You are more than welcome to compare the earnings of privately owned airlines from Europe like BA, LH or KL (not AF though) over the last twenty years to the rest of the airlines on this planet...

I recommend linking the financial results to the quality of strategy and execution

I am more than happy to read this upcoming post, although I already know most of the answer. :p

In other words, if you want to contest what worked in aviation, please come up with numbers (you are free to garnish them with cherries though)

Mr. Hogan was just in the States, wasn't he?

Or do you really expect the travelling public to "form lines on Capitol Hill" for what is just a spat between airlines? Dream on! Like I said, the travelling public shows their support with their wallets.

None of those points are particularly clear...

But perhaps those Germans had the same reaction as when Hartmut Mehdorn went from AB to head up BER and therefore now runs the entity which his former company is suing? (I really don't understand your point about Hütte. I don't even know who he is - a Google search for "Hütte Air Berlin" and "Hütte Etihad" returns no relevant results. And anyway - why is it in any way remarkable that an airline employee should move within the group after a change in structure? Perhaps you could make some assumptions if he left the group entirely - but why does staying on mean anything? Was it suprising that Willie Walsh went to IAG from BA after they tied themselves into that group?)

I stand corrected, it really feels more like the 80's. ;):D

Do you have any idea what it takes to turn around an airline financially that has nothing left, absolutely nothing left?

Again, this is Europe. You have to publish real numbers, you cannot come up with annual reports containing what is convenient only...

If you do so, you will end up in jail and I guess that is unpleasant both in Rome and Berlin. :(

I don't - but luckily, I have not been charged with that particular task.

You can come back and gloat - in 1, 2, 3, 5, 10, 25, 100 years - whenever either of Air Berlin and/or Alitalia [or, indeed, Etihad, Qatar Airways, or Emirates] fails but until then - let's not write anything off! I think it was you that said, some pages ago, that Emirates' model had yet to be proved (despite 30 years of seeming prosperity) - so let them at least attempt the job before writing them off!

When Alitalia was rescued, there was a feeling around that if anyone could do the job, it would be Etihad. Certainly, no-one else was even able to afford the risk!!!

Noir made a good point earlier, although from my point of view Italy was really something special, hence KLM invested heavily 15 years ago.

Since then, everything went downhill, Ryanair is alive and kicking, the high speed train is brilliant and Italy's economy is way less competitive than 20 years ago. Even Trap did not really win anything in recent years. ;)

Tourism is booming though and EK finally made it into the major markets after being forced to secondary markets early on, IIRC.

And please do not become a believer of this Arabian Nights 1 A310 and ten milllon story as well.

"When Alitalia was rescued, there was a feeling around that if anyone could do the job, it would be Etihad"

Now AZ really is a financial black hole....even a genie in a bottle and 3 wishes could not sort that basketcase of an airline out! :p

There celebrating their first strike since Etihad bought in.

And AFKL refused to participate in the more recent rounds of funding, which meant that their (originally 20-25% share, IIRC correctly) got diluted down to, effectively, nothing. So AFKL got burned there - but maybe they invested too early, before there was a genuine political will in Italy for actual reform.

Or maybe that will never change. Time will tell.

Whatever about foreseeing the advent of high speed trains in Italy, I'm sure that, if someone told you back in 1985 that an upstart Irish airline, who had only just started service between Waterford and Gatwick with a leased, 15-seater plane - despite the best efforts of Aer Lingus and the Irish Government (the Irish refused to allow them fly between Ireland and Britain - but the permission came from the British side. Under the air services agreement in force at the time, only one of the two governments' approval was necessary to start service) who tried to thwart their expansion on more then just that one occasion - would become Italy (and Europe's) leading airline and bring the legacy carriers to their knees, despite pursuing largely a model of flights to distant, out-of-town airports where no-one ever assumed anyone in their right mind would ever want to fly - then I'm sure you would have been shaking your head at the implausibility of it all, too.

You, and the OP, appear to come from the old-school, protectionist, coddled flag carrier mentality. You seem to think only in terms of what can't work, and how things could not work because they were never tried/contemplated/needed before. It's a "can't do" attitude.

While I'm not directly comparing Ryanair with EK, Ryanair flies predominantly only to markets that could be called "secondary", but in many cases are tertiary or worse! They chased entirely new markets - allowing people to fly several times a year when they may only have flown once, at most, a year; and creating brand-new demand in markets that previously were not just underserved, but not served at all.

Of course, the key to their success - finally - was reducing their cost base away to effectively nothing. The existing flag carriers couldn't do the same. But those other airlines - or new airlines - who could take advantage of a low cost base can, seemingly, do many of the things that the existing aviation heads just can't get their heads around. Thrive on extremely tight margins.

There are some parallels, though.

But an Irish fairy tale came true. Why not several Arabian fairy tales, too?

I think it's time to put the idea that EK can't fill their A380s with decent yielding passengers to bed - luckily in various jurisdictions that EK send A380s to publish independent data collected by their national regulators - someone did mention that in the EU you have to publish reports :D

I had a quick scan over a few:
UK: http://www.caa.co.uk/default.aspx?ca...geid=3&sglid=3
France: http://www.developpement-durable.gou...ue-annuel.html
Spain: http://www.aena.es/csee/Satellite?pa...adisticas/Home
Australia: https://www.bitre.gov.au/publication...me_series.aspx

What we see is that over the course of the year, low season load factors generally drop to around 65-70% and in high seasons it approaches 95%. What we also see is that low season generally only lasts for two months or so, and then load factors increase towards 80-85% where they stabilise. This is on routes with A380 service.

So this idea of 40% LF out of EU markets really doesn't correspond with current market realities.

Next up is to look at the claim that even though EK can fill their planes, they are all filled with low yielding pax:

Now, we know that fares and seat capacity don't move in a linear fashion. As the plane fills up, the increase in prices for the last seats is steep. We know this from public fare information. What this means in reality is that given a certain breakeven point, let's say 80% load factor, the loss you would make from having 60% load doesn't mean you need 100% another day. If the breakeven point is predicated on say, filling up 80% of the cabin on cheap fares to cover fuel and some operational costs, the remaining 20% (during high season), can conceivably be charged such high fares - as many of us on this board can attest to - that the revenue from that 20% can be double or even triple the other 80%.

EK state their breakeven point at about 79%. We know that some do not want to rely on any representations on the part of EK, so what we can do instead is look at fuel and operating costs for a sweet-spot 6hr sector EU-DXB on an A380. You'll probably fill it 1/3 of the way - so c. 60k USD. In the event that EK can only fill the plane with "cheap Y backpackers", to use the archetypical pax profile in this thread, and we allocate 125 USD of their 600 USD ticket to this sector, that's 53k USD of revenue. Now, that gives us 82% LF for this flight, with 0 premium pax.

But we know this is lower bound revenue - EK sell premium fares, even anecdotally. And when the plane approaches 90-95% LF, in this scenario we know there will be some fat margin premium pax. Also, it is simply implausible for any revenue manager to sell out a Y cabin with entirely cheap fares. You'd simply get fired. Y fares can head into the 1800s, or should we say 450 for this hypothetical sector -3.6x times the backpacker. And we know these fares are paid due to the independent load factor data.

So, flying A380s all around: plausible to make money from ops here, given current aviation trends, globally.

So that of course means that DL et al will no longer be able to sell Canada-Mexico, England-Colombia, LHR-SYD, etc, right :D

OPINION: Why US protectionism is bad for everyone.

http://www.flightglobal.com/news/art...eryone-410401/

ANALYSIS: Gloves come off in US-Gulf open-skies spat

When Etihad Airways chief executive James Hogan accepted an invitation months ago to speak at a high-level aviation event in Washington DC, he was not expecting to end up defending his airline's business strategy to hundreds of people in a packed ballroom.

"The world has changed," he remarked wryly towards the end of his keynote speech on 17 March at the US Chamber of Commerce aviation summit. "We hoped these facts have helped clarify our position."

Hogan, outlining what he called "10 facts" about Etihad, sought to persuade the audience that the Abu Dhabi government's involvement in Etihad was similar to the role that other states play in their hometown carriers. "Our shareholder has provided equity and investment, they've invested and seen success," he says. "That's business."

The USA's three biggest airlines do not agree. Weeks before the event, Delta Air Lines, United Airlines and American Airlines made public a 55-page report alleging that Etihad and two other Gulf carriers - Emirates Airline and Qatar Airways - have benefited from more than $40 billion of state subsidies since 2004. These alleged subsidies have tipped the playing field to the advantage of the Gulf carriers, say the three US legacy airlines, who are calling on their government to take action.

Supported by some of their unions, the three US carriers are asking Obama administration officials to begin talks with their counterparts in the UAE and Qatar. The US airlines, which say that the alleged subsidies have distorted the marketplace in an open-skies environment, believe that the Gulf carriers had flouted fair competition clauses in the open-skies agreements.

"We're just asking our government to give us some support as well, not in subsidies but at least that the playing field is level," said American chief executive Doug Parker at the summit, hours after Hogan's speech.

Rumours of the report and the three US carriers' lobbying effort - first reported by Flightglobal - have swirled around Washington DC for months before the report was unveiled at a press conference in early March. Chief executives from the three carriers had initially planned to take their case to US government officials as early as October 2014, but put off the meeting, apparently due to concerns over timing as the UAE and Qatar are US allies in the fight against Islamic State.

A meeting finally took place in late January. While the issue brewed silently among industry watchers in the weeks afterwards, it burst into mainstream consciousness when Delta chief executive Richard Anderson appeared on CNN charging that the Gulf carriers had received unfair state subsidies. During the segment, Anderson drew a relation between the Gulf carriers and the 9/11 terrorist attacks, citing "the great irony" that the terrorists originated from the same region as Emirates and the like.

The comment - which Delta subsequently apologised for - drew a harsh comeback from the vocal chief executive of Qatar Airways, Akbar Al Baker. "Quite frankly, I think Mr Richard Anderson needs to go and study in a university to find out what the difference is between equity and subsidy," Al Baker told CNN.

Both Anderson and Al Baker were notably absent from the US Chamber of Commerce's aviation summit this week, but it was clear that the issue would dominate the agenda. So much so, that Carol Hallett, counsellor to the Chamber, reminded summit delegates at the start of the day to be "respectful" of one another's views, even if there were differences.

GULF PUSHBACK

Across town from the summit, Emirates president Tim Clark met with reporters at the National Press Club as part of a whirlwind trip to the US capital to meet with officials to defend the airline against the US carriers' allegations.

Clark would not say how the talks went, aside from characterising them as "very constructive". Hogan, speaking with Flightglobal, says Etihad plans to hold its own talks with US officials in Washington this week.

Both Clark and Hogan say their airlines will respond to the allegations in full, but would not be drawn on committing to when. "We will do it in a methodical manner," says Clark. "Goodness me, it took them two years to produce it, so give us a bit of time." Calling the accusations "low hanging fruit", he adds: "I don't intend to spend a lot of time on this.... It could be quicker than people expect."

"We will take our time to respond," says Hogan. "We will work through it and understand and consult people."

Both airline chiefs strongly deny the subsidies allegations. "Tosh" was Clark's response when asked if Emirates had billions of dollars in fuel hedging losses assumed by the Dubai government. The carrier says the losses were paid for by its own cash reserves.

Asked to comment on the timing of the campaign against the Gulf carriers, Clark appeared frustrated. "I wish we knew... I struggle with their allegations."

Most perplexing to Emirates, says Clark, is the US carriers' claim that the Gulf airlines have taken away passengers and market share. "We are already feeding the big three anyway," says Clark, referring to Delta, American and United. "If we are seeking multiple fifth freedoms across the Atlantic, then maybe they will have a concern or two, but we don't do that.... What's driving this? I don't know."

US airlines and Italian flag carrier Alitalia were irked when Emirates launched flights from Milan to New York John F Kennedy. Clark says the airline had started the route after being approached by the Italian government when Alitalia was going through financial troubles. "If you look at our business model... we have very little fifth freedom operations," says Clark. "The essence of our model is to connect multiple city pairs. So the notion that we will 'plunder' the north Atlantic market, I struggle to get to the bottom of that one."

OPEN SKIES, FAIR SKIES

While the Gulf carriers have vehemently denied that they receive state subsidies, the three legacy US carriers and their supporters are not relenting in making sure they are heard. The US airlines and four unions have banded together under a coalition called Partnership For Open and Fair Skies, formalising their lobbying efforts in Washington.

Former president of the Air Line Pilots Association, Lee Moak, now heads an organisation called Americans For Fair Skies which is supporting the three US carriers in their push.

Immediately after Hogan's speech at the US Chamber summit, representatives from the coalition rebutted the Etihad chief's comments. "We are not against a national airline," ALPA executive administrator Rick Dominguez told reporters in a media scrum outside the summit. "There is compelling evidence that these loans [to the Gulf carriers] are not required to be repaid."

The report alleging the subsidies was unveiled after about two years in the making. The US carriers say they obtained the Gulf carriers' financial statements after trawling through accounts in several countries that they operate and are required to file financial figures with.

Asked why it took the coalition so long to unveil the report, Dominguez says the numbers were difficult to obtain. Allied Pilots Association president Keith Wilson says: "It's like a jigsaw puzzle."

The US carriers and their supporters now await a decision from US officials, after presenting to them the findings. "We are still waiting on the DOT to make an announcement on their findings," says Dominguez. But this could be a while, acknowledge the two pilots.

"You know how our fellow government works," says Wilson. "Hopefully they will engage soon, It will take some time."

DRAWING BATTLE LINES

Since the US carriers' report was made public, they have faced backlash, may it be from players in the industry, consumer organisations or the consumers themselves - many of whom have taken to the Internet to voice their opinions.

The US airlines have taken pains in the recent month to draw a distinction between their opposition against the Gulf carriers and their support for open-skies agreements. They say that the Gulf carriers deserve to be looked at based on the magnitude of the alleged $40 billion in subsidies.

"We are not attacking open skies, in fact open skies have been wonderful," United chief executive Jeff Smisek told reporters on the sidelines of the US Chamber summit. "There have been 114 open-skies treaties, [only] two of them are being abused and they're being abused by governments."

Delta, United and American have found a tentative show of support from Southwest Airlines. While Southwest - one of the big four US carriers with the legacies - has not joined the coalition, its chief executive Gary Kelly said in February that he believes the allegations should be investigated.

"We certainly do not want to be faced with subsidised competition," said Kelly, noting that Southwest had just begun international flights.

Among the other US carriers, JetBlue Airways and FedEx have opposed the US legacy airlines' campaign. JetBlue has codeshare relationships with all three Gulf carriers, and none with any of the three US mainline carriers.

The existence of open-skies agreements is essential in helping smaller carriers like JetBlue succeed, its newly minted chief executive Robin Hayes told Flightglobal on the sidelines of the US Chamber summit. "You have the four large airlines [in the USA], and there is a huge gap between number four and number five," he says. Open-skies deals are vital in helping JetBlue grow into new markets, he adds.

Smaller US airports, particularly those that do not have hub status with any of the big three US carriers, have come out in support of the Gulf airlines. Attracting service from foreign airlines is key to their connectivity, these airports have told Flightglobal.

Trade association Airports Council International-North America (ACI-NA) voiced its support for open skies in a February letter to senior Obama administration officials.

"If the United States were to weaken its open skies policy generally or with respect to targeted countries, ACI-NA believes that many of the benefits enjoyed today could be decreased," says the group's chief executive Kevin Burke in the letter. "Each country has its own approach to governance of the aviation industry and to subsidies and incentives for a variety of historical, political and other reasons. What some consider to be subsidies, others consider to be legitimate business practices."

Echoing the Gulf carriers, Burke pointed out that the Chapter 11 bankruptcy protection process in the USA could be considered "a form of subsidy because US airlines are able to reduce their labour and creditor obligations as a result".

Delta, United and American have all restructured through Chapter 11.

BANDING TOGETHER

Allegations of the Gulf carriers benefiting from state subsidies are not new. In recent years, US and European carriers have taken aim at Emirates, Qatar Airways and Etihad. But until recently, these comments have largely been kept to panels at industry conferences and one-off media interviews.

With the three US carriers formalising their efforts to persuade the US government to take a second look at its open-skies deals with the UAE and Qatar, other parties that have long opposed the Gulf carriers have upped their criticism.

Lufthansa Group chief executive and chairman Carsten Spohr - who stepped into the top job in May 2014 - has thrown his support behind the three US legacy carriers. "We do support the campaign by the leading US carriers against state aid and fully share their concerns," he said at the US Chamber summit.

It appears that Germany has listened to its flag carrier. EU transport commissioner Violeta Bulc said earlier this month that France and Germany had raised concerns on unfair competition from the Gulf carriers. These concerns are slated to be addressed as part of new European aviation policies that will be outlined later this year, she said.

Ahead of Bulc's comments, the French and German transport ministers had issued a joint statement in which they said European carriers are losing market share because of "unfair competitive practices" of the Gulf airlines.

Emirates' Clark brushed off Lufthansa's backing of the US carriers, saying: "Everybody is entitled to their own opinion. Good luck to them, I cannot say or make a judgement about what the carriers outside the three may or may not think about us."

Elsewhere in the world, Qantas Airways has called on the Australian government to be restrained when negotiating air services agreements with Middle Eastern countries, warning that liberalisation could hurt Qantas and Australian consumers.

Clark and Hogan would not comment further on how talks with US government officials are going, or the reactions they have received from their respective governments. "I am here as an airline manager," says Clark when pressed. "I don't want to cross over into governmental affairs. They will decide how to respond to that."

Both men have expressed confidence that their airlines will emerge with their reputations intact from the subsidies row, but the fact that both are holding talks with US officials to defend their carriers underlines that neither airline is laughing off the US legacy carriers' campaign.

The Gulf carriers need to look no further than the impasse faced by Norwegian, who has yet to receive US governmental approval for its Irish subsidiary to take over long-haul flights to the USA more than a year after filing for the permit. The big three US carriers, and unions including Southwest's pilots, have vehemently opposed Norwegian's plan and there is no inkling when US officials will make a decision.

The hold on Norwegian's application, while infuriating the airline and aggravating EU officials, has shown how powerful the US airline lobbying force can be.

As Eithad's Hogan has acknowledged, the world has changed.

Additional reporting by Edward Russell

http://www.flightglobal.com/news/art...s-spat-410328/

Could you elaborate on which numbers (freight ton-km, revenue, CATM, or other things) look "so bad"?

Government Subsidies Keep Air France Flying High: http://www.bloomberg.com/bw/stories/...ce-flying-high

Lufthansa accused of receiving government subsidies: http://www.law360.com/articles/40070...d-to-lufthansa