Here is an example of EK pricing that exists today. Lowest fare selected on both flights:
Toronto - Sydney, Australia airfare (June 2010) comparison:
EK airfare $2038.00 taxes $141.32 total $2179.32
total distance flown: 14380 nm via DXB
AC airfare $2108.50 taxes $420.82 total $2529.32
total distance flown: 9841 nm via YVR
Several things could be be happening:
1) EKs operation is more efficient because of lower fuel costs+ lower fuel taxes/lower wage rates/lower total corporate taxes paid. I'm assuming fuel burn/hour per seat are about the same for both airlines.
2) EK is able to offer fares below cost because of their stronger economic position and they are more interested in grabbing market share than making money on this seat.
How can they offer a fare $360 cheaper on a route that is 46% longer?
This is a glaring example of why Canada doesn't need EK poaching in Canada. The tax load is too high for Canada's airlines to compete against a better financed EK. There has to be upside for both parties in any agreement and in EKs case there isn't any upside for Canadian carriers.
GMC1500 admits AC frequencies across the Atlantic may decrease but says AC can find business elsewhere on other routes. How very generous of EK to muscle in and tell Canadian carriers to look elsewhere for profit. How about EK just quit Canada and go elsewhere for their profits?
Pilot job prospects and wages in Canada won't increase if Canada's airlines are made weaker by poachers like EK.