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

Once T-100 data is published covering periods where A380 service has commenced for a year, the public will have a better idea of LF to DXB ex-USA. Of course you would have to strip out the effect of cities with 777 service, but that can be done of course!

Maybe the US3's whole approach is to throw a monkey wrench in the works, and see what happens.

If something goes they're way good for them, if nothing changes then they're left with what they started with.

She is a journalist whose background was as a student of history. Her finance background is limited to her journalism history. I wouldn't trust her to do a financial or economic analysis on her own.

This ME3 'long-haul super service low yield passenger business model' has not been proven yet and based on all parameters we have, it will be difficult coming up with a working business case.

Filling an aircraft is rather easy, making money with it is a completely different story and we are not talking about Ryanair operating a 738 at €4k an hour, we are talking about the big bird with lease payments close to 2 million a month.

How many EK A380 are needed to serve the US?

We are not talking about birds returning to the hub after 15-18 hours like on the highly profitable Europe-US East Coast runs, we are talking about bigger birds being on short finals into IAH, DFW, LAX or SFO after the same amount of time. They take revenue once (mostly from connecting low yield pax) and not twice within 15-18 hours, so the sparse revenue has to be allocated not only for the A380 from DFW to DXB, but also on the 77W to Delhi...

And 300 migration workers on $100 RT tickets to/from Dubai are not really helping the cause for the connecting 77W. :rolleyes:

And with all due respect and giving EK the benefit of the doubt, even if we exclude the cost of capital (like we will see within the EU starting in 2024 for all the cash-bleeding airports...;) ) I still do not see too much light at the end of the tunnel.

And under the bottom line, it is somehow pointless whether the losses (and subsidies) amount to $ 6, 8 or 10 billion.

Even at fares significantly higher than what EK is able to extract from the market, even at loads close to 100% and oil priced at $50, I still do not see any working business case, even if we argue that someone gave EK some 20, 30, 40 billion at 0% interest to be paid back starting in 2099. ;)

This leaves Clark in the same position as most people on FT trying to make a case for EK, you have to be scrappy and in need of some acting skills.

Or they simply turn it around, like they tried to do in Europe; drop your pants, show what you received and compare it to the subsidies all other state owned carriers used to get over their existence.

Betting on the manufactorers to bail you out in Paris, Berlin or Washington is maybe too thin a strategy and as long as Bombardier does not come with a Widebody it is not working across the border in Canada. ;)

Nifty move by the US3, Freedom of the Skies.

Interesting choice of direction at the crossroads, I actually expected them to take another exit and move along the Predatory Pricing street.

Difficult to prove, but sucessful in some cases, i.e. in Germany with Germania and Lufthansa on the famous FRA-TXL runs...for more info:

DAFFE/COMP/WD(2004)41

Like I said earlier, this was the exit LH opted for some years ago in Berlin 'forcing' EK to raise fares in the premium cabins, the same strategy worked out for KLM in the Netherlands (after they could not 'prohibit' the market entry any longer)

The Obama administration, marking its first written response to US airlines’ lobbying effort, has asked for more information on their claims that Gulf carriers have received market-distorting subsidies.

The administration asked US airline representatives about 20 questions in writing last week about their method in determining the subsidy allegations and about the market harm they say Gulf carriers have caused them, according to a person familiar with the matter.

The request for more proof reflects the growing focus on the debate in Washington. The questions are factual and did not suggest that the US administration was either swayed or skeptical.

Leaders in the US House Committee on Transportation and Infrastructure recently called on the administration to look into the allegations, while US airlines repeated their request on Tuesday for the United States to open talks with Qatar and the UAE on the “Open Skies” agreements that authorise flying between the nations.

http://khaleejtimes.ae/biz/inside.as...on_March29.xml

Still waiting for an answer.

I don't think it is merely a 'philosophical discussion'. It is always worth zooming in to where exactly the problem was. It may not be worth it for you, however - as you may find it no longer fits your narrative.

It was neither the tall tower, the metro, or the airport; it was a conglomerate called Dubai World.

If you have a set up like Dubai (or the Lufthansa Group) you will have a lot of co-operation inhouse, which brings us to internal pricing.

Under the bottom line, I do not really care whether LSG charged LH a bit more for each salad, so that their profits are up and the profits of the passenger division are down.

To give you another example. Shortly after Eurowings started flying, they used T2 at MUC and LH handled the flight for a fee of roughly €90.

In other words, LH charged Eurowings a fee of €90 to turn an Airbus A319 around....go figure. @:-)

Another example is the internal pricing between VW and Seat for TDI engines and parts...

At the end of the day, I care about the bottom line and it did not look good for Dubai late last decade. I do not really care whether the profits from EK were too low or the charges for fuel hedging losses were too high ( ;);) ) or EK Cargo charged too much for getting certain parts to Dubai, so another sub-division responsible for Logistics went bust.

But I really like to see a stripped down financial statement for EK alone, incl. finances for the fleet and excluding DNATA and all other subdivisions...

But I fear we will never see something remotely comparable, so I did my own research, I also rely on many many educated folks within the industry and that is more than enough to get an overview to be able to judge the financial sustainability of the ME3.

I really do not have a narrative other than recommending other airlines not to copy the approach without deep pockets to cover the losses, which is a reasonable strategy originally invented in Europe after WWII.

Of course, it is not the success story we always hear, we started with 10 million & an A310, but do they really need this 1000 and 1 night Arabian fairy tale?

Even die hard Disney fans do not really believe that Cinderella was an eye-witness account and they still go to Orlando or Anaheim...

The question of internal pricing was raised by the US3 in their report. Except for fees to DXB, Emirates has not yet responded. (and when they do, I hope they don't include any embarassing mistakes like the direction of the $1.6 billion or the "38%" load factor).

Btw, the financials already exclude DNATA (Emirates and DNATA financials are provided separately). Have you had a look at them?

The Eurocentic, cheerleading Europe approach is a fantastic narrative; but most of Europe was such an economic wreck after WWII that deep pockets were far and few between, while their national strategic plans were subjected to contested calls for national resource use as is natural where democratic dynamics are relevant.

The GCC3 looked to Singapore and to the British as their models -- not surprising at all, given how the leaders in the GCC looked at democracy and how they looked at things British. KLM/Netherlands and Lufthansa/Germany were out of focus for the GCC3, annoying as KL and LH management and its cheerleaders may find that to be when wanting nothing more than attention/applause, undeserved or otherwise.

This is what is has all been about probably. Has anyone checked the prices for flights from JFK to Rome and compare that to prices of JFK to Milan? Prices that I have checked for 3 dates (April, June and September), show a price differential of 400-700 euro between the 2 cities. I guess the airport charges in Rome must be expensive. Maybe it is the extra fuel that needs to be flown?:confused:

Or is the fact that EK provides competition for the US3 and the JV partners. No-one to skim off the fat profits on the Rome route, but EK provides the competition in fares (never mind quality) to Milan at a lower cost.

This has never been about whether EK is a scam, or whether they are actually profitable, or if their business model can be replicated elsewhere in the world. This is about fat profits for the JV partners. If they have no competition then they can charge what they want to (and do they charge that and more), and EK, EY and QR will ruin their 9% profit margins if they start flying 5th freedom flights.

Emirates is also the third largest cargo airline in the world, only slightly behind UPS. (https://www.iata.org/publications/Pa...reight-km.aspx )

Cargo is almost certainly profitable - there is no incentive for EK to carry cargo at a loss or at breakeven (cargo is not going to stay at Dubai hotels or spend any money in Dubai). At EK's scale, it would be a significant revenue source.

Analysis based on seats therefore cannot give you an upper bound on EK's revenue. If the plane has fewer passengers, that means fewer checked bags, giving space and weight for more cargo.

(It can give you a lower bound, of course, and I think we are all convinced from earlier posts that the flights would make money, based on passenger revenues alone, if the seat factors are high)

In err, transit at the moment, but did want to add a note about cargo which did come up a few pages ago:

a point was made that EK's cargo operations, as they are all hubbed through DXB don't attract the premiums for the fastest, point-to-point services. However I don't think it therefore follows that EK doesn't make good profits off cargo because the market for cargo has a range of timescales - not all high value cargo has to be there on the fastest route possible, but a forwarder may want it there faster than a container. Airports also offer quicker end-to-end service (especially to inland destinations), where 1-2 weeks is fine, but 4-6 weeks isn't. Additionally, high-yield specialised cargo can sometimes have no choice but to go by air, no matter the time requirement.

Cargo operations are attractive due to the network, not the speed - this is why freight transporters have hubs all over the place. If point-to-point cargo for immediate delivery was such a high proportion of market demand, we would see major cargo operators delivering point-to-point instead of via 2-3 hubs as anyone who receives a non-priority international courier package can tell you.

In a way, it's similar to EKs pax model: scoop up lower margin business (but in a deep pool) and leverage the network - undeniably their biggest asset when it comes to the cargo offering: the one-stop route pairs in many cases represent the quickest freight path) and cost structure to make it acceptably profitable (for EK - 4-5%, not the 7-8% of the FedEx and UPSes of the world).

AF/KL and LH personnel are too busy striking every other month to notice... :rolleyes: