1279shp
27th Jul 2007, 00:45
From Indedpent Financial Review this morn.
A paragraph buried deep in papers accompanying Dubai Aerospace Enterprise's (DAE) offer for Auckland International Airport (AIA) reveals a key driver of the bid is Dubai's desire to speed expansion of its airline, Emirates.
Other carriers servicing the Middle East will also be encouraged to increase tourism and trade to New Zealand.
These might include Dubai's national airline Etihad Airways, which also flies international routes.
While observers have speculated Dubai's royal family and investors aim to make AIA a hub for Emirates, DAE spokesmen have this week remained cagey about disclosing the aims of the airport control bid.
However, details are revealed deep in the merger implementation agreement under the heading "Tourism Growth."
It says the DAE Group will use "reasonable endeavours" to create new routes and services to Auckland for Emirates Airlines.
DAE personnel who drew up the deal are understood to have met government and National Party representatives to outline the proposal, which has prompted a backlash from politicians and commentators opposed to foreign ownership of strategic assets.
Air New Zealand isn't commenting on the proposed amalgamation. But Forsyth Barr aviation analyst Rob Mercer doesn't believe the push for volumes using Emirates will sideline Air New Zealand.
On the contrary, he says, the airport's growth is projected at 4 per cent to 5 per cent in the medium term which, he said, is modest. To increase growth in a very small market such as New Zealand you have to go after a major carrier like Emirates, Mercer said.
He says DAE is using the Copenhagen model the Danish airport went to Emirates to stimulate growth but Emirates turned it down, so Scandinavian carrier SAS stepped in instead.
"If Emirates drives volumes then aeronautical charges will go down and Air New Zealand will benefit," he says.
Lower costs would enable Air NZ to meet its growth projections from expansion plans to niche markets such as Vancouver from November, Mercer said.
Emirates, which has ordered 47 of the giant Airbus 380 aircraft seating 550, won't want to fly many of the routes Air New Zealand flies, such as Auckland to Shanghai, because the volumes aren't there for its scale of operation and its wide-bodied fleet of aircraft.
Air NZ, by contrast uses smaller aircraft for smaller markets.
If the amalgamated business prompted Emirates to set up a hub in Auckland, Mercer said, it would help it to make inroads in to the US where its business was not particularly strong.
He doesn't believe Emirates would cut across Air New Zealand's path on a route such as Los Angeles where it has around 65 per cent of the volume to New Zealand.
"You can't come in and take market share off others because you would lose money," he said. "You need to drive volumes.
"It's a good thing. It shifts the volume model to make it affordable."
Shareholders will be asked to vote on DAE's merger proposal in November.
The deal is being touted as a strategic partnership between Auckland Airport and the multi-billion dollar interests of the relatively new United Arab Emirates DAE conglomerate.
The parties say in a press release the aim is to enhance the airport's existing business, but would not be drawn on details.
Emirates already flies from Dubai to New Zealand four times daily via Australia but if initiatives outlined in the agreement are realised the airline could potentially fly direct to Auckland in future with new long-range aircraft, providing it can free them up from other routes and find enough crew.
UAE government-owned Emirates' bosses have talked repeatedly about becoming a global carrier. It flies to 90 countries through five continents.
The merger agreement says DAE Group will use "reasonable endeavours" to enhance the relationship between the merged company and Emirates Airlines "with a view to increasing New Zealand tourism and creating new routes and services to Auckland."
It also says the group would assist the merged airport entity to "progress route development opportunities, including in particular new services and carriers to and from Dubai and other places in the Middle East."
A paragraph buried deep in papers accompanying Dubai Aerospace Enterprise's (DAE) offer for Auckland International Airport (AIA) reveals a key driver of the bid is Dubai's desire to speed expansion of its airline, Emirates.
Other carriers servicing the Middle East will also be encouraged to increase tourism and trade to New Zealand.
These might include Dubai's national airline Etihad Airways, which also flies international routes.
While observers have speculated Dubai's royal family and investors aim to make AIA a hub for Emirates, DAE spokesmen have this week remained cagey about disclosing the aims of the airport control bid.
However, details are revealed deep in the merger implementation agreement under the heading "Tourism Growth."
It says the DAE Group will use "reasonable endeavours" to create new routes and services to Auckland for Emirates Airlines.
DAE personnel who drew up the deal are understood to have met government and National Party representatives to outline the proposal, which has prompted a backlash from politicians and commentators opposed to foreign ownership of strategic assets.
Air New Zealand isn't commenting on the proposed amalgamation. But Forsyth Barr aviation analyst Rob Mercer doesn't believe the push for volumes using Emirates will sideline Air New Zealand.
On the contrary, he says, the airport's growth is projected at 4 per cent to 5 per cent in the medium term which, he said, is modest. To increase growth in a very small market such as New Zealand you have to go after a major carrier like Emirates, Mercer said.
He says DAE is using the Copenhagen model the Danish airport went to Emirates to stimulate growth but Emirates turned it down, so Scandinavian carrier SAS stepped in instead.
"If Emirates drives volumes then aeronautical charges will go down and Air New Zealand will benefit," he says.
Lower costs would enable Air NZ to meet its growth projections from expansion plans to niche markets such as Vancouver from November, Mercer said.
Emirates, which has ordered 47 of the giant Airbus 380 aircraft seating 550, won't want to fly many of the routes Air New Zealand flies, such as Auckland to Shanghai, because the volumes aren't there for its scale of operation and its wide-bodied fleet of aircraft.
Air NZ, by contrast uses smaller aircraft for smaller markets.
If the amalgamated business prompted Emirates to set up a hub in Auckland, Mercer said, it would help it to make inroads in to the US where its business was not particularly strong.
He doesn't believe Emirates would cut across Air New Zealand's path on a route such as Los Angeles where it has around 65 per cent of the volume to New Zealand.
"You can't come in and take market share off others because you would lose money," he said. "You need to drive volumes.
"It's a good thing. It shifts the volume model to make it affordable."
Shareholders will be asked to vote on DAE's merger proposal in November.
The deal is being touted as a strategic partnership between Auckland Airport and the multi-billion dollar interests of the relatively new United Arab Emirates DAE conglomerate.
The parties say in a press release the aim is to enhance the airport's existing business, but would not be drawn on details.
Emirates already flies from Dubai to New Zealand four times daily via Australia but if initiatives outlined in the agreement are realised the airline could potentially fly direct to Auckland in future with new long-range aircraft, providing it can free them up from other routes and find enough crew.
UAE government-owned Emirates' bosses have talked repeatedly about becoming a global carrier. It flies to 90 countries through five continents.
The merger agreement says DAE Group will use "reasonable endeavours" to enhance the relationship between the merged company and Emirates Airlines "with a view to increasing New Zealand tourism and creating new routes and services to Auckland."
It also says the group would assist the merged airport entity to "progress route development opportunities, including in particular new services and carriers to and from Dubai and other places in the Middle East."