Ek Now Challenges Germany

[manwest]

EK seeking rights to Berlin

http://www.arabianbusiness.com/lufthansa-seeks-clip-emirates-wings-in-germany-says-berlin-mayor-373861.html

[inchman]

It amazes me how UAE can complain about freedom of competition when NO foreign company or individual can set up shop in UAE without taking on a "local partner" who must hold the majority of the company, can shut it anytime they want, but does not have to provide any money. Moreover, UAE does not allow foreign nationals, particularly non-muslims, to become citizens. Even a child born in UAE is considered by UAE to be a citizen of their father's country, not of UAE.

Maybe my objection to all of this is that UAE seem to think that they can use capitalist words like competition whenever they want something, but don't feel any need to provide the same in their own country, nor provide any basic rights to non-citizens.

[Maverick]

For those of us that are annoyed with links, here is the text from manwest's provided link.

Lufthansa, Germany’s national carrier, is lobbying its government to deny Dubai's Emirates Airline’s request for landing slots when Berlin’s new airport opens in 2012, the city’s mayor has said.

The German airline is pushing the federal government to refuse Emirates direct flights to the capital through Berlin-Brandenburg Airport, Mayor Harald Wolf said.

“The Berlin government was, and is, in favour to open the airport to Emirates and give them the possibilities to have direct flights,” Mayor Wolf said from his office in the German city.

“But the difficulty is the federal government. They are very restrictive. They [the Federal Government] have had a very strong lobbying from Lufthansa not to strengthen Emirates.”

Emirates currently flies to Frankfurt, Munich and Dusseldorf, but has been asking for direct flights to Berlin and Stuttgart since 2004.

Mayor Wolf said the federal government was likely to force the Dubai carrier to sacrifice some of its existing landing rights in order to gain a direct route to Berlin.

“If they want to fly from Berlin they can give up Stuttgart or Hamburg but they will they will not give them another additional right,” he said.

A spokesperson for Lufthansa was not immediately available for comment.

Lufthansa is one of a number of European carriers, including Air France KLM and British Airways, to call for curbs on the expansion of Gulf carriers on long-haul routes.

The carriers claim Gulf airline use unfair subsidies to finance aircraft deals and to take market share from existing airlines.

A number of US and European airlines are impacted by a 'home market rule,' which states that countries where Boeing and Airbus build aircraft cannot use export credit agencies to help their carriers buy passenger airliners.

The rule, which impacts carriers in the US, UK and France, among others, is seen as offering an unfair advantage to Gulf carriers unaffected by the law.

A spokesperson for Emirates said it was ‘hopeful’ that Berlin’s federal government would support its request for fresh landing slots at the new airport.

“Emirates’ services to Berlin and Stuttgart, both of which remain underserviced in terms of scheduled intercontinental routes, would benefit trade, investment, tourism and employment,” the airline said in an emailed statement.

“We are hopeful that our long-standing request will receive German government support. We have had discussions with the relevant officials on this matter, and look forward to further dialogue.”

Emirates has faced similar issues in Canada. Last November, Ottawa’s transport agency declined to give UAE carriers Etihad and Emirates additional landing rights, despite years of requests.

Emirates’ vice president Maurice Flanagan told Arabian Business he believed the refusal was fuelled by opposition from Lufthansa.

“They are targeting Emirates, being egged on by Lufthansa… It is purely the protection of Air Canada,” Flanagan said.

[Spinnaker]

I wonder how this tantrum will play out?

[CAT3DUAL]

Alot of heavy hitters are starting to line up against EK, and for good reason. Anyone here been to UAE, I have, this a poptart of a country. there is no way in hell they can justify the amount of seats in and out of the country, they know it, we know it, and the rest of the world knows it and are starting to line up and voice their collective displeasure. Worse yet bilaterals have been signed and accepted and now these bilaterals don't meet with EK's expansion plans, so they figure they can bully afirst world nation into giving them what they want. Sorry, I've delt with these ARAB sob's in the first Gulf war, they don't understand much, until a loaded gun is pointed in their direction. In are case, our gun is our airspace, it worked with the russians back in 2003. The americans havn't stepped into this dust up, they are happy to let the other governments do the dirty work.

[blues deville]

I wonder how this tantrum will play out?

Hopefully with a field full of parked A380's that have nowhere to go.

[wjet4]

I wonder how this tantrum will play out?

http://www.emirates247.com/business/economy-finance/emirates-boosts-germany-flights-2011-05-23-1.396336

Thats how

[boestar]

What kind of loads is EK seeing on all of these flights. I cannot imagine loads are that high with all that capacity.

[Specs]

Supporters state Emirates is completely self reliant and independent of any government assistance but numerous inconsistencies suggest otherwise. As Emirates is privately held, in the absence of any publicly available financial records for equity investors or analysts to review it’s really impossible to categorically determine one way or the other. They can essentially say whatever they want, as we often see with other privately held, short lived, carriers.

For starters, consider that the airline continues to claim it pays world prices for jet fuel yet the residents of Dubai pay only 38 cents a litre for the petrol in their cars. Kind of a disconnect there wouldn't you say?

The answer is further obscured behind the fact that Dubai is a constitutional monarchy, as are all of the emirates that comprise the UAE. As anachronistic as that may appear to be to us westerners, it is a legitimate and accepted form of government. The country is administered through familial bloodlines and connections to the royal family. The list is exhaustive but suffice to say every organization in the state is chaired or controlled by a family member or relative of the current ruler Sheikh Mohammed bin Rashid Al Maktoum and they have a vested interest in all trade and commerce in the kingdom. Fair enough, it is their kingdom after all, but one has to wonder on the type and transparency of the corporate governance and financial controls that influence the market dynamics at play here. 'Wonder' is the key word there as even the IMF has stated as recently as last week (1st week of June, 2011) that they are finding it difficult to penetrate the veil of secrecy and swirling sands surrounding issues such as the debt obligations Dubai World has recently walked away from; the restructuring of Dubai’s foreign dept obligations; and their planned bond issuance to pay back that debt. The terms of the bond issue may provide some insight into the debt problems but many analysts suggest it will be misleading as the staggering dollar amounts and risk of loss leave the commercial banks with little leverage to dictate terms. In plain language, the debt is so huge, the banks can’t allow it to fail. Sound familiar?

Dubai World mentioned above is the critical government owned conglomerate or holding company that controls Emirates Airlines, DXB airport and a good number of other enterprises on which the future of Dubai, with only an estimated 20 years of oil and gas reserves remaining, depends. Sheikh Ahmed bin Saeed Al Maktoum, the uncle of Dubai’s current ruler is the President of the Department of Civil Aviation, and by virtue of his Chairmanship of Dubai World, he is also the Chairman and CEO of Emirates Group and DXB airport.

That is not a typo. The uncle of the current ruler controls the CAA, the national airline and the airport. So really, how much more perspective or expertise does one need to draw some rather obvious common sense conclusions here? Emirates Airline and DXB airport are controlled and supported by the state of Dubai. Among other things like access to expedited Visas for Canadian visitors, it’s more than likely they also have access to preferential state financing and probably pay discounted fuel and airport fees. In the absence of transparent financial controls and regulatory filings to indicate otherwise it is simply ridiculous in the extreme to debate the point.

In the face of common sense and logic the implausible denials from the Emirati side continue nonetheless. Why?

Well firstly, it may help to understand that criticism of the ruler, and that would extend to his appointees, or criticism of their economic policies and management, is subject to criminal penalties that may include jail. The authourities in Dubai censor such content in the media and even go so far in their censorship as to monitor internet traffic closely and prohibit email access via the internet to secure https sites/servers such as the one you may have at your own company HQ. In essence, the Sheik can do no wrong and your days in Dubai will be numbered if you ever publicly acknowledge, even by omission, any argument that suggests or hints otherwise.

It may also help to recognize the parallels here with that other family run town – Las Vegas. They are both destination cities in the middle of a desert that simply function to generate cash and gambling is central to the success of both. But unlike the Vegas of old, where the penny slots kept the lights on, the gambling in Dubai is for much higher stakes. Dubai and the ruling family are gambling that Dubai can reach a critical mass of capital and real estate investment before the oil and gas reserves run out in 20 years to secure itself a future as a world financial and tourism centre.

In doing it’s part towards that goal, Dubai world, Emirates Airline and DXB continue to move forward with growth plans that will eventually see 250-300 wide body long range aircraft operating from, and connecting passengers from around the world, through DXB. Concern and opposition from more established carriers around the world is building however the objections are countered by Dubai with charges of protectionism and restraint of the free enterprise. That’s pretty funny coming as it is from a long standing member of the OPEC oil cartel. Pointing out such hypocrisy will fall on deaf ears in Dubai. And good luck to any desperate capitalist hoping to start up a competitor or LCC in Dubai without the endorsement (protection?) of an Emirati who does not even have to invest a cent yet still receives a financial interest of 51%. There is already one LCC operating there already of course. Guess who owns it?

The hypocrisy from Dubai and the royal family spokespeople re free trade and competition is absurd but that’s the nice thing about having a Monarchy I suppose, you can pick and choose which rules you want to play by

[Specs]

Noted and corrected. Apologies.

[B75/76]

The comments on Emirates inevitably always state that financial information is not publicly available. Each year, however, their financials as audited by PWC are on the group website.: http://www.theemiratesgroup.com/english/facts-figures/annual-report.aspx?TYPE=ANNUALREPORT

Interestingly, Willie Walsh of BA doesn't share the views on EK that some of his western competitors do:

What are your views about the emergence of the Middle East carriers?

The Middle East is fascinating. In this one area of the world, we have seen growth through this recession; demand has continued to increase. It is an important market for British Airways. Many of my European counterparts will bitch and moan about the way the Middle East carriers operate; they think that it is unfair competition. I don't buy into that. Emirates [Airline] has been flying to the U.K. for over 20 years now. I just got a copy of its [financial] accounts the other day, and they look like a normal set of accounts to me. I have much more experience in dealing with Emirates, and have no doubt that they acted in a rational, commercial way in every way that I have seen. Clearly, all of the Middle East carriers are very ambitious and are looking to establish global hubs in the Middle East. Whether you can establish three hubs in such a small area is going to be challenge, and I may well agree with that part--that there isn't room for three in the Middle East--and that they may actually develop only two hubs that succeed in establishing a truly global presence. But I see it as just another bit of competition to British Airways, and I see the decision of the [u.K.] government not to build a third runway as being a positive for the Middle East because there is no question that the absence of a third runway at Heathrow will provide growth opportunities to further hubs in the Middle East. The next 10 years will be fascinating to watch in the Middle East.

http://www.thetransnational.travel/news.php?cid=Willie-Walsh-British-Airways-BA.Jun-10.24

[Fido]

...there is no question that the absence of a third runway at Heathrow will provide growth opportunities to further hubs in the Middle East. ...

A bigger factor is the UK and EU governments unrelenting increase in taxes on aviation that punish people for connecting over Europe.