Wishing our gov't was competent as the West, protecting our air traffic

[WishLivePak]

aircanada.com - About Air Canada - Products & Services

The Impact of Emirates on the Industry
Since Emirates entered the Australian market in 1996, no fewer then 11 Australian and Continental European operators have terminated service. That traffic and the associated economic benefits now flow through Dubai.

In 2000, Australia enjoyed services to nine European cities aboard 5 carriers (Qantas, British Airways, KLM, Austrian and Alitalia). Today, the only carriers left serving Australia are British Airways, Qantas and Virgin Atlantic operating to just two European cities: London and Frankfurt.

As a result of the Australian experience with the Gulf carriers, the Australian government today has decided to block any new carrier access to its Trans-Pacific routes (i.e. Australia to North America) including the refusal to provide these rights to Canada at the negotiations held in February 2009. The Australian government has made it clear that Australian carriers (particularly V Australia) will be given reasonable opportunity to establish services on the Trans-Pacific route prior to negotiating any new rights for Trans-Pacific Access with any country.

Emirates and the other Gulf carriers rely disproportionately on connecting traffic for their flights. In Canada, existing flights already provide more than enough capacity for current traffic between Canada and the UAE as well as any growth in traffic for the foreseeable future.

If the Australian experience were repeated in Canada, the resulting impact on Air Canada and the Canadian air transportation sector would be devastating.

Air Canada routes such as Ottawa-Frankfurt rely on connecting passengers for as much as 85% of their traffic. These customers take the Ottawa-Frankfurt flight and connect at Frankfurt for points in Europe, Africa, the Middle East and Asia. The impact of greater UAE access to Canada would mean the loss of nearly 2.5 million international passengers putting over 20 international flights at risk representing over 10,000 direct and indirect jobs*.

In addition, this loss of international traffic would also have a severe negative impact on Air Canada’s domestic and transborder networks which rely on connecting international passengers for traffic placing dozens of domestic and transborder flights and the associated jobs at risk.

The Gulf carriers (Emirates, Etihad and Qatar) are able to dump capacity into markets such as Canada and undercut incumbent air carriers such as Air Canada because of the virtually unlimited subsidies and support they receive from their respective governments.

A recent study by Arthur D. Little estimates that Emirates Airlines pays 48% less on labor than European airlines due in large part to the lack of any income taxes in Dubai and favorable labor rules which allow for the importation of guest workers from overseas. The same study estimates that Dubai Airport charges 78% lower landing and other fees for an Airbus 340-300 than other international airports such as Frankfurt.

Canada is not the only jurisdiction concerned about access from the UAE - and Air Canada is not the only international carrier to sound the alarm bell:

• In an October 7th interview the CEO of Air France - Pierre-Henri Gourgeon remarked "Emirates, the biggest Gulf carrier, already pays very little in the way of airport charges or fuel tax at its Dubai hub, as well as escaping many of the social charges that weigh on European companies. Those benefits could generate 3 billion euros ($4.2 billion) of operating income if applied to Air France-KLM," he said. “They don’t pay tax -- they don’t even have a word for it.”
• The Government of France has rejected Emirates application for additional access to Paris - approving only a single landing slot at Lyon.
• Emirates has been refused additional capacity to South Korea.
• Emirates has also become embroiled in a fare dispute with the German Government who last year forced the carrier to raise ticket prices on some routes to German to prevent the undercutting of European carriers.

* Calculations based on formula formulated by InterVistas Consulting that each million passengers has an economic impact $460,000,000 - which translates into 4,125 direct, indirect and induced jobs. Indirect jobs are those which are not directly at the airline such as caterers, airport personnel, etc.


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Air Canada, Lufthansa and other airlines have protected themselves with the help of gov'ts. Our gov't is too poor to provide subsidies or concession like that of Emirates.

Perhaps the rules were written long ago and cannot be changed, but it doesn't mean we, as Pakistanis, can be milked as much as they wish to. They pick our passengers, make billions, yet they've added very little to our airports. It is not only Emirates, but Qatar, Eithad, Saudia, Oman, Turkish and so many more airlines. PIA was able to offer cheaper airfare with lesser service offers, but even that didn't work as Flydubai came in with low airfare no frills airline.

The passengers, ourselves, will opt for cheapest airfare or best service. But the gov't should opt to protect our industries. "he impact of greater UAE access to Canada would mean the loss of nearly 2.5 million international passengers putting over 20 international flights at risk representing over 10,000 direct and indirect jobs*" Emirates has hampered Pakistan air traffic much more. They alone offer over 70 flights, not to mention using big jets like 777 (compared to our 310s, 320s and occasional 777). It would be too much to count the flights offered by other airlines. For Air Canada, just 20 international flights were at risk of taking away 10,000 jobs, think about how many of our jobs are lost due to these middle eastern airlines.

We used to fly to way many cities and now fewer. The routes are simply not full enough, thanks to middle eastern airlines. Sure people can blame PIA for offering bad service, but lets not forget that Swiss and British Airways used to visit Pakistan. Now that Emirates has taken business away from even Pakistan, they foreign airlines have withdrawn services.


I wish to add that I'm aware BA withdrew service after the hotel bombing. However, security has improved, but BA hasn't returned. They instead have done code sharing with Qatar airways, as for them, the route isn't lucrative anymore, thanks to middle eastern airlines.

 

[Al Bhatti]

 

[Al Bhatti]

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July 04, 2014

Etihad president denies airline receiving state subsidies
James Hogan says European airlines built upon decades of government ownership and support

Europe’s governments and airlines should embrace external investment to help strengthen the aviation sector, said James Hogan, President and Chief Executive Officer of Abu Dhabi’s Etihad Airways.

Speaking in Vienna at a European Union conference on air transport competitiveness in Europe, Hogan said aviation was a global, not regional, industry, generating strong economic and social benefits. He said his airline wanted to engage with Europe for mutual gain.

“Consolidation of airlines is critical to sustainable air services,” Hogan said. “External investment is not a threat. It is an opportunity to strengthen airlines, and to support employment and economic growth.”

Etihad Airways has acquired minority stakes in three European airlines – airberlin (29.2 per cent), Aer Lingus (4.99 per cent) and Air Serbia (49 per cent), and is finalising the acquisition of a 33.3 per cent stake in the Swiss regional carrier Darwin Airline, which operates as Etihad Regional.

Etihad Airways has also announced its intention to acquire a 49 per cent stake in Italy’s Alitalia, subject to regulatory approval.

Hogan said Middle Eastern airlines were coming under increasing scrutiny in Europe, as opponents cited the expansion of Gulf carriers as a major competitive threat.

“All Gulf carriers are not the same,” said Hogan. “We are different sizes, have different hubs and follow different strategies. We are actually vigorous competitors with each other.”

He said Etihad Airways, in particular, had become a major focus of larger competitors who feared and opposed its investment strategy.

“Etihad Airways is wholly-owned by the Government of Abu Dhabi. We received start-up capital, like every airline does, but we receive no state subsidies, no free fuel and no reduced airport charges in the United Arab Emirates.”
Hogan said the European airline industry was built upon decades of government ownership and support, and that even after privatisation or part-privatisation, government bailouts, debt waivers and various forms of subsidies had continued.

He cited examples of direct state aid totalling €14.2 billion, including an €800 million payment by the German Government to Lufthansa to support a pension fund gap, state aid of €1.1 billion for Swiss following the collapse of its predecessor, Swissair, and the Austrian Government’s absorption of €500 million of debt accrued by Austrian Airlines. Both airlines are now subsidiaries of Lufthansa.

“Gulf carriers are not the cause of Europe’s aviation challenges,” Hogan said, adding that the industry was already facing serious problems decades before Etihad Airways was established in 2003.

He said the biggest problems facing the European industry were long-standing issues including congestion from under-investment in airports and airspace management, high operating costs at traditional hub airports, high labour costs and inconsistent and inequitable taxes levied on airlines and passengers.

The rapid and broad growth of low cost airlines has also impacted heavily on legacy airlines, causing a major shift of intra-Europe traffic to budget operators and losses by legacy carriers on short and medium-haul routes. In 2013, the 10 member carriers of the European Low Fares Airline Association operated 915 aircraft and carried 216 million passengers, or 43 per cent of all scheduled intra-Europe air traffic.

Hogan said consolidation had created three major European airline blocs – the Lufthansa Group, which, in addition to its Swiss and Austrian subsidiaries, owns Germanwings, holds major stakes in Brussels Airlines and SunExpress and a minority share in the US carrier JetBlue; International Aviation Group (IAG), which owns British Airways, Iberia and Vueling; and Air France KLM, which has equity in Alitalia, Transavia, Martinair and foreign carriers including Kenya Airways and the Brazilian airline GOL.

“We understand and respect the fact that European airlines have their own business models, and we understand and work within the rules of Europe,” Hogan said. “We have a different business model to suit our different requirements.

“To grow, we need scale. We cannot match the size of long-established competitors, including other Gulf carriers, so we have developed a strategy of growth through partnership,” he said.

“Our strategy is pro-competitive. We work with all partners for mutual gain, and within competition and ownership rules. Collaborative growth delivers sustainable businesses, and more choice, convenience, consistency, reliability and stability for our customers.”

Hogan said the investments by Etihad Airways strengthened partner airlines, preserved and created jobs, and maintained air services, delivering benefits to consumers, local and national economies, as well as major suppliers such as Airbus Industrie.

Without Etihad Airways’ stakes, Hogan said there would be a loss of financial investment and synergy benefits for airberlin, Aer Lingus, Air Serbia and Darwin Airline, and loss of a ‘rescue investor’ for Alitalia, costing thousands of jobs and leading to air route closures, flight reductions, higher fares and lost tax revenue for European governments. Some carriers could even fail, causing much greater social problems.

“There are strong economic and social benefits from stable and connected airlines,” Hogan said.

“Etihad Airways wants to engage with Europe.”

Etihad, England cricket board sign 3-year deal

Etihad Airways and the England and Wales Cricket Board (ECB) have signed a three-year partnership deal which will see the carrier become the first ever official airline partner of the England Cricket Teams.

The sponsorship agreement will see all England national teams across men’s, women’s, age-group and disability cricket, fly with Etihad Airways and experience its award-winning products and services.

As part of the partnership, the airline will benefit from a comprehensive range of commercial rights which will include access to England players for promotional appearances, advertising at six international cricket grounds in England and Wales, tickets and hospitality packages.

Encompassing England’s domestic international and overseas cricket tours from 2014-2016, the agreement will also include winter training camps in Abu Dhabi and a joint community-based cricket initiative.

Among the highlights of the sponsorship tenure will be the home series against India (2014), the Ashes series against Australia (2015), the ICC World Cup in Australia and New Zealand (2015), the ICC World Twenty20 and ICC Women’s World T20 in India (2016), and the tour of South Africa (2016).

Etihad president denies airline receiving state subsidies - Emirates 24/7

 

[Al Bhatti]

November 5, 2010

Tim Clark: Subsidy debate has airline boss in a spin

Tim Clark is tired of saying it, but will say it as many times as is necessary. Emirates Airlines is not subsidised by Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, and it generates its own cash for investment in its fleet.

“The biggest form of subsidy for airlines is aero-political protection,” says the Emirates Airlines president who was one of the founding team of 10 executives when Sheikh Mohammed decided to launch the carrier in 1985.

“The French, Germans and British all had that in their formative years, they kept people out of their markets,” says Mr Clark, who began in aviation nearly 40 years ago with British Caledonian.

“I was here seven months before it was formed. I know what we did and how we did it,” says Mr Clark.

“When we formed, [Sheikh Mohammed] said, ‘I’m going to keep the skies open’. And that’s how we grew. So the notion that we are subsidised – it’s a horse that’s been flogged for 25 years.”

The government-owned airline, one of the Dubai’s corporate star performers amid a collection of debt-riddled operations, is once again getting up the nose of its rivals. Last week it reported a fourfold rise in half-year profits, while its passenger seat factor – the number of seats available divided by the number of passengers – rose more than 80 per cent. It carried 15.5m passengers and there was a 2.6 per cent increase in premium seats.

It is adding to its 12 existing A380 superjumbos, with a further 78 on order, each of which costs about $350m, and since April it has opened six new destinations, four of which are passenger operations to Amsterdam, Dakar, Madrid and Prague.

Its overall fleet of 151 aircraft is set to more than double with total aircraft orders of $68bn.

But its European and US rivals want their governments to curb export subsidies they claim are enabling airlines such as the Emirates to finance aircraft purchases cheaply.

Last month Ottawa denied landing rights to Emirates and Etihad after Air Canada protested they were taking its business. In response the UAE declined to renew Canada’s lease on a Dubai airbase.

All of this has reignited the subsidy debate, to the exasperation of Mr Clark, who likens it to a school playground argument. “If the Canadian government has concerns in Canada, that is a position we respect,” he says. “I hope sense will prevail.”

One key element of the Emirates business model is for passengers to reach their destination in one journey. “If you have to make a stop in Europe en route to the US west coast from Dubai, you get an inevitable wait and people don’t want that,” he says.

He predicts Emirates will build up a fleet to fly long-range routes of up to 18 hours. “That’s what the business community wants, provided we give them the comfort they need, flat beds, and eating when they want to eat,” he says. “Watch this space.”

Mr Clark spoke to the Financial Times before Quantas grounded its A380 fleet following engine problems last week. He says he is delighted with the pulling power of the aircraft, which have engines made by different manufacturers from those of the Quantas fleet.

Attractions include first class shower spas, a lounge and bar that is becoming a business networker’s meeting place, flatbed suites, plus its ICE entertainment system – which allows you to check your flight progress, make calls, or watch the news and films, and which has become something of an industry benchmark.

Emirates’ expansion is also creating business opportunities where they did not previously exist, he claims. “We are going to where the markets are or are likely to be in the future. People start travelling to places where they didn’t think there was business,” he says.

It is rich, he argues, for European carriers to moan about the Emirates eating into their business when they did not have the business in the first place.

“Ask business people in Newcastle and the north-east of England how we transformed a lot of the way they did business. In the old days, they tried to get to Indonesia or Africa in a convoluted way. Ask them how Emirates has aligned what they want with our services to Newcastle.”

The moment the business traveller stops demanding new routes is the moment to worry, he says.

Since the subsidy question will not go away, Mr Clark details the support that got Emirates flying. In 1985 Sheikh Mohammed gave Maurice Flanagan, the airline’s first managing director, $10m.

“He said, ‘Go and set up the airline.’ He gave us two 727s from the Dubai Royal Air Wing and built a training facility. In total it worked out at $50m,” Mr Clark says. “That’s all we have had. And he was absolutely clear: ‘You don’t come to me for money. You will buy your own aircraft.’ And we have done ever since.” As Emirates continues to grow, it is a story Mr Clark will probably have to retell.

Tim Clark: Subsidy debate has airline boss in a spin - FT.com

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I hope the questions are answered now.

 

[WishLivePak]

@Al Bhatti

I can't give all of that a read. Perhaps you may be right about subsidy, or Emirates, but many disagree. Moreover, whatever the middle eastern airline do, Pakistan should still protect its air traffic. 70 flights just from Emirates to Pakistan.. How many all Pakistani airlines do?

 

[Cherokee]

Emirates flights are one of the finest when it comes to international travel . Their cabin crew is far well mannered towards brown/black people then other airlines .

 

[Al Bhatti]

@Al Bhatti

I can't give all of that a read. Perhaps you may be right about subsidy, or Emirates, but many disagree. Moreover, whatever the middle eastern airline do, Pakistan should still protect its air traffic. 70 flights just from Emirates to Pakistan.. How many all Pakistani airlines do?

Yes Pakistan like any country (including UAE) has to make sure their national assets are making money. But, do we have capable and able decision makers and heads to formulate a business model that can turn PIA, Railway, electricity companies and all the other national assets into entities making profits worth millions of dollars every year.

When UAE was formed in 1971 only one ruler was formally educated at university and he had couple of PHDs. Since decades the criteria to be member of the Federal National Council (something like our parliament) is minimum Masters degree.

Looking at Pakistan (1947), we by now should have had a law in place which sets the bar at PHD degree for anyone wanting to sit in the parliament or senate or the provincial assemblies. Provincial assemblies can have masters degree as minimum.

If out of 190 million+ Pakistanis we cannot bring forward people having PHDs to the parliament, senate and the provincial assemblies then nothing can be done with the nation.

UAE had shortage of manpower (be it normal manpower or educated ones having masters and PHDs) but the leaders set one thing in sight not to allow this to be an excuse to take the nation where it is now. On the contrary Pakistan has always had no shortage of manpower (be it normal manpower or educated ones having masters and PHDs) but the leaders set one thing in sight to make sure personal links and priorities are always on the top.