Originally Posted by
Havoc10G
Well your odd jibe about mode of government aside, clearly you understand very little about how a tribal system in the Gulf works, I can say that the accounts are audited by a western firm so that should give you some comfort in your armchair but also the holdco regularly receives loans etc which requires a high amount of disclosure. But anyway it makes no sense for the government to subsidise the airline. It is not logical and Dubai is driven by profits and profitability not subsidy.
I am in an armchair like all of us, but I have worked with state-owned companies (and their western-branded auditors) in the Gulf for years so have plenty of experience. There are myriad ways for a government to opaquely subsidize a national champion, some of which are certainly more creative than I am. (One way that does not require great creativity is to give loans, as you note, that are implicitly backed by the state, thereby achieving a better price than the market would give.) A small example in Qatar is government preference, or mandate, to fly QR premium classes on official travel; I am not sure if Dubai does this (and it probably wouldn't have much impact given EK's scale, but in Qatar's case it's probably a non-trivial indirect subsidy).
More importantly, it might make perfect sense for the government to subsidize the airline -- build it up now, achieve domination, with a nominal strategy to return profits later. Not necessarily an irrational investment approach, except perhaps that the "tribal" governance in the Gulf doesn't have the same long-term market discipline, in general, as the West -- or do you dispute that also? Moreover, building Emirates obviously has positive ripple effects for Dubai Inc. as a whole, which the rulers might rationally calculate but from which a market actor (i.e., a private investor in the airline) may not benefit much.