Surely what needs to be taken into consideration is the fact that as Emirates uses only one hub (unlike the 5 or so hubs of the US airlines) and they certainly use that as an added advantage. Instead of having 5 hubs to cater for, or provide airport services for they can focus on one. And as we should all know economy of scale will then come in. The more you buy the cheaper it gets. This allows the airline to cut their costs even more than the other airlines.

This with the fact that their labour force is on lower wages (for the company) compared to their counterparts around the world (no tax to be paid by Emirates and their suppliers in Dubai), means they can have higher expenses in other areas where it really matters.

While not of significant relevance to the OP, I mentioned CX and SQ in the "invasion of gulf airlines" thread, as having similar models to EK et al, and was rebuffed in the case of CX (e.g. HK is actually a pretty big market when you take the PRD, as a whole, into account). It later occurred to me that SQ isn't all that analogous because either because, in spite of the fact that SIN is a small market, lots of people actually do like going to/from there. As such, both CX and SQ tend to fetch the same sort of "hub premium" that the OP intimates is necessary for success in the airline business.

Just quickly hopped into this thread.

Find it an interesting discussion. Since the EU forbids national governments to subsidize airlines for the sake of 'competition', it seems they forgot that they are competing increasingly with government owned airlines such as Emirates that are profiting massively from the wealth of their owner. Be it a cheaper workforce, (very) cheap fuel, untaxed profits or a massive new airport.

Europe should consider subsidizing all airlines equally which would boost employment and as such, profits from taxation in a fight against to the as far as I'm concerned unfair competition from the middle east.

And the evidence to support the implied assertion that Emirates is being subsidised and not operating as a profitable carrier ?

The counter argument is both HKG and SIN have a ton of airlines flying there (so CX and SQ do not dominate O&D traffic to quite the same extent as EK at DXB) and there are also several other large airports in the region that are home to other airlines (weakening the catchment argument).

Wouldn't you a call a fancy airport, built and owned by the government, with dedicated Emirates services, a subsidy?
Wouldn't you call lower staff costs due to absence of unions and an abundance of cheap labour from Asian countries a subsidy?
Wouldn't you call the absence of any income or corporate tax a subsidy?
Wouldn't you say that the CFO being a member of the royal family (he is the uncle of Sheikh Al Maktoum) is a bit far from their claim that 'it is a fully fledged commercial enterprise run at arm's length from the Dubai government, despite being wholly owned by it'?

I could go on. Only thing where I was wrong is regarding the cheaper fuel. Their fuel cost is lower because their fleet is younger. Which one could claim is again an advantage gained because of....well ;)

Some of those arguments are pretty weak. USA runs a massive deficit so clearly doesn't tax enough. By your logic then this means every US based airline is receiving a massive and ongoing subsidy.

Airport: Maybe.
Staff costs: No, not unique to airlines.
Corporate tax: No, not unique to airlines.
CFO being part of the government or whatever: Not a subsidy though it could lead to one.

Mostly you're saying that Dubai/the UAE is a cheaper/more profitable place to run an airline (or company in general) than Europe. Obviously, the EU countries should just cut government expenditures, remove worker benefits, and lower taxes so that their companies can have the same advantages.

No ; no more than airports elsewhere being owned by government ; I believe that US airports are not privately run

Absolutely not. If the airline can get people to work for it for a low cost then why would it pay more


Not if it is a general feature of a country; as far as other companies go, look at the machinations of other companies to bring their taxes down to only a few percent

That does not indicate anything to do with it being subsidised rather than run at a profit

Al you have indicated is that basing a business in the UAE seems to be a good idea

That is very strange reasoning. IMO, the US taxes enough but spends too much, that would be an entirely different discussion which doesn't seem appropriate here.


I agree with the latter, and I agree with the fact that Emirates is far from a financial scam. But there are quite a lot of points leading to one thinking that the least one could say is that there is a serious whiff of unfair competition.


Just a small example, but I think we'd all agree that for example staff in UAE is mainly cheap due a large Pakistani/Bangladeshi/Sri Lanka/Indian...etc workforce. Of course there are also expats from richer countries such as UK running the airport, but I've not yet seen one there wiping floors or cleaning toilets if you know what I mean.
No unions, no pensions, long hours...(look at the Qatar World Cup, same discussion) and on and on.


Looked that up, seems you are correct there. In Europe I think most are privately owned / run.


See my points mentioned above. Taxation wise, you are correct, that is the business model of Dubai.

Correct


Disagree with that one. It clearly shows that there is not 'an arm's length' between Emirates and the government of Dubai, hence contrary to Emirates' statements. Wonder why?
Look at the airport, I can't understand how you can flatly deny this fact.
Their dedicated terminal cost 4.5 billion USD and is exclusively for Emirates (and Qantas through their codeshare). This comforts their transit pax, the bulk of their traffic.

Correct, but not all.

Is Emirates a financial scam?
 

Well done the Wolf for actually coming onto this thread and debating the counter agreement with facts and logic whether I agree or not with your conclusions I applaud your approach.

Not sure if you've missed or are unaware of where the Emirates Group that owns EK among a multitude of things, sits on the ladder of Dubai's investment corp which is Dubai's sovereign fund.

The argument that any company or subsidiary of a government owned entity 'should be at an arm's length' is irrelevant and misguided in this scenario. This organisation operates for the long term benefit of the citizens not private pockets. And the presence of the ruling family, who are part of the very small population, in the business is expected.

The airline works as a separate entity in the sense that government does not budget for it or run it. And working for the airline is not a public sector job.

As for the statements you referred to, can you please point a few out?

What AA is doing at DFW would arguably be considered risky, because DFW-HKG is obviously not as big a market as, say, LAX-HKG. But it's certainly a route that is entirely plausible by traditional aviation metrics. First, they're not flying a crazy large A380. Second, Dallas is the 4th largest metro area in the USA (almost 7 million people). Third, Dallas is one of the world's largest airports, and AA's biggest hub, feeding an enormous catchment area (probably around 75 million of among the most affluent people in the world) without faster service to China. And AA has a strong partner on the other end -- Cathay Pacific. So I don't think anyone would put the "logical-ness" of this route in the same class as Emirates flying an A380 from DFW to Dubai.

Actually, I think one hub is a material disadvantage -- as is the fact that Emirates is not in an alliance. Corporations like to sign contracts with airlines that can take them anywhere; individuals tend to be loyal to their frequent flyer programs. Again, this makes Emirates supposed success in Dubai peculiar.


HKG and SIN are among the great business cities of the world. I guess Dubai would like to be in their league, but I don't think many people would try to argue that they are. Does anyone have the O/D numbers for these cities compared to Dubai? It must be startling. Also, the nearby population density could not be more different. Everything else equal, nobody would prefer to have a hub in Dubai over a hub in Hong Kong or Singapore.

I guess if Emirates was a publicly-traded company, we'd have more information about how these various little benefits add up to reduce their costs. That said, even added together, I find it hard to believe how these savings could make it truly profitable to fly A380s from Texas to Dubai. It's just so far beyond anything else that is occurring in world aviation today. A true outlier, which is what caused me to wonder about it in the first place.

I was about to address the once again, weak arguments (that actually work to the contrary of your intent) you raised in this post until I read this sentence.

You've just proven to me, and am sure to many of us, that you have no real evidence, but a case of wonder. If you were open to addressing the countless counter arguments raised by many, and at least admitted that your ideas are not set in stone by Moses, I doubt this thread would have gone this long.

You still argue back with things like O/D to DXB, catchment size, lack of partners....oh please. :rolleyes:

Here is a link to a whole paper about refuting the accusations that they are subsidized.

http://www.google.be/url?sa=t&rct=j&...,d.d24&cad=rja


As for the 'arm's length' statement, it was reportedly said by Tim Clark in a speech to European Aviation Club on 12 Nov 2009. Sadly, the link to the Emirates website seems dead unless my extremely bad computer skills come into play.

http://www.emirates.com/uk/english/i...275-523298.pdf