SEPilot From United States of America, joined Dec 2006, 6257 posts, RR: 39 Reply 5, posted (11 months 1 week 5 days 10 hours ago) and read 18210 times:
Quoting sweair (Reply 1): With all that income from oil, I am sure they can bare the cost?
In any case, that is not the issue. The issue is who is legally obligated. I am quite sure that the liability of Airbus is limited to making repairs; loss of use is on the airline except in very unusual circumstances.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
EK156 From United Arab Emirates, joined May 2005, 765 posts, RR: 3 Reply 10, posted (11 months 1 week 5 days 9 hours ago) and read 17720 times:
Well look at it this way. Many passengers who booked and paid to fly the A380 were downgraded to A330 or the old 777. I would imagine EK had to compensate alot of those passengers in one way or another who paid big bucks to the fly the A 380!!!
I guess this scenario would not be covered by Airbus. But not being able to fly the A380 due to a manufacturing defect must bear consequences on Airbus in one way or another! There was a chain reaction of losses on EK and Airbus must cover some of that!
nighthawk From UK - Scotland, joined Sep 2001, 4988 posts, RR: 38 Reply 12, posted (11 months 1 week 5 days 9 hours ago) and read 17654 times:
Quoting sweair (Reply 11): There must be warranty agreements? If this is covered by warranty Airbus pays, if not Emirates pay.
typical warranty agreements only cover the cost of repairs, not losses of revenue or other costs encountered trying to cover for the loss of item.
It depends on the contracts, but I would imagine Airbus would pay for the repairs, but Emirates would need to foot the bill for leasing replacement planes or otherwise rebooking/compensating passengers.
Quokkas From , joined Dec 1969, posts, RR: Reply 13, posted (11 months 1 week 5 days 8 hours ago) and read 17555 times:
Emirates (and other operators) will pay for any losses of revenue or compensation paid to passengers, but the repair costs themselves would be borne by Airbus. The warranty would cover defective parts replacement or repair but other things like lost revenue are beyond the scope of warranties., particularly as it would be difficult to prove passengers chose to fly with other airlines because they couldn't fly on an A380 or because in some instances the airline gave additional miles to customers who found themselves on a 77W instead.
Quote: Airbus has said it will cover the cost of the repairs but will not pay any compensation for lost revenue during the work.
Revelation From United States of America, joined Feb 2005, 10453 posts, RR: 20 Reply 14, posted (11 months 1 week 5 days 8 hours ago) and read 17496 times:
Quoting EK156 (Reply 10): Well look at it this way. Many passengers who booked and paid to fly the A380 were downgraded to A330 or the old 777. I would imagine EK had to compensate alot of those passengers in one way or another who paid big bucks to the fly the A 380!!!
A lot?
Chances are, not a cent.
EK has a terms of carriage document that will tell you what you are entitled to as a pax, and I've never heard of any obligation for an airline to compensate for change of equipment.
At best, they may throw a VVIP some sort of perk to smooth things over, the rest will be told how comfortable the 777 or A330 is, yada yada.
I love your enthusiasm, but it just isn't lining up with reality...
BrouAviation From Netherlands, joined Jun 2009, 981 posts, RR: 1 Reply 15, posted (11 months 1 week 5 days 8 hours ago) and read 17401 times:
Quoting moo (Reply 3):
You dont get compensation from Toyota when your car is recalled for a warranty replacement, do you? Same situation here.
Comparing apples with pears here, as 'you' in this case is a private customer, while EK is a corporate customer with income depending on the A380. It is not unusual at all when a customer asks for compensation when production has been stopped due to mistakes made by the manufacturer.
And Toyota might not pay you, they do give you a rental car free of charge which airbus does not either.
Never ask somebody if he's a pilot. If he is, he will let you know soon enough!
EK has a terms of carriage document that will tell you what you are entitled to as a pax, and I've never heard of any obligation for an airline to compensate for change of equipment.
At best, they may throw a VVIP some sort of perk to smooth things over, the rest will be told how comfortable the 777 or A330 is, yada yada.
I love your enthusiasm, but it just isn't lining up with reality...
Actually A380 tickets most of the time cost more than A330,340 and 777 tickets. You can check it on emirates.com , and when it comes to business class I would definitely be pissed off and would ask for compensation if I paid a big amount for flying the A380 and then have to fly A330 or 777 Old business class. And if you are a silver or gold skywards member that's even another story! Emirates must have compensated in one way or another!
B777LRF From Luxembourg, joined Nov 2008, 1000 posts, RR: 3 Reply 17, posted (11 months 1 week 5 days 8 hours ago) and read 17325 times:
It is, as mentioned, all down to the legalese in the contract between EADS and Emirates, and I can assure you EADS would not have signed a contract that makes them liable for covering of indirect costs or loss of revenue.
Neither will Toyota, bringing that example back to the conversation, and that's regardless of whether they sell a single car to a private owner, or a whole fleet of them to a corporation. Toyota may provide replacement vehicles for the duration of the repairs, but whilst there are many Hertz', Avis' etc. in the world, it's hardly as if you can bowl up to your local "Rent a Plane" and fly away in an A380, or any other large commercial airliner for that matter - the supply simply does not exist.
From receips and radials over straight pipes to big fans - been there, done that, got the hearing defects to prove
tdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 80 Reply 18, posted (11 months 1 week 5 days 8 hours ago) and read 17295 times:
Quoting EK156 (Reply 10): I guess this scenario would not be covered by Airbus. But not being able to fly the A380 due to a manufacturing defect must bear consequences on Airbus in one way or another! There was a chain reaction of losses on EK and Airbus must cover some of that!
Airbus only has to cover what's in the warranty; I've never heard of any airliner warranty that includes lost revenue. If that were a common term, aircraft would cost a lot more.
Quoting sweair (Reply 11): There must be warranty agreements? If this is covered by warranty Airbus pays, if not Emirates pay.
There are warranty agreements. They don't cover lost revenue. That's known and understood by both the OEM's and the airlines.
Quoting BrouAviation (Reply 15): It is not unusual at all when a customer asks for compensation when production has been stopped due to mistakes made by the manufacturer.
It's not unusual to *ask*. It's virtually unheard of, in the airliner world, for the OEM to pay it.
BrouAviation From Netherlands, joined Jun 2009, 981 posts, RR: 1 Reply 19, posted (11 months 1 week 5 days 7 hours ago) and read 17183 times:
Quoting tdscanuck (Reply 18):
It's not unusual to *ask*. It's virtually unheard of, in the airliner world, for the OEM to pay it.
The question is why, as in other sectors it is not unusual at all.
Boeing is paying hefty compensations for the airlines having to fly guzzling 767s for 3 more years than they expected to. Now, Airbus delivered their aircraft, not according to spec now appears, and all of a sudden the airlines will not be compensated anymore?
When you don't have the airplane when you expected to have it, you get compensated, but when you have the aircraft and you suddenly loose it because of the OEM screwing up, which is a much more expensive and difficult situation to solve for the airline, they have to sort things out themselves?
Quoting B777LRF (Reply 17): Toyota may provide replacement vehicles for the duration of the repairs, but whilst there are many Hertz', Avis' etc. in the world, it's hardly as if you can bowl up to your local "Rent a Plane" and fly away in an A380, or any other large commercial airliner for that matter - the supply simply does not exist.
Not relevant at all. There are plenty of 747's available for rent who can do the job, at higher costs. Why would the airline have to pay for this when the OEM screwed up big time, again?
Am I right when I suspect EK getting a sweeter deal on for example A350's in the future because of this?
Never ask somebody if he's a pilot. If he is, he will let you know soon enough!
moo From Falkland Islands, joined May 2007, 3596 posts, RR: 4 Reply 20, posted (11 months 1 week 5 days 7 hours ago) and read 17183 times:
Quoting BrouAviation (Reply 15): Comparing apples with pears here, as 'you' in this case is a private customer, while EK is a corporate customer with income depending on the A380.
And theres no difference between the two.
A product was bought. A warranty was given.
And this might shock you, but private people are not the only purchasers of Toyotas - I've worked for a vehicle fleet management company in the UK, and I've seen commercial fleet recalls from the inside. No compensation is offered, and its rarely given on request - in very specific circumstances you get compensation when you fight for it (for example, an engine dying after 10,000 miles).
So I certainly am comparing apples with apples here - one apple just happens to be larger than the other, and gets sold less.
Quoting BrouAviation (Reply 15): It is not unusual at all when a customer asks for compensation when production has been stopped due to mistakes made by the manufacturer.
Its not unusual for a customer to ask, but its nowhere near guaranteed that they will get.
Quoting BrouAviation (Reply 15): And Toyota might not pay you, they do give you a rental car free of charge which airbus does not either.
I've *never* seen a car manufacturer give a rental car on a warranty recall - I've seen garages give them, if they have one spare at the time, but never have I seen a manufacturer actually arrange one.
During my time at the aforementioned vehicle management company, the routine was to book a hire vehicle for the period the warranty repair was being carried out, and that hire vehicle cost was borne by the owner of the vehicle.
moo From Falkland Islands, joined May 2007, 3596 posts, RR: 4 Reply 21, posted (11 months 1 week 5 days 7 hours ago) and read 17130 times:
Quoting BrouAviation (Reply 19): Boeing is paying hefty compensations for the airlines having to fly guzzling 767s for 3 more years than they expected to. Now, Airbus delivered their aircraft, not according to spec now appears, and all of a sudden the airlines will not be compensated anymore?
The difference is that no product is ever delivered without defects - thats why in civilised countries warranties are required by law on most products, so its reasonable to assume that whatever you buy and whatever you pay for it, it could end up with a problem that has to be fixed by the manufacturer.
Delivering a product without any defects at all, and you are either delivering a very simple product or you arent ever going to deliver.
On the flip side, delivering to a contract is something that you should be certain that you are able to do when you agree to the contract - if you said "in three years I can deliver you an airplane", and you said it in good faith, then its reasonable to hold you to those terms. The fact that there are delay compensations built into every aircraft contract suggests that its known that there is reasonable leeway in a delivery schedule, however doubling the delivery period is not "reasonable leeway", its far beyond that.
If the contract said "pay us compensation for warranty claims", or "ensure the product has no defects at all", then suddenly (as many people have already said) you've just increased the cost of that product extortionately.
Whilst basically agreeing with when you compare Dubai with it's neighbours,but Dubai actually does have oil reserves and pumps between 50,000 and 70,000 barrels of crude per day plus a large quantity of gas. It's peak output was back in 1991 when I believe it pumped about a quarter of a million barrels per day.
How much of this revenue can be used to support it's airline is very small if any as Dubai seems to have debts amounting to $100 billion
As to who pays for the cracks well I am sure the figure will be resolved by negotiation behind closed doors and just because Emirates says it is losing $30 million per month this is probably their opening bid for the negotiations rather than the actually figure.
It's not unusual to *ask*. It's virtually unheard of, in the airliner world, for the OEM to pay it.
The question is why, as in other sectors it is not unusual at all.
In other comparable sectors, it's extremely unusual. The lost revenue cost on large capital assets like airplanes is enourmous...the OEM's and airlines agreed a long time ago on the split: OEM's covered the cost of repair, airlines covered the cost of lost revenue. They could do it the other way but the whole pricing structure of aircraft would have to change.
Similar industries are oilfield, mining, etc, where the loss of a large capital asset can easily cost hundreds of thousands or millions of dollars per day. An airliner is not a Toyota.
Quoting BrouAviation (Reply 19): Boeing is paying hefty compensations for the airlines having to fly guzzling 767s for 3 more years than they expected to
No, they're not. They're paying because they said they'd deliver on a certain day and they didn't. That's very different, contractually, than delivering an aircraft then later having it down for repair.
Quoting BrouAviation (Reply 19): Now, Airbus delivered their aircraft, not according to spec now appears, and all of a sudden the airlines will not be compensated anymore?
Airbus is paying their share: the cost of the repair. They're not paying the lost revenue. That's not what either side agreed to.
Quoting BrouAviation (Reply 19): When you don't have the airplane when you expected to have it, you get compensated, but when you have the aircraft and you suddenly loose it because of the OEM screwing up, which is a much more expensive and difficult situation to solve for the airline, they have to sort things out themselves?
No, they have to absorb the lost revenue themselves. The OEM is responsible for getting the aircraft back in service (paying the repair, equivalent to paying a delay payment for delivery). Boeing isn't paying lost revenue payments for late 787's either (Air India notwithstanding).
Emirates is owned by the government of Dubai who owns the oil. It's circular.
Quoting moo (Reply 3): You dont get compensation from Toyota when your car is recalled for a warranty replacement, do you? Same situation here.
In most first world nations, you would be entitled to a replacement - be that a rental car, or a taxi.
Quoting EK156 (Reply 10): I guess this scenario would not be covered by Airbus. But not being able to fly the A380 due to a manufacturing defect must bear consequences on Airbus in one way or another! There was a chain reaction of losses on EK and Airbus must cover some of that!
Just my view on the situation!
And your view is consistent with that of most jurisdictions in Europe.
Quoting Revelation (Reply 14): EK has a terms of carriage document that will tell you what you are entitled to as a pax, and I've never heard of any obligation for an airline to compensate for change of equipment.
Emirates Airlines is an enterprise that can write whatever it so pleases in its terms of carriage. But Emirates Airlines also want to make money and build up a solid reputation. It is just good business practice and customer service to compensate your paying customers if you can't deliver the advertized product.
Quoting Revelation (Reply 14): I love your enthusiasm, but it just isn't lining up with reality...
It is actually your argument that runs parallel to reality.
Quoting BrouAviation (Reply 19): but when you have the aircraft and you suddenly loose it because of the OEM screwing up, which is a much more expensive and difficult situation to solve for the airline, they have to sort things out themselves?
Airbus is not paying more in compensation than the $350m. figure floating about because it needs its annual balance to be above a certain threshold. Compensation would be counted against the annual profit which would disgruntle not only shareholders but also limit Airbus' immediate financial freedom.
Quoting BrouAviation (Reply 19): Am I right when I suspect EK getting a sweeter deal on for example A350's in the future because of this?
This is exactly what is being done in lieu of monetary payments. Though I am not sure how well adviced this strategy is. Raising capital has never been as cheap as it is today; on the other hand, this way Airbus ensures future sales. They will have done what's best for them.
Quoting moo (Reply 20): And this might shock you, but private people are not the only purchasers of Toyotas - I've worked for a vehicle fleet management company in the UK, and I've seen commercial fleet recalls from the inside. No compensation is offered, and its rarely given on request - in very specific circumstances you get compensation when you fight for it (for example, an engine dying after 10,000 miles).
If you no longer work for them, I suppose they let you go because of the above described work practices?
The UK law is fairly difficult to grasp. It's ancient and not codified as that of most other nations and as such, leaves much more freedom for interpretation than say, the German law. However, ''even'' the UK law is very clear on contract formation and entailed obligations of said.
[Edited 2012-06-13 06:53:29]
..sick of it. -K. Pilkington.
25 moo: Not under UK law you aren't - you aren't legally entitled to a temporary replacement nor have your cost of operating covered while the warranty repai
26 Revelation: I know EK wants to keep customers happy, but personally I have a hard time seeing them setting a broad precedent that they will compensate pax when th
27 EPA001: Are you sure they are doing this for every repair under warranty? . Which is only logical and normal. It is. Incorrect. The aircraft was build and de
28 windshear: It's funny how truth can get twisted with out people even realizing it. The UAE is where DXB is located, and the UAE is still in the top 5 list over t
29 EPA001: The seven Emirates are treating the income out of exporting oil separately when it comes to financial accounting. The economy of Dubai consists for l
30 rotating14: Im sure that EK and Airbus have a fairly good relationship but does this discord over compensation and the loss of revenue hurt future orders??
31 moo: Just asked a lawyer, and his reply is quite obvious - the seller does not take on the cost of the buyers business, or the cost of the buyer conducting
32 blueflyer: It is probably handled on a case-by-case basis for premium passengers, with one-time fliers receiving a nice email about how comfortable the 777 real
33 astuteman: There's certainly some A-net myths being busted here.... So despite the fact that most of EK's A380's are actually flying (myriads of recent youtube v
34 kanban: My Jeep dealer paid for a rental ... so it's rare but not unheard of An A.net myth that normal (most) people pay to fly a specific a/p model rather t
35 enilria: It is my experience that while it is not expressed in the contract that Airbus must pay for the lost revenue, EK will ask for the lost revenue. That
36 brilondon: They may have money, but the reason they have it is that they don't spend it stupidly on things that they can get Airbus to have to pony up for. If t
37 WingedMigrator: For all the talk of lost revenue, the article in the OP describes a $30 million/month loss in PROFIT, not revenue. The revenue loss is no doubt much l
38 astuteman: That was my point, really. Your calculation requires ALL of the A380's to be grounded the whole time for $1.4M a month to be the profit their A380's
39 ghifty: In the US, whenever my Volvo sedan faced a warranty recall I was given a free rental car for the duration of the time it would take to right whatever
40 tdscanuck: Repeat after me...an airliner is a (very expensive) capital asset. A car is...a car. The warranties are not, at all, comparable except in the sense th
41 flightsimer: Actually, you get a rental car or tempo replacement free of charge... at least we did with our warranty for my parents mini-van... So yes you do.
42 kanban: Tom, we recognize that and nobody is suggesting A or B provide loaners...
43 PHXA340: I respect a ton of the things you say but ... you know this isn't a fair comparison. When a T7 goes tech in the EK fleet it is an isolated issue. The
44 Quokkas: Aircraft go "tech" all the time. In fact in any industry plant and equipment need to be maintained, have replacement parts, etc as part of normal wea
45 astuteman: Do I? Sorry. But I'm not inclined to dismiss it out of hand. Which again, is my point. It happens without warning, it happens often, and has the airl
46 PHXA340: You just proved my point. The BA 777 was an isolated issue. The A380 cracks have been found in multiple aircraft. I fully agree with you that Airbus'
47 Quokkas: As posted above (reply 13), it is my opinion that Airbus is not liable for loss of revenue and will not be providing payment for such. There, I think
48 VictorTango: EK has a disclaimer on their website in the 'Services by flight' section. Can't provide a link here. You'd have to look up a particular flight. I did
49 astuteman: If proving that my example was a bad one floats your boat, despite the fact that the point being argued remains fundamentally valid (and you actually
50 UALWN: The BA 777 accident prompted an EASA-mandated urgent modification of all RR-powered 777s. Hence the comparison astuteman made.
51 tdscanuck: No, but they're suggesting Airbus compensate EK for lost revenue while their A380 is out of service, which is financially equivalent to a loaner. Aut
52 moose135: But that isn't required by law - that's a service the dealer offered. The last time I was car shopping, talking with two dealers for the same manufac
53 katekebo: Don't know about Fakland Islands, but here in US you usually get a free "loaner" car paid by Toyota / dealer if the repair is going to take more than
54 PHXA340: Yup , it being a RR problem , not a manufacturing problem by Boeing. The Airbus cracks is a manufacturing defect by Airbus. I purchase an aircraft kn
55 UALWN: Did RR pay for lost revenue to all affected 777 operators? Actually, all aircraft develop cracks over time. Only not this quick. You probably also pu
56 astuteman: It might be me being a tad pedantic, but I'll reiterate that I think you're actually agreeing with my point whilst debating whether the example used
57 EPA001: Indeed it is. Too bad for EK in this case, and for all other affected customers, but that is just all in the game.[Edited 2012-06-14 09:23:10]
58 goosebayguy: When making a claim for lost money you simply cannot claim for revenue. Revenue or turnover is the total amount of money that say a A380 earns in a mo
59 cmf: I do not think there is a claim to be made. But IF there is, then it would not be on the lost profit. IF, again not the word if, there is any claim t
60 lightsaber: BMW in Southern California used to require the dealer garage to supply a vehicle for warantee work. I had several warantee reparairs on my (now sold)
61 tdscanuck: If you purchased it under that assumption, you were misinformed. You may not have personally assumed structural cracks (or at least not this soon) bu
62 PHXA340: Fair enough , I guess I am just having a problem with comparing these cracks to a routine maintanence matter that makes an aircraft go tech. But when
63 lightsaber: Thank you. Why I go to a.net, to learn! Hey, I'm a technical person, not the money person, I just hear about the funds when things go south and my em
64 PHXA340: Lufthansa is considering asking for compensation ... http://www.reuters.com/article/2012/...hansa-airbus-idUSL5E8HE4ZS20120614
65 lightsaber: Man would it have been much more entertaining if AI had bought the A380... Lightsaber
66 747classic: Emirates Wing repair costs are escalating beyond $30 million /mnd. - Emirates external auditors claim the actual effect is closer to $50 million per m
67 SEPilot: The address is Toulouse, France. The person to talk to is a guy by the name of John Leahy. I'm sure he'd be delighted to take your $200,000,000 or th
68 astuteman: So long as I can borrow ALL of that for the 2 years it takes to make that much profit with it, I'll be laughing.... Rgds
69 SEPilot: Do I get a commission for giving you the address?
70 tdscanuck: I agree with you that a design defect like the cracks is not the same as unplanned (but statistically expected) maintenance. I also agree that cracks
72 lightsaber: No wonder EK is squeeling. I though the number was 3 or 4. That is effectively six fewer daily flights that EK can service. The A380s being delivered
73 SEPilot: Well, that should take care of both of our retirements...
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