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These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market; one made possible through Open Skies. If US carriers seek regulatory help to fend off Gulf competition in North America, then they have no recourse should Asian flagships do the same to them.” - Karen Walker, Executive Editor, Air Transport World The US3 are playing a dangerous game here, especially Delta. How will that lovely TPAC hub work out for ya when CA, CX, HU, KE, OZ, and JL lobby their governments to block the competition? Are you ready to pull the plug on SEA? |
Originally Posted by Dieuwer
(Post 24766329)
Exactly.
The US3 are playing a dangerous game here, especially Delta. How will that lovely TPAC hub work out for ya when CA, CX, HU, KE, OZ, and JL lobby their governments to block the competition? Are you ready to pull the plug on SEA? No matter how silly the activities of the Mideast carriers -- and today was a particularly silly day with Qatar announcing FOUR new USA routes (probably more int'l ASMs than AA, the largest airline in the world, will add all year) -- none of the apologists here ever think to question where the money is really coming from. |
Originally Posted by Xlr
(Post 24766276)
At this rate we will probably see their 2014-2015 financials released first - and that document would also liven up this thread.
Release is on Thursday however the numbers are anyway wrongly published, so it doesn't matter for FD1971 / iahphx |
Originally Posted by iahphx
(Post 24766598)
Those countries will not block DL flights because DL is a for-profit enterprise that competes fairly.
No matter how silly the activities of the Mideast carriers -- and today was a particularly silly day with Qatar announcing FOUR new USA routes (probably more int'l ASMs than AA, the largest airline in the world, will add all year) -- none of the apologists here ever think to question where the money is really coming from. 2. How much money do you have invested in US3 stock? 3. Do you have any intention of presenting any kind of proof that supports your allegations? 4. What is the true reason for starting this thread, other than trying to manipulate US3 stock prices? Simple questions, but you will no doubt refuse to answer them. That speaks volumes about you. |
Originally Posted by iahphx
(Post 24764174)
The comparison is absurd. There is ample business justification for AA's new flights to China from the world's largest airline -- that has few existing flights to China. They might not be immediately profitable, but I can assure you that they wouldn't launch these flights if they didn't see profitability within a year or two.
I might also note that there are 1.3 BILLION people in China, with massive trade ties to the USA. There are 9 MILLION people in the UAE. It's why this discussion is essentially absurd, as folks try to justify the ridiculousness. Since you repeatedly argue that only Americans buy airplane tickets and most travel is O/D we have to point out that even the most generous calculation of Dallas' metro population is only around 6 million which means there is no market between China and Dallas. You have no other option than to declare American Airlines a scam. |
Originally Posted by iahphx
(Post 24762215)
The problem with your excuse is that yields suck to Asia right now, too. The USA airlines are pulling capacity out of Asia because it's unprofitable.
Originally Posted by iahphx
(Post 24764174)
The comparison is absurd. There is ample business justification for AA's new flights to China from the world's largest airline -- that has few existing flights to China. They might not be immediately profitable, but I can assure you that they wouldn't launch these flights if they didn't see profitability within a year or two.
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Originally Posted by iahphx
(Post 24764174)
I will happily look foolish if you can prove to me that there money to be made flying to Africa from the USA via the Middle East.
With the exception of a few countries (like Ethiopia -- which happens to have its own int'l airline with flights to the USA), it's completely illogical to fly to Africa via the Middle East from the USA. It would add several hours to your travel time. The flight times are also longer, logically, for the EK flights as you have to travel away from your destination at the start. So what factors are in play that will make someone choose this crazy routing? Firstly there is a price consideration, which surprisingly on the dates I checked EK wasn't the cheapest option. Then you have the convenience factor. Do you want to go through security and passport control in JNB which will have lots of international flights or will you choose DUR where you are the only international flight? So whilst it would seem crazy to fly east to go west, the reality is that for an extra few hours you can connect more conveniently. I know I prefer to fly a longer last flight as well rather than have a short connection to my home airport. You are already tired after the long international flight (minimum 8 hours), then having to wait another 2-3 hours, clear immigration, and wait at your new gate when all you want to do is sleep (for most of us that travel Y), the extra time spent on the aircraft doesn't seem that bad anymore. At least you have IFE to play with, or you can sleep in your seat, instead of the airport with the commotion that is common. And therein is the beauty of EK, connecting secondary city to secondary city from DXB. It is not about the ME direct flights as you stubbornly cling to. Geography truly is a B*%$h for the EU and US airline when it comes to the ME3. If you compare flying to BOS from DUR then I think it is even more convenient to take EK. You will then avoid a thoroughly enjoyable domestic flight experience in the US as well, just as a bonus...:p |
Originally Posted by iahphx
(Post 24766598)
Those countries will not block DL flights because DL is a for-profit enterprise that competes fairly.
No matter how silly the activities of the Mideast carriers -- and today was a particularly silly day with Qatar announcing FOUR new USA routes (probably more int'l ASMs than AA, the largest airline in the world, will add all year) -- none of the apologists here ever think to question where the money is really coming from. For instance, in previous years, QF doesn't make any money at all from operations, it is kept afloat by the profitability of the Loyalty programme - only now in 2015 after serious efforts are they turning a corner. With regards to DL (and indeed AA, and UA), is it fair if a significant chunk - in the case of DL, over 60%, AA over 70% according to latest quarterly reports - of its profits are generated in anomalously high margin environments protected by law from external competition - and to use this cash to bankroll tentative service like - DFW-PEK/PVG? As to questioning where the money has come from - I do recall there being quite a few posts about that very subject, but in case you missed them, it boils down to this: Qatar - petroleum and liquified natural gas, generating a fiscal surplus of 12.6% of nominal GDP in 2013/14, which is about 24 billion USD. http://www.gsdp.gov.qa/portal/page/p...15EnUpdate.pdf,http://www.tradingeconomics.com/qatar/gdp Abu Dhabi - I couldn't find detailed reports for the Abu Dhabi government budget, but given the various press releases about "double-digit" surpluses in previous years, 480 billion in sovereign wealth and a GDP of 260 billion USD, I think they could find some cash to prop up Etihad/use Etihad as their airline investment vehicle - especially given hydrocarbon extraction forms about 50% of GDP. https://ded.abudhabi.ae/en/media-cen...2014-Addresses,https://ded.abudhabi.ae/en/studies-i...conomic-report Dubai - budget deficit in 2014, surplus of only 990M USD projected for 2015. Government debt at EU levels (over 85% of GDP). Funds itself on capital markets via debt issues. Instead of linking to each part separately, I'll just link to my previous post which has the citations: http://www.flyertalk.com/forum/emira...l#post24712876, http://www.reuters.com/article/2014/...0NF33N20140423. So yes. Everyone here has asked where the money has come from. Instead of relying on prejudiced speculation though, one can easily find actual facts. Unless your position is simply: "I don't trust the Arabs", in which case there is nothing anyone can do to persuade you. |
Are they going to say Turkish Airlines and it's rise as a global airline to be reackoned with is also a financial scam?
Americans... |
"He said, she said." That's how I would describe this thread.
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Here's a classic example of a Middle Eastern analyst talking about how wonderful Emirates business model is -- without any knowledge whatsoever of airline economics.
https://foreignpolicy.com/2015/05/04...-delta-united/ All I can say is that if there was real money to be made flying Indians to the USA, we'd have the US3 launching all sorts of nonstop service from their hubs and cleaning the clocks of the ME3. Almost everyone would pay, say, an extra $100 for nonstop service and some would pay more. This is true of every nonstop service in the world. The cost of operating such flights would be lower than the ME3 costs even if the ME3 paid no ground handling expenses whatsoever at their hubs. It would be service that the ME3 couldn't match, because they don't have the route rights. Yet, the USA-India flights don't exist. In fact, USA-India flights are declining. Until somebody can explain how its cheaper to operate a connecting flight that adds 600 miles of distance and how this is more desirable to passengers than nonstop service, this "argument" remains a farce. |
Originally Posted by iahphx
(Post 24767986)
Here's a classic example of a Middle Eastern analyst talking about how wonderful Emirates business model is -- without any knowledge whatsoever of airline economics.
https://foreignpolicy.com/2015/05/04...-delta-united/ All I can say is that if there was real money to be made flying Indians to the USA, we'd have the US3 launching all sorts of nonstop service from their hubs and cleaning the clocks of the ME3. Almost everyone would pay, say, an extra $100 for nonstop service and some would pay more. This is true of every nonstop service in the world. The cost of operating such flights would be lower than the ME3 costs even if the ME3 paid no ground handling expenses whatsoever at their hubs. It would be service that the ME3 couldn't match, because they don't have the route rights. Yet, the USA-India flights don't exist. In fact, USA-India flights are declining. Until somebody can explain how its cheaper to operate a connecting flight that adds 600 miles of distance and how this is more desirable to passengers than nonstop service, this "argument" remains a farce. http://www.newamerica.org, http://www.newamerica.org/experts/afshin-molavi/ http://en.wikipedia.org/wiki/Afshin_Molavi https://www.linkedin.com/pub/afshin-molavi/3/954/956 |
http://m.arabianbusiness.com/emirate...14-591712.html
More comments from Tim Clark. Pasted below for convenience. He told a seminar at the Arabian Travel Market conference in Dubai that the subsidies row, in which it is claimed by US-based carriers Delta, American and United, that Emirates, Etihad Airways and Qatar Airways received more than $40 billion in subsidies from their home governments, was "flim, flam and tosh" and "you could drive a bulldozer through everything [the three US airlines] said about us [in their white paper to the US government last month]". Clark said: "If the US government is as serious about examining the allegations as it says it is - and given that the airlines claim to have taken two years to compile their report - then I need more time to put together a robust response. "They have given us 60 days, but the Open Skies agreements do not set a timeframe [for something like this]. "We will do it in our own time and we will deal a sledgehammer to their report." |
Originally Posted by iahphx
(Post 24767986)
Here's a classic example of a Middle Eastern analyst talking about how wonderful Emirates business model is -- without any knowledge whatsoever of airline economics.
:D |
Originally Posted by iahphx
(Post 24767986)
Here's a classic example of a Middle Eastern analyst talking about how wonderful Emirates business model is -- without any knowledge whatsoever of airline economics.
https://foreignpolicy.com/2015/05/04...-delta-united/ All I can say is that if there was real money to be made flying Indians to the USA, we'd have the US3 launching all sorts of nonstop service from their hubs and cleaning the clocks of the ME3. Almost everyone would pay, say, an extra $100 for nonstop service and some would pay more. This is true of every nonstop service in the world. The cost of operating such flights would be lower than the ME3 costs even if the ME3 paid no ground handling expenses whatsoever at their hubs. It would be service that the ME3 couldn't match, because they don't have the route rights. Yet, the USA-India flights don't exist. In fact, USA-India flights are declining. Until somebody can explain how its cheaper to operate a connecting flight that adds 600 miles of distance and how this is more desirable to passengers than nonstop service, this "argument" remains a farce. Assume you would use a 777 to operate the route: , JFK-DEL and JFK-DXB have similar fuel burn profiles at 11000km stage lengths. At 2300km stage length, DXB-DEL, the fuel burn is 9.4% more efficient. https://www.gov.uk/government/upload...efficiency.pdf So, JFK-DXB-DEL and JFK-DEL on a 777 when it comes to fuel costs is a bit of a wash, there is going to be a little bit more for the longer route, but not that much. Given a 777-300ER has a fuel tank of around 47890 US gallons and a range of 14490km, we can estimate fuel costs for the extra sector of around 9500 US gal, or 19000 USD. Considering operating costs for the entire sector JFK-DXB sector would be on the order of 185k USD (given 40% fuel costs at 3 USD a gal fuel, with the tanks filled to 85% capacity) for EK, one can see there is scope for a 100 USD fare cut: capacity of 304 in Y for EKs 777-300ERs that fly those sorts of stage lengths, that's only 30400 USD. If your target is for a 5% operating margin on the flight, then you need to generate 324k USD revenue. Fares right now are about 1300 USD ex-India in Y, 3800 USD in J and 6700 USD in F (these are the "el cheapo" fares), so let's say 550, 1700, 3000 is allocated to the JFK-DEL sector, at 80% loads, that's revenue of 257,000USD. (550*304+1700*42+8*3000)*0.80 = 257k. So, a bit of a shortfall, but not insurmountable because not everyone on the plane is going to be on an el cheapo fare. If we adjust the fares to more real-world scenarios, by say, increasing them across the board by 20% (rather conservative) to reflect the fact that those fares go all the way up to 1900 USD in Y, 7600 in J and 11500 in F at top prices, then we achieve revenue of 308k (breakeven). Add in some cargo and the fact pax will be coming from all sorts of markets with different bands, then the lower costs and lower margin targets make it possible to make some money here. Even with cheaper fares and lower loads, you can still reach the 5% profit margin quite easily, especially as loads approach 85-90, fares tend to increase exponentially, not linearly - and this is assuming everyone on these flights have the same origin and destination and uniform fares. Clearly DXB hub captives and US originating tickets are going to be paying much, much more for premium, especially. If you were to use US airline cost structures and margin requirements - with DLs CASM of 13.49 cents in Q1, instead of EKs 2014 of 12.2c CASM, then you would need revenue of 400k USD - now that is a big ask, which I think is unlikely to happen, especially considering the product on offer. I don't think the equity markets would tolerate deploying capital on routes for such a low return - unless the US3 could prove they have the pricing power to jack up the fares and still have good loads. That requires product, as well as connectivity, which imho they don't have. Given EKs non-fuel operating costs being that much lower than the US3, specifically salaries which are on the order of 50% less as a percentage of revenue than the US3, then it is plausible, given the operating margin requirements for EK (around 4-5%, after including repayment of financial lease liabilities) compared to say, DL, which is projecting 16% for next quarter (14% in 1Q by GAAP, adjusted operating margin 8.8% - http://ir.delta.com/files/doc_financ...001_k0ii9v.pdf) - that "real money" can be made. Just not very much of it, if your expectations are high. It is rather ego-centric to assume your flying preferences extend to everyone in the world. Some people are happy to save 100 USD and put up with an extra couple of hours flying - or some think that non-stop US3 carriers have such a poor product that it is laughable to even consider paying a premium for them. If you have a family of 8 flying to the US, each saving 100/150 USD - that's a significant amount of money: especially if the kids will be entertained by the in flight entertainment and the reputation of being shouted at by US3 flight attendants (a reputation that is either warranted or unwarranted, but still exists outside the US - and arguably inside the US too). Additionally, you must stop conflating non-stop, with fastest route: EK has a lot of unique route pairs that are one-stop itineraries, but still provide the quickest and most convenient (e.g. daily schedules). As an aside about your incredulity that there is any money in Africa and there is money in African services - I'm sure that regular African flyers will let us know about the composition of the premium cabins there, but do note that, Luanda was for the 2nd year in a row in 2014 the most expensive city to live in the world: and EK has daily service there. . Quite a few African cities continue to rank high in the 2014 survey, reflecting high living costs and prices of goods for expatriate employees. Luanda (1) remains the most expensive city for expatriates across Africa and globally, and Ndjamena follows in second place. Victoria, Seychelles (13) is the next costliest city in Africa followed by Libreville, Gabon (19). |
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