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Italy Approves EK MXP-JFK Service  
User currently offlineLAXintl From United States of America, joined May 2000, 24814 posts, RR: 46
Posted (1 year 2 months 3 days 22 hours ago) and read 7674 times:

Italian authorities have approved Emirates request for slots and traffic rights in order to commence service between Milan Malpensa and New York's JFK effective October 1st 2013.

The new service will operate using 777-300ER aircraft and complement EK's twice daily planned A380 nonstops to JFK.

Schedules in GDS and now available for booking;

EK205 MXP-JFK 1600-1900 77W
EK206 JFK-MXP 2220-1215+1 77W


Story:
http://www.mondaq.com/x/240244/Aviat...ights+A+New+Target+On+EU+US+Routes

=


From the desert to the sea, to all of Southern California
26 replies: All unread, showing first 25:
 
User currently offlinecargolex From United States of America, joined Apr 2010, 1259 posts, RR: 8
Reply 1, posted (1 year 2 months 3 days 21 hours ago) and read 7517 times:

Not sure what benefit this is to Italy, honestly. What does Italy get out of this that it didn't have before?

User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17335 posts, RR: 46
Reply 2, posted (1 year 2 months 3 days 21 hours ago) and read 7481 times:

JFKHAM lasted about a year and a half--I don't think this will even make it that long.


E pur si muove -Galileo
User currently onlineflyby519 From United States of America, joined Jul 2007, 1124 posts, RR: 0
Reply 3, posted (1 year 2 months 3 days 21 hours ago) and read 7481 times:

So does EK now have the authority to buy/sell tickets to passengers who O&D in MXP? Would this also mean EK has the authority to operate flights from MXP to other points in Europe? I'm thinking of a mini-hub sort of operation, would this be possible?

[Edited 2013-05-21 16:02:04]


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User currently online2travel2know2 From Panama, joined Apr 2010, 2566 posts, RR: 1
Reply 4, posted (1 year 2 months 3 days 19 hours ago) and read 7160 times:

It all depends on how big is the market between Northern Italy and NYC area.
IMHO Italians made a bad move allowing EK on the MXP-NYC route.
If EK wanted to fly to JFK via Milano then Italy should have told them BGY or nothing. And talking about Northern Italy, I'm sure TRN would have loved both a non-stop to NYC and a flight to DXB.
Not sure how an EK DXB-NYC via London STN (if EK got the rights) would have worked instead of via MXP.



I'm not on CM's payroll.
User currently offlineViscount724 From Switzerland, joined Oct 2006, 24803 posts, RR: 22
Reply 5, posted (1 year 2 months 3 days 19 hours ago) and read 7112 times:

Quoting flyby519 (Reply 3):
So does EK now have the authority to buy/sell tickets to passengers who O&D in MXP?

Yes, that's the whole point of the route.

Quoting flyby519 (Reply 3):
Would this also mean EK has the authority to operate flights from MXP to other points in Europe?

No, unless it's covered by the bilaterals between the UAE and both Italy and the other European countries involves. I expect the bilaterals have a wide variety of 5th freedom provisions.


User currently offlineleftyboarder From Turkey, joined Apr 2008, 693 posts, RR: 1
Reply 6, posted (1 year 2 months 3 days 14 hours ago) and read 6795 times:

Quoting flyby519 (Reply 3):
I'm thinking of a mini-hub sort of operation, would this be possible?

And the point of that would be? EK has no narrowbodies, so are you suggesting EK operate widebodies from MXP to secondary cities in Europe, or transfer its nonstop DXB-CDG/LHR/MUC etc flights to MXP? For MXP-JFK it might have a shot but I doubt in the days of FR and U2 they can take over intra-Europe.


User currently offlinetortugamon From United States of America, joined Apr 2013, 3385 posts, RR: 10
Reply 7, posted (1 year 2 months 3 days 14 hours ago) and read 6764 times:

Doesn't EK have an agreement with U2? Is that agreement just for Skyward miles? IF EK could sell tickets throughout Europe via MXP on codeshare with U2 things could get very interesting. Italy could really use the taxes/fees associated with all of those connections.

tortugamon


User currently offlineleftyboarder From Turkey, joined Apr 2008, 693 posts, RR: 1
Reply 8, posted (1 year 2 months 3 days 11 hours ago) and read 6540 times:

Quoting tortugamon (Reply 7):
Doesn't EK have an agreement with U2? Is that agreement just for Skyward miles? IF EK could sell tickets throughout Europe via MXP on codeshare with U2 things could get very interesting. Italy could really use the taxes/fees associated with all of those connections.

That only makes sense for pax originating in DXB, for someone traveling from HKG or PEK, transiting in DXB and then in MXP on to U2 for a flight to say Groningen or Bordeaux might not be that attractive.


User currently offlinetortugamon From United States of America, joined Apr 2013, 3385 posts, RR: 10
Reply 9, posted (1 year 2 months 3 days 11 hours ago) and read 6500 times:

Quoting leftyboarder (Reply 8):
That only makes sense for pax originating in DXB

What about people originating in NYC and are looking for a cheap flight to Europe? I just did a search for flights from MXP to CDG, LGW, AMS, MAD, and SXF for a random date in July and the tickets were between $50-90. That could be really bad news for a lot of TATL airlines.

tortugamon


User currently offlinetortugamon From United States of America, joined Apr 2013, 3385 posts, RR: 10
Reply 10, posted (1 year 2 months 3 days 10 hours ago) and read 6408 times:

Quoting tortugamon (Reply 9):
What about people originating in NYC and are looking for a cheap flight to Europe?

Ok, something is up and I am way off the mark here. The tickets on Kayak.com from MXP-JFK on EK are priced very low; 1/3 the price of the nearest direct flight competitor which could clearly drive traffic to their partner JetBlue. However, JFK-MXP right now are priced $3,400 one way for a bunch of dates I chose. Those could be place holders for the time being and they are not true fares yet.

Scheduled to land at MXP at 12:15 really told me that they were doing this to connect with U2's 45+ destinations from MXP but with a fare like $3,400 something is off. Maybe they will let you book cheaper multi day layovers in MXP through the website so you can take trips in between your trip to DXB or something. That would make sense as they will have a hard time filling MXP-DXB otherwise and if they can keep a captive demand in the network but on an additional vacation that could drive up numbers. Anyone going to DXB would probably just take the direct A380 flight anyway so why else would they stop in MXP. I do not know, just complete speculation. I just know they are smart so they must have some kind of plan here.

tortugamon


User currently offlinemozart From Luxembourg, joined Aug 2003, 2167 posts, RR: 13
Reply 11, posted (1 year 2 months 3 days 10 hours ago) and read 6303 times:

Quoting cargolex (Reply 1):
What does Italy get out of this that it didn't have before?

Choice.

No one forces people to take that flight. If too few people take the flight it will be pulled by EK. If enough people take the flight for EK to continue it that will be prove that it gives people something they didn't have before.

Allowing EK was the right thing to do. At the same time Air France and Lufthansa are putting all kinds of pressure on their governments to block the ME3. How lame. If they can't compete because they're not good enough then that's their problem. Cusotmers should not suffer from it through lesser choice


User currently offlineleftyboarder From Turkey, joined Apr 2008, 693 posts, RR: 1
Reply 12, posted (1 year 2 months 3 days 8 hours ago) and read 6142 times:

Quoting mozart (Reply 11):
Allowing EK was the right thing to do. At the same time Air France and Lufthansa are putting all kinds of pressure on their governments to block the ME3. How lame. If they can't compete because they're not good enough then that's their problem. Cusotmers should not suffer from it through lesser choice

Well, does Dubai allow LH or AF to set up a base / hub at DXB to serve India, for example? Why should AF or LH be happy with Italy allowing this? Dumping capacity will not result in more, but less choice eventually. Europe-BKK is an indication IMHO.


User currently offlinemozart From Luxembourg, joined Aug 2003, 2167 posts, RR: 13
Reply 13, posted (1 year 2 months 3 days 6 hours ago) and read 5917 times:

Quoting leftyboarder (Reply 12):
Well, does Dubai allow LH or AF to set up a base / hub at DXB

Yes they do. Open skies.

Quoting leftyboarder (Reply 12):
to serve India, for example?

Dubai allows it, but India doesn't.

Quoting leftyboarder (Reply 12):
Why should AF or LH be happy with Italy allowing this?

I am not saying they should be happy. I am saying they should not lobby their governments to resort to protectionism.

Quoting leftyboarder (Reply 12):
Dumping capacity will not result in more, but less choice eventually. Europe-BKK is an indication IMHO.

Excuse me?? So what you are saying is that there is less choice in open markets than in protected markets? If your point is that some markets do not have as many airlines in them as they used to at one point, then fine. But that does not justify protectionism.

Compared to the current situation there will be more choice for people on the JFK-MXP route. Should the market not be able to feed all that capacity then capacity will go out of the market, either EK's or someone else's. But that again will be decided by the market. Why let politicians decide which airline people should fly?

[Edited 2013-05-22 06:55:38]

User currently offlineleftyboarder From Turkey, joined Apr 2008, 693 posts, RR: 1
Reply 14, posted (1 year 2 months 3 days 6 hours ago) and read 5828 times:

Quoting mozart (Reply 13):
Excuse me?? So what you are saying is that there is less choice in open markets than in protected markets? If your point is that some markets do not have as many airlines in them as they used to at one point, then fine. But that does not justify protectionism.

Compared to the current situation there will be more choice for people on the JFK-MXP route. Should the market not be able to feed all that capacity then capacity will go out of the market, either EK's or someone else's. But that again will be decided by the market. Why let politicians decide which airline people should fly?

I don't see the analogy to open / protected markets here. An open market would be where no airline within a country is favored over another, say as in the US where UA / DL / US / AA all are equal before the same set of laws and regulations. AF / LH / BA all enjoyed privilages back when they were gov't owned, but no more so yes, these countries are also open markets. But global aviation as a whole is not an open market since we don't have global laws and regulations regarding employee rights or taxation orr ownership rules or transfer of gov't funds, so you can't say EK should have all access to Europe when they are not responsible to the same laws, regulations and requirements - they are a corporation based in the UAE, which is not labor friendly, union friendly, tax friendly etc. What is happening in MXP is Italy giving AZ the middle finger, as EK definitely has lower costs due to no tax, no union cost base. Eventually we might see AZ abandon this market and then yes, there will still be few options and none will be homemade.


User currently offlinemozart From Luxembourg, joined Aug 2003, 2167 posts, RR: 13
Reply 15, posted (1 year 2 months 3 days 4 hours ago) and read 5583 times:

Quoting leftyboarder (Reply 14):
I don't see the analogy to open / protected markets here. An open market would be where no airline within a country is favored over another, say as in the US where UA / DL / US / AA all are equal before the same set of laws and regulations. AF / LH / BA all enjoyed privilages back when they were gov't owned, but no more so yes, these countries are also open markets. But global aviation as a whole is not an open market since we don't have global laws and regulations regarding employee rights or taxation orr ownership rules or transfer of gov't funds, so you can't say EK should have all access to Europe when they are not responsible to the same laws, regulations and requirements - they are a corporation based in the UAE, which is not labor friendly, union friendly, tax friendly etc. What is happening in MXP is Italy giving AZ the middle finger, as EK definitely has lower costs due to no tax, no union cost base. Eventually we might see AZ abandon this market and then yes, there will still be few options and none will be homemade.

You are mixing up two things:

1) "open market" relates to whether or not you allow foreign players to offer their products in your home market. For instance Italy letting an airline from the UAE offer flights. This is the opposite of "protection" which means that you protect your nation's companies by keeping foreign competitors out.

Italy has chosen the "open market" solution because it allows competition from a foreign player. That is the right thing to do.

2) Competitive advantages by one player over another: different companies have different competitive advantages. In the airline industry a company based in the UAE has the advantage of no corporate taxes and probably preferred pricing from airport authorities. A company based in Europe has the competitive advantage of very big home markets (Italy has 60 million inhabitants, the UAE only 8 million. And if you only take Dubai it has less inhabitants than Milan), access to a well trained labour pool and no need to pay for housing/schooling/insurance/other benefits of its employees, and tax credits in case of financial losses.

European airlines often complain about "unfair advantages" of airlines from the Gulf States, but i) only few of them have any factual foundation and ii) the European companies themselves have competitive advantages.

If you want a world where domestic firms do not have to compete with foreign firms, fine, close your borders. In aviation consumers are the ones to suffer because they get to choose only from whatever high fare the national airlines charges (there is no need for the national airline to slash prices, there is no competition after all) and the service that if offers (why improve service, there is no competition).

If you cannot live with the fact that different countries have different ways of workings and different competitive advantages then stop being a part of world commerce.

Of course there is a smarter way which is to raise your standards and retain your market share against foreign competitors, or leave the business if you have nothing to offer. And in world commerce the smarter way is to open up, leverage your own capabilities and sell to other countries those products that you can produce better than them. Remember, open borders goes both ways.

Therefore, I applaud Italy's decision to let EK try its chance and offer flights. If Alitalia has a right to win, they will. If Alitalia's offering is not attractive, they will lose, but then that will be for a good reason.

Lufthansa and especially Air France should stop whining and better get their act together and start offering better products and better fares to earn the right to have a market share.


User currently offlineYULWinterSkies From United States of America, joined Jun 2005, 2176 posts, RR: 5
Reply 16, posted (1 year 2 months 3 days 4 hours ago) and read 5162 times:

I never realized the Italian government would ever go THAT low.
What does Italy have to benefit from EK stealing them market shares? Not sure.

Quoting mozart (Reply 15):



I disagree with exactly 100% of what you say.

Quoting leftyboarder (Reply 14):
you can't say EK should have all access to Europe when they are not responsible to the same laws, regulations and requirements - they are a corporation based in the UAE, which is not labor friendly, union friendly, tax friendly etc. What is happening in MXP is Italy giving AZ the middle finger, as EK definitely has lower costs due to no tax, no union cost base. Eventually we might see AZ abandon this market and then yes, there will still be few options and none will be homemade

Exactly. The market between the EU and the US being open to anyone (it is open among US and EU-based airlines), it is about granting access rights to foreign airlines from a third country, under the blessing of a "democratically" elected government. Italian politics at its most mediocre.
I certainly hope that the unfairly treated US airlines who operate into MXP sue the Italian government for this.
If not, they will eventually downsize or drop MXP (and so would AZ), all for the consumer's loss, because this will mean more EK monopoly.



When I doubt... go running!
User currently offlineAzure From France, joined Dec 2012, 609 posts, RR: 16
Reply 17, posted (1 year 2 months 3 days 3 hours ago) and read 4898 times:

Quoting mozart (Reply 15):
European airlines often complain about "unfair advantages" of airlines from the Gulf States, but i) only few of them have any factual foundation and ii) the European companies themselves have competitive advantages.

Sorry, I have to disagree with you here :
i) One that has factual foundation and not the least is the export credit scheme that the ME3 can take advantage of when they purchase aircraft from either Boeing or Airbus. None of the European Big 3 and none of the US carriers are allowed to benefit from this very favorable tax regime (or with very limited exceptions), as per an OECD rule from the 1980s. This is truly an unfair advantage that makes it possible for the ME3 to purchase their new frames in much better conditions than AFKL, IAG, LH, or UA, DL, AA can even dream of.
ii) which clear competitive advantages do the European companies have against the ME3 ?



Quoting YULWinterSkies (Reply 16):
What does Italy have to benefit from EK stealing them market shares?

In the first place, the Italian State is NOT an AZ shareholder. By allowing EK to fly MXP/JFK, they certainly expect more direct and indirect revenues from these operations (airport taxes, tourism, etc.).



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently offlinemozart From Luxembourg, joined Aug 2003, 2167 posts, RR: 13
Reply 18, posted (1 year 2 months 3 days 2 hours ago) and read 4341 times:

Quoting YULWinterSkies (Reply 16):
What does Italy have to benefit from EK stealing them market shares? Not sure.

"Italy" as in the country? More choice for its traveling public.

"Them market share" as Italian airlines? Nothing. But who says Italian airlines lose market share? They will if EK has the better product, but then it's good that they get the business.

Quoting YULWinterSkies (Reply 16):
I certainly hope that the unfairly treated US airlines who operate into MXP sue the Italian government for this.

Huh?? "Unfairly treated US airlines"? Because someone gets fifth freedom rights? So should the Singapore government complain about US airlines operating between Tokyo and Singapore? Or the Japanese government sue anyone because US airlines operate between Hong Kong and Tokyo?

You have quite an interesting view of how global commerce works. There is nothing "unfair". If the US is not happy with Emirates flying between Milan and New York the DOT in Washington can block the approval, as simple as that.

Quoting YULWinterSkies (Reply 16):
If not, they will eventually downsize or drop MXP (and so would AZ), all for the consumer's loss, because this will mean more EK monopoly.

Again, if Delta, United and American have a better product than Emirates then there will be no need to move out of the market. If passengers don't want them then they may need to reduce their capacities.

I don't see why you want to impose on people which airlines they must fly.

Quoting Azure (Reply 17):
One that has factual foundation and not the least is the export credit scheme that the ME3 can take advantage of when they purchase aircraft from either Boeing or Airbus. None of the European Big 3 and none of the US carriers are allowed to benefit from this very favorable tax regime (or with very limited exceptions), as per an OECD rule from the 1980s. This is truly an unfair advantage that makes it possible for the ME3 to purchase their new frames in much better conditions than AFKL, IAG, LH, or UA, DL, AA can even dream of.

The fact is correct. But then I don't know why you complain about an "unfair competitive advantage" by the ME3? Actually EVERY country in the world (more than 200) except the very small number of countries involved in building Airbus has that advantage. And EU airlines can get expot finance for Boeings and Embraers, just not on Airbus. And US airlines can get export finance on Airbus.

So do you also complain about United having an unfair advantage over Lufthansa because United can get export-finances A320s? Or do you want to complain about Lufthansa having an unfair advantage over United because Lufthansa can get export-financed Boeing 747s?

So in the end this boils down to a handicap that the aircraft-producing countries have. Not an unfair advantage specifically enjoyed by the ME3.

Quoting Azure (Reply 17):
ii) which clear competitive advantages do the European companies have against the ME3 ?

See my earlier post.


User currently offlineAzure From France, joined Dec 2012, 609 posts, RR: 16
Reply 19, posted (1 year 2 months 2 days 22 hours ago) and read 3212 times:

Quoting mozart (Reply 18):
EU airlines can get expot finance for Boeings and Embraers, just not on Airbus. And US airlines can get export finance on Airbus.

No and no ! You seem unaware of this agreement signed by the airbus countries, ie France, Germany, Spain and the Uk on one hand and the USA on the other hand. Per a body of various agreements first signed in the 1980s, these countries have agreed that their carriers could not benefit from the export credit scheme when buying aircraft from any of these countries, in order to prevent the EU airlines from buying only Boeing or to prevent the US airlines from buying only airbus. In a nutshell, this obscure "home country rule" makes it impossible for airlines established in said producer States to benefit from the credit export scheme. It made sense at that time since the European and American carriers were dominating the market. But time has changed as you may have noticed. The LH group, IAG and AFKL have joined the ATA and lobby to reform this rule that gives an enormous advantage to their competitors, such as some low costs carriers (mainly the Irish Ryanair), or the Gulf carriers. But there have been no progress in the negotiations so far...
This rule does not apply when the US or EU airlines buy Brazilian or Canadian aircraft, of course.


Quoting mozart (Reply 18):
See my earlier post.

Sorry to insist, but I still do not understand why the European airlines have a competitive advantage over the ME3.



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently offlinemozart From Luxembourg, joined Aug 2003, 2167 posts, RR: 13
Reply 20, posted (1 year 2 months 2 days 13 hours ago) and read 2867 times:

Quoting Azure (Reply 19):
No and no ! You seem unaware of this agreement signed by the airbus countries,


Indeed I did not understand the agreements this way. Thanks for clarifying them to me.

But it still does not change what I said earlier: labeling this "a competitive advantage of the ME3" is factually correct, but it is misleading. This is a competitive advantage that EVERY airlines has, except those from the EU and US. So it has as much to do with Emirates and Etihas as it does have to do with Air India, Aeromexico, Aeroflot, Qantas, TAM, etc.

Quoting Azure (Reply 19):
Sorry to insist, but I still do not understand why the European airlines have a competitive advantage over the ME3.

Quoting from my earlier post and spelling it out in detail:

Quoting mozart (Reply 15):
A company based in Europe has the competitive advantage of very big home markets (Italy has 60 million inhabitants, the UAE only 8 million. And if you only take Dubai it has less inhabitants than Milan),

This means that European airlines have a natural advantage of being located in countries which are big airline markets. There are passengers all over the place. These countries are important O&D markets. The ME3 have to rely a lot more on transit passengers, they have to go out and find people that are willing to take a connecting flight between - for intsance - Europe and China rather than a nonstop flight. They do not have a large home market. Numbers: Italy has 60 million inhabitants, the UAE has 8 million.

That is a natural advantage.

Quoting mozart (Reply 15):
access to a well trained labour pool

The ME3 have to import and train labour from other countries. This is more difficult than tapping into a local labour pool. Alitalia will find it much easier to hire for instance cabin crews that speak the national language and are used to the local culture. It is much easier for Alitalia to find in the local labour market people that can do accounting, marketing, IT, pricing, regulatory law. The ME3 have to find and recruit people elsewhere. Whilst finding cabin crew in India may still be relatively easy, convincing accountants or marketing specialists to move to Doha is extremely difficult. It is by the way one of the things the ME3 suffer from, particularly Qatar Airways.

So, EU companies have a natural advantage.

Quoting mozart (Reply 15):
and no need to pay for housing/schooling/insurance/other benefits of its employees,

European companies complain that life is more difficult for them because they have to pay social security and tax to the state. In the UAE or Qatar these charges do not exist, that is true. But instead of paying social security charges companies have to pay for housing of their employees, their medical and other insurance, school fees for kids, etc. So instead of the state-regulated schemes like in Europe it is simple local labour market practice in the Gulf states which adds a cost to the HR line item.

Quoting mozart (Reply 15):
and tax credits in case of financial losses.

Something that doesn't exist in the the UAE and Qatar. Look at AFKL for instance: they have accumulated losses of several billions over the several years. Because of that they can get a tax credit and reduce the amount of taxes they are paying (I only took AFKL as an example because in a recent thread I analyzed that particular case. I am certain that it is the same for other companies that are making losses in the EU, e.g. Alitalia). So the complaint about having to pay taxes is weakened substantially because many European airlines also have very reduced (to zero?) tax bills.

In sum, it is just a fact when operating in a global market that you are facing competitors that have different natural advantages than you.

And lastly, why would passengers fly on (for example) Etihad between Europe and Asia? Because Lufthansa cannot get export financing for its fleet? Or because most of its fleet still has sliding seats in longhaul business class with miniscule screens and lousy catering when on Etihad they can get a fully flat seat with a good IFE and better catering?

Hence my 3 points:

1) indeed European companies have some handicaps. That is true. But it is also true that ME3 companies have some handicaps. Therefore the complaining is hypocrit
2) the difference in handicaps does not explain the commercial success of certain carriers vs others. It is what they offer. Companies that have a clear value proposition for their customers are profitable. That has nothing to do with only the ME3, it is true even in Europe. People that want inexpensive go to Ryanair -> very profitable. People that want upmarket go to Swiss -> very profitable. Where does that leave middle of the road players like AFKL -> too expensive for the cheapo passengers and not good enough for the upmarket passengers -> huge losses
3) it is inappropriate to be in a global industry like aviation and complain against the fact that you compete against firms from countries with different rules. If you don't want that, open a taxi company. Competition is purely local.


User currently offlinetortugamon From United States of America, joined Apr 2013, 3385 posts, RR: 10
Reply 21, posted (1 year 2 months 2 days 12 hours ago) and read 2778 times:

Quoting Azure (Reply 17):
ii) which clear competitive advantages do the European companies have against the ME3 ?

They have brand loyalty. They also have a natural advantage for TATL flights that the ME3 does (did?) not.

Quoting mozart (Reply 15):
Italy has chosen the "open market" solution because it allows competition from a foreign player. That is the right thing to do.

I have a hard time believing that in Italy's condition they are doing anything because it is the right thing to do. They do not care about being good to capitalism philosophy. Would you rather have a struggling Alitalia (a given) or a struggling Alitalia and EK which will drive traffic meaning more tourists, more transfers and more taxes? This is not about giving people choice. This is about making money. Good for them. 1 flight a day is not going to kill anyone and they can evaluate from there.

Quoting mozart (Reply 15):
European airlines often complain about "unfair advantages" of airlines from the Gulf States, but i) only few of them have any factual foundation and ii) the European companies themselves have competitive advantages.

There are plenty of ME3 advantages: (1) better geographical location for layovers between Asia and Asian Pacific, (2) governments that assist in their growth (building bigger airports, clearing red tape), (3) Not having to pay inflated EU wages and benefits.

Quoting mozart (Reply 13):
Compared to the current situation there will be more choice for people on the JFK-MXP route.

I for one, do not think this is about NYC-MXP for EK. This is all about driving traffic to U2 and B6 and aiding EKs long term growth plans. Who is motivated to give consumers choice? Who is motivated to make money? Only one way to come out on that decision.

Quoting mozart (Reply 20):
The ME3 have to import and train labour from other countries.

'have to' I would prefer to say 'get to'. Have you been on a ME3 flight? Nice, courteous, young, eager to please staff; how nice! Have you done the calculation of labor/revenue? The do not have to pay the same rate as the European liners do.

Quoting mozart (Reply 20):
So the complaint about having to pay taxes is weakened substantially because many European airlines also have very reduced (to zero?) tax bills.

They may have to pay zero income tax because they are broke, is that what you mean? They still have to pay airport taxes, payroll taxes, real estate taxes, etc. Not sure if VAT comes into play as I am not up on European tax code but boy, if they do that can be a bad situation. Emissions tax? Fuel consumption tax? Do we really need to list them? I lived in the ME for a bit, want to guess how much their gas is? Want to guess how much tax they add to this stuff that they pull out of the ground? Gas is 40% of operating costs right?

Quoting mozart (Reply 20):
And lastly, why would passengers fly on (for example) Etihad between Europe and Asia?

Because its ofen cheaper and well run.

Quoting mozart (Reply 20):
Because Lufthansa cannot get export financing for its fleet?

They cannot get export financing which makes it more difficult to buy newer model aircraft (how many A340s do they still have vs EK?) which makes them have higher variable costs which makes plane tickets more expensive which makes people chose EY if they do not have loyalty.

Quoting mozart (Reply 20):
here does that leave middle of the road players like AFKL -> too expensive for the cheapo passengers and not good enough for the upmarket passengers -> huge losses

So you either have to be cheap or luxury and no one can survive in the middle? The airline industry is a bad investment for sure but I would not go that far. Where would you put EK? Are they luxury at 10 abreast in Y? It is more complex than just LCC vs Luxury. CX and SQ have a dedicated loyal very high-end consumer base and they are not doing well.

I have said this before but I think this is a way to make money on TATL traffic using U2 and B6 and feeders and pullers on both ends. This is their first (2nd?) toes in the water and they know they are going to need these partners on either side of the pond to move people around once they arrive. Do we think this is just a coincidence that JFK is the only JetBlue hub and Milan is U2's largest airport outside of the UK (and 2nd overall)? Italy sees this as a way to make more tax revenue (which they desperately need) while only giving up one unprofitable Alitalia route (for now). I have not figured out all of the angles here but this turns out to be very profitable for EK and MXP. Italy makes money on the tickets but also the added traffic could be more tourism and taxes/fees on the U2 to/from MXP. Its a no-brainer.

tortugamon


User currently offlineRyanairGuru From Australia, joined Oct 2006, 5177 posts, RR: 4
Reply 22, posted (1 year 2 months 2 days 12 hours ago) and read 2753 times:

One thought that I've had, and could be well of the mark here, is that maybe this flight isn't totally about O&D traffic.

We all know that EK has 2x 380 from DXB-JFK, a route that is almost pushing ULH distances. We also know that they carry a decent amount of "ethnic" traffic, VFR to the Sub-Continent. This traffic by its nature tends to be of the lower yielding kind.

ULH flights, by their nature, tend to be high cost. They generally only work with high yielding traffic. Maybe, just maybe, EK want to push the low yield stuff off of their non-stop flights, flown by A380s with a spacious Y cabin and almost 50% of available floor space devoted to the premium cabins, and onto a 77W where they cram in as many people as physically possible in Y and that have relatively small premium cabins. This way the low yield stuff doesn't chew up ULH, low density aircraft, but rather a high density configuration that is running across shorter stage lengths. The lower yield traffic is less likely to mind an additional stop, and it would allow EK to focus on more high yield stuff on the non-stop services.

(This is pretty much their approach to Australia, where they run non-stop and one-stop services side by side to SYD, MEL, and BNE. The non-stops are pretty much always more expensive, often some of the most expensive options from Australia to Europe, while the one-stops pick up more of the bucket-and-spade crowd)

Obviously they are looking to O&D to help fill the aircraft (and hopefully drive yield) but I wouldn't fall over in shock if there were more DXB-JFK passengers on these flights than you might first assume.



Worked Hard, Flew Right
User currently offlinetortugamon From United States of America, joined Apr 2013, 3385 posts, RR: 10
Reply 23, posted (1 year 2 months 2 days 11 hours ago) and read 2705 times:

Quoting RyanairGuru (Reply 22):
Obviously they are looking to O&D to help fill the aircraft (and hopefully drive yield) but I wouldn't fall over in shock if there were more DXB-JFK passengers on these flights than you might first assume.

Good analysis. I could see that definitely being the case. I also agree this is not entirely an O&D story. Something of a mystery though: It looks like flights from DXB-JFK have a layover option in MXP online (I am using Kayak.com) for the same price while the way back there is not a one stop to DXB option. Maybe they feel this low yield traffic is going one direction. I know if I was heading to NYC from DXB I would transfer in MXP and use my Emirates miles for a free plane ticked on U2 for a couple day mini vacation in between legs.

tortugamon


User currently offlineAzure From France, joined Dec 2012, 609 posts, RR: 16
Reply 24, posted (1 year 2 months 2 days 11 hours ago) and read 2700 times:

Quoting mozart (Reply 20):
Thanks for clarifying them to me.

My pleasure.



Quoting mozart (Reply 20):
labeling this "a competitive advantage of the ME3" is factually correct, but it is misleading. This is a competitive advantage that EVERY airlines has, except those from the EU and US.

Correct, but among all the direct European airlines competitors, the ME3 are the airlines benefitting most from this financial advantage giving their massive orders of aircraft. When Lion Air orders 200 A320s, it is not to compete with any European Carrier. When Emirates orders 90 A380s, it is a different story, I hope this is clear for everyone.
According to IAG legal department (that hopefully no one will consider as anti liberal) "when aircraft can cost in the hundreds of millions of US$ it is easy to construct scenarios where the savings to airlines benefiting from ECA support
are over $10m per aircraft" (Source : http://ec.europa.eu/competition/cons...ns/2011_export_credit/iag_en.pdf). It is not unlikely that EK for instance saved almost US$ 1 billion thanks to ECA support (ie the export credit regime) on their Super jumbos order, just to mention this one order.
The European airlines CEOs do have a point when they are talking of "unfair competition" from the ME3, this is my point.



Quoting mozart (Reply 20):
Quoting from my earlier post and spelling it out in detail:

Thanks for getting more specific but still all the natural advantages of Europe versus the UAE are counterbalanced by other advantages the UAE benefit from :

The UAE have virtually no domestic market indeed but their geographical location between Europe, Africa and South Asia is ideal and next to fast growing areas, not only in terms of population but also on economics.

The UAE does not have a domestic work force, indeed. Big deal ! They "import" this workforce at a much lower cost that European companies can even dream of... They may have to give some incentives to attract this workforce, but even so the total cost of labor in the Gulf is much lower than the Western European standards.

As for the fiscal advantages (tax credit for AFKL for instance) I am not an expert in the UAE fiscal regulations but I doubt a company cannot deduct their losses from their revenue as this is a basic in accounting...
Nevertheless what I am sure of is that none of the ME3S provides accounting abiding with the IFRS norms, with the the exception of EK that will do so for the next fiscal year. So clearly here again the ME3 have some kind of advantage.

Finally, my point is not to create a debate with you but to draw your attention on some facts. I am not a supporter of protectionism but I acknowledge that the European airlines CEOs have a point against the ME3, based on certain points that the public is not often aware of.
You know, things are not always black or white, they might be grey too.

[Edited 2013-05-23 01:42:17]


I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
25 mozart : The way you put things is precisely the kind of one-sidedness and whining attitude that I criticize. If you consider that the agreement abot export f
26 magpie75 : So does this mean that I could possibly book a round the world with QF flying from MEL to DXB on QF metal then onto to MXP with EK and then on to JFK
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