subject2load

Could the alternative plan involve getting rid of all those big A380's and replacing them with smaller aircraft .....?

And management could then fill their time thinking up ways of solving the daily problem of mismatch between demand & seat capacity .....? (er ...hang on .....I reckon I already have a radical solution : Use larger aircraft ......)

And of course if you were looking at ways of actually reducing demand, then stop spending all that money on providing a high quality product in premium cabins to the ever-demanding traveller ......

FLLDL

This really is the gist of it for me. EK's model is not new - it is the same as CX and SQ just on a far vaster scale. Not sure why this is so hard to understand. They are exploiting their geographic location and access to very low cost labor. If any of the US routes are running at a loss, they will simply end them.

I do believe EK will face some headwinds in the future as competition from the other ME airlines heats up and as the number of easy potential destinations runs low. None of this makes them a scam however.

eternaltransit

The numbers I used were trying to give a less than ideal revenue number to EK so as to try and see things more from the OP's perspective and whether he had a case to say that these routes are definitely losing money - I did mention that I hadn't included profit from cargo, but it turns out that it's feasible to run those routes with pax revenue only with premium loads anyway. I also based pax revenue on the ULH configuration as stated in my posts (14/76/399).

Obviously cargo/savings on fees etc all bolster EKs bottom line!

jackiedada

Flights DXB- JFK haven't been full in Y lately. Last one I had an entire 4 seater to myself and yesterday the seat next to me was vacant (80% occupancy).

ClipperDelta

Actually, if you look at EK's financial statements, you will notice that one area which EK saves a lot on (relative to other US/European carriers) is its labor costs. EK's salaries/benefits accounts for 13% of its total operating costs, compared to 20-25% for most US/Euro carriers.

For the 12 month period 2013-2014, EK's total labor expenses were the equivalent of US$2.784 billion, for a total of 52,500 employees (across the Airline and DNATA), which equates to around US$53,000 per employee. Compare this to say Delta, which spent US$7.72 billion on labor costs for the full year 2013 on 77,700 employees, essentially around US$100,000 per employee.

eshaq786

Basing your business on connecting traffic would not work as well in the USA because the USA isn't a good geographical location for connecting traffic. Only possible connecting traffic would be to that of other US cities but not really for international travellers to other parts of the world. I can imagine maybe Europe to South America via US but thats about it.

Thats why it would not work for USA airlines to fly A380 but for EK it would since they are at a good geographical location for people connecting to several parts of the East and they can fill their aircraft quite easily. EK's location is an asset to EK.

You are still thinking in terms of IAH-DXB when you should really be thinking in terms of IAH-Anywhere else EK connects to.

edy4eva

More like vice versa since the potential market size connecting through DXB to the US is several times larger than the US going the other way.

As for EU-Latin America via the US, though that market exists, it's a much smaller chunk than going via one of the EU hubs, one of the reasons is the US visa requirement for transit passengers that hits Latin Americans going to Europe.

The OP seems to be unaware that transiting via DXB is as seamless as transiting domestically in the US -even easier than some large airports. Also that reference to how 'enormous North American aviation market' is, serves as a confirmation to how limited his knowledge is of the global market and where this sizeable but not THAT enormous market stands.

iahphx

I am. Based on the way all other foreign carriers operate (other than the Middle East airlines), I don't see the market. As anyone with map skills knows, the Middle East isn't a good connecting point for at least 95% of USA int'l travelers.

lighthand

Just to check. Are you referring to flight route map or just map in general?

TRAVELSIG

Have you had a chance to read the Economist piece on Emirates that was posted in this thread? How about the Foreign Affairs piece from earlier this year?

http://www.foreignaffairs.com/articl...ne/flying-high

After reading both of these it would be interesting to hear your comments and feedback.

CAPA also has published a number of particularly interesting pieces of work on the unit costs including here for Emirates:

http://centreforaviation.com/analysi...king-it-147262

Looking forward to some feedback a touch more detailed than "I don't see a market".

FLLDL

If you are based in IAH it shouldnt take too much imagination to think up the types of destinations where EK has an advantage US-INTL (hint think energy). Plenty of destinations which used to be unwieldy two stops or badly timed one stops via Europe or East Asia can now be reached in one stop via DXB.

Combine that with the enormous South Asian and Arabian population in Houston and it is pretty easy to imagine the type of people who would prefer connecting in DXB.

An Indian family going to visit relatives in some lower tier Indian city like TRV would previously have flown something like IAH-FRA-DEL-TRV on a ticket across several airlines and messy connections. Now they can just go IAH-DXB-TRV in one stop with an easy connection in Dubai and short flight to TRV. No connecting point in Europe or the Far East can offer anything like this. Multiply this by the number of similar destinations across South Asia and Africa and the math very quickly starts to make sense.

edy4eva

You're still assuming that EK are serving the US market. That's US-centric thinking.

EK in essence are serving other markets in Asia/Africa/EU-to some extent by flying to the US. IST/BEY/AMM/CAI/(a whole bunch of African points)/KWI/JED/RUH/MCT/DOH/BAH/(a whole bunch of others) all have limited options for a one stop trip to the US. EK publish steep fares out of most of these points to the US, they're almost all high yield affording EK to beat competition out of the US at lower fares that you might see as low yielding but really they're breaking even at worst case and we're no longer talking about bean-level accounting here, but somehow this is the level at which you like to view things.

moondog

-you clearly don't know how "all other foreign carriers operate"
-even if you did, it is not reasonable for you to assume such knowledge is applicable to EK's business strategy
-statements like "I don't see the market" suggest to me that you're not taking the time to digest the discussion here, much of which has been in direct reply to your points of confusion
-EK does not operate at the behest of "USA int'l travelers"

CaptainEKAirbus

Maybe part of your ignorance is that you don't realize how large the market for international travelers is from Houston. Let's look at the publicly available 2011 O&D market data from Houston, where flying EK would be justified, because of the convenience of connecting via DXB.

DXB - 75,393
BOM - 40,860
DEL - 25,153
KHI - 25,110
HYD - 21,491
DOH - 15,259
MAA - 14,194
BLR - 13,240
COK - 12,372
DMM - 12,116
IKA - 10,190
KWI - 10,077
AMD - 8,727
BAH - 8,448
LHE - 7,084
DAC - 6,633
RUH - 6,037
JED - 5,926
ISB - 4,773
CCU - 4,452
TRV - 4,383
MCT - 4,223

That totals 336,141 passengers per year, or about 921 per day. With these 2011 figures alone, it's pretty evident that there's a market to destinations that EK serve conveniently via DXB. I didn't even count JNB, NBO, AUH, CPT, KTM, ADD which are also all conveniently connectable via DXB.

Whilst not totally accurate, but if we used Houston's international growth figures for the past few years being 1.5% (2012) and 2.5% (2013), we would estimate that the total O&D passengers to this region is somewhere along the lines of 349,713 passengers per year, or about 958 per day at a conservative estimate in 2013. This obviously doesn't account for higher growth in certain regions than other regions, or the fact that many passengers will fly domestic, then connect internationally at other hubs, and will thus be included in domestic passenger growth figures.

According to 2013 figures, EK captured 183,367 passengers on the IAH-DXB route which is 52% of my prediction of a 349,713 passenger market for IAH to EK's convenient connectable destinations. Is it really that unfeasible that EK cannot capture more of this market; or conversely that flying from DXB-IAH cannot be sustained due to connections? Personally, I believe with the right pricing, it is made profitable.

TRAVELSIG

The OP has not answered regarding hard data sources from:
The Economist
Foreign Policy
CAPA

So- or this debate can turn into "what I feel and what I want"- or there isn't much to debate as the hard numbers seem quite clear in answer to the OP question. OP if you can come back and pick some holes in the numbers that would be really interesting and would probably help the folks at audit out as well as some of the stressed EU airlines.