the a/c. This advantage has allowed EK to be “1st in” to many markets which have gone on to become lucrative destinations and another spoke in the “EK Hub”.

2) Its closely knit association with other aviation associated businesses in DXB (DNATA, Catering, GCAA, DGCA, etc). Having a vertically integrated company (which in this case includes the regulatory authority as part of your “company”) is a huge advantage for both operational efficiencies and also, due to the government ties, clout in negotiating bilateral agreements with other countries and also streamlining regulatory aviation issues within the UAE.

The EK “Hub and Spoke” business model is well known (2 billion people within 7 hours flight time of DXB, connecting every point on the globe with 1 stop, etc). The model was built and developed based upon the assumption that bilateral traffic rights between the UAE and the other countries containing these 2 billion people would be relatively “free” and allow EK access to these 2 billion potential customers. Up until recently that has been the case but I don’t expect that to continue.

While there has been rumblings about EK for years, it is only recently (with the Canadian issue) that we may be at a turning point. Most competitors are currently on the back foot when competing with EK/EY hence the current political backlash in support of home airlines and anti-EK/EY.

In the case of Canada, my personal opinion is the government politically cannot allow EK/EY increased slots until Air Canada has the right tools to compete. They currently do not and any further exposure to Middle East carriers will only hurt the company (and Canadians). I suspect once AC receives their long delayed B-787 and they are able to do direct Toronto-Delhi and direct Toronto-Mumbai (as the majority of traffic current coming out of Canada to Dubai is not O & D but transit pax to India), you’ll see a gradual increase in slots allowed to ME carriers. Of course, the UAE also understand this and hence the reason I believe they have been so forceful/outspoken on this issue. They know the competitive advantage the UAE carriers currently have will be lost as soon as these new a/c are in service (Indians having the option of either doing a 1-stop YYX-DXB-DEL/BOM with EK or YYZ direct DEL/BOM with AC; I would suggest if prices are similar they will opt for the direct with AC vs a 1-stop with EK if going to these major destinations) and would like to fully develop the market before the competition has a chance to “catch up”.

I suspect the issue with Berlin, Seoul and Paris (others to follow in the future) are for other reasons not related to equipment. The governments in these countries realize the Middle East vertically integrated business model has become a threat to the economic survival of their own international carriers. I suspect there will be increasing backlash over the next few years (mostly directed from the carriers themselves to their respective governments) looking to provide further restrictions on ME carriers access to home markets. It is easy to argue the amount of seats from any current “developed market” is well beyond the requirements of ME carriers O & D traffic. As further slots in “developed countries” are restricted, this will force EK/EY to look to invest in more “undeveloped” markets.

In India I believe the government probably has given enough capacity to Middle East carriers to provide relatively easy access to air travel for their population while still allowing their domestic/international carriers a chance to expand (ref recent A-320 purchase announced last week). I don’t expect a huge increase in available slots in India in order to protect their domestic carriers from increased saturation by EK.

Irrespective it will be interesting times ahead. I would love to be a “fly on the wall” at some of the recent senior management meetings at EK. It appears the business model and expansion plans that were put in place may need to be reexamined should this anti-ME carrier backlash continue to expand.

[mutt]

I suspect once AC receives their long delayed B-787 and they are able to do direct Toronto-Delhi and direct Toronto-Mumbai (as the majority of traffic current coming out of Canada to Dubai is not O & D but transit pax to India) Are you sure that the 787 can operate those routes with a viable payload? Bear in mind the summer temperatures and the winter prevailing winds.

Mutt

[shresht]

@Dune - I too would love being a fly on the wall on one of their meetings :P

This is perhaps the wrong place to ask, but I'm also curious about airspace regulations. Emirates uses European and Canadian airspace to reach many of their destinations; is there a possibility of the Canadian government denying permission for ME carriers to fly in Canada's airspace?



Really interesting thread, by the way.

[White Knight]

is there a possibility of the Canadian government denying permission for ME carriers to fly in Canada's airspace?

That would just be beyond petty:rolleyes::rolleyes: Don't see that happening!

Back to the 787 question... Will it actually ever enter service?:{

[Dune]

Mutt:

Pretty sure they can given the interview below. They tried it several years ago with an A-340-300 but it just wasn't working out given the limited payload they were able to carry vs fuel required.


Boeing 787 delays hampering Air Canada growth

Ross Marowits
Montreal— Globe and Mail Update

Published Thursday, Jun. 17, 2010 2:40PM EDT
Last updated Friday, Aug. 27, 2010 6:55AM EDT

Delays by Boeing Co. (BA-N69.23-1.33-1.88%) in delivering its new 787 aircraft have limited Air Canada's (AC.B-T3.21-0.09-2.73%) ability to expand its international flight map, Canada's largest airline said Thursday.

Air Canada said it has been busy adding new destinations in the United States, Europe and Asia. However, it could have done more to add routes to India and elsewhere in Asia if it had the smaller, long-range Boeing 787.

“It opens up all these route opportunities that normally wouldn't be viable for us,” Ben Smith, Air Canada's chief commercial officer, said in an interview.

Mumbai in India and Changzhou in China, for example, don't generate enough traffic for the airline to be profitably serviced using the giant Boeing 777, while the smaller 767 doesn't have sufficient range.

“A 787 and all of a sudden it becomes interesting,” Mr. Smith said.

Air Canada has 37 Boeing 787s on order. They were originally supposed to be delivered in 2008, but manufacturing delays have pushed that back to 2013.

The airline believes increasing travel to international destinations, along with a push for higher fares in business class, are key drivers to sustainable profits.

“We only have 37 per cent of the market share for Canada international [travel], and we think we can do a lot better than that, so you'll see from us a lot more focus and effort in that area,” Mr. Smith said.

Boeing 787 delays hampering Air Canada growth - The Globe and Mail (http://www.theglobeandmail.com/globe-investor/boeing-787-delays-hampering-air-canada-growth/article1607878/)

[Dune]

shresht:

I don't see the Canadian government doing such a thing as the issue is really "small potatoes" compared to other trade disputes. This is really just "grandstand" politics with both sides looking to appear to be stronger.

Ironically, it would not surprise me to see Air Canada's revenue INCREASE as a result given the petty response by the UAE wrt visa fees. There are now stories emerging about Canadian business travelers and Canadian exporters avoiding the UAE (and EK/EY) due to the visa requirements and instead using other alternative airlines to travel/transport to India (predominantly) for business. Also Turkish appears to be picking up some business traveler traffic to the Gulf region as a result.

Don't get me wrong; the A-380 out of YYZ will still be full. However, any time an airline loses a premium passenger it is a concern.

It would be interesting to know how much "gain" the UAE made in their visa charges when offset by the loss in revenue due to premium class pax using "alternative" routes.

[777AV8R]

No, Canada couldn't refuse flight through the airspace because they are part of the ICAO Convention. Canada could refuse landing rights and place time restriction on flight through Canadian airspace thereby hampering operations.

[Dune]

Interesting graphics showing the Air Canada footprint with the B-787. I expect India to be a significant target out of YYZ.

Why Air Canada needs the 787 | airceo.com (http://airceo.com/2010/04/why-air-canada-needs-the-787/#)

[Dune]

Interesting new twist.........just when you think you have it all figured out :E


Emirates, Etihad get France clearance
To operate 22 more weekly flights

Bloomberg Published: 00:00 January 29, 2011

Paris: Emirates and Etihad Airways won clearance to add 22 weekly flights to France in bilateral government talks.

Emirates and Etihad will each receive permission for an additional four weekly Paris flights and seven to smaller cities, said a French Transport Ministry spokeswoman who declined to be identified, citing government rules.

Flying rights

Air France-KLM Group, Europe's biggest carrier based on traffic, had pressed the government to refuse any new flying rights to Emirates and Etihad, arguing that lower taxes and airports fees at their hubs amount to an unfair advantage.

The French carrier had no comment on the agreement, Nicolas Petteau, a spokesman at the company's Paris headquarters, said yesterday.

Emirates said in an e-mailed statement that it was "encouraged by these developments."

Emirates is the biggest customer for the Airbus A380, with 90 of the superjumbos on order or flying.

The airline overtook Deutsche Lufthansa AG in 2009 as the biggest carrier on international flights following a sixfold increase in traffic since 2000, when it ranked 24th.

La Tribune newspaper reported on the aviation agreement earlier yesterday, without citing anyone.

Resume talks

The newspaper said the stalled talks on a UAE order for Rafale fighter jets from Paris-based Dassault Aviation would resume following the deal.

The French ministry spokeswoman declined to comment.


gulfnews : Emirates, Etihad get France clearance (http://gulfnews.com/business/aviation/emirates-etihad-get-france-clearance-1.753756)

[FUSE PLUG]

Globalising 'free' trade is the noose. :}

-FP

[Ben_Al_Katre]

Well, if France does not grant EK and EY more slots, then this thugs could cancel the huge Airbus orders they have. Simple reasoning!!!

[shresht]

Emirates said in an e-mailed statement that it was "encouraged by these developments."

Wikipedia says there are 65,000 Indians living in France, so no surprises there.

[mynameisjon]

And the French surrender again.

[The SSK]

The little bird whispering in my ear tells me UAE were demanding 42 a week. They got 22, which I suppose is more than half. But who am I to know?

[jethrotull]

Obama and Egypt: Crisis in Egypt puts Obama to the test - latimes.com (http://www.latimes.com/news/nationworld/nation/wire/sc-dc-0130-egypt-obama-20110129,0,2093531.story)

Well folks, this looks like more than one force trying to ''squeeze the noose''.
Pray Bahrain is not in line next or the contagion will grow. I know the locals are well fed and AQ is being paid protection money, but then you never know..........many have been made redundant in DXB following the debt crisis, which is only likely to get worse before it gets better.


Wikipedia says there are 65,000 Indians living in France, so no surprises there


The french are on a bilateral gifting spree to boost their own economy. AI & 9W will be flying daily into CDG.


Well, if France does not grant EK and EY more slots, then this thugs could cancel the huge Airbus orders they have. Simple reasoning!!!


Wherever u come from, never forget these thugs are in their SEAT because of the largese of USA/UK. The owners of EK, EY & QR were pirates and smugglers not very long back............. and the present revolt in eygpt will reach here once these AUTOCRATS are past their sell by date......... we live in epochal times.

[Desertbannanas]

Either extreme does not work Contacted. Regulation and protection are in many ways the same thing... How far you go is what determines. There is a place in the world for a bit of control and regulation as well as free trade. It all depends on good management and making sure you ensure viability of your own interests as well as allowing your neighbor to open his business on your property if you so decide you want to do that.

I would like to think you believe the same and you don't just argue free trade for Emirates just because it might benefit you. Especially since the UAE is just a guilty on the protection front as anyone.

[Schibulsky]

Can I please have our apologist's views on the fact that there is F all competition allowed in Dubai.
Why is no other catering company allowed to operate at DXB, why are there no other handling agents allowed than DNATA, are you happy with all the monopolized services in DXB e.g. the high prices of telecom providers leading to obscene profits for Etisalat and the pseudo competitor DU?

anyone?....anyone?...Bueller?....Bueller??? :p

Anybody can set up a company e.g. in the EU whereas the UAE is a closed market, keeping all ownership majority in UAE hands.
It's easy to point at others and accuse them of protectionism while the whole of the UAE is a prime example of exactly that!!
That doesn't justify other protectionism but they should start to clean their own shop first!

[ruserious]

Amen to that Schibulsky :ok:

[White Knight]

Hey Schib! Who is an APOLOGIST in your little book?

I mean; let's face it, you seem to try and speak for me and my family!!!! Telling me I should have plan A,B,C,D and possibly E...

As a pilot here at EK - do I give a flying whatsit about free trade??? Nope! Don't give a monkey's!.... As long as I get paid every month. Same ideals as most of the flyers here.........

Toodle-pip old fellow.....

[GoreTex]

spitfire pilot is pretty cool at least he wasn't an idiot like his grandson

[sheikmyarse]

White Knight I pity the poor FOs having to fly with you.
Toddle pip my sheiky arse.

[MATMAX]

"many d1ckheads are present here on ME forum:ugh:http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/boohoo.gif:ugh:http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/boohoo.gif:ugh:http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/boohoo.gif:ugh:http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/boohoo.gif "
white night , you are their leader ...
your grand-father should be ashamed of you ...

[Schibulsky]

This was a reasonable and polite discussion until the village idiot came along!
No contribution to the topic...considering everything as related to his oh so important person and reverting to the usual name calling.:D
WK, if you don't consider yourself an apologist (so why did you reply??)...what about being an opportunist?
Here the definition of opportunism (just in case):
"the policy or practice, as in politics, business, or one's personal affairs, of adapting actions, decisions, etc., to expediency or effectiveness regardless of the sacrifice of ethical principles"

...so what you call an "ideal" sounds more like an excuse to me!:}

So puleeze do us all a favor and stay out of a discussion between adults....and keep your verbal diarrhea for the F/Os who will definitely "love" it as much as your charming personality!:E

[Schibulsky]

You might be right in general that open skies policy will prevail worldwide, although I hope it will not just lead to free but also fair trade.
You are also right that the telecom example has nothing to do with aviation, it was only an example of the overall UAE protectionism that effects you guys personally.
The point I made (and DB obviously had in mind) was indeed aviation related...the monopolized operation at all UAE airports.
MF and TC are constantly winging about the protectionism of other countries while the UAE is keeping all competitors out of their airports. They bragging about unlimited access to the UAE airports...as long as everybody is using THEIR handling, catering and all other services!
What if LH wants to establish their chauffeur service for high profile customers at DXB? Yes, they could set it up...but meet Mohammad, he will hold 51% of that company!:uhoh:

Another good post was at the other "Canadian/UAE" thread by Confusedcanuck. It was about the service to Canadians NOT living in the few big cities. They have to rely on the unprofitable domestic feeder services that are subsidized by the international operations of Canadian airlines.
Do you think EK cares beyond the transportation between DXB and YYT?..so much for "consumers choices"... there will be none!

[sheikmyarse]

:D:D:D:D:D

[ferris]

It depends on whether you consider commercial aviation part of essential infrastructure. If you do, then handing over control of it to 'the market' is fraught with danger.
Sometimes, tempering 'the market' is a good thing.

[Wizofoz]

I also don't get who is supposed to benefit if the Dubai Government gives EK extra breaks at DXB- It loses revenue for the Dubai Government by giving cheap handling to by far DXBs biggest customer- thus cutting revenue to the Dubai Government.

Thus supposedly giving a hand to EK which is owned by and gives dividends to.....the Dubai Government.

Out of one hand, into the other, with no net benefit.

The belief comes because other National Carriers are traditional loss makers and are propped up, for political reasons by Tax-funded subsidies.

EK is a CASH COW for the Dubai Government and funds FROM EK are a huge art of Dubai's economy- why would ANY funds flow the other way?

[Schibulsky]

Wiz, you are right, it doesn't matter...but only as long as there is no competition at DXB airport. So at the end, ALL money goes to the government. Same goes for most services in the UAE.
Btw LH is a cash cow for the German government as well...lots of tax revenue from LH employees and to some extend from LH itself! The German government also profits from holding a lot of LH shares.
And absolutely no subsidizing since decades!

Commercial Aviation is part of essential infrastructure. Thats why it should be given the freedom to thrive
I beg to differ, some infrastructure is part of the public service of a country.
Look what happens when state owned railways are privatized. They cherry pick the most profitable routes and the services to remote areas factually stop.
And I don't defend the bad and inefficient service of the state railways! Same for private roads etc.
Also keep in mind that the infrastructure of these countries are mostly built on the tax payer's expense by the government.
As already pointed out, the deterioration of rural air service would happen to a great extend in Canada. So "protecting" and regulating is actually part of the responsibilities of the Government. The "free market" doesn't give a rodent's behind about the transportation needs of people outside the main stream of traffic!

[Wizofoz]

Schib,

But, as you point out, who gives a stuff about operating from DXB airport? I spent a very pleasant hour in the Desdi hold last night at the end of a 12 hr duty sweating fuel and wondering if i was going to be spending the night in Doha or Al Ain. DXB is saturated.

AND, as you rightly point out, NONE of that is because the UAE is a destination, it's because it is a hub. ANY airport within 500NM could do the job as well, so why is limited access to DXB such as impost? If any European airline wanted to hub-and-spoke in the ME, they could do so through Abu Dhabi, Bahrain, Sharja, Ankara or any number of other places.

The only reason I can think of to why a European operation would WANT to come to Dubai?

On-carriage of passengers EK has brought there....

And absolutely no subsidizing since decades!



Lets talk about LH and AF, and access to regional airports in France and Germany....

[jethrotull]

Wow now we are comparing EK and DXBs model, to Globalisation and free trade.


You could say "Commercial Aviation is Globalisation" (movement of people and goods around the world).


True, aviation is all about movement of goods and people. It is a mode of transport. In the case of EU, rail and road move more goods and people than aviation, however to compare aviation with globalisation IMO is not factual.
Further to claim that this is the way forward in aviation and open skies is inevitable is premature and wishfull thinking.

Look at EU to start with, there is a OS across EU, any airline can operate from any country within EU. Back in 2003/4 i remember listening to the CEO of AirMalta asserting to exploit his right to operate from UK. Airmalta did start operating from UK to Spain but had to wind up ops soon in face of competition, which was from airlines based in UK. On paper Airmalta should have been very successfull because they have a low operating cost base, so then what went wrong.
Market forces, in te form of govt regulators stop these growth because they don't want revenue and jobs to migrate. EZY and FR have faced tremendous barriers to entry in France.

Back in 2004 in an academic env i had to write on INDEXING PILOT WAGES, worldwide. All i did was raise the issues involved which make it impossibile to Index pilot wages in a local market like LHR, LGW, STN and LTN, leave aside global market. There are huge number of variables, house price, unions, local laws etc etc that distort these numbers. You guys would be in a better position to raise the diff variables involved, anyway the daft bean counter prof was not impressed because i had not used fin jargon and the numbers were thin. Don't we all know what/who (criminal pilot remuneration) brought Airlingus to its present state and consequently saw the rise of FR (full leverage of contract labour, upto 49% in some case), you see gents the distortion i was talking about.

Ref LH which IMO is a brilliant model of indirect state support, inspite of the airline being a independent listed co. It gains massively from the largese of the Deutsche Vertretungen around EU. Malta has a huge LT-Tecknik base, LH pension fund is based there alongwith many other Tier-1 german co PFs. LHT has been declaring record profits repeatedly whilst LH airline has been moaning about diff trading.
LHT are now based in low cost E-EU where all their facilities are built by the local (country based in) govt with money borrowed from Deutsche banks or deutsche PF shall we say. HAM has been shrunk as a behmoth of aircraft maint down to, only taking the maint orders from global airlines (read new ME carriers) for their maint/repair. This is then sold to these E-EU based LHT cos to bid.
So the model is very simple, LH owns LHT as a standalone co. Sets up LHT at low cost base countries, makes the local govt pay for the infra, money is lent by LH PF or preffered bank and then these local LHT co bid for the work from LHT-HAM which keeps a chunk as profit even beore the work has actually started. LH makes money on every step of the way.

So coming back to the argument of the EK business model and its fight against western govt and airlines. My point is EK is being subsidised heavily by the govt of DXB and this subsidy is at a cost, we will never know the cost but can only guess. As a guesstimate, you've to chk the cost of building the terminals and maint facility at DXB, the infrastructure cost of building all those hotels for the transit pax, the apt for the crew, the financial city which was to attract the business to DXB, the road and metro network etc. Not to mention the 90% expatriate workforce to build and operate all these institutes/Org.

The parallel to this kind of state support can be evaluated from the history of BA/BAA or LH/FRA or AF/CDG, or more recently Olympic airways, Alitalia. In all these cases a open democratic society (parliament, media, analysts etc) highlighted the huge losses incurred by these org as the cost could never be recouped by the govt to the benefit of the tax payer and had to be pvt by listing them publicly.
It is no diff in the case of EK. Shk Mo is the tax payer here. We know he is $120b into the dodo, THAT MY FRIEND IS THE TRUE COST OF OPERATING EK (apart from Dubai world, every other venture compliments EK). The profits and staff bonuses were to retain the manpower and fool the market for the previously planned stock listing.

So my conclusion is that Aviation is only a mode of transport. As a commodity its like any other commodity and globalisation is nothing but the ploy of western govts, banks and MNC (multi national cos) to dominate global trade and business as their domestic markets mature and shrink.
EK, QR and EY have a PLACE in this world, but they seem to have forgotten it and want to DISPLACE these airlines that are core to the transport and consequently economy of these democractically elected countries, whilst being run by the autocratic monarchies based in the most volatile but OIL rich region of the world.

I had mentioned in my earlier post about the epochal times we live in. For a moment try to look back to the last 20yrs. The rate of change in the world, be it global politics (USSR broken by glasnost, The unification of Germany, Formation of EU ), global finance (growth of banks, Euro), Technology (Internet, Mobile phones) and Global trade making inroads into markets governed by autocrats (China, Middle-east). We are in the last phase where the plan is to have a single political, finance and trade regulation across the globe.

Mia culpa for the long post. You see since we were talking about globalisation and de-regulation, i wanted to highlight that de-regulation took years to frution in USA or EU. But if you look at the runaway growth of the ME airlines, it begs the question what exactly is the end game...................tunisia, eygpt,..........

[Schibulsky]

Hi Wiz, I don't think any European airline would be interested in setting up a hub in the middle east.
e.g. LH indeed uses DXB as a destination for tourists and business pax, covered by the hand full of flights they have, plus the triangle flights via some other ME airports.
The only onward pax I could think of would be for Australian/NZ destinations.
All other destinations in Asia and Africa are reachable non stop by LH or their Star Alliance partners or with one stop for a domestic onward flight.
I can't really see any agent selling a ticket FRA-Perth changing carriers in DXB anyway. Most pax like to earn miles on their favorite carrier/alliance.
Lets talk about LH and AF, and access to regional airports in France and Germany....
Yep...let's look at e.g. Hahn airport EDFH close to FRA, where the government spent millions of tax payers money to accommodate Lyin'air and other non-german freight carriers :ooh:
And Jethro is right, there is an indirect support from the government for LH...but like Hahn shows, also for all other carriers who generates business and employment. Don't mistake tax breaks and incentives to create employment and business with direct subsidizing.
The idea behind the EU is distributing the business and wealth through all EU countries, of course LH and others take advantage of that. You could see the EU as a small scale globalization, but with proper rules. And again, its NOT perfect, but beats the heck out of the shark tank the rest of the world has become.

[Dune]

Austria rejects Emirates’ bid for Vienna landing rights

Austrian Airlines boss says carrier would need 'child labour' to compete with state-backed Emirates

By Joanne Bladd
Wednesday, 23 March 2011 11:00 AM


Austria’s air traffic control centre has rejected Emirates Airline’s bid to almost double its daily flights to Vienna under its planned summer flight schedule, amid a wider row between Austrian Airlines and the Dubai carrier over access to the European market.

Emirates, the Arab world’s largest airline, had planned to increase lights on the route to 13 a week from March 27 in response to high customer demand, but the request was denied by Austrian authorities over what Emirates has called a “technical disagreement.”

The state-backed carrier told Arabian Business it is still in talks with Austrian authorities to secure the landing slots and is optimistic of the outcome.

“Emirates is confident that from 27th March 2011, a total of 13 flights per week will be operated from Vienna to Dubai in response to a high demand for our services,” a spokesperson said.

“Talks continue with the Austrian authorities to resolve a technical disagreement concerning the air services agreement between the UAE and Austria and our additional flights, which passengers have booked on, Emirates has invested in promoting and hired new staff for.”


The refusal follows explosive comments from the co-chairman of Austrian Airlines (AUA) who this week accused Emirates of leveraging its state links to undercut its European rival.

“It’s not a match of airline against airline – it’s a game between a state and AUA,” Peter Malanik told Austria’s Kurier newspaper Tuesday.

“The hub Dubai is being expanded regardless of the project’s profitability. It’s just about the location. The owner is also the lawmaker, the regulator, it owns the airline and the airport and is in charge of air traffic monitoring. It also provides the kerosene. Money doesn’t matter.”

Malanik said labour rights rules and consumer protection regulations in Europe prevented the region’s airlines from being able to compete fairly with Gulf carriers.

“The situation is similar to the production of T-shirts using child labour. AUA would need to hire 1,000 staff from Bangladesh immediately to be able to compete. Do we want that? Certainly not,” he said.

Austrian Airlines is one of a number of European carriers, including Air France KLM, British Airways and its parent company, Lufthansa – which earlier this year was accused of lobbying its government to stop Emirates securing new landing slots - to call for curbs on the expansion of Gulf carriers on long-haul routes.

The carriers claim Gulf airline use unfair subsidies to finance aircraft deals and to take market share from existing airlines.

A number of US and European airlines are impacted by a so-called 'home market rule,' which states that countries where Boeing and Airbus build aircraft cannot use export credit agencies to help their carriers buy passenger airliners.

The rule, which impacts carriers in the US, UK and France, among others, is seen as offering an unfair advantage to Gulf carriers unaffected by the law.

Malanik said AUA had scrapped flight routes to Mauritius and Australia due to competition from Emirates.

“[The airline’s] next target is to kill our link to Bangkok," he added.

Emirates Airline’s president Tim Clark said in February that European carriers must address their own failing business strategies rather than attacking the growth of Gulf airlines.

“It has taken European carriers donkeys’ years to adapt their business models to the changing dynamics of global civil aviation,” he said. “They haven’t been able to align their traffic flows to what is going on, whereas we have.”

2010 Arabian Business Publishing Ltd. All rights reserved.

[shresht]

its parent company, Lufthansa

Explains a lot.