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-   -   Is Emirates a financial scam? (https://www.flyertalk.com/forum/emirates-skywards/1627541-emirates-financial-scam.html)

irishguy28 Feb 6, 2015 5:05 pm


Originally Posted by iahphx (Post 24303289)
As a consumer, it's OK to be an Emirates cheerleader. After all, you're getting more than you pay for, because somebody is subsidizing your travel. I personally like when I get more than I've paid for.

But to be 100% certain that this isn't actually happening? Well . . . .

And to be 100% certain that it IS happening?

The US is late to this party! The ME3 have shaken up the incumbents in Europe, Asia, and Oceania. We've heard all this before. The old flag carriers that were set in their ways don't like to see therir markets being cannibalised. The first, and most obvious, reaction is to spit the dummy, and wail about HOW UNFAIR this competition is. All the European airlines tried this, at one time or another. But they eventually grow up and do something about it. Many of the European carriers that once complained are now cooperating and working with some one of the big 3, in some shape or form. (Lufthansa is the last remaining sulking holdout).

The US carriers will come around...there is a lot of fat still to be cut there. The old, unproductive, inefficient, low-service, highly unionised, overstaffed, high-cost carriers will have to change their product and slim down to become leaner, more efficient and more productive. No-one will listen to their whining when the product they offer is increasingly sub-standard.

That the airlines (or, at least the cosseted staff) are lobbying to close and regulate the industry and restrict access should be decried by all for what it is - a retrograde step for the US consumer.

irishguy28 Feb 6, 2015 5:16 pm


Originally Posted by iahphx (Post 24304544)
The US carriers are obviously looking out for themselves, but do you honestly see NOTHING odd about the Gulf airlines buying 3x the number of widebody airplanes as all the USA airlines? Nothing?

And it's not like the USA airlines are hurting for cash now, either.

Folks, this isn't normal. This isn't free market capitalism. There's something very squirrely going on here.

Each of the 3 main US carriers have fleets about three times the size of Emirates' fleet. And none of the US carriers are expanding, or adding destinations or frequencies, with anything like the same pace as Emirates.

AA, UA and DL are mature, well established airlines. EK is a young, growing airline. There is nothing unusual or sinister or suspicious about a growing airline adding airframes.

It's a shame the US airlines don't renew their fleets with something approaching the same vigour as other airlines that maintain younger fleets.

edy4eva Feb 6, 2015 5:32 pm


Originally Posted by iahphx (Post 24303289)
As a consumer, it's OK to be an Emirates cheerleader. After all, you're getting more than you pay for, because somebody is subsidizing your travel. I personally like when I get more than I've paid for.

But to be 100% certain that this isn't actually happening? Well . . . .

More than you pay for? I don't think so. EK F, J and Y fares in most of the markets they serve, and certainly ex-Australia and some M.E. countries are among the steepest. A point raised numerous times and continues to be on the EK forum.

Kiwi Flyer Feb 6, 2015 5:43 pm


Originally Posted by iahphx (Post 24303190)
Again, the cheerleaders will come up with more excuses, but look at which 3 destinations from the USA (both int'l and domestic) have had the biggest price drops in the past year:

http://www.cnbc.com/id/102401973?__s...doc=102401973#.

It is plain as day that Emirates is dumping capacity into the USA in a way that makes it impossible to actually make money on this flying. They don't care. The USA airlines do. That's why they're going to Washington to stop it.

Is it any surprise that with markedly falling fuel costs the longer routes have larger decreases in fares than shorter routes?

I'm beginning to wonder if perhaps the OP has some skin in this game through participation in the USA airline lobbying efforts?

midtownapsk Feb 6, 2015 8:04 pm

These efforts by the US3 to get politicians involved is really about blocking fifth freedom expansion. Emirates service from Milan - JFK has really sent alarm bells ringing at the US3. Delta tried to block this in an Italian court because it could see the writing on the wall. It is one thing to cede the ME/South Asia market to ME3 but competing with them on TATL would be effectively cutting into the bone for the US guys. Reportedly, ME3 are considering additional TATL (UK-East Coast) and possibly Japan - West Coast. From the US3 perspective this expansion has to be stopped no matter what the cost.

I would be surprised if the US3 succeed in convincing the Obama administration to make any significant policy changes. They are not just taking on the ME3 but they are also picking a fight with Boeing where the ME3 are responsible for significant part of the order book. The ME3 probably don't have much lobbying muscle in DC but Boeing certainly does. Just see the fight over the Boeing Bank (ex-im) that Delta picked last year and lost. But that being said US3 have been pretty effective at blocking Norwegian so far.

ccyao Feb 6, 2015 8:13 pm


Originally Posted by iahphx (Post 23821748)
Thanks for the comments. But I remain 100% convinced that Emirates could not make money flying these flights from the USA. Dubai is simply an illogical connecting points for most destinations from the USA. As I said, the only major connecting market is India. Otherwise, the geography is simply wrong.

If the 25 years of profits won't impress you, I don't know what will.

Enzokk Feb 7, 2015 4:25 am

We have to look at these recent articles in the context that they are comparing the ME3 and we are looking at it from the Emirates perspective. Doha has had a recent new airport built, AUH will have a new terminal, DXB has continual improvements. Does these rank as subsidies by the respective governments?

If Dubai has invested $6B on infrastructure, but Doha and Abu Dhabi $20B, then the figure is a little lopsided (With EY and QR playing catch up to DXB and EK). This is not to say that infrastructure like airports are subsidies.

Dave Noble Feb 7, 2015 4:40 am

In the US, the airports are not privately owned - so if trying to call airport investment a subsidy then it is just as much a subsidy there with the airports being basically nationalised

HelloKittysMum Feb 7, 2015 8:41 am

I travel regularly (at least once per month) all economy for work. Wherever I am going needs at least two flights - from my home airport (MAN) I can (and do fly) to Hong Kong, Singapore, Saigon, Johannesburg, Lusaka, Port Louis (Mauritius), Muscat (Oman), Colombo with one change (Cathay have just resumed direct flights to HK) in Dubai, with multiple options on departure times (three flights a day - 2 of them A380s - on MAN-DXB). A lot of the EK traffic is people going from non-capital cities in Europe to cities across Asia, Africa and beyond (because as multiple posts have said Dubai is within 7 or 8 hours of 2/3 world population).

But it's not all Europeans and wealthy Indians travelling - Emirates have three flights a day to Colombo and 2/3 times I get upgraded because the flights are full of Sri Lankan migrant workers going to /from their jobs in the Middle East.

As someone has already said the world is bigger than the US (and I say this as an Americanophile who has done 17 holidays to the US and visited more states than a lot of Americans I have met (28 plus DC)) and while American businesses continue to be inward looking (and cry foul when anyone dares to beat them) they will not compete in the global marketplace (remember when the boys in Detroit were convinced that all these small Japanese cars would never catch on...)

Havoc10G Feb 7, 2015 9:14 pm

Is Emirates a financial scam?
 
Well said HKM! The car analogy is a good one. The OP may as well say because so many Japanese and German cars are sold in the US that it is a scam rather than people choosing a better product!

iahphx Feb 9, 2015 11:10 am

Emirates has again repeated their claim that they don't receive subsidies, and are using the (tired and entirely tangential) argument preferred by their defenders here that the Big 3 US airlines have previously benefited from bankruptcy laws.

http://www.bloomberg.com/news/articl...rates-backlash

Honestly, the only way to settle this is for Emirates to allow the US gov't to hire an auditor to independently examine their books. I don't think this will happen, though, because I think Emirates would prefer to lose the Open Skies rights than have a truly independent examination of their books. And that is their right, of course.

Dave Noble Feb 9, 2015 11:28 am

Why on earth should Emirates do anything; just because a few US airlines are making accusations ? the US companies throwing accusations around are the ones that should be providing the proof to substantiate their claims if they have any

If this investigation has discovered 40 milliard dollars in subsidy, then provide that evidence - simples

CaptainEKAirbus Feb 9, 2015 11:35 am


Originally Posted by iahphx (Post 24318977)
Emirates has again repeated their claim that they don't receive subsidies, and are using the (tired and entirely tangential) argument preferred by their defenders here that the Big 3 US airlines have previously benefited from bankruptcy laws.

http://www.bloomberg.com/news/articl...rates-backlash

Honestly, the only way to settle this is for Emirates to allow the US gov't to hire an auditor to independently examine their books. I don't think this will happen, though, because I think Emirates would prefer to lose the Open Skies rights than have a truly independent examination of their books. And that is their right, of course.

Why is it necessary for the US government to audit Emirates? As I mentioned previously, PWC audits Emirates; the same PWC that is in the top four financial auditors in the world. I don't understand why you'd believe that suddenly because Emirates is being audited, that their credibility is jeopardized.

eternaltransit Feb 9, 2015 12:09 pm


Originally Posted by iahphx (Post 24318977)
Emirates has again repeated their claim that they don't receive subsidies, and are using the (tired and entirely tangential) argument preferred by their defenders here that the Big 3 US airlines have previously benefited from bankruptcy laws.

http://www.bloomberg.com/news/articl...rates-backlash

Honestly, the only way to settle this is for Emirates to allow the US gov't to hire an auditor to independently examine their books. I don't think this will happen, though, because I think Emirates would prefer to lose the Open Skies rights than have a truly independent examination of their books. And that is their right, of course.

Please don't lump all the "defenders" together and imply they are only using one "tired" argument against the claim of subsidy - as you very well know by reading through this thread, multiple different arguments that use trains of thought that have nothing at all to do with US Chapter 11 have been put forward to explain the plausibility of EK running a non subsided operation.

It is telling that in the article you linked that one of the main arguments put forward by DL is that:


Emirates, Etihad and Qatar are using their Persian Gulf-region hubs to facilitate far more passenger traffic than their home populations need, Trebor Banstetter, a Delta spokesman, said today. Their expansions already have hurt European carriers, he said.
“They are planning to take market share from international carriers outside of their home countries, and this is all being done in a subsidized manner,” Banstetter said in a statement. American and United didn’t immediately comment.
The inconsistency and hypocrisy is laughable - why no issue with say, openly subsidised carriers in their own alliances, e.g. TG - or now in US carriers' views that there is something improper or immoral about an airline both operating outside of its "home" population and bigger than "proper" size for their home population (whatever they are, I assume a level set by the US carriers): yet they use profits from a domestically protected market to offer intercontinental service! You know, it's almost as if these airlines, along with their alliance partners - who have antitrust immunity, mind you, so I can call them a cartel - have divided the world into certain geographic regions, made a gentlemen's agreement not to enter each other's spheres of influence (sounds a bit like modern geopolitics) and these non-aligned upstarts are trying to change the established order of things...

As someone said above, it sounds like the JFK-MXP fifth freedom operations might be spooking them, or their legacy alliance partners are cheering them on/opening another front in the PR war after aviation authorities elsewhere slapped the arguments down...

edy4eva Feb 9, 2015 2:25 pm


Originally Posted by iahphx (Post 24318977)
Honestly, the only way to settle this is for Emirates to allow the US gov't to hire an auditor to independently examine their books. I don't think this will happen, though, because I think Emirates would prefer to lose the Open Skies rights than have a truly independent examination of their books. And that is their right, of course.

What has what over who?
Since when does the US government have the powers to police over the world? Aren't enterprise America the ones promoting "the best government is that which governs least".

And suppose this narrow street thinking eventuates and EK have their 'books' audited and nothing is found, what would be the standpoint of those mouthing accusations left and right without any regard to basic logic? I'd wager nothing less than more accusations of something fishy and not right.

All the statements and arguments forwarded by the those US carriers and so-called experts have little ground to stand on. If this was PanAm, they'd be like 'f!@k yeah!'.


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