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EK: A380 To Enable UK-OZ For $480 RTN  
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Posted (9 years 3 weeks 6 days 10 hours ago) and read 9155 times:

Economist newspaper proposes that EK, although not an LCC as we know it, already operates with a cost base closer to F9 than BA or LH. It also says that their profit per seat is twice the level of LH and two fifths that of BA.

And they also quote Tim Clark, EK President, predicting an A380, seating 780 passengers, all economy, buying coffee/food at self-service counters and paying for access to inflight entertainment or even gambling. The 15-20% lower operating costs promised (compared to 744) could mean flights from UK-Australia for 400 euros ($480) return. A stretched version, seating 870 pax, could potentially offer lower fares. EK fares from Paris, London & Frankfurt to Hong Kong, via Dubai, are up to 30% cheaper than direct flights on AF, LH or BA.

So, is EK the potential LCC of long-haul?

75 replies: All unread, showing first 25:
 
User currently offlineRedChili From Norway, joined Jul 2005, 2302 posts, RR: 5
Reply 1, posted (9 years 3 weeks 6 days 7 hours ago) and read 8938 times:

So is this the reason why they want a huge fleet of A380s? Maybe they're planning to use them to hijack the whole long haul market?

Quoting Scotron11 (Thread starter):
and two fifths that of BA.

Only 40 percent of BA's profit per seat? That's very little.



Top 10 airplanes: B737, T154, B747, IL96, T134, IL62, A320, MD80, B757, DC10
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 2, posted (9 years 3 weeks 6 days 7 hours ago) and read 8893 times:

Quoting RedChili (Reply 1):

Only 40 percent of BA's profit per seat?

I should have wrote two fifths "more" than BA. Oops!


User currently offlineThorben From , joined Dec 1969, posts, RR:
Reply 3, posted (9 years 3 weeks 6 days 7 hours ago) and read 8836 times:

Quoting Scotron11 (Thread starter):
So, is EK the potential LCC of long-haul?

I think that's what they intend to do. Connect a lot of cities with only one stop in Dubai and use large planes so that the economies of scale allow them to have very low prices.

Just imagine, you want to go from TXL to PER, or ISB or somewhere in Southeast Asia, or even Southeast Africa. The choice between a flight with EK only stopping in DXB, or using LH, flying to FRA first, maybe to a second hub near your destination, and paying 50% more, is a no-brainer.


User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7266 posts, RR: 57
Reply 4, posted (9 years 3 weeks 6 days 6 hours ago) and read 8710 times:

I read this article also. Most interesting piece of information was that EK's seat costs are closer to Ryanairs than any other airline.

We read a lot here about EK's service levels slipping. Perhaps EK are heading towards being the Ryanair of the long haul markets - allowing the service to further decline.



The world is really getting smaller these days
User currently offlineStartknob From Germany, joined May 2004, 156 posts, RR: 0
Reply 5, posted (9 years 3 weeks 6 days 5 hours ago) and read 8633 times:

EK as "Long-Haul LCC" makes perfectly sense.

+ Capacity: Already months ago we had discussions here, what the heck EK is planning with all this capacity in terms of newly ordered aircraft and wondered, how EK wants to get them full.
+ Development: It would be also in total compliance with the goal to massively develop Dubai into tourism while the oil supply lasts for a VERY limited number of years.
+ DXB home base: Pic of the day is the big construction hole in DXB for the next terminal...
+ Cost structure: Flying X->DXB->Y for virtually an given point on earth also harvests an very strong competitive advantage for EK: In the next 20-30 years oil products will be cheaper near the Persian Gulf than in many other parts of the world because of virtually no transportation cost (no tankers). So around 50% of the EK flights will have lower fuel cost than 90%+ of the competition.

On the other hand such a development would also lead to problems:
- Development: The high-yield / high-price / high-quality tourism will go downhill due to the masses. This will have implications on and with Dubai citizens.
- DXB must become an EXTREMELY efficient airport in order to not become a transfer nightmare - connections must work and ways must be short. Just imagine 40+ large high-density widebodys feeding other 40+ widebodys in a time frame of 4-6 hours 3/7/365 - whoa.

And then? Harsh times to come for all the "old" large airlines. Some will probably go belly up and EKs market share will rise. Then (ca. 2016?) the market is ready for milking - EK will raise prices (and add an free extra drink in Economy  Wink).



When playing cat and mice it's imperative to know, who's the cat.
User currently offlineA342 From Germany, joined Jul 2005, 4690 posts, RR: 3
Reply 6, posted (9 years 3 weeks 6 days 1 hour ago) and read 8310 times:

Assuming a 100% load factor, for a single trip, EKs income would be 156000€. Is this enough for profitable flights ?


Exceptions confirm the rule.
User currently offlineRedChili From Norway, joined Jul 2005, 2302 posts, RR: 5
Reply 7, posted (9 years 3 weeks 6 days 1 hour ago) and read 8282 times:

Quoting A342 (Reply 6):
Assuming a 100% load factor, for a single trip, EKs income would be 156000€. Is this enough for profitable flights ?

All pax won't be able to get the cheapest fare. A few hundred pax will have to pay some more to get flexible tickets etc. Plus, they will also pay for food, entertainment, etc.



Top 10 airplanes: B737, T154, B747, IL96, T134, IL62, A320, MD80, B757, DC10
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 8, posted (9 years 3 weeks 6 days 1 hour ago) and read 8243 times:

I have said before that doing a business with Emirates was ultimately a mixed blessing for European interests. I think this illustrates the point.

While the big sales of Airbus aircraft are obviously positive, Emirates and the tidal wave of capacity that they are going to introduce constitute a big threat to European airlines. Dubai is perfectly located to siphon off quite a bit of eastbound traffic from the European airlines.


User currently offlineCandid76 From United Kingdom, joined Apr 2005, 742 posts, RR: 4
Reply 9, posted (9 years 3 weeks 6 days 1 hour ago) and read 8191 times:

Quoting N79969 (Reply 8):
I have said before that doing a business with Emirates was ultimately a mixed blessing for European interests. I think this illustrates the point.

Just to give you an (often quoted) example - EK has been great for long haul travel opportunities from Manchester, Birmingham, Glasgow, and there will no doubt be a growing number of similar examples across Europe. Carriers who only operate from single hubs in their home countries will be the losers - and EK know that. So unless you live in London, Paris or Frankfurt I don't see why this is a bad thing for Europeans in terms of hitting flag carriers business.


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 10, posted (9 years 3 weeks 6 days 1 hour ago) and read 8174 times:

Also, I think another big problem might be for the other Arab carriers such as QR, GF, etc. Unless the other Arab cities/countries make their airports into "superhubs" like DXB is becoming, they are in danger of losing lots of business to EK.

I've already personally started to dislike EK a few years ago, their service has gone downhill the past 3-4 years. 5-6 years ago, EK's service was amazing, they paid attention to detail, and that is not what's been happening lately.
In fact, the only time I fly EK now is a short-haul DXB-KHI-DXB service.

While I applaud their vision and their lofty goals, I'm a bit skeptical of them and unless the fares are SUPER CHEAP, I doubt I will use EK for any long-haul services....



"Up the Irons!"
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 11, posted (9 years 3 weeks 6 days 1 hour ago) and read 8147 times:

I was not thorough in my point. European travelers who live in secondary cities who would ordinarily transit through Paris, London, Amsterdam, or Frankfurt will transit through Dubai in larger numbers. While the European airlines will be able to hang onto business and premium traffic who tend to prefer non-stop/direct flight, Emirates will be able to take their bread-and-butter traffic with the A380--- even at places like London, Frankfurt etc;

All that said, there is probably a strong argument to suggest that Emirates will stimulate much of its own traffic as opposed to merely siphoning it off of the European airlines.


User currently offlineThorben From , joined Dec 1969, posts, RR:
Reply 12, posted (9 years 3 weeks 6 days 1 hour ago) and read 8150 times:

Quoting Candid76 (Reply 9):
Just to give you an (often quoted) example - EK has been great for long haul travel opportunities from Manchester, Birmingham, Glasgow, and there will no doubt be a growing number of similar examples across Europe.

Yes, like TXL. QR will be coming in December, EK wants to come, and sooner or later I expect EY here as well. I'm really looking forward to that.

Quoting Jacobin777 (Reply 10):
Also, I think another big problem might be for the other Arab carriers such as QR, GF, etc. Unless the other Arab cities/countries make their airports into "superhubs" like DXB is becoming, they are in danger of losing lots of business to EK.

DOH and AUH are both going to be big airports, too.

http://www.airport-technology.com/projects/doha/
http://www.airport-technology.com/projects/abu_dhabi/


User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 13, posted (9 years 3 weeks 6 days 1 hour ago) and read 8135 times:

Quoting Jacobin777 (Reply 10):

While I applaud their vision and their lofty goals, I'm a bit skeptical of them and unless the fares are SUPER CHEAP, I doubt I will use EK for any long-haul services

I guess that's the point. If we look at all LCC's business plans, it is basically pack'em in and ship'em out! Wasn't F9 thinking of disposing of seatback trays and window shades to lower weight on their aircraft to save fuel?

What else are you going to do with 45 A380's?


User currently offlineDrerx7 From United States of America, joined Jun 2000, 5203 posts, RR: 8
Reply 14, posted (9 years 3 weeks 6 days 1 hour ago) and read 8109 times:

Is the A380 certified for all-economy 700+seats?


Third Coast born, means I'm Texas raised
User currently offlineA342 From Germany, joined Jul 2005, 4690 posts, RR: 3
Reply 15, posted (9 years 3 weeks 6 days 1 hour ago) and read 8098 times:

Quoting Drerx7 (Reply 14):
Is the A380 certified for all-economy 700+seats?

It will be certified for all-economy 853 seats !



Exceptions confirm the rule.
User currently offlineRj111 From , joined Dec 1969, posts, RR:
Reply 16, posted (9 years 3 weeks 6 days ago) and read 8060 times:

Reducing fares in this way is effectively taking a step down the fare heirachy. It will open up a whole new market of people like me, who'd love to travel to Oz but not at current prices. And there are a lot of people like me around.

User currently offlineJetMaster From , joined Dec 1969, posts, RR:
Reply 17, posted (9 years 3 weeks 6 days ago) and read 7996 times:

Quoting Scotron11 (Thread starter):
And they also quote Tim Clark, EK President, predicting an A380, seating 780 passengers, all economy, buying coffee/food at self-service counters and paying for access to inflight entertainment or even gambling.

I'm a bit sceptical of that. Offering full service is one of EK's key strategies, I can't imagine they would want to transfer into a "longhaul Ryanair".

Any link to the article?


Regards,
JM

[Edited 2005-11-03 15:38:02]

User currently offlinePPVRA From Brazil, joined Nov 2004, 8971 posts, RR: 39
Reply 18, posted (9 years 3 weeks 6 days ago) and read 7988 times:

You guys keep mentioning that EK has a very low cost, comparing them to Ryanair... shouldn't that be expected though? They fly only widebodies.

Cheers



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineJetMaster From , joined Dec 1969, posts, RR:
Reply 19, posted (9 years 3 weeks 6 days ago) and read 7966 times:

Quoting PPVRA (Reply 18):
You guys keep mentioning that EK has a very low cost, comparing them to Ryanair... shouldn't that be expected though? They fly only widebodies.

It's not the widebodies but mainly low labor expenses (partly) and non-existant taxes in Dubai which makes it possible for them to operate at low costs. Don't forget they offer full service and countless "frills", not only in the air but also on the ground.


Regards,
JM


User currently offlineJaysit From , joined Dec 1969, posts, RR:
Reply 20, posted (9 years 3 weeks 5 days 23 hours ago) and read 7860 times:

Why is this presenting a doom and gloom scenario?

Passengers prefer flying an airline offering low fares and acceptable standards of service (look at JetBlue in the US), than those that offer higher fares with shoddy standards of service (many legacy carriers).

When PanAm died ignominously, few people (other than those of us who had flown it for most of our lives) shed any tears.

The old days of national pride being linked to a state carrier are over. If EK can shuttle millions of fun seeking Europeans to Oz for a pittance, more power to them.


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 21, posted (9 years 3 weeks 5 days 23 hours ago) and read 7814 times:

Quoting RedChili (Reply 1):
So is this the reason why they want a huge fleet of A380s? Maybe they're planning to use them to hijack the whole long haul market?

Yes, IMO that's exactly what they plan to do. How will QF, SQ, BA, LH, et. al., react when they start dumping capacity on their premier routes? QF is already firing back (subject of another thread) alleging that EK is being unfairly subsidized. The last thing that airlines like SQ, QF, CX, etc. want to do is to compete on price, but the day of reckoning is fast approaching.



"When all is said and done, more will be said than done".
User currently offlineWingman From Seychelles, joined May 1999, 2315 posts, RR: 5
Reply 22, posted (9 years 3 weeks 5 days 23 hours ago) and read 7789 times:

But JM, if EK are benefitting from an internal tax scheme that hurts European business then the EU will take EK to the WTO to have their tax scheme overturned. This is what EADS did to Boeing.

I agree with N79969, this will be torture to European aviation enthusiasts, at least the ones that love their national airlines. They will jump for joy at the hundreds of 380's rolling out of Toulouse for EK and then wail bloody murder as the great Euro carriers drop to their knees.

I can't see many Germans or Brits ponying up for rides on LH or BA with fares from EK ike those.


User currently offlineLH477 From Canada, joined Jan 2004, 584 posts, RR: 5
Reply 23, posted (9 years 3 weeks 5 days 23 hours ago) and read 7758 times:

Quoting RedChili (Reply 1):
So is this the reason why they want a huge fleet of A380s? Maybe they're planning to use them to hijack the whole long haul market?

Maybe EK is not so stupid after all.....Maybe there is a valid reason why they want 43 A380. If EK is able to pull this off, which I expect them to do, you'll start seeing CX and BA order the A380. Airbus exce's for one is probarbly preying everynight that the EK is succesful with their long hual cattle strategy.



Come on you gunners......!!!!!
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 24, posted (9 years 3 weeks 5 days 23 hours ago) and read 7749 times:

Quoting RedChili (Reply 1):
So is this the reason why they want a huge fleet of A380s? Maybe they're planning to use them to hijack the whole long haul market?

Ignoring their substantial fleet of other types, they ordered 45 A380. That is simply staggering. Those airplanes will have to be flown somewhere and Europe is the logical point in the west for many reasons. Emirates could simply suck all the air out of the room for many Europe based airlines. Frankly, I feel sorry for LH, BA, AF, and so on because of what they are facing.

At the last IATA conference, Emirates was apparently attacked from all sides by other carriers.


25 N79969 : Why would CX and BA do that? To make a massacre into an all-out bloodbath? If Emirates can actually supply substantial numbers of seats for around $4
26 JetMaster : Any business going to Dubai and investing there enjoys the same tax benefits. If Dubai doesn't charge taxes on its own soil, nobody can stop it. That
27 N79969 : I was referring to the response of European carriers and not EK's use of the A380. I agree that EK will also offer premium services with the A380 as
28 NorCal : Any buisness going to Washington can enjoy the same tax breaks that Boeing does, so is there really a difference? Hell I'm sure any state in the US w
29 Jacobin777 : " target=_blank>http://www.airport-technology.com/pr...habi/ you are correct, what I meant to say was that DXB is becoming a thriving city and the Emi
30 JetMaster : But EY's and QR's growth rates have been truly amazing... Pricing always depends on the specific market conditions. Of course EK's pricing policy is
31 LTBEWR : I see several practical issues with such potentially cheap fares: 1) Putting 780+ virtually all coach seats on one a/c means Ryanair seat pitch for wh
32 SunriseValley : My view is that as soon as EK looks like impacting the "national" carriers of the countries they plan to "hit" with this format, they will be told to
33 Lumberton : I agree with you on this: it will ge very UGLY before it gets better. The UAE doesn't have the international clout to force these countries to open u
34 Post contains images JetMaster : Just easily and quickly, sure... They do not scream and shout, but rather do intelligent business - unlike many other companies. And I wouldn't call
35 BHXFAOTIPYYC : I can assure you that at my last meeting with EK in MAD a couple of months ago, they had no intention of becoming the Ryanair of the MidEast. C and F
36 Jacobin777 : correct....I should have been a bit more clear as to say I'm curious as to what's going to happen in the next few years with all the new added capaci
37 JetMaster : EK is not really happy about EY most likely - but annoyed? Have there been any statements yet which suggest such an attitude? Regards, JM
38 Gigneil : Fortunately, it doesn't work that way. You don't penalize successful businesses that are bringing benefits to your constituency. N
39 N79969 : I strongly agree. They are no two-bit player. They are much closer to being the "500-lb. gorilla." How exactly could Europeans or anyone else do this
40 LH477 : They may have little choice. EK might to them on int'l routes what LCC's have done to them on domestic and intra-Europe routes (talking of BA specifi
41 SunriseValley : Sorry, I was referring to UAE not the airline.
42 N79969 : I think they would have more choice than you suggest. Rather than racing EK to the bottom on fares and buying A380s for that purpose, European airlin
43 Wingman : Disagree Neil. A politician will suffer more due to airline job losses than by pissing off backpackers who have to pay an extra $100 to fly the home t
44 N79969 : Thank goodness for the Atlantic Ocean.
45 BHXFAOTIPYYC : Quite a lot at the meeting I attended actually, but no, nothing in writing. It does go beyond minor irritation though. DXB is still better known than
46 N79969 : This sounds a bit like the scenario that Karl Marx envisioned when he talked about capitalists selling the nooses that would hang them.
47 Post contains images JetMaster : But LH will offer new nonstops only from FRA/MUC, BA from LHR/LGW, AF from CDG. Many pax from all around Europe and these carriers' respective home m
48 N79969 : JetMaster, I am not sure if I understand your point. Would you mind elaborating?
49 JetMaster : AF, BA or LH will add new (higher margin) nonstops to Asia (or elsewhere) from their well established hubs most likely. That means many pax still hav
50 N79969 : Agreed. That was what I was arguing would be the smart response. (or perhaps only response) I further argued that this would actually favor smaller a
51 AirNZ : I agree with you wholeheartedly. As for myself as an example, why should I fly with BA anywhere considering they have no interest whatsoever in servi
52 Art : I suspect that a $480 dollar price will result in an enormous growth in the demand for seats ie Emirates will be growing the market enormously, rathe
53 Post contains links Jacobin777 : While I'm not going to make accusastions like the Chairwoman of QF does... ""Emirates currently operates over 90 services per week between Dubai and t
54 Post contains images Lumberton : Again, well said Wingman. There appears to be a lot of denial about the real nature of the threat. So, from where is all the growth going to come fro
55 Birdbrainz : If EK offers the extremely low fares to DXB, it would be quite a sight seeing the lager louts from Europe snatching up those fares and partying in Dub
56 Lufthansa : Well there is no need too...AS our friends at SIA proved to the world long ago. To make it as simple as possible, the cost of those little perks (lik
57 Wunala : A lot of people on the OZ-UK route would actually pay more for extra room. Not sure of the space that EK offers on this 1 class A380, but if it meant
58 Lumberton : I don't want to belabor this, but what about EK's leverage with the order book. Couldn't they just "tear up" their orders and options with a certain
59 Post contains images HKGKaiTak : And then there's lots of people who baulk at the high prices between Europe and Australia ... those of us working in travel would much rather have mo
60 ER757 : They might change their minds if DXB becomes a transfer nightmare because of all the 1000's of additional passengers that EK would be pushing through
61 Abba : I think that you are making a very important point here. At the moment you are about three hours travel from an airport with intercontinental connect
62 Iloveboeing : I really hate how many of these airlines raise fares super-high when they get a monopoly in a market. I know it's simple economics, but can't they ca
63 Scotron11 : Just to give you an (often quoted) example - EK has been great for long haul travel opportunities from Manchester, Birmingham, Glasgow, and there wil
64 Simpilicity : The suggestion is just insane. Why on earth would they do it, when they are trying to maintain themsleves as a premium carrier. If fares went down th
65 Alessandro : The all economy seated A380 could also be used during Hadjj flights to Mecca, so I´m sure a few of Emirates A380 will fly like this.
66 Scotron11 : what I find interesting is that I've never found EK's fares, especially their business class/first class fares to be cheap, and I've been traveling w
67 Simpilicity : For Hajj flights operators generally find the cheapest aircraft per seat & this generally means old aircraft, certainly not A380's. Maybe A380's in 3
68 Ikramerica : It's really something that they could have learned from the US, honestly. While we spread it over multiple airlines, we still have so many different
69 Alessandro : Simplicity, surely the Hajj operators are cost sensitive, on the other hand, it depends on fuel-price as well, if high, the old B747s and such become
70 Lufthansa : While you are totally right, part of the issue for these carriers is their cost structure is totally dependent on that large business travel componen
71 Simpilicity : The acquisition/lease costs of an A380 versus a 30 year old 747-200 are incredibly different. As fuel prices rise, costs to acquire or lease an old g
72 Abba : You get a few more stars on your hotel fro that saving! You might say so. However the problem is that people from Hamburg or Leeds might not have NY
73 Jacobin777 : you are correct, interesting find....I will have to look into this myself... maybe its a seasonal thing..so far, as I said, thats been my experience
74 Ozair : Are we even sure that an A380 could do east coast OZ non-stop with 780 economy seats on board. I know the first and business seats weigh more but were
75 Post contains links N79969 : There is no question there will be considerable stimulation of demand if Emirates can supply a critical mass of seats at these fares. But along with t
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