|
Originally Posted by Firemansam
(Post 23870565)
Oh lordy lord... My palm keeps hitting my face.. This is hilarious. Others have put up the numbers yet you still don't put up any form of evidence to back yourself or refute their claims.
Take the statements of the CEO of the most financially succcesful airline in the world, Delta. Richard H. Anderson, Delta’s chief executive, has said the A380 is “by definition an uneconomic airplane unless you’re a state-owned enterprise with subsidies.” http://www.nytimes.com/2014/08/10/bu...a380.html?_r=0Anderson can't make the math work, because it doesn't work in a free market. Even the makers of the A380 say it was designed to serve high traffic, high volume routes. Not long thin routes. Yet most of the buyers are flying it on long thin routes. That's why Anderson knows something is wrong. As a pax, I always enjoy getting more than I paid for while flying. But I don't equate that value proposition with profitability; you usually get more than you pay for when somebody else is picking up the tab. That's what's happening with Emirates these days; you're not actually paying the full price for the air travel you consume. Nothing wrong with that (from a passenger's perspective). It's just not fair to competitors. |
Originally Posted by iahphx
(Post 23870556)
More helpfully would be a financial explanation of how, reportedly without gov't subsidy, you could run a business model that has shown repeated failure everywhere else in the world. And then "double down" by flying enormous aircraft to several USA cities without any obvious way of making those routes profitable. While there are plenty of Emirates believers here, there's also 65 years of jet-age transatlantic business history. Nobody has ever made this work. Nobody. The first airline to do it, profitably, will not be from in a mid-sized Middle Eastern city.
Or do you prefer to stay with conjecture? The Economist article quite clearly lays out the financial explanation and it is only two pages. Give it a read. Come on. |
Is Emirates a financial scam?
So according to the OP this is a scam (def defraud or swindle) would be fascinated to hear who is being defrauded here and who is benefitting? By your own admission fares are reasonable so can't be that pax are the victims. Maybe the airline and it's shareholders are benefitting at the expense of the state oh but wait a minute the state is the shareholder! The simple math as you put it doesn't add up nobody would benefit from a "scam" that involve the government taking with one hand and paying with the other. It would a zero sum game. Unless you think the lending banks are being "scammed" and the banks and auditors have missed this as well as the regulators and competitors.
Can you better define your scam terms of reference? ESP wrt who actually is bernie madoff in your mind and who is the poor investor? |
It's interesting that even in the NYT article which the OP has provided a link for, and in which we are supposed to find "TONS of evidence", he has somehow missed this crucial paragraph:
"Unlike airlines in the United States, Emirates, which is a product of Dubai’s aviation-friendly policies, operates from a single hub. The airport handled 66 million passengers last year, rivaling Heathrow as the busiest international hub. Emirates serves more than 140 destinations, essentially connecting flows of passengers with a single stop in Dubai." This point, which has been so painstakingly explained again and again by forum members, appears to be a real blind spot for the OP. |
Originally Posted by activistflyer
(Post 23870716)
It's interesting that even in the NYT article which the OP has provided a link for, and in which we are supposed to find "TONS of evidence", he has somehow missed this crucial paragraph:
"Unlike airlines in the United States, Emirates, which is a product of Dubai’s aviation-friendly policies, operates from a single hub. The airport handled 66 million passengers last year, rivaling Heathrow as the busiest international hub. Emirates serves more than 140 destinations, essentially connecting flows of passengers with a single stop in Dubai." This point, which has been so painstakingly explained again and again by forum members, appears to be a real blind spot for the OP. I know you Emirates loyalists refuse to believe it, but the math just does not add up here. We know AS A FACT that the USA gov't has subsidized Emirates airplane purchases through the Ex-Im Bank (likely to now stop), but that could never be enough to actually make this flying profitable (or other foreign airlines would do it, too). Unless the books are just wrong, there is some other HUGE cost that other airlines have that Emirates doesn't pay. I'm sure they're not actually paying real market costs for their facilities in Dubai, but that's probably not enough to make this work, either. They don't pay income taxes -- that's nice, but that's also probably not enough. We know their labor costs are lower, but that's not enough either. I'm sure the facts will eventually come out. Meanwhile, we'll see what happens on Emirates new USA routes. If this train-wreck of a business strategy is reversed, we'll at least know that the airline does face some real-world business restraints. If even more A380s start showing up in secondary USA int'l markets, we'll certainly have other voices raising suspicions. |
Originally Posted by iahphx
(Post 23870837)
We know AS A FACT that the USA gov't has subsidized Emirates airplane purchases through the Ex-Im Bank (likely to now stop), but that could never be enough to actually make this flying profitable (or other foreign airlines would do it, too). Unless the books are just wrong, there is some other HUGE cost that other airlines have that Emirates doesn't pay. I'm sure they're not actually paying real market costs for their facilities in Dubai, but that's probably not enough to make this work, either. They don't pay income taxes -- that's nice, but that's also probably not enough. We know their labor costs are lower, but that's not enough either. 1) they finance their aircraft at good rates (whether from Airbus or Boeing) 2) they have lower labor costs for crew and ground staff (don't underestimate this) 3) they have access to a good hub airport at attractive rates 4) they don't pay corporate income taxes (this a huge cash flow impact) Add all those up... what else do you want? |
Originally Posted by extramileage
(Post 23870962)
Ok, so let's sum it up as you already do:
1) they finance their aircraft at good rates (whether from Airbus or Boeing) 2) they have lower labor costs for crew and ground staff (don't underestimate this) 3) they have access to a good hub airport at attractive rates 4) they don't pay corporate income taxes (this a huge cash flow impact) Add all those up... what else do you want? One could argue that the difference between Emirates and other state-owned airlines is good management, and that is undoubtedly true. In most cases, the CEO of a state-owned airline is hired for his political connections and not his business acumen -- and then he's forced to hire or pay employees more than they deserve. Emirates doesn't work that way. So that PARTIALLY explains their success. But it's a long way from running an airline that can stay in business (this is a VERY difficult industry, after all) to one that can dispatch luxury A380s to Texas and make a profit. There's more to this story. |
Originally Posted by iahphx
(Post 23870837)
I'm sure the facts will eventually come out.
|
There are no EK loyalists here. It's a pure fabrication courtesy of your imagination. You should know that, seeing you've been on FT for a decade and half.
Your theory of a scam could have had some ground if it was backed by actual data, a form of evidence. You can't point into the abyss and claim that the evidence that contradicts all that has been discussed by others is on the other side where no one can see let alone analyse. The terminology that you use makes me doubt your claimed expertise. Long and thin is used in literature to describe a route where demand is low and costs are high which calls for a small aircraft/less frequency to cut on costs and restrict supply to reach profitable threshold making the route viable. This is true for airlines operating point to point network with little/no onward/inward connectivity. This is NOT the case with EK. As for EK management. There has been changes over the years. SVPs and below come and go. If your claim about 'connections' is true we wouldn't see folks from LH, GF, BA, VS among others, come on board. Heck there wouldn't be any vacancies with EK to begin with. Lastly, have you even looked at the counter example I had provided before? QF flying A380 between SYD and DFW. US of A et al. potential market size 350 mil vs AU & Co. of about 30 mil at most. Yet they maintain this route as well as 2x A380s to LAX daily on top of 2x 747s (I'll ignore HNL for the time being). As for DFW they have gone from a 747 on 3 days to an almost daily operation. If QF is anything to go by then EK with a reach of about 2 bil (Asia/Africa/a bit of EU) to a market of about 300mil should be sending multiple A380s. Wait they already do that! And how about SQ doing Houston via Moscow? |
Originally Posted by iahphx
(Post 23870614)
Take the statements of the CEO of the most financially succcesful airline in the world, Delta.
Richard H. Anderson, Delta’s chief executive, has said the A380 is “by definition an uneconomic airplane unless you’re a state-owned enterprise with subsidies.” http://www.nytimes.com/2014/08/10/bu...a380.html?_r=0 |
Every time I thought this thread couldn't get any more hilarious, OP proves me wrong. Thanks so much ^
|
Originally Posted by iahphx
(Post 23870998)
But it's a long way from running an airline that can stay in business (this is a VERY difficult industry, after all) to one that can dispatch luxury A380s to Texas and make a profit. There's more to this story.
|
Originally Posted by YuropFlyer
(Post 23871376)
Every time I thought this thread couldn't get any more hilarious, OP proves me wrong. Thanks so much ^
|
Originally Posted by iahphx
(Post 23870998)
It's not enough. Otherwise, there would be other state-controlled airlines with decent management doing the same thing.
One could argue that the difference between Emirates and other state-owned airlines is good management, and that is undoubtedly true. In most cases, the CEO of a state-owned airline is hired for his political connections and not his business acumen -- and then he's forced to hire or pay employees more than they deserve. Emirates doesn't work that way. So that PARTIALLY explains their success. But it's a long way from running an airline that can stay in business (this is a VERY difficult industry, after all) to one that can dispatch luxury A380s to Texas and make a profit. There's more to this story. http://centreforaviation.com/analysi...king-it-147262 Aircraft operating efficiency measures for Emirates, IAG and Virgin Atlantic: 2012* Emirates IAG Virgin Atlantic Ave of IAG & Virgin Ave trip length km 4,788 3,223 7,194 5,209 Ave. daily departures per aircraft 2.2 3.2 1.5 2.4 Utilisation hours per day 13.55 12.20 13.73 12.97 Ave. seats per departure 309 155 333 244 Passengers carried per aircraft per day 548 397 392 395 The real summary of this is: Emirates’ aircraft, on average, carry nearly 40% more passengers per day than both IAG and Virgin Atlantic |
iahphx:
In post 163 you ask for a financial explanation of the business model - are you deliberately ignoring posts that have actually given you mathematical breakdowns on the feasibility of A380s of ULH routes - central to your thesis that this makes the entire airline operation unsustainable therefore requiring direct subsidy? Posts that address all the points you made in post number 170? In the NY Times article that you linked, did you seriously just cherry pick that one quote from 2012 from DL's CEO, and ignore the rest of the article which has more nuanced discussions about the risks and advantages of deploying A380s? Are you also deliberately ignoring other posters who have linked you to other discussions and research about the viability of a global transit model? Judging by your replies in this thread however, I doubt I will get a direct reply to this post... Oh well, onwards to 10000 views! |
| All times are GMT -6. The time now is 7:59 am. |
This site is owned, operated, and maintained by MH Sub I, LLC dba Internet Brands. Copyright © 2026 MH Sub I, LLC dba Internet Brands. All rights reserved. Designated trademarks are the property of their respective owners.