Originally Posted by
iahphx
Thanks for the comments. But I remain 100% convinced that Emirates could not make money flying these flights from the USA. Dubai is simply an illogical connecting points for most destinations from the USA. As I said, the only major connecting market is India. Otherwise, the geography is simply wrong.
It would be very interesting if EK ever publicly released figures on connecting traffic that fed their L/H flights to the US. You'd actually be very surprised on the market. An example, on any given day there's people boarding the LAX flight to go to JNB via DXB. Why they fly via DXB instead of other points like ATL/JFK/LHR which are probably all shorter? Probably comparable fares, maybe FF status, maybe simply because EK has better service than the other airlines that compete for this traffic? Like I previously talked about, with 30 'logical' connecting points, only 9 people going to each point has to be onboard a flight. Now think about it, add in other destinations that EK can fly passengers to cheaper than it's competitors and suddenly you have 50 connecting points that are fed from one US flight. Now that number reduces just about 6 passengers per destination.
The population of Dubai is only 2 million -- about the same as Budapest which, to my knowledge, has zero nonstop flights to the USA from ANY city. On "real economics" -- the economics that would apply to a USA airline -- MAYBE this flight would work from NYC. That's about it.
But that's not the point; if you're bringing economics into this, you should know there are a lot of factors that play into the demand for air travel between two countries. Whether it be GDP per capita, historical ties, business ties (Oil?), ... you cannot compare the traffic to the US from DXB and BUD. BUD doesn't have the network of destinations connected to it, whereas DXB does.
Emirates does not partner with any of the 3 world alliances. That would cause most American businessmen to fly other airlines. There would also be a natural booking away from Middle East airlines: indeed, while I would appreciate the service on Emirates, I honestly wouldn't be looking for a reason to fly them to connect to someplace else. I think at least 95% of Americans would feel the same (and probably the majority of high elite status USA frequent flyers).
Probably pretty close to 95% of Americans would also be price sensitive enough to want to fly the cheapest route from point A to point B. Therefore, when EK can offer the best price from Point A to Point B even if it's via Dubai, they will win over these passengers. Just look at the trend of American legacies now sinking to the offerings of LCC on domestic services. As mentioned previously, there's a variety of contributing factors that make EK the cheapest by reducing it's costs to levels that American legacies just could not afford.
The vast majority of the cost of this route would be aircraft and fuel. I don't care what they pay their staff -- it would be largely immaterial.
In the financial year ending 2014, 13.1% of EK's cost were made up from employee costs. How is that not relevant? That's the second largest cost component behind fuel! I'm confident that one of the principle reasons why EK can keep it's costs lower is largely because of the lower salaries it can pay its workers.
There is obviously squirrelly mathematics going on with these Middle East airlines. If the rest of the world operated like this, there would be several dozen of A380 flights from the USA to Europe every day. This level of service doesn't exist because no one is picking up the tab for it.
Don't forget that there is still large percentage of the traffic traveling from N. America to Europe isn't O&D. As I previously implied, carriers like BA, LH, KL, AF, ... are also carrying traffic from N. America to MENA / Indian subcontinent regions too. It's even been quoted by AC's CEO that their flight from YOW-FRA simply would not be profitable, and thus operate without the feed that FRA provides to the MENA region on LH metal. Think of it this way, the ME3 including EK are just redistributing the same traffic through their respective HUB airports instead of going through Europe. The ME3 also have a significantly smaller number of daily flights to the US from their respective HUBs by consolidating traffic onto bigger aircraft.
Believing that every passengers that boards a flight from N. America to Europe is simply an O&D passenger is the wrong approach to this.