NOIR

http://www.khaleejtimes.com/mobile/i...ction=aviation

Show us the proof.

irishguy28

http://www.flyertalk.com/forum/turki...er-2015-a.html (Turkish Airlines' annual Valentines "companion ticket for €1" offer)
[earlier TK offers in this series:2014, 2013, 2012, 2011, 2010]
http://www.flyertalk.com/forum/singa......-deals.html (Nov 2014)
http://www.flyertalk.com/forum/air-f...ere-offer.html (Air France, from US only; Sep 2012)
http://www.flyertalk.com/forum/russi...price-1-a.html (Aeroflot, October 2009)
http://www.flyertalk.com/forum/ameri...lus-2-1-a.html (July 2006)
http://www.flyertalk.com/forum/unite...l-economy.html (United, Feb 2006)


Perhaps only Turkish Airlines is the only other airline that "routinely" offers such deals - but so what? Why is a 2-for-1 offer indicative of the "wackiness" of US routes?

You keep talking about this "evidence" but what you have shared is not at all convincing. You seem to have a mindset that nothing will change and that anything just confirms.

What I like about this offer - the first time EK has done this in the US market, to my knowledge - is the timing. As that other scion of aviation, Michael O'Leary has often said, there is no such thing as good publicity. Who would have thought back in 1985 (the same time Emirates was starting up) that an upstart airline, flying a 15-seater plane between Waterford(!) and Gatwick, would become Europe's largest airline within 30 years, largely from pursuing a strategy of flying people from second- or third-tier remote airports where few other airlines bothered to serve?

Is the Ryanair strategy similarly "wacky"? Or will they only become "wacky" when they pop up on your radar and start flights to the US? (They have said for several years that they will; they may, eventually).

But back to the timing - why shouldn't Emirates capitalise on the "publicity" that the US3 are throwing their way? Not all Americans will be impressed or taken in by the bluster. EK may find a few new customers as a result of the attention being focused on them.

FD1971

Did not find the time to read the report yet, but both Germany and France 'supported' the US point of view by sending letters to Vio. Bulc at the EU.

Considering Bulc is from Slovenia, I fear Emirates has to start LJU-DXB service soon in order to get what they want.

An A380 seems suitable for the route.

On a more serious note, according to some sources close to the action, Dobrindt is looking for new EU wide air service agreements with Doha, Abu Dhabi and Dubai.

If this is the case, I guess the UK will agree with mainland Europe for the first time in the history of the EU.

FD1971

A 2 for 1 sale is an old instrument circumventing IATA fare rules, so another old strategy copied by EK.

As pointed out so often before, there are some routes from the US with demand to fill a daily Widebody (not at cost however) and there are some thinner routes. Philly or Dallas have been challenging even for European legacy carriers, so it is not surprising to see EK offering massive promotions.

The comment by Carter Yang at the end of the blog entry is pretty stupid though.

It is not the amount of money you charge during a sale that is important, it is the actual number of seats you make available at that price.

This is especially true for the US, a market in which almost any sale is matched by the competition.

In Europe, we see more and more fare-matching as well, however strong carriers like LH hardly make any seats available, if the fare is loo law.

Some Neksayers on the LH forum actually threatened to take LH to court due to this 'unfair advertising`strategy.

More importantly, offering a seat @ $600 (all in!!) on a 16000 mile RT will def. not really increase your yield.

But you get all the backpackers for sure. ^

moondog

This is a frequent topic on the CX forum (getting good "fan fares" is almost like winning the lottery).

iahphx

Which may explain the promo. One of the biggest holes in Emirates case is the fact that there is little demand for service from the USA to Dubai. There's really no other air service to the USA that's like this (because the economics of serving only connecting pax are atrocious and no unsubsidized airline could possibly operate that way). So now Dubai can show there is some demand for Dubai flights (at half off).

irishguy28

No airline serves "only" connecting pax. And given that most airlines are not O&D only (save the LCCs), it means that connecting pax are necessary for maintaining frequencies, or indeed for maintaining some destinations.

I don't understand why you single out Emirates for their connecting services to its US destinations - I doubt there is any European/Asian airline that could run a daily service to, say, Dallas with only customers originating in their hub. Just like AA couldn't fly daily from Dallas to most of the European/Asian cities it serves from there without the benefit of being able to scoop up passengers from cities other than Dallas to help fill its planes.

If you want to believe that "serving only connecting pax" is an atrocious business model, then fine. The facts and the numbers don't seem to support your opinion.



111 airlines currently fly to Dubai from over 260 global destinations. Apart from Emirates (and partner Qantas) and flydubai, most of these airlines will have extremely limited connecting opportunities at Dubai, and so will presumably have a majority of passengers originating/terminating in the UAE.

If so many airlines from all around the world can find these elusive, UAE-bound passengers - why would Emirates find it SO DIFFICULT to fill their US flights???

The US appears in the Top 10 of source markets for visitors to Dubai.

This report prepared by Deloitte shows it is #4 on the list.



Please - engage with these questions!!!

rasheed

I see no evidence that seats are hard to find for this promotion by the way.

By the way, the base fare is less than 45 dollars each way with lots of YQ. Interesting trick.

Rasheed

lokijuh

Not that interesting. Outside the U.S. this is not uncommon. Many carriers charge significant YQ and have sales with sub $100 "base fares" because of this. In this instance highlights the often poor value of Skywards.

iahphx

The stats are in the US airline report. There has been essentially no increase in demand for flights to Dubai since Emirates started all the crazy new flights to the USA. To my knowledge there are no other int'l flights in the world that, as a percentage of the cabin, transport fewer O/D passengers. Everyone in the industry with the exception of Tim Clark will tell you that is a certain recipe for financial insolvency. It is Airline Economics 101: a connecting passenger costs more to transport and will pay less than a nonstop passenger. You need nonstop passengers.

Unless you are Emirates.

lokijuh

I wonder how many non connecting pax QF have from SYD-DFW? Or MEL/SYD-DXB? I am sure these numbers aren't significant either. In fact I'd expect between Australia and Dubai (other than those doing stopover enroute to elsewhere - which are financially no different to those connecting) are minimal/ no different to EK's US-DXB routes.

But I guess we all know QF is a financial scam due to arrangements put in place in the early 90s when it was privatized.

Xlr

Lies, damn lies, and statistics. Those stats in the report use 2008 as a reference point.

Dubai then fell spectacularly in 2009, and EK cut capacity into the US then (they took their 380s off the JFK route, and deployed them to Toronto instead).

If you look at the patterns since 2001 (when Delta first flew to DXB, thrice a week from JFK via Cairo) or 2004 (when Emirates started nonstop to JFK), it would be clear that the GFC was an aberration.

Edit: Even prior to Delta entering this route, Malaysia Airlines used to fly JFK-DXB-KUL.

geminidreams

I think the point you are missing is there are many markets that are not serviced by non stop flights and never will be. Australian routes for example have a high value but there are few direct flights to destinations outside of Asia with most destinations requiring one or two transfers. Why you think that this is an unusual state of affairs is the perplexing bit.

eternaltransit

The 2014 MasterCard Global Cities report has a much more thorough analysis of global visitor flow (I think I referred to it in previous posts).

http://newsroom.mastercard.com/wp-co...inal_70814.pdf

Page 23 has the statistics for the Middle East and specifically: Dubai in 2014 had 11.95 million overnight international visitors (the top). In fact, Dubai just edges out New York out of the top 5 globally with 11.95 compared to 11.81 - international visitors, of course, we are all aware of the deep US domestic market which New York gets a lot of visitors to. The top 5 are globally are London, Bangkok, Paris, Singapore and Dubai.

Now, the top 5 source markets are London (by far: not surprising given Dubai's popularity in the UK market for short vacations, and 14 daily services from the UK), Riyadh, Kuwait, Jeddah and Paris. 66% of visitors to Dubai are from outside the Gulf and Middle East region. So clearly there is some demand for O&D travel to Dubai which EK captures a lot of, and with O&D premiums, your point about non-stop traffic which pays more shows there is a sufficient base of traffic, demand and yield which can be used to sustain other lower margin business across the network to further the owners' objective of getting people to Dubai/putting it on the map. Visitor spending in Dubai amounted to 10.90 billion USD in 2014, which is approximately 10% of GDP.

This is no different to US3 network carriers using protected markets like TATL (and their JV partners using high margin routes protected from competition TATL) to achieve high margins which they can use to sustain much lower margin or loss making parts of their businesses, for instance intra-EU short haul ops in the case of legacy EU carriers. Except in EKs case, overall group margin can be sacrificed in the name of connecting Dubai with the world and bringing in the visitors: which is borne out by the fact that EKs margins are a relatively average 4%, instead of the well run network carriers like BA/IAG and some of the US carriers which achieve on the order of 10%. Nothing close to something like Ryanair and Easyjet which are heading to the 20% of course, but they have a different business model. EKs owners accept lower margins than they could otherwise achieve in order to expand the network. This doesn't imply that they are not a commercial sustainable business however. It does mean that neoliberal and perhaps borderline libertarian economic mindsets are offended and intellectually challenged by the notion of a corporate body not existing to maximise direct financial profits though.

However, I digress, as I often do. We were talking about USA-DXB traffic. Happily for us, MasterCard has broken down source regions to Dubai, one of which is "USA". So in 2013, Dubai had 11.1 million visitors, 4% of whom came from the US. That means, 444,000 pax O&D into Dubai from the US. Now, by your own thesis, most of those passengers will be travelling into DXB on direct flights (because who wants to connect, right?) and not connecting via Europe or another Gulf Airline. Let's be generous and say 85% of people are going to go on EK, DL or UA to DXB. DL and UA have poor load factors to DXB otherwise why don't they have many daily flights. So, let's say 75% of those 444,000 O&D pax are going on EK. That means 912 daily pax ex-USA to DXB on an O&D basis.

In post 314, I used Department of Transport and EK fleet stats to work out that EK deployed about 3200 seats a day to the US in 2013, with load factors of 80%. So we can say that out 912/2560 pax a day on average are O&D into DXB - 35%.

Department of Transport statistics also show that year on year growth to DXB is running at 15-20% a year (in fact 20% a year in 2013-14). So, it is not implausible to need extra capacity.

http://www.dot.gov/policy/aviation-p...tistics-report

So, filling the planes is not a problem - can EK get enough yield to make it work is the question. Clearly not if everyone on the plane is paying discount Y prices. But we know that there is premium demand out of the US. Now, ex-USA J and F fares are about 3 times that of the reverse direction when connecting. When O&D the price is even more outrageous- 20k for F USA-DXB. Now if the breakeven load factor for the plane is 80%, but one third of the plane are paying 3 times the discounted fares - well, simple mathematics can tell you that on average, the per pax fare matches the calculated breakeven fare. All they need is breakeven load factors for that - which they achieve, according to the Department of Transport.

The difficulty is achieving this across seasonality - you can have an empty plane, but revenues are capped at the max seat capacity. You can never overfill a plane.

So - back to your statement:
No one disputes that connecting passengers cost more.
No one disputes that connecting passengers pay less.

These two things are generally true. What is not true is the logical implication you are making, namely that because these pax pay less, and that the airline is built on connecting passengers, the airline therefore loses money. Less is a comparative - it offers no actual specific information.

Paying less does not imply a loss - the loss is predicated on other factors such as costs to run the service; the actual fares; the actual load factors. There are plausible scenarios where even with connecting passengers that lose money, there are enough pax paying enough money to keep the services running - because there are independent numbers where you can check that data, both running costs and potential revenue.

Wealthy O&D pax ex-USA are the people giving subsidies to cheap backpackers here, not anything external. What are unacceptable margins to owners of publicly traded companies (4%) are acceptable to owners who give their company a dual mandate both to be commercial sustainable but also to connect their home city to the world. The consideration here is whether you feel, on an ethical, ideological basis, a corporation should be allowed to not totally maximise profits.

lokijuh

I think this gets to the heart of the issue. For this reason, and this reason alone, EK is either a "scam" or not a scam depending on answer to this question.

Also, on your lengthy discussion, whilst generally it makes a lot of sense, I think *any* discussion about connecting vs O/D partners, that is based on publicly available data is inherently flawed, particularly for places like SIN & DXB, which thrive on offering stopovers as part of a longer trip. So it is difficult to tell (from public data) whether an O&D passenger is simply flying from point A to DXB, and paying the corresponding O&D fare, or whether they are travelling from point A to point B via DXB, with a 3 or 4 day "free" stopover (and paying a A to B fare). Not to mention those of us who live in hubs, but save money by purchasing tickets with free stopovers that are months in duration. Of course airlines like SQ & EK probably make some money from people buying stopover packages.

The other thing I don't understand in this whole " bang your head against the wall" thread is why the ongoing comparison to US based carriers by the OP? Is it not clear that they operate on a different model, at least internationally. If one is going to discuss an airline that operates mainly to serve connecting passengers from Country A to Country C via City B, particularly a city-state that has no domestic operations, then CX & SQ are the obvious comparisons.