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-   -   'Is Flying First Class Doomed?' (https://www.flyertalk.com/forum/emirates-skywards/1606377-flying-first-class-doomed.html)

DL2SXM Aug 29, 2014 12:51 am


Originally Posted by JW76 (Post 23432532)
It will survive for long-haul routes which cannot easily be reached by private jet. Who would voluntarily submit to the TSA for anything under 6 hours?

TSA is not that bad. Other then a few newsworthy incidents, most of the time going through security is a non event, especially with TSA pre check. I have never had an issue with TSA, if anything, quite the opposite

OzTennis Aug 29, 2014 1:20 am


Originally Posted by bhrubin (Post 23440637)
Wow, a well composed and clearly articulated response--thank you! I actually agree with your assessments for the most part.

I will point out that Emirates profits for a year are about comparable to what AA, DL, and UA can make in a quarter, however.

Again, I say that those state-owned enterprise carriers like EK, SQ, EY, TK, CX, etc. seem to be the only ones with the "tremendous" service and amenities and outrageous suites--with LH being the biggest exception. That says tons about LH and what it is able to do as a true private enterprise, and it reflects the challenges with other private enterprise carriers like UA, DL, AA, BA, AF, and the like in competing with those state-owned enterprises. It's easier for more authoritarian states like Thailand, China, UAE, and Singapore to build airports where and how they want compared with the industrialized and more democratic West, and it's easier IMO for those state-owned enterprise carriers to implement more fabulous offerings without the same profit concerns as their counterparts in the West, too.

Aren't you conveniently forgetting the tens of billions of dollars that Congress has given to American airlines (including American Airlines, Delta etc)? e.g. $15 bill alone in 2001 after Sept 11th. You are making out they are bravely doing it solely the private enterprise way against the state funded airlines elsewhere.

DYKWIA Aug 29, 2014 2:17 am


Originally Posted by joshwex90 (Post 23442011)
Government funding (meaning no need to rely on your actual revenue) is very different than bankruptcy protection

Can you provide proof that EK receives government funding? As far as I know, it's a completely self sufficient airline that makes a profit.

eternaltransit Aug 29, 2014 3:40 am


Originally Posted by DYKWIA (Post 23442357)
Can you provide proof that EK receives government funding? As far as I know, it's a completely self sufficient airline that makes a profit.

I think the only "subsidy" they get are indirect benefits, e.g.:
- a low/no tax state, which allows them to offer attractive salary and benefit packages (as regulars on this board know, it's basically, free accommodation and living costs) which reduces their cost of labour compared to other carriers
- as EK lease the vast majority of their aircraft, the interest rate they pay is the best in the market considering EK's financial position (healthily profitable) and implicit debt guarantees from the emirate of Dubai

The subsidy that people imply is generally fuel - which actually isn't subsidised at all. In fact, if you look at the recent financial history of Dubai, EK actually contributed to the Dubai treasury during their recent problems I think...

The other benefit is the 30 odd percent discount they get on their widebodies, which I would assume is at the top end that Airbus and Boeing offer considering EK's purchase power.

subject2load Aug 29, 2014 3:45 am

DYKWIA - I suspect you will wait a long time for such proof.

It's a very common myth amongst many travellers with limited/zero first-hand experience of Emirates, and the part of the world in which they are based, that the airline is heavily subsidised - or even totally state-funded. I think the myth gets peddled around as the result of a misguided belief that it must be, surely ....I mean ...... with all that money they've got out there ....... :eek:

My own understanding, having previously spent some years living in the region, is that in the early days of its inception & initial development, the airline did indeed receive significant 'state support'. However, the intention all along was that it would stand on its own feet, and the clearest indication that the transition to a conventional commercial operation had been successfully completed was the first publication (can't quote the actual year) of fully-audited company accounts & reports, a practice which of course has continued ever since. State-run industries are not in the habit of providing Annual Reports for public consumption .....!

One qualification I would add - and this more by way of an educated assumption than any sort of 'inside knowledge' - is that if by chance EK ever got itself into serious, 'life-threatening' difficulties, then those holding the reins of power in Dubai would not wish to see their flag carrier fail. Given the airline's ongoing level of success, such protection seems unlikely to be needed ; but I'd bet my mortgage that it would be there.

DYKWIA Aug 29, 2014 5:00 am


Originally Posted by subject2load (Post 23442567)
DYKWIA - I suspect you will wait a long time for such proof.

It's a very common myth amongst many travellers with limited/zero first-hand experience of Emirates, and the part of the world in which they are based, that the airline is heavily subsidised - or even totally state-funded. I think the myth gets peddled around as the result of a misguided belief that it must be, surely ....I mean ...... with all that money they've got out there ....... :eek:

My own understanding, having previously spent some years living in the region, is that in the early days of its inception & initial development, the airline did indeed receive significant 'state support'. However, the intention all along was that it would stand on its own feet, and the clearest indication that the transition to a conventional commercial operation had been successfully completed was the first publication (can't quote the actual year) of fully-audited company accounts & reports, a practice which of course has continued ever since. State-run industries are not in the habit of providing Annual Reports for public consumption .....!

One qualification I would add - and this more by way of an educated assumption than any sort of 'inside knowledge' - is that if by chance EK ever got itself into serious, 'life-threatening' difficulties, then those holding the reins of power in Dubai would not wish to see their flag carrier fail. Given the airline's ongoing level of success, such protection seems unlikely to be needed ; but I'd bet my mortgage that it would be there.

That was my understanding... but I thought I may be wrong as there are some very strong opinions being passed of as facts by certain posters.

The initial set up was funded by the Dubai government, and it consisted of 2 (I think) aircraft.

I also agree that the Dubai government would step in to prop up EK if it had financial difficulties. A bit like what happens when US airlines have financial difficulties (Chapter 11) :)

Always Flyin Aug 29, 2014 10:36 am


Originally Posted by joshwex90 (Post 23442011)
Government funding (meaning no need to rely on your actual revenue) is very different than bankruptcy protection

Even when, as part of that bankruptcy process, the government assumed liability for the airlines' pension plans?

Havoc10G Aug 29, 2014 1:51 pm

'Is Flying First Class Doomed?'
 
There are no implicit guarantees anymore in Dubai. The banks made the mistake of assuming this in '08. As a result the banks lend at market rates to EK with no sovereign guarantee. I also tend to believe the only subsidies are indirect eg salary cost lower. EK is profitable in its own right. Dubai of all places would never subsidise such a large enterprise as it would not make sense to a place with no huge oil and gas income.

joshwex90 Aug 30, 2014 2:37 pm

It's wholly owned by the government of Dubai...

Havoc10G Aug 30, 2014 4:42 pm

'Is Flying First Class Doomed?'
 
No it's owned by ICD a government entity. The same as Dubai World which if you remember during the crisis did not receive any automatic guarantee on its debts and went through a restructuring process as did nakheel. Sovereign guarantees are explicit not implicit. There many other examples.

TRVLUPGD Aug 30, 2014 5:29 pm

Arguments on StATE fINANCED OR NOT..i CAN'T BELIEVE THAT EITHER OF YOU HAVE PROOF ONE WAY OR ANOTHER.

I have not seen their balance sheets....can you tell me who actually owns the airline ? Where did the $$$ come from for the capitalization and continuing expansion?

It is the flag carrier,its sucess at any rate is paramont to Dubai Govt. $$$ invested, new airport,"excess " personnel but very importantly PRIDE.

joshwex90 Aug 30, 2014 11:37 pm


Originally Posted by Havoc10G (Post 23449788)
No it's owned by ICD a government entity. The same as Dubai World which if you remember during the crisis did not receive any automatic guarantee on its debts and went through a restructuring process as did nakheel. Sovereign guarantees are explicit not implicit. There many other examples.

Their own website says:

Originally Posted by Emirates.com
Though wholly owned by the Government of Dubai

Source: The Emirates Story | About Emirates | Emirates

Havoc10G Aug 31, 2014 2:15 am


Originally Posted by joshwex90 (Post 23450862)
Their own website says:

Source: The Emirates Story | About Emirates | Emirates

My point was it isn't in receipt of any guarantee and that owned via ICD, which in turn is owned by the Government does not imply a guarantee as per the other examples.

duckied Aug 31, 2014 8:03 am

RE Emirates. Let's look at what we know to be fact.

It is 100% owned by a govt holding company.

Dubai is running out of oil. Emirates is INTEGRAL to the government of Dubai to stimulate the tourism industry and has really helped put Dubai on the world map.

You cannot put oil into a planes fuel tanks. Emirates needs to buy jet fuel like every other airline.

Emirates biggest advantage is perhaps that the Dubai government is extremely PRO aviation. It has a geographical advantage. It has a HUGE advantage in that it's hub operates 24/7 allowing Emirates to get much more utlisation out of their staff and aircraft than those operating from night restricted hubs in europe and much of the western world.

Emirates doesn't have the western world corporate problems of contributing to pension funds for staff. Negotiating with unions. Paying staff while they are off on long term sick or maternity/paternity leave. If you are crew for emirates and get pregnant or get cancer - you are on the next plane back to your home country.

DYKWIA Aug 31, 2014 8:24 am


Originally Posted by duckied (Post 23451862)
RE Emirates. Let's look at what we know to be fact.

It is 100% owned by a govt holding company.

Dubai is running out of oil. Emirates is INTEGRAL to the government of Dubai to stimulate the tourism industry and has really helped put Dubai on the world map.

You cannot put oil into a planes fuel tanks. Emirates needs to buy jet fuel like every other airline.

Emirates biggest advantage is perhaps that the Dubai government is extremely PRO aviation. It has a geographical advantage. It has a HUGE advantage in that it's hub operates 24/7 allowing Emirates to get much more utlisation out of their staff and aircraft than those operating from night restricted hubs in europe and much of the western world.

Emirates doesn't have the western world corporate problems of contributing to pension funds for staff. Negotiating with unions. Paying staff while they are off on long term sick or maternity/paternity leave. If you are crew for emirates and get pregnant or get cancer - you are on the next plane back to your home country.

Complete rubbish yet again.


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