I'm not sure how much most of you guys know about airline finance, but there seems to be something fundamentally illogical with Emirates' business plan. They -- and other Middle Eastern airlines -- seem to be able to place enormous airplanes on long thin routes where no other airline could possibly make money by providing such service. And then they spend more money per passenger on service than other airlines spend.
Like take this latest USA expansion:
http://www.bloomberg.com/news/2014-1...tml?cmpid=yhoo
As most of us know, the economics of the A380 aren't terribly attractive to most airlines. Indeed, no USA airline has bought one. The non-Middle East airlines that fly them tend to fly them on very heavily travelled routes -- where the economics of offering 600+ seats on a flight could make sense. There are only a handful of such A380 flights from the USA to the much larger European market. Yet, Emirates flies these planes on "long thin routes" like Houston to Dubai.
You'd have to be smoking something (as Gordon Bethune would say) to think there are more than 600 pax a day who want to fly from Houston to Dubai. Nor is Dubai a logical connecting point to pretty much anyplace other than the Middle East and India.
So where is the money coming from for this service? Are the books of Emirates and other Middle Eastern airlines audited the way Western companies are audited? There must be some massive subsidies coming into these companies somehow, because there's no logic to this business plan.