The noose tightens?

[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

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 Don't see that happening!

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

[Dune]

Toronto-India on the B-787

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

[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]

Airspace....

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

[Dune]

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

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

[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!!!