FD1971

Enzokk, your question justified a serious answer, unfortunately I have some work to do but will get back to you later.

eternaltransit

Qatar has the money to do that kind of deal though - Dubai, not so much, so we are back to the question of, where does Dubai get the money to pay for EK or the commercial transactions to get additional landing slots, sorry, a favourable government supportive of such deals.

The UAE is not Dubai - and if the UAE is going to be buying equipment like that, then Etihad is going to be the beneficiary of any transaction, not EK, given Abu Dhabi's dominance in the UAE Federal budget and indeed, economic and political clout in the UAE.

Additionally - EK flying A380s on 12hr+ routes is not the bulk of operations, and given that the planes are likely going to be on operating leases, there is, I think, some potential to slow down the delivery schedule if required (e.g. EK doesn't think it can cover the costs on a new route).

iahphx

The USA-Europe market is NOT a protected market. It's a tough market with lots of competitors, but it's also a REAL BUSINESS. Demand to travel from the USA to India is relatively modest (and will remain so for many more years); demand to travel to Dubai is tiny. But demand from USA to Europe is huge. It would be beyond foolish if the CEOs of the USA airlines didn't do everything within their power to prevent non-profit-motivated deep pocket competitors from entering that market using a loophole that nobody would agree to today. The damage they could do to profitability would be enormous. Bethune's adage that you're only as smart as your dumbest competitor would never be more true.

UA1K_no_more

You'd think that an "expert" would know that, but apparently not...

I'm sure that would be a change from the food and drinks you usually serve him during conferences.
Don't forget to pack your bowtie!

eternaltransit

Come on, you know that IAG profits don't come from South America - they come from BA (975m GBP operating profit on the BA segment, compared to 50m EUR on IB and 141m EUR from Vueling). North America is the thing that keeps IAG doing really well - they even state that themselves in their own report. Capacity increases to Latin America and Caribbean (total capacity share of ASKs being 17.4%) were the lowest on the network (at 4.1%, with LF of 81.4%), whereas North America, with its total capacity share of the network at 29.2% saw a 6% increase in ASKs and LF of 83.1%.

That only took 3 minutes of debunking - I know you don't think much of any of the posters here, but it really is a disservice to the forum by providing inaccurate information...

http://www.iairgroup.com/phoenix.zht...-reportsannual

eternaltransit

How is antitrust immunity not protection?!?!

irishguy28

It's a real business - but it IS a protected market!

There are not many airlines flying the route. You have oneworld*, SkyTeam*, Star Alliance*, airberlin, Aer Lingus, Emirates, Icelandair, Kuwait Airways, La Compagnie, Norwegian, SATA, Singapore Airlines, TAP, Turkish Airlines, WOW! Air, and some charter/holiday operators (Did I miss any?). The first 3 - oneworld, SkyTeam and Star Alliance - account for the vast majority of the market. The remaining players are minnows (Kuwait, Emirates and Singapore Airlines each have at most one daily flight; SATA only operates seasonally; none of these remaining players operate to more than a handful of destinations in the US, etc etc).

The 3 alliances (excluding airberlin from the oneworld joint venture and SQ, TAP and THY from the Star Alliance joint venture) operate immunised joint-ventures across the Atlantic, allowing them to co-operate, set prices, share revenues and plan together in ways that are otherwise deemed illegal. These 3 virtual "airlines" own the vast majority of the market.

The US3 have already loudly complained about new entrants such as Norwegian. They have protested about Emirates' routes (proposed and existing) between Europe and the US. They consider the transatlantic market to be "theirs", which they are happy to split 3 ways, tolerating minnows like those mentioned above. But they object to any increase in competition.

eternaltransit

I think the 3 virtual airlines (the alliance JVs) comprise around 80% of the TATL market - I can't remember where I saw that slide, but in 2013 it was 75%: http://www.flightglobal.com/news/art...nue-to-389676/

So, like telecoms in the United States - there is nominal competition because there are 3 players...but in reality, you get an oligopoly where you can bully out new entrants who don't play by your rules (which are, double-digit margins, capacity discipline etc. etc.). That is not good for competition or consumers. If someone wants to gamble away their money giving consumers benefits, they should be able to. And if it turns out their gamble is actually commercially sustainable - congratulations, you've just achieved the social imperative of capitalism: make things more efficient and thus cheaper for humanity, so we can allocate our capital better elsewhere.

irishguy28

I missed out Virgin Atlantic from my list of operators - however, they are 49% owned by Delta and, although not part of the Skyteam Joint Venture, they appear to have their own "arrangement" with their paymaster - so they are part of the oligopoly, too.

eternaltransit

I apologise for not replying to the rest of your post - the assertion that TATL is not protected is, I think, rather inaccurate.

But I agree with the substance of your next point, which is yes, if I was the CEO of a US3 airline I would see additional competition in the TATL market by operators who didn't care about single-digit margins at best, as a quite existential threat - the domestic market is rather competitive, after all, given that none of the US3 could I think say with a straight face they can offer a sufficient price premium on product alone, apart from select routes - and so would go to just about any length to defend the status quo (and rope in my JV partners to go on the offensive too, as they arguably have had more to lose).

As regards to the "loophole" - well, I think the Italian authorities agreed to it relatively recently, so I think the US3 are actually fearful that some cities and governments might actually do it. The US3 are under no illusion as to what their products are vis-a-vis the competition internationally and consumer preferences. They are not stupid. The US government could conceivably say, great, no problem, consumers like lower fares and allow it.

Thus the PR battle.

GUWonder

The U.S.-Europe aviation market is a protected market, even as it also has real business.

EK is a non-profit-motivated competitor with deep pockets? So then EK is a charity?

Do you label truly charitable organizations as being financial scams? I don't.

EK is neither a charity nor a financial scam. It's playing the capitalistic game (in a quasi-mercantilistic world) as a money-seeking competitor and using the rules and means available to it. That is what the US3 and EU3 airlines do too.

shonamac

... you seem to be comparing Europe - a continent - with Inda, a country. Regardless of that, just because some Americans may not be familiar with the US-India passenger traffic market, and may be mistakenly using US carriers' capacity on these routes as a yardstick of demand, does not make the market "modest" per se.

For years, carriers like LH and SQ (just to name two out of many) have sustained their transatlantic and transpacific routes with feeder traffic from India. Now that the ME carriers have usurped that role to a large extent, they carry fewer Indian passengers - but it still remains substantial.

Fredrik74

Perhaps you didn't notice he was talking about demand from the US toIndia, not the other way round. He has repeatedly posted things that suggest he doesn't understand that Aliens can buy tickets.

adambisi

BOS-BLR O+D traffic tripled between 2003 and 2011.
NYC-DEL O+D traffic doubled during that time. Over 800 people travel between those two cities every day.

In 2011 almost 300 people travelled between DXB and NYC each day.

The trend seems to be going in an upward trajectory.

AA_EXP09

9W
My friend based in HK used them to go to YYZ instead of CX and took advantage of the free stopover in BRU for a free Europe holiday (the rest of the ticket, other than the additional Belgian taxes was paid for by his employer.)
Was my friend('s employer) also supporting a 'financial scam' according to OP? (especially as he never had any intention to fly to India, other than to connect there?)