The US Department of Transportation’s (DOT) recent approval to add Continental to Star Alliance, as well as approving a joint venture agreement involving Air Canada, Continental, Lufthansa and United Airlines, creates a related policy issue deserving attention.
As one of the world’s largest non-aligned airlines, Emirates believes the approval of this immunised bloc will result in carriers like Air Canada and Lufthansa increasing their market power and effective dominance at many of the world’s largest airports and on many of the most important European, American and Asian routes.
We therefore argue that such market power must be the final nail in the coffin for the aero-political protectionism demanded and often secured by some carriers in their home markets, which in turn significantly reduces competition and limits consumer choice. Using the example of Frankfurt, Star has a flight departure market share close to 80% and on the Toronto-Frankfurt route, Star’s passenger market share in 2008/09 was 88%. By comparison, Emirates’ share at Dubai International Airport is 47%. Given the sixth freedom nature of Frankfurt (see page two), Star can and does
dominate a market like Canada on a global scale via their German and Toronto hubs. This dilution of competition increases barriers to entry and threatens fair pricing for consumers. As a logical competitor against this Star-German-Canadian axis, Emirates is denied the chance to compete thanks to Canada’s illiberal market access policies which restricts our flights to just three a week for the entire country.
Latest alliance immunity must end protection
77 x 777 + 1 = a milestone for Emirates, Boeing and aerospace
Issue 4 | August 2009
Will Löfberg -Manager Public and Government Affairs
Four million flights and 18 million flying hours later, the Boeing 777 celebrates a new milestone with Emirates becoming the world’s largest operator of the B777 family of commercial aircraft.
On 29 July 2009 our latest B777-300ER – tail number A6-ECS – landed in Dubai from Seattle to join our family of 77 other B777s at Emirates. Our B777s fly daily from Dubai to locations as far afield as São Paulo, Houston, Johannesburg and Osaka.
The 78th Boeing 777 to find a home in Dubai is a major achievement not only for Emirates but for US, Canadian and international aerospace and manufacturing. There are three million parts in an Emirates B777 provided by 500 suppliers from around the world. The aircraft is one of the most valuable exports from the United States. It is also a significant export revenue earner for Canada where close to 30% of components for our B777s are manufactured.
The Boeing 777 owns the world record for distance travelled non-stop by a commercial jetliner when a B777-200LR set a record distance of 11,664 nautical miles lasting almost 23 hours. Today’s B777 operators enjoy a 99.2% dispatch reliability rate.
The newly delivered Boeing 777-300ER will bring this type to a total of 46, with Emirates also operating nine B777-200s, 12 B777-300s and 10 B777-200LRs. We also recently accepted two new B777-200LRF freighters into our fleet. Emirates has a further six B777-300ER passenger aircraft due for delivery through the 2009/10 financial year.
Taking the sixth – in defence of sixth freedom
Emirates’ hub at Dubai benefits from advantageous geography to enable non-stop flights on almost all routes and provides consumers convenient travel options between points which would otherwise not be directly or frequently connected.
Concerns are raised in some quarters about the content of sixth freedom in Emirates’ carriage. Yet, carriage of connecting traffic over home hubs is a significant part of the traffic mix of all network carriers.
Airline International connecting (6th freedom) passengers as % of total international passengers
KLM at Amsterdam Schiphol 65%
Singapore Airlines at Changi International 47%
Air France at Paris Charles de Gaulle 51%
Lufthansa at Frankfurt International 53%
Emirates at Dubai International Airport 56%
Source: MIDT 2008 – assumes one passenger per connecting itinerary
Airports Total passengers - 2007 (in millions) Total connecting passengers - 2007 (in millions) % connecting passengers
Frankfurt International 53m 29m 54%
Amsterdam Schiphol 46m 19m 42%
London Heathrow 68m 24m 35%
Paris Charles de Gaulle 57m 18m 32%
Source: UK CAA, November 2008
Route % share of 3rd/4th freedom carriers % share of major 6th freedom carriers % share of Emirates
Delhi – Toronto Jet Airways 30% KLM 13%, Air France 13%, Lufthansa 3% 2%
Delhi – New York Air India 39% Virgin Atlantic 4%, British Airways 3%, 3%
Lufthansa 3% London – Sydney Qantas 26%, British Airways 15% Singapore Airlines 11%, Cathay Pacific 10% 6%
London – Auckland Air New Zealand 28% Singapore Airlines 18%, Cathay Pacific 10% 8%
Manchester – Hong Kong British Airways 22%, Cathay Pacific 11% Lufthansa 13%, Air France 12%, KLM 10% 10%
London – Beijing Air China 38%, British Airways 33% Austrian Airlines 5%, Lufthansa 4% 4%
Paris – Osaka Air France 37% KLM 11%, Korean Air 8%, Alitalia 7%, 1%
Lufthansa 5%, Finnair 5% Paris – Lagos Air France 72% KLM 7%, British Airways 5%, Lufthansa 3% 1% Source: MIDT data, May 2008 – April 2009
The above table prompts the query: is sixth freedom carriage by some airlines more acceptable than by others?
Basic freedoms of the air
First freedom: The right to fly over the territory of a foreign country without landing.
Second freedom: The right to stop in a country for refuelling/maintenance, while enroute to another, without putting/taking on passengers/cargo. Third freedom: The right to carry passengers or cargo from one’s own country to another.
Fourth freedom: The right to carry passengers or cargo from another country to one’s own. Third and fourth freedom rights are invariably granted simultaneously in bilateral agreements between countries.
Fifth freedom: The right to carry passengers or cargo between a foreign country and a third country.
Sixth freedom: The right to carry passengers or cargo from a foreign country through one’s own home country to a third country – a combination of fourth freedom on one sector and third freedom on another sector in a single journey.
Over recent decades most sectors of the global economy have opened up to competition. However, aviation has remained regulated by a web of bilateral air services agreements between states that, in many cases, significantly curtail effective competition by limiting the freedoms of the air (see box at bottom of page).
About 130 countries have mutually exchanged first and second freedoms of the air through the multilateral agreements. Countries such as Canada and Russia, with large air space, have used overflight rights as bargaining chips for concessions in other areas of air services. The exchange of third, fourth and fifth freedoms of the air normally form the core of air services agreement negotiations.
Countries have not traditionally negotiated the exchange of sixth freedom traffic rights. Protectionist tendencies surface most often when a foreign airline is perceived to be ‘exploiting’ opportunities to carry sixth freedom traffic. Yet, the carriage of such traffic has been an
important part of aviation for decades, is a key feature of the business models of all network carriers and a critical source of competition. Large European airlines such as British Airways, Air France, KLM and Lufthansa have moved sixth freedom traffic over their hubs for decades. Singapore Airlines and Cathay have similarly carried significant volumes of sixth freedom traffic between Europe and Australasia and between Australasia and North America over their hubs. And sixth freedom traffic is an important part of the Emirates business model too.
The organisation Enviro Aero looked at hub operations and found for traffic between Europe and Asia, 94% of the originating and destination points of passengers are not directly linked, due to the traffic volumes between them being low. Sixth freedom carriage has an environmental benefit too - a hub-based operation requires fewer flights to transport the same amount of passengers.
Government-owned, fully commercial, state-aid, legacy carrier, privatised, start-up, low cost, audited accounts. Just as British Airways is different to Alitalia as Jet Blue is no United or Air New Zealand is unique from Virgin Blue, the carriers of the Middle East and Gulf region also offer significant differences in their structures, financials, transparency and operations.
‘Gulf carriers’ has become an overly convenient moniker, particularly when in the pejorative. Namely, the grouping of all airlines in one basket is not an accurate representation of aviation in this part of the world. While the Middle East is generally a less mature aviation market compared with Europe or the US and many carriers are growing via large aircraft orders (although compare global orders on page four for a more accurate picture), there are fundamentally
different business models being deployed in this region. Some airlines are more than 60 years old, others privatised, some government-owned and state supported and others commercially focussed. Emirates, owned through a government investment corporation, is one of those run on a fully commercial basis. We also have our financial accounts independently audited. We receive no subsidies or discounted fuel.
Further, Emirates needs to make a commercial return on shareholder funds, even in a global recession. Emirates receives no government subsidy and cannot engage in commercially unsustainable discounting in the hope of being bailed out in the future. As a result, Emirates is forced to assess its pricing on a constant basis to ensure that it covers its costs and makes a return.
Not all carriers are the same
For those who may have missed it, the CEO of Star Alliance, Jaan Albrecht, recently told Germany’s Aviation Press Club that he considers the hubs of the Middle East (or ‘Arab Gulf region’) as ‘artificial’. Specifically Mr Albrecht said, “We (Star) don’t want to support any artificial hub systems in the desert”.
Why he considers a hub in a region of 260 million people artificial is unclear (the population of just Gulf Cooperation Council countries is larger than Canada, Australia, Argentina or Malaysia) and we strongly disagree that Dubai’s aviation credentials are synthetic.
Of the world’s 20 largest international airports by international passenger numbers, the European Union – with its 499 million people – has 10 on this list. The Middle East – with 260 million – has just one. Expand this to the 30 (or even 50) largest airports and the share for Europe – the home of Star and its governing member Lufthansa – increases.
But instead of just assessing our arguments on this issue, consider the actual capacity behaviour of Star Alliance carriers at the largest of these so-called ‘artificial’ hubs in the Gulf, Dubai International Airport.
Compared to 2008, Star carriers have increased overall capacity to Dubai in 2009 by 14%. In a recession.
If Dubai truly is ‘artificial’, how does Mr Albrecht explain the following facts, all amidst the worst economic downturn in 70 years, and with significant cuts to airline capacity worldwide:
• Star Alliance carriers offer over 100 flights a week to Dubai or over
14 flights a day.
• Star’s dominant carrier Lufthansa held a press conference in Dubai
this year to announce a big increase in its services to Dubai, including new services from Munich.
• As the National newspaper reported, “Lufthansa was diverting
aircraft from weakening markets in North America and East Asia and would use them on Middle East and Africa routes where demand was faring better. Lufthansa’s seating capacity will rise 110% this summer on flights to the UAE, while the Gulf region will see a 40% growth in overall capacity.” This does not include the weekly Dusseldorf-Dubai service which commences on 26 November 2009.
• Singapore Airlines this year is increasing flights to Dubai to 17 a
week from Singapore, five from Istanbul and four from Cairo.
• United Airlines started services to Dubai from Washington DC
last year.
• Deutsche Post World Net and Deutsche Lufthansa AG form a joint
cargo airline this year with one of their first destinations being Dubai. As competition purists and the home of open skies (with some 130 airlines flying to our base), Emirates welcomes this further injection of competition. This sentiment is true even in a global downturn. Finally, consider the world’s regions. Below is a comparison of the world’s 30 largest international airports (or those with over 200,000 one-way departing international seats per week) and a comparison to their respective percentages of world population and GDP. We contend our home region is not over-represented.
Hello from the ‘artificial’ desert hub
Region % of world population % of world GDP % of world’s top 30 airports
Middle East 4% 7% 3% North America 7% 27% 10% Europe 10% 30% 57% Asia 58% 30% 27% Singapore Airlines – flights up 24% in 2009 United – seven new
weekly flights in 2008
Egypt Air – flights up 13% in 2009
Lufthansa – flights up 100% in 2009
An Emirates perspective on the ETS
Emirates continues to pursue significant advances in environmentalperformance through its internal Fuel Optimisation and ‘Emvironment’ programmes. We believe that it is aviation’s responsibility to continue to make technological advances in aircraft performance, flight operations and fuel efficiency.
We are supporters of research into alternative fuels, however, we believe this role is best played by the oil industry in cooperation with engine manufacturers. Emirates advocates the application of the ‘precautionary principle’ with respect to terrestrial-based bio-fuels, as the environmental and social impacts of unsustainable production over large land areas do need broader evaluation. Algae-based fuels sound the most promising and when these fuels are ready, Emirates will use them.
Emirates continues to work with stakeholders such as Air Services Australia (ASA) to implement flexible routing initiatives that take advantage of tail winds. Over the last five years, the Emirates-ASA FlexTracks initiative has resulted in savings of over 10 million litres of fuel and 26,644 tonnes of CO2. Other recent advances include the implementation of a ground power
programme at Dubai International Airport for all Emirates flights, resulting in emission savings of up to 50,000 tonnes to date in 2009.
Emirates has also invested considerable time and resources preparing for the EU’s Emission Trading Scheme (ETS), with EU destinations accounting for 20% of our overall activity. As most readers of Open Sky know, all flights
to, from, and within the 27 Member States of the EU will have to report their tonne-kilometre (TK) and fuel burn/emissions data to their administering Member State in 2010, with continued emissions reporting and trading from 2012 to 2020. Despite lingering questions over the legality of the EU ETS, Emirates is committed to meeting the compliance requirements of the scheme. The costs to our business and customers will be in excess of a billion Euros over the first phase of the scheme to 2020.
In recent times, a number of EU carriers have been arguing the case for ‘carbon leakage’, in an attempt to receive additional free allowances (subsidies) from the EU. As highlighted in February’s Open Sky, a group of aviation industry organisations commissioned a study by
Ernst & Young which attempted to put the case for carbon leakage - suggesting that the EU ETS would create regional distortion by pushing passengers to fly via non-EU destinations to avoid paying additional ETS-related charges. Their argument has been dismissed by the European Commission, which stated that “the aviation industry is not considered to be at risk of carbon leakage”.
Emirates strongly supports the efforts of ICAO, IATA and others in the industry for a global scheme - based on a sectoral approach - and adopting the Kyoto principle of ‘common but differentiated responsibilities’ (CBDR). After all, aviation is a global industry and greenhouse gas emissions are a global issue. The complexities of a fractured, regional patchwork of emissions trading schemes would be too unworkable to contemplate.
Oxford Economics, a UK economic forecasting consultancy, released a report entitled ‘Aviation: The Real World Wide Web’ in London in June, which had the following key findings:
• If aviation was a country, it would rank 21st in terms of Gross Domestic Product (GDP), generating US$425 billion of GDP, considerably larger than
some members of the G20.
• Over 5.5 million workers are employed directly and by 2026, 50 million jobs and US$3.6 trillion of the world’s GDP will depend on aviation. • Limiting aviation’s growth to 1% below its current trend rate would cost
six million aviation related jobs and the industry’s GDP contribution by
US$600 billion.
• A survey of over 600 companies by IATA found 80% of firms reporting
air transport as important to efficiency and 50% regarding it as vital. The report also stressed the wider advantages that aviation brings in unlocking the benefits of tourism and providing a catalyst to international trade. It included case studies of numerous regions which have been rejuvenated by the benefits brought by international aviation.
For example, it described how the Moroccan city of Fez has been reborn as a tourist destination and that ‘the realisation of the city’s tourist potential and its successful entry into the European city-break market depends on the introduction of point-to-point flights from the major cities of Morocco’s key overseas markets.’ The report also argued that thinking purely of ‘food miles’ does not always equate to the level of emissions produced to get the food from farm to fork. This is because to grow foodstuff in the UK often requires artificial conditions (heat and light)
which generate emissions, whereas to grow the same products abroad in a warmer climate means it can be produced more naturally.
Total aircraft orders by region
Connecting the globe
The diagram to the right was produced by the Centre for Asia Pacific Aviation (CAPA). They describe the downsizing challenges faced by the major US airlines in recent years and why their financial position does not permit them to lock in large aircraft orders.
The CAPA research shows that while North American airlines feature actively in total aircraft orders, with 2,707 on order, most of these are single-aisle aircraft, destined only for the United States domestic market.
What is clear is that both Europe and Asia continue to lead the way with 3,274 and 3,022 total orders respectively for both single-aisle and wide-body aircraft.
Emirates accepts the issue of ‘subsidy’ is a legitimate question of any airline. And such has been the subsidy speculation about Emirates over many years that we seek to genuinely and credibly allay concerns on this subject.
Soon Emirates will be distributing a comprehensive document responding to decades old allegations of subsidies. In this issue of Open Sky, we preview the document and confront the specific issue of cheap or subsidised fuel and oil.
Airline Business recently carried an article that covered the issue of oil for Saudi Arabian Airlines. It said, “The problem for the government is that travellers in this oil-rich nation enjoy the benefits of cheap fuel, whether in the guise of subsidised air tickets or subsidised fuel for their cars. Saudi Arabian itself enjoys subsidised fuel prices too…In May the local, privately owned low-cost players Sama and NAS Air were given the fuel subsidy...”.
Given Saudi Arabia is a neighbour of the UAE, is it therefore reasonable to ask if we receive similar government support? The answer is no. Emirates procures its fuel at market rates from multiple suppliers at all airports to which it operates, including, of course, Dubai International Airport (DXB).
At DXB, fuel is sourced from five suppliers (Emarat, British
Petroleum, Shell, Chevron and ENOC). Except for Emarat and ENOC all other suppliers are global fuel merchants. ENOC and Emarat are UAE-based fuel suppliers and are commercial entities that sell fuel at commercial prices. Together they provide Emirates with a minority of its fuel requirement at DXB. The majority of Emirates’ fuel requirement is procured from global suppliers.
Outside of DXB, the main fuel suppliers for Emirates are Exxon, British Petroleum, Shell and Chevron.
The market rate for fuel which Emirates pays at DXB is the Platts ‘Arab Gulf’ rate, which is transparently traded in Singapore. This is the same market rate applied at other airports throughout the region. The ‘add-on’ to the market rate for fuel (covering cost of local storage and logistics) is however actually higher at DXB than at many other airports around the globe. Therefore, Emirates pays a lower price for fuel at some international airports than it does at DXB.
Like many other airlines operating on a fully commercial basis, Emirates was not spared the pain and suffering resulting from the unprecedented volatility in oil prices during the last decade. In the financial year 2008/09, Emirates’ fuel expenditures escalated to
US$3,925 million from US$891 million in 2004/05.
The below table provides evidence of the direct influence and close relationship between average jet fuel prices and Emirates’ expenditure on fuel and oil.
Subsidy – let’s consider oil…
Year Emirates’ fuel Average jet
and oil expense fuel prices** per ATKM* (in US Cents (in US Cents) per US Gallon)
2004/05 6.7 119
2005/06 9.3 170
2006/07 10.5 189
2007/08 13.6 223
2008/09 16.0 266
Average annual change +24% +22%
*ATKM (Available tonne-kilometres) – overall capacity measured in tonnes available for carriage of passengers/cargo load multiplied by the distance flown
**Source: Energy Information Administration
Fuel and oil expenditure Other expenditures
35% 29% 31% 2004/05 2005/06 2006/07 2007/08 2008/09 71% 69% 65% 79% 21% 73% 27%
Analysis of the audited accounts for the last financial year reveal that in percentage terms, Emirates’ fuel bill is in line with what other major international airlines pay for fuel per annum.
In line with market prices, Emirates’ fuel cost per ATKM increased by 18.8% between 2007/08 and 2008/09 and comprises a significant 35% of its operating cost in 2008/09, up from 21% in 2004/05.
Airline unit cost break-up - fuel as a % of unit cost
Emirates’ total operating costs
Fuel Others 68% 32% 65% 35% 42% 50% 21% British
Airways Emirates SingaporeAirlines CathayPacific Lufthansa
On 1 June 2009, EK241 touched down at Toronto’s Lester B Pearson Airport, the flight from Dubai marking the first commercial operation of an Airbus A380 to Canada.
About 200 representatives from government, business and the media attended, including welcoming group comprising the Honourable Diane Ablonczy, Federal Minister of State for Small Business and Tourism; the Honourable Gerry Phillips, Ontario’s Chair of Cabinet; Her Worship Hazel McCallion, the Mayor of Mississauga and; Lloyd McCoomb, President and CEO of the Greater Toronto Airport Authority. The introduction of the A380 to Toronto demonstrates the potential of the route and the increasing trade between Canada and Dubai. Minister Phillips and Mayor McCallion both used the launch to stress that they will continue to lobby the Canadian Federal Government for
additional Emirates flights. Currently the Federal Government restricts Emirates to three flights a week to all of Canada. Minister Ablonczy highlighted the great tourism potential of increased Emirates service, noting that tourism contributes as much to Canada’s wealth as agriculture, fisheries and forestry combined.
Canadian A380 first
Consumers Association of Canada
Economic Club of Canada
Getting to the bottom of denied access
On 12 June 2009, the President of the Consumers Association of Canada (CAC) wrote to the Canadian Transport Minister to formally express his organisation’s support for increased Emirates flights to Canada. The letter stated that, “In the Emirates case, allowing more flights would provide Canadian consumers with more choice in accessingthe increasingly popular destination of Dubai, as well as destinations in the Middle East and North Africa, two areas of the world that are not currently served by domestic Canadian carriers…Refusing to open these routes to foreign carriers wishing to offer them is harmful to consumers. It effectively forces Canadian consumers onto the Air Canada/Star Alliance route network.”
In the same week as the A380 inaugural, the President of Emirates Airline, Tim Clark, was the keynote speaker at an Economic Club of Canada luncheon in Ottawa. In his speech ‘Dubai and Emirates Airline: Canada’s Premiers, Ministers, Mayors and Business Leaders can’t all be wrong’, he gave an overview of the current economic state of the global aviation industry and argued for increased liberalisation of Canada’s restrictive international air policy.
The speech contrasted the flight restrictions in Canada faced by Emirates, with the business realities and prospects for the wider Canada-UAE relationship. The UAE is Canada’s largest export partner in the Middle East and North Africa, with bilateral trade growing 54% in 2008. Tim Clark argued that Transport Canada’s ongoing refusal to renegotiate the Canada-UAE Air Transport Agreement signed in 2001 is artificially limiting the growth potential of Canadian businesses interested in expanding their footprint in Dubai and the Middle East,
while simultaneously thwarting efforts of the tourism industry to attract new visitors to Canada.
The event was attended by 250 guests including Members of Parliament, Senators, political aides, business leaders and media.
Various Canadian stakeholders have recently indicated to us that Transport Canada are directing a number of claims against Emirates, in order to defend and maintain Emirates’ restricted access to Canada. “The Australian experience with Emirates suggests that caution is needed - it is unclear if Emirates’ services were a net gain for Australia.” Fact: This claim contradicts the Australian Government position that Emirates is a key partner for Australian tourism and its economy. If Emirates’ services were not an overall “net gain” for Australia, why would the then Prime Minister of Australia, Honourable John Howard, have said in June 2005, “I would like to see you (Emirates) fly here more often in the future”?
Since the commencement of its flights to Australia in 1996, Emirates has directly invested millions of dollars in the Australian economy through
its operational (AU$2.1 billion), advertising and promotional (AU$90
million) spend. Emirates’ flights have also helped generate significant tourism, trade, investment and employment benefits to Australia.
Emirates’ services have not been at the expense of other airlines. The Australian international passenger air traffic has grown from 14 million to over 23 million annual passengers during that period. Australia’s national airline Qantas progressively grew profits, employment numbers and revenue, becoming one of the most successful airlines in the world.
“The government is helping finance Emirates’ wide-body aircraft orders.”
Fact: In financing its aircraft orders, Emirates receives no government support or help of any kind. Emirates trades as any other normal commercial airline in securing its debt and capital needs, working with international markets and banks around the world. During the last 13
years, Emirates raised a total of US$16.7 billion to finance new aircraft
and other corporate finance requirements. This amount came from a wide range of sources, including operating leases, export credit and commercial asset-backed debt as well as non-conventional sources such as Islamic funding and equity from Japanese investors.
It’s that time of year…
The recent IATA AGM featured the regular CEO panel at which several Star Alliance CEOs commented on Emirates. Here is our response.
• Canada-UAE scheduled origin and destination traffic is extremely strong and has been
growing rapidly in recent years, but its real potential cannot be realised as long as the market demand is stifled by flight frequency restrictions under the current air services agreement between the two countries.
• Australia, Germany, UK, New Zealand are all Canadian tourism competitors and countries
which Emirates serves. None of these destination tourist markets existed in any reasonable form before air services were offered on a meaningful basis. The Australian Government has often articulated what a key, high-yielding market Dubai is for Australian tourism.
• Canadian voices also beg to differ: “At a time when other airlines are reducing their flights
to Canada, Emirates wants to fly to more destinations in Canada more often…It will provide an immediate economic and tourism stimulus. A new air transport agreement between Canada and the UAE is a priority for the hotel industry.” – Hotel Association of Canada, 2009
• Notwithstanding the existing restrictions, Canada-UAE scheduled origin and destination
traffic is larger than the origin and destination traffic between Canada and several countries with which Canada has recently concluded open skies or liberalised agreements, such as Barbados, Dominican Republic, New Zealand, Iceland, Portugal and Ireland.
Emirates commenced services to Auckland in 2003 and Christchurch in 2004, via an extension to its existing long-haul services to Australia. Besides Air New Zealand’s double daily service from London Heathrow to Auckland, no other airline operates from Europe, Middle East or Africa to New Zealand. Importantly, in 2008 only 4% of Emirates’ New Zealand passengers travelled to London Heathrow on its services.
Since launching regular services to Auckland and Christchurch, Emirates has:
• Provided approximately one million passengers from the Middle East, North Africa and
Western Europe, a more direct route to New Zealand from its hub in Dubai.
• Grown visitor traffic from the UAE by 13% year-on-year and facilitated a 300% increase in
New Zealand trade export growth to the UAE.
• Invested over NZ$3.3 million on New Zealand destination marketing which has led to a
257% increase in traffic from Middle East and North Africa, significantly outstripping the 163% growth achieved across all markets in that period. Additionally, Emirates has also
invested over NZ$60 million on sponsorships such as Emirates Team New Zealand, Rugby
World Cup 2011, International Rugby Board (IRB) Referees and ICC.
• Maintained a full-service offering for passengers on the Trans-Tasman which was largely
abandoned by legacy carriers on the route.
• Provided New Zealand residents and visitors a choice to the alliance multi-carrier option. • The Honourable Dr Wayne Mapp, Associate Minister of Economic Development said, “The
government is very pleased to see that Emirates has invested, and continues to invest, in New Zealand, opening up new markets to us, and also making it easy for New Zealanders to get to amazing places like Dubai.”
“…We have a little bit of an issue – similar to what Robert described – as actually trading very little traffic between Dubai and New Zealand which you can count before you fall to sleep each night.
But the issue more for us that we do have a problem with is where current competition regulations allow carriers to dump capacity, at below fully costed levels into a market, just to grow a market position. In most other industries, capacity dumping and predatory pricing is far more heavily policed than they tend to be in the airline industry.’’
Rob Fyfe, Chief Executive Officer, Air New Zealand
“…I say let them (Emirates) fly a hundred times a day into Canada if they want but only serving the customers that are flying between Canada and Dubai without the ability to connect them to every other market on the planet because there is no underlying market between Dubai and Canada of any substance…’’
Robert Milton, Chairman, ACE Aviation Holdings Inc (parent company of Air Canada)
Andrew J Parker -Senior Vice President Public Affairs, International Affairs, Industry Will Löfberg -Manager Public and Government Affairs Do foreign carriers simply redistribute existing passenger traffic from a
particular country’s market, with little or no overall increase in visitors? Carriers like Emirates believe that competition is critical. A healthy market is good for the flying public who benefit from carrier choice. But do carriers go beyond just providing competition for an existing market supply or can new entrants like Emirates help to grow the actual tourism and export pie?
Recently released data from the Australian Bureau of Statistics on inbound passenger numbers to Australia reveals the benefits of competition and slays the arguments of redistribution vs overall market growth. The first thing to note from the chart is that the total short-term overseas visitor numbers to Australia increased just over two and a half times from 180,600 in January 1991 to 474,900 in May 2009 – a significant increase in the size of the overall pie.
Secondly, the rate of growth varies substantially by market. Growth in visitor numbers from Asia and notably from the Middle East and North Africa (MENA) are well above the growth rate in overall visitor numbers. Meanwhile growth in visitor numbers from Oceania and particularly the Americas are sub-trend.
Could competition be the common denominator underlying this phenomenon? Certainly routes into Asia and the MENA have enjoyed strong competition and an increase in the number of carriers serving them. New and vibrant inbound markets have developed, providing a reliable stream of high-value visitors to Australia every month. Emirates cannot of course claim all the glory, as it was not the only carrier to join the market during this time.
Overseas visitor arrivals into Australia: 1991 – 2009*
In comparison, routes to and from Oceania and on the Trans-Pacific were historically shielded from the beneficial effect of competition by aero-political restrictions. This resulted in inbound traffic to Australia from North America merely doubling over the 18 years between 1991 and 2009, whereas traffic from the UAE alone has increased 48 times. The only other markets which have enjoyed similar levels of growth into Australia are China 27 times, Vietnam 15 times and India 13 times. Australia has been a leader in allowing routes to flourish based on the actual and potential level of demand in those markets that increases the pie for all - the travelling public, carriers, businesses and the country.
• Aircraft in fleet 137 • Number of destinations (passenger and cargo) 100 • Passengers (2008) 24.5 million • Seat factor (2008) 78%
• Cargo (2008) 1.4 million tonnes • Daily departures from Dubai International Airport 140
How open skies grows the pie – an Australian perspective
Fast facts
• Longest flight Dubai - Los Angeles (16 hours 35 minutes) • Shortest flight Muscat - Dubai (50 minutes)
• First flight 25 October 1985 • Employees (Airline) 28,037 • Nationalities in workforce 156
• Financials 08/09 (Airline) Revenue US$12 billion, Net profit US$268 million 0 100 200 300 400 500 600 700 800 900 1,000
Jan 91 Jan 92 Jan 93 Jan 94 Jan 95 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09
TOTAL MENA Americas Europe Asia Oceania
Emirates commences regular services to Australia
Venice Newcastle Toronto Toledo Zaragoza Casablanca ParisHahn Nice Athens Rome Moscow Seoul Beijing Osaka Glasgow Manchester Birmingham London MunichVienna Milan Larnaca Tripoli Tunis Malta Zurich Hamburg Amsterdam Gothenburg Istanbul DusseldorfFrankfurt Shanghai Singapore Kuala Lumpur Manila Bangkok Jakarta Addis Ababa Eldoret Entebbe Dar es Salaam Johannesburg Cape Town Lilongwe Nairobi Lagos Accra Abidjan Khartoum Dubai
Kolkata Hong Kong Taipei Dhaka Guangzhou Melbourne Sydney Brisbane Perth Auckland Christchurch Thiruvananthapuram Chennai Bangalore Kozhikode Lahore Islamabad Peshawar Hyderabad Mumbai Delhi Karachi Ahmedabad Malé Kochi Colombo Mauritius Seychelles São Paulo New York Los Angeles San Francisco Houston Muscat Dammam Bahrain Riyadh Doha Sana’a Jeddah Kuwait Tehran Dubai Amman Cairo Damascus Beirut Luanda Durban Route Map August 2009
Graphic illustration only
, not a complete r
epr
esentation or to scale. © 2009. Emirates. All rights r
eserved.
