IAN-UK

Quite recently there's been some pretty serious bumping both in EK's home and in all its markets. So I guess you are looking ahead to some economic meltdown rather than a bump. And here (I guess again) you trust Lufthansa to dust itself off and rise as a phoenix-crane from the ashes while Emirates sinks into the sand.

I'm not sure I understand your leverage comments, but I can write that off to my ignorance. However, the point of your reference to Panam, and the relevance of the tax-free restrictions cited in your post, escape me entirely.

FD1971

Nicely said, beautiful conclusion of what became pretty obvious over the last couple of weeks.

I really think, we should leave it at that point. @:-)

San Gottardo

By the way, does some have the average yield for the longhaul operations of Lufthansa and other major carriers? EUR, USD or whatever other currency.

FD1971

And this is the interesting point. Most of the passengers EK is transporting in Y are not interesting for other airlines, aside from filling some seats for a low amount from Poland or Venice on inconvenient connections with massive layovers. Not surprising given the rather paltry yields and RASK of around 5.5 Cents. We already talked about C class to most Asian destinations..., full and at very high yields, so again, limited interest.

Luckily, or not, depending on the outcome, the sheiks decided to subsidize the global backpacker community to such an extent that a bankruptcy of the NE3 would massively impact global tourism flows. One can only hope that they do not lose interest.

Remember, Qatar is badly managed already.

FD1971

Cinderella might be able to help you out. I believe they use Disney Dollars over there.

IAN-UK

Well, that covers Y and C, and I'm sure F follows the same story. So the notion that Emirates offers any serious threat to the well-being of Europe's legacy carriers is clearly baloney.

In fact they are doing a favour to their European cousins by removing the tat from the market and allowing the likes of Lufthansa to cream off the high yielders.

Good to know!

FD1971

You fail to understand the point.

They are doing the backpackers a favour by offering fares that allow them to travel, well, travel without using the likes of PIA, Biman and other airlines that offered fares in the typical regions the NE3 are known for ex Europe.

Carriers like LH never went down into these fare regions, at least not for the vast majority of their seats.

Hence, you see the lobbying, for example, in Berlin, going into a certain direction.

A vast vast majority of NE3 customers are not interesting for carriers like AF, BA or LH, except for some extra seats here and there. Sunseeker with his Euro 2000 fare to South East Asia was a very fitting example.

San Gottardo

So Lufthansa uses Cinderella accounting now as well?

I know that you feel linguistically and intellectually weakly equipped to participate in a debate where arguments built on coherence and facts trump. But do you need to go as far as contradicting yourself? Lufthansa, which a couple of posts ago had the world's hihgest accounting standards now uses Cinderella accounting? But then it goes in line with your argument that the yield numbers they published themselves are bla bla.

You still owe us a couple of things:

1) Why EK average yield cannot be profitable
2) Why EK audited financial reports are Cindarella accounting
3) Your insider knowledge of what is going on at QR and why that proves that the company is well managed

In the meantime, whilst I didn't have time yet to find the longhaul yield of LH I did find that at least until some time ago the CASK for LH longhaul was 33% above that of Emirates. Which may explain why EK can make money even at lower yields and at lower RASK.


Yes and no. You are right in pointing out that European legacy carriers are not interested in carrying Y passengers at low fares to Asia. It simply wouldn't be profitable for them. But if the ME3 didn't transport those passengers, someone else would, and in part it would be the European legacy carriers, but at their fares. THen those passengers suddenly become profitable. The same goes for C pax: simply saying that a customer is not profitable here because he pays less elsewhere is logically incorrect.

sunseeker

[QUOTE=FD1971;22589725)
A vast vast majority of NE3 customers are not interesting for carriers like AF, BA or LH, except for some extra seats here and there. Sunseeker with his Euro 2000 fare to South East Asia was a very fitting example.[/QUOTE]

i don't have a problem with your statement, but this goes both ways:
AF,BA or LH, except for some specials here and there, are not interesting for pax who want to travel on a great product for reasonable money...
@:-)

FD1971

No, but Cindy might know the answer to your question.

Yes, probably the main reason why I am unemployed since years, not even AB wanted to hire me.

1) When did I say that?
2) 23 years and counting...
3) Twisting facts again..., you said that they are badly managed. i just asked whether you have the knowledge and position to judge that.

BTW, typical fan corner behaviour.

Again, for the 24th time now, isolated numbers make a lot of sense..., talking about certain capabilities, linguistically and intellectually.

No, they would not fly at all, alternatively, back in the days, they used airlines like PIA and Biman, which brings us back to accounting standards. In Europe, they used to take the bus, before Ryanair reached London significantly faster...

Like many other posters, you fall victim to the same mistake. We hardly see any passenger migration from the incumbent non-stop carrier to the low cost airline, but we saw and see migration from other one or two stop alternatives to the low cost Gulf carriers. Surprisingly (...) that is the reason why LH continues to transport more passengers, Emirates continues to transport more passengers, the overall market grows and we see some airlines losing passengers, especially in certain city pairs or situations.

But again, why go into details, when you can claim that an airline is badly managed from your position.

FD1971

I am not accusing you of being a cheap shot, I just point out that your spending patterns do not match with what the incumbent premium carrier offers most of the time.

Some people actually prefer a Hyundai Genesis to a BMW 5 or even 7 series.

At that price point, BMW could only offer a badly equipped 3 series model, hence Hyundai sells the Genesis (while BMW has a different focus or sells you a 2010 used model)

But blaming LH or BMW for not offering a product to my preferences is so lame and boring, but hey, the main reason why the LH forum on FT is doing fine.

So please stop whining about losing your SEN status and start celebrating your EK Plat perks (without any doubt, in Germany you will be ridiculed for driving a Genesis or holding EK status, but again, you laugh in the end, you saved a bundle)

gojko88

I still haven't heard why LH is a "premium" carrier compared to the ME3 in anything but name. Quite contrary, the latter are often referred to as "bling" airlines, while LH is still serving me the same Gherkin and Cheddar sandwiches on 350€ intra-EU tickets.

Your Hyundai/BMW analogy would make perfect sense if the price difference was equal to the difference in product quality. It's quite clear, however, that's not the case.

If the LH management really shares the same kind of arrogance about LH's product as you do, then the downfall will be most entertaining to watch.

N1003U

Fortunately, I don't think arrogance is the primary problem. When I looked Spohr and Huber in the eye during the Kamingespräch and asked them (at separate times on-on-one) some pointed questions about the competition to Asia (e.g., "what are the plans to deal with deteriorating business to Asia?", I saw more fear and only a little bit of disdain. And then after some thought, they answered very carefully with vague references to focusing key markets (commercial and industrial destinations) and managing capacity. I took the answers on the whole to mean, "retreat, re-group, and try to figure something out..."

To the limited folks I ask about it, LH has a great reputation in Asia, but the customers are still price sensitive. LH probably needs to figure out how to cater better and in a differentiated way from the competition to the specifics of the Aisan market if they want to command a premium there. That will be a challenge...I can't even imagine how they could do that...

sunseeker

you are missing the point again; for me EK is much closer to "BMW" than LH, who in many aspects are "Mitsubishi" at best and i couldn't care less whether Sheikh Mohammed bin Rashid al Maktoum, Cinderella or Allah himself make this possible.

btw, where does your assumption i am loosing SEN come from ?
whether i like it or not, i am still using LH enough to maintain SEN hands down; currently i am qualified until Feb. 2017 and whether some ignorants would snezze upon my EK status, trust me, that is really of no whatsoever importance to me and if i should ever be happy enough not to fly LH enough to requalify for SEN, my SQ Solitair will still give me *A Gold status anyway.

so, thanks for feeling sorry for me, but thanks for nothing...

gum

No, you shouldn't write the leverage effect off to your ignorance.

My personal assumption is that a larger company is much more prone for a bump or an economic meltdown when some of the following preconditions occur:

+ The company has a very high percentage of leisure traveller who - in case of a bump - immediately stay away and travel to short-haul destinations for holiday.

+ The risk is as higher as the company size is. If you have a tiny airline which justs fulfills the needs of the own country and transporting a large number of captive passengers the ups and downs of leisure travel (as well as the trend to or against a specific destination) the risk is not so high as establishing your hub as intercontinental transit hub.
My theory is that the several country risks don't offset each other but are multiplied.

+ A large growth rate leads to a relatively younger fleet and therefore the need to refinance the exorbitant depreciation.

That were my ideas for a leverage effect. It's the same like investment if you invest with a small sum of money and than leverage your portfolio by credit or similar level of debt.

To the idea of the tax free nightmare of the founders and owners:

If there wouldn't be any limits on tax free purchases an airline which is at the same time an airport operater there would be a trade-off from losses and profits of the airline as well as the airport operator.

If the passengers could purchase without imits either the rents for the shops within the terminal arise or the airport operator itselves gets a comfortable margin.

This woud be a kind of airbag for delivering profits on an additional pillar.

That was the idea behind.