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PW100
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EK To AMS With A380 . . .?

Fri Oct 21, 2011 1:10 pm

A local newspaper [usually pretty reliable when it comes to Schiphoil Airport] is reporting that Emirates is considering using A380 equipment on their daily AMS run. At the moment I believe they are doing 6x weekly 77W and 1x weekly 77L. Apparently an official request has been made to the Amsterdam Airport Authorities by Emirates to deploy the A380 next year. However Emirates is also considering going double daily. Decision has not yet been made, it appears they are exporing their options.

Also the article mentiones that EK expects additional benefit on the AMS [and all european flights] from the ETS; for connecting flights b[i.e. AMS-DXB-KUL, the pax will only be CO2 charged for the AMS-DXB part of the ticket, while the DFXB-KUL will not be charged. KLM on the other hand, would be charged for the full length of the flight.

Click . . . . . . sorry, only in Dutch

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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 1:24 pm

I would strongly expect that EK will first add a second flight in the afternoon departure hub with an evening turn around in AMS before upgauging the existing flight to A380, but it is of course possible that both happen within a short time frame. MAN received the A380 and shortly later a third daily frequency. Then there may also be the consideration of being the first A380 operator at AMS, i.e. before MH could potentially deploy its A380 there.
 
lijnden
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 1:45 pm

With the CO2 deal coming, airlines like EK will create strategies to keep costs as low as possible for passengers. I am expecting that DXB will become important hub for travel between the Far East / Australia and the EU.

We see already that Garuda is flying CGK-DXB-AMS.

Other A380 traffic I might expect in AMS is SQ with a stop-over in ZRH (non-eu) and have Malaysian do something similair.
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kl911
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 1:45 pm

Quoting HB-IWC (Reply 1):
Then there may also be the consideration of being the first A380 operator at AMS, i.e. before MH could potentially deploy its A380 there.

And CZ eventually I guess. Linking two large Skyteam hubs.


I think it will be an EK A380 before double daily since EK was only allowed 14 flights a week IIRC of which 7 are cargo at the moment and very lucrative.
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 2:08 pm

Quoting PW100 (Thread starter):
A local newspaper [usually pretty reliable when it comes to Schiphoil Airport] is reporting that Emirates is considering using A380 equipment on their daily AMS run.

And that makes AMS unique in what way?     

Quoting PW100 (Thread starter):
However Emirates is also considering going double daily.

Do they have the bilateral rights. Note, I'm asking as I'm just under the impression EK was maxing out their flight rights with 1X cargo and 1X pax (daily). Please correct me if I'm wrong.

Quoting HB-IWC (Reply 1):
Then there may also be the consideration of being the first A380 operator at AMS, i.e. before MH could potentially deploy its A380 there.

EK did bring forward their MUC A380 flight to be 1st there...    I personally have seen the A380 sell seats. Non-aviation fans are excited about the A380. Just as some people must buy the hottest cellphone, they also must fly the plane they can brag about.

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PW100
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 2:17 pm

Quoting HB-IWC (Reply 1):
Then there may also be the consideration of being the first A380 operator at AMS, i.e. before MH could potentially deploy its A380 there

They do seem to find that important to their business . . . cough MUC cough . . .  
The same article also suggest that Malaysian may bring the A380 to AMS next year, so maybe EK indeed wants to be first A380 operator at AMS also.

Quoting kl911 (Reply 3):
think it will be an EK A380 before double daily since EK was only allowed 14 flights a week

Do you have link to that? Not that I'm disputing, just curious to see the wording.
Thanks.


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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 2:22 pm

Quoting lijnden (Reply 2):
Other A380 traffic I might expect in AMS is SQ with a stop-over in ZRH (non-eu) and have Malaysian do something similair.

No, AMS is a leisure destination for SQ, a 777-300ER is much more likely in case they would like to increase capacity.
This as well as the A380 is a premium aircraft and I do not expect AMS to be tag-on from ZRH.
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 2:25 pm

Quoting lightsaber (Reply 4):
And that makes AMS unique in what way

It would be the closest airport to my bed, receiving regular A380. Pretty unique I would say         

Seriously, having a look at their A380 delivery positions for 2012-2014, a lot, and I mean a lot of airports will start seeing EK 380's. AMS seems to fit perfectly in their A380 business model.

I suspect that delivery positions from 2014 will focuss more on [ultra] long haul, while 2012 and early 2013 A380 frames will see more "regional" EK operations. I expect several more european EK A380 announcements before the end of next year.

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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 2:27 pm

Quoting lijnden (Reply 2):
Other A380 traffic I might expect in AMS is SQ with a stop-over in ZRH (non-eu) and have Malaysian do something similair.

It will never happen. There is no financial benefit to operating a one-stop instead of a non-stop. Garuda doesn't have an aircraft capable of flying CGK-AMS non-stop, and even if they did, their price sensitive customer base wouldn't mind the stop. Garuda is no where on the same level as SQ and MH. To suggets that SQ and MH would drop the non-stop route because of this tiny tax is ridiculous. The cost of a stop far outweighs the tax.
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 2:54 pm

Quoting SASMD82 (Reply 6):
No, AMS is a leisure destination for SQ, a 777-300ER is much more likely in case they would like to increase capacity.

Actually, SQ's 3 class 77W has less seats than their 2 class 77E's. And with the huge premium cabin of the 77W, I can't see SQ sending the 77W to AMS (the A380 neither, for the same reason)

Quoting PW100 (Reply 7):
EK 380's. AMS seems to fit perfectly in their A380 business model.

I'm not so sure... EK's cargo position at AMS is very strong, and their 777's are a lot better suited for belly cargo than A380´s.

I wouldn´t take it too seriously yet. EK is probably weighing their options, considering what/if scenarios, but I expect AMS to remain a 777 destination for the time being. How good are their load factors at AMS?

And about being the first A380 operator into AMS, before MH, it would appear LHR and SYD will be the first destinations for MH's A380. So, MH will need to have at least 4 A380's delivered before AMS will see it, and it has strong competition from MEL as well.

Quoting airbazar (Reply 8):
Garuda doesn't have an aircraft capable of flying CGK-AMS non-stop

They ordered the 77W with AMS non-stop in mind, but it appears they have some trouble filling their A332 up till now... Little wonder with EK and KL as main competitors.
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 3:21 pm

Quoting frigatebird (Reply 9):
EK's cargo position at AMS is very strong, and their 777's are a lot better suited for belly cargo than A380´s

True. However having daily cargo flights would somewhat alleviate the need for belly cargo (bring on the 748F . . . ).

Quoting frigatebird (Reply 9):
I wouldn´t take it too seriously yet. EK is probably weighing their options, considering what/if scenarios, but I expect AMS to remain a 777 destination for the time being. How good are their load factors at AMS

I agree that they are weighing their options. Considering they are (apparently) contemplating double daily and/or A380, I suspect their load factors to be pretty solid.

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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 4:34 pm

They shouldn't be allowed more flights to AMS than KLM has to dubai.
Even better is to make the deal about seat capacity, like some other states have with each other.
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 4:46 pm

Quoting PW100 (Reply 10):
Quoting frigatebird (Reply 9):
I wouldn´t take it too seriously yet. EK is probably weighing their options, considering what/if scenarios, but I expect AMS to remain a 777 destination for the time being. How good are their load factors at AMS

I agree that they are weighing their options. Considering they are (apparently) contemplating double daily and/or A380, I suspect their load factors to be pretty solid.

Rgds,
PW100

Based on this thread they are weighing their options which is wise of course. At the same time we all know how many A380's EK still needs to be receive. With their mega A380 order I think EK can (and probably will) send the A380 to a lot more destinations than they are doing now. In any case, in my opinion AMS does sound like a potential A380 destination for EK. Who knows, time will tell...

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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 5:32 pm

Quoting PW100 (Reply 7):
Seriously, having a look at their A380 delivery positions for 2012-2014, a lot, and I mean a lot of airports will start seeing EK 380's. AMS seems to fit perfectly in their A380 business model.

   AMS does make sense. I was just having fun.  
Quoting PW100 (Reply 7):
suspect that delivery positions from 2014 will focuss more on [ultra] long haul, while 2012 and early 2013 A380 frames will see more "regional" EK operations. I expect several more european EK A380 announcements before the end of next year.

I agree with you opinion. In 2014, lighter A380s should be delivered that have an easier time with ULH. Is EK doing anything to lighten cabin fittings? IMHO, that is keeping the A380 closer to home.

And European destinations are now regional EK flights?   

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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 5:43 pm

Quoting Amsterdam (Reply 11):
They shouldn't be allowed more flights to AMS than KLM has to dubai.

Why do you think that?

If I say the same about BRU: "QR/EY shouldn't be allowed more flight to BRU than Brussels Airlines has to Doha/Abu Dhabi", it becomes instantly clear why your statement is absurd...

I don't get the whole point of [EU countries] blocking EK to expand, the EU is so much about liberalization and free trade of goods and services, but why are they so protectionist about their airlines?

What is wrong with a battle between EK and KL if that means lower fares for (all) customers? If you look at the succes of FR/U2, it is clear what the customer wants, lower fares...

edit:typo

[Edited 2011-10-21 10:51:32]
 
kl911
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 6:58 pm

Quoting sf260 (Reply 14):
I don't get the whole point of [EU countries] blocking EK to expand, the EU is so much about liberalization and free trade of goods and services, but why are they so protectionist about their airlines?

What is wrong with a battle between EK and KL if that means lower fares for (all) customers? If you look at the succes of FR/U2, it is clear what the customer wants, lower fares...

So true, Let EK go 4x daily to AMS if they want. KLM then has the choice to do the same. And indeed it will lower fares for us.  
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 7:59 pm

Quoting sf260 (Reply 14):
I don't get the whole point of [EU countries] blocking EK to expand, the EU is so much about liberalization and free trade of goods and services, but why are they so protectionist about their airlines?

That's a very short sighted view. Free trade is proving to not be all that's hyped to be. Just ask the United States middle class  
Free trade is great as long as there's a level playing field for all parties involved, but that's hardly the case when you're dealing with a lot of emerging economies. What do you think will happen to the fares when EK drives every competing airline out of business?
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 8:20 pm

I heard this great news too and it would be great. Not only in the newspaper mentioned earlier, but also in simple talking in and around the airport.
Next one will be Malaysia Airlines and they are planning using them from oktober on. I also do expect to see the SQ A380. Why...competation. I do not thinkt that SQ will continue to use the 772 or 77W when its biggist rival, MH, use the A380. And who knows what AF/Kl will do then.....
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 8:24 pm

Quoting sf260 (Reply 14):
Quoting Amsterdam (Reply 11):
They shouldn't be allowed more flights to AMS than KLM has to dubai.

Why do you think that?

If I say the same about BRU: "QR/EY shouldn't be allowed more flight to BRU than Brussels Airlines has to Doha/Abu Dhabi", it becomes instantly clear why your statement is absurd...

I don't get the whole point of [EU countries] blocking EK to expand, the EU is so much about liberalization and free trade of goods and services, but why are they so protectionist about their airlines?

What is wrong with a battle between EK and KL if that means lower fares for (all) customers? If you look at the succes of FR/U2, it is clear what the customer wants, lower fares...

It's not possible to compete with the Persian Gulf carriers.
Emirates is a state company with limitless cash.
Plus the same company owns their hub airport.
The fleet they've got on order is worth more than AF-KL, the Lufthansa group, BA-IB, and maybe all other European carries together as companies.
The catalog worth of their order is around 37 billion euro.
That's 51 billion dollar.
All North American carriers are also worth much less than their order.
No normal company can 'buy' anything that's worth so much.
Maybe Shell, Exxon Mobile, and a couple other oil companies have got that kind of potential.
But even Microsoft and McDonalds probably can't make an order that big.

Plus the European courts make the EU airlines pay out high fines for delays, even if it's not their fault like with the vulcano.
And last week a European court even ruled that EU airlines have to pay for mental suffering in case of cancellations. O_O

With the CO2 laws European airlines are going to pay much more for using European airspace, because all their flights begin and end in Europe. Unlike other airlines that have just a portion of their flights going to Europe.

The list goes on.
 
kl911
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 8:34 pm

Quoting Amsterdam (Reply 18):
It's not possible to compete with the Persian Gulf carriers.
Emirates is a state company with limitless cash.
Plus the same company owns their hub airport.

Maybe they cant compete on quality you mean, but the government is not doing anything for EK.

quote:

In 2010 Emirates paid dividends worth AED956 million (US$260 million) in 2010, compared to AED2.9 billion (US$793 million) in 2009. The government has received Dhs7.1 billion from Emirates since dividends started being paid in 1999 for having provided an initial start-up capital of US$10 million and an additional investment of about US$80 million at the time of the airline's inception, the Dubai government is the sole owner of the company. However, it does not put any new money into it, nor does it interfere with running the airline.

end quote. ( see wikipedia )
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 10:16 pm

[quote=kl911,reply=19]Quoting Amsterdam (Reply 18):
It's not possible to compete with the Persian Gulf carriers.
Emirates is a state company with limitless cash.
Plus the same company owns their hub airport.

Maybe they cant compete on quality you mean, but the government is not doing anything for EK.

quote:

In 2010 Emirates paid dividends worth AED956 million (US$260 million) in 2010, compared to AED2.9 billion (US$793 million) in 2009. The government has received Dhs7.1 billion from Emirates since dividends started being paid in 1999 for having provided an initial start-up capital of US$10 million and an additional investment of about US$80 million at the time of the airline's inception, the Dubai government is the sole owner of the company. However, it does not put any new money into it, nor does it interfere with running the airline.

end quote. ( see wikipedia )
[/quote

So you say the airline Emirates can make a 50 billion dollar fleet order without support of their goverment?
No way.
Almost no companies in general can afford anything like that.
Certainly no airlines.
Like i said, their orders alone are worth more than all legacy airlines in europe together as complete airlines.
It's completely out of this world
 
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 10:21 pm

Quoting kl911 (Reply 19):
Maybe they cant compete on quality you mean, but the government is not doing anything for EK.

The Dubai government couldn't... they're squeeking by.

Last I looked, the #1 source of cash for EK, after profits, was borrowing from French banks.  
To buy A380s.

Quoting Amsterdam (Reply 18):
No normal company can 'buy' anything that's worth so much.

EK is buying based on their profits. If they were not making money, no one would loan them for the new planes.

Quoting Amsterdam (Reply 18):
But even Microsoft and McDonalds probably can't make an order that big.

I bet McDonald's long term food purchase contracts sum up to a similar number. You're talking as if EK will keep all the planes at once.   

EK purchases in bulk, so you shouldn't be quoting list prices. They're paying substantially less. I don't know how much, but 30% or more less than list price.

UAE law has aircraft depreciation over 14 years instead of 20. Thus, EK is able to sell 'slightly used' aircraft at a profit! e.g., a pair of A332s. I'm certain that the 77Ws will leave the fleet at a profit when EK chooses to do so.


The main reason the European carriers have trouble competing is their own governments 'handicap them.' e.g., cerfews, fights to expand airports (NIMBY$), etc. Back in the 1950s, governments were often 'pro-business.'


It is very easy to compete with the gulf carriers; BYPASS THEM! Send a horde of A330s/787s around the mid-east hubs. Expand the European hubs to offer connectivity from secondary European cities to secondary Asian and African nations.

Why a 3rd runway at LHR would make that possible, combined with 24/7 operations Err...

Ok, the new runway and soon to be finished new terminal will really help FRA. In particular with its 24/7 operations. Err...

Then just expand AMS and... oh. What's that limit on night flights?

Well then France just needs to open up the bilaterals to CDG and increase the flights. Oh... France isn't doing that...


It isn't EK's/ EY's, or QR's fault their competition is having to fight with one hand tied behind their back. The fast economic growth is happening outside of the 'Western World.' Thus, the Western World will want to connect (or better, fly direct) to new cities. For most of these new cities, hubbing will be required due to the lack of P2P demand (to secondary European cities). The hubbing could happen anywhere and for many, it would be prefered to hub in Europe. But that requires high frequency flights to maximize connections. EK is the master of connections. Time for many other airlines to step up. But first, their governments must start helping them (e.g., night ops at FRA).

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jacobin777
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 10:29 pm

Quoting lightsaber (Reply 21):

Why a 3rd runway at LHR would make that possible, combined with 24/7 operations Err...

Ok, the new runway and soon to be finished new terminal will really help FRA. In particular with its 24/7 operations. Err...

Then just expand AMS and... oh. What's that limit on night flights?

Well then France just needs to open up the bilaterals to CDG and increase the flights. Oh... France isn't doing that...

You also forgot to add:

Don't want to serve an extra hot towel in Y+, time for a strike.    Humongous need for a 90-110 seat plane to make carrier very competitive? Sorry, against our scope clauses.   

M.E. carriers don't have to deal with this.
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RE: EK To AMS With A380 . . .?

Fri Oct 21, 2011 10:57 pm

Quoting Amsterdam (Reply 18):
It's not possible to compete with the Persian Gulf carriers.

Ofcourse it's possible, but European legacy carriers prefer to heavily compete with other airlines from neighbouring countries, work together with unions so salary costs can go sky high and employees can go on strike, decrease inflight services and increase ticket prices... And then they start complaining about so called 'unfair' competition such as Emirates. Airlines such as KL and LH should have a look at themselfs first to see what can be improved before they start complaining.   
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RE: EK To AMS With A380 . . .?

Sat Oct 22, 2011 10:02 am

Quoting airbazar (Reply 8):
Garuda doesn't have an aircraft capable of flying CGK-AMS non-stop, and even if they did, their price sensitive customer base wouldn't mind the stop

KL is planning AMS-CGK nonstop and with GA entering Skyteam everything is possible.

Quoting Amsterdam (Reply 11):
They shouldn't be allowed more flights to AMS than KLM has to dubai.

There is no sign that the aviation treaty between The Netherlands and UAE is up to renewal. Thus it will be hard for EK to start double daily pax flights unless they drop their cargo flights (which is unlikely).
 
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RE: EK To AMS With A380 . . .?

Sat Oct 22, 2011 10:31 am

Quoting Amsterdam (Reply 11):

They shouldn't be allowed more flights to AMS than KLM has to dubai.


Because KL doesn't send 700 seats daily to DXB, EK shouldn't as well? Why?

Quoting airbazar (Reply 16):
Just ask the United States middle class
Quoting Amsterdam (Reply 18):
It's not possible to compete with the Persian Gulf carriers.
Emirates is a state company with limitless cash.

Please keep factual.
Quoting Amsterdam (Reply 20):

So you say the airline Emirates can make a 50 billion dollar fleet order without support of their goverment?

Yep. Every airline can do so when they can show banks a business case in which they are going to make a profit with them. And mind the fact that airliners are quite valuable assets not losing their value really quick. Add to that the low price they sure have paid for their A380s because they buy them with large numbers, you'd be surprised how many banks are lining up to pour a little money in.
If there is a way the Emirati government helps the airline, it is by providing it with one of the greatest hubs on the planet (location, facilities, capacity, opening times) at a ridiculously low price.
Quoting BasilFawlty (Reply 23):
Airlines such as KL and LH should have a look at themselfs first to see what can be improved before they start complaining.

That is true for AF/KL indeed, but LH sort of proves it's own complaints pointless by having solid financial results year after year. Can't blame them for trying though. Legacy carriers in Western Europe basically float on TATL traffic, as on those routes every airline in the game is overloaded with the heavy burden of union demands and ridiculous tax systems.
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RE: EK To AMS With A380 . . .?

Sat Oct 22, 2011 11:41 am

Quoting PW100 (Reply 7):
It would be the closest airport to my bed, receiving regular A380. Pretty unique I would say

That is also the best reason I can think of.  
Quoting PW100 (Reply 7):
AMS seems to fit perfectly in their A380 business model.

I would agree. If the B77W can be operated profitably, the A380 is within reach of enough passenger numbers to make that happen.

Quoting lightsaber (Reply 21):
EK is buying based on their profits. If they were not making money, no one would loan them for the new planes.

Very true. And the discussion about EK being state-run has been redone here on A-net at least 10,000 times.   And still many people do not want to grasp reality. EK is not state-run, period!.

Quoting lightsaber (Reply 21):
In particular with its 24/7 operations. Err...

Well, that might still happen in the future, but short-term it is unlikely.

Quoting lightsaber (Reply 21):
Why a 3rd runway at LHR would make that possible, combined with 24/7 operations Err...

Well, that might still happen in the very, very, very, very distant future, but short-term it is not going to happen.  .

Quoting BrouAviation (Reply 25):
Please keep factual.

   Indeed.
 
behramjee
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RE: EK To AMS With A380 . . .?

Sat Oct 22, 2011 2:30 pm

Quoting LJ (Reply 24):

There is no sign that the aviation treaty between The Netherlands and UAE is up to renewal. Thus it will be hard for EK to start double daily pax flights unless they drop their cargo flights (which is unlikely).

KLM used to operate double daily A 332s to DXB not too long ago and just recently reduced to 12 weekly. You sure that EK can only operate daily pax flights to Holland?

On a separate note, if given the option EK would usually first increase frequencies from daily to double daily instead of upgrading capacity from daily B77W to daily A380.
 
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RE: EK To AMS With A380 . . .?

Sat Oct 22, 2011 4:06 pm

Quoting lightsaber (Reply 21):
UAE law has aircraft depreciation over 14 years instead of 20.

It is often up to the airlines to set the actual time and residual values, as long as they can justify them. Many airlines have changed the schedules over the last 10 - 15 years and I'm sure they did before that.

I get the feeling that most often it has been done to make result look better as expenses are lowered for the years management are still in place. My opinion.

I know that LH is currently on a 12 years 15% residual schedule and many US airlines at least until recently has been at 25 years ~10% residual but large differences between airlines. I think it was AA who increased residual value with 5%.

As with many other financial decisions it comes down to selecting where you want the poison.
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RE: EK To AMS With A380 . . .?

Sun Oct 23, 2011 3:53 am

Quoting cmf (Reply 28):
As with many other financial decisions it comes down to selecting where you want the poison.

To a degree. But the fastest depreciation rate is set by local tax laws. I recall SQ switching depreciation rates when times become tough...


But aside from that, my point is that due to their relatively fast depreciation schedule, EK is *usually* able to sell aircraft for more than they have depreciated them for and thus have the option to keep the fleet young. A340s excepted.   

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NTLDaz
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RE: EK To AMS With A380 . . .?

Sun Oct 23, 2011 4:03 am

Quoting frigatebird (Reply 9):
Little wonder with EK and KL as main competitors.

Garuda's onboard offering is excellent. At least on a par with Emirates ( excepting IFE ) and arguably better than KLM. It is reputation they need to rebuild.
 
HiJazzey
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RE: EK To AMS With A380 . . .?

Sun Oct 23, 2011 4:30 am

I don't grasp why faster depreciation is advantageous, it should be the opposite. Accruing a larger depreciation charge on your income statement every year (and corresponding drop in the balance sheet) just to book a larger profit on disposal doesn't make sense to me.
 
cmf
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RE: EK To AMS With A380 . . .?

Sun Oct 23, 2011 6:39 am

Quoting lightsaber (Reply 29):

To a degree. But the fastest depreciation rate is set by local tax laws. I recall SQ switching depreciation rates when times become tough...

Not just SQ. From top of my head, LH and just about every US airline.

Quoting lightsaber (Reply 29):
EK is *usually* able to sell aircraft for more than they have depreciated them for and thus have the option to keep the fleet young.

But just about every airline have that option. It's just that most of them have decided to show better results now and push the shown cost down the road.
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NTLDaz
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RE: EK To AMS With A380 . . .?

Sun Oct 23, 2011 6:48 am

Quoting cmf (Reply 32):
But just about every airline have that option. It's just that most of them have decided to show better results now and push the shown cost down the road.

Airlines only have the option to do this if their local tax laws are favourable. It's a mighty bold statement to say just about every airline has the option to do this.
 
cmf
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RE: EK To AMS With A380 . . .?

Sun Oct 23, 2011 7:28 am

Quoting NTLDaz (Reply 33):
Airlines only have the option to do this if their local tax laws are favourable.

LH is at 12 years. US Airways was at 11 years but as so many other (all?) have extended it. QF say they depreciate over the time they expect to hold the asset so if they wanted to do it over 10 years...

I only know the numbers given by the airlines in the annual reports. Where are the tax laws limiting them from depreciating over 14 years?
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
hal9213
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RE: EK To AMS With A380 . . .?

Thu Oct 27, 2011 1:50 pm

Quoting Amsterdam (Reply 18):
Plus the European courts make the EU airlines pay out high fines for delays, even if it's not their fault like with the vulcano. And last week a European court even ruled that EU airlines have to pay for mental suffering in case of cancellations. O_O

Yea, and you are EXACTLY pointing it out. The EU is darn blocking themselves. Why blame other fairly competing carriers (dont come up with this EK gets free oil BS. And cheap labor isnt an argument either, why arent african/indian carriers overwhelming us?) for the blockades the EU (or EU countries) are imposing on themselves?
Germany and the UK are effectively lowering profit for LH/BA due to those stupid taxes implied (yea, foreign carriers pay too, but it affects LH/BA most because of the feeder / domestic traffic), and all kinds of senseless regulations, taxes, fees, bureaucracy, etc.
Its this German mentality to just complain, complain, complain, but not be willing to change anything.
People complain about a "level playingfield", well, which level is the right level? Are Europeans really demanding for Gulf Carriers to artificially be more beaurocratic, unlean, less structured, and more wasteful? We all know that European (and American) carriers have one of the most inefficient wasteful financial/organisation structure in the industry, Airfrance being the top leader (sry, source not handy right now, read it last year).

EU Airlines and Countries: Stop complaining about Gulf Carriers being so evil, do something about it, change, adapt, make things leaner, remove taxes, subsidize, upgrade your product, and compete head-on-head.
Willy Walsh and BA did it correctly: He said once, if Gulf Carriers are threatening with a superior product, we have to compete with it, do it better, and fight for the customers!
THATs the spirit!!! Not some lame "mama, mama, he is throwing sand at me!!" from Lufthansa. Throw sand back!

(Cant believe I am writing this with a German flag...)
 
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RE: EK To AMS With A380 . . .?

Thu Oct 27, 2011 3:32 pm

Quoting cmf (Reply 32):
But just about every airline have that option.

They should. The issue is most don't to boost the reported profits. If an aircraft is under-depreciated, but from a cash-flow standpoint should be rotated out of the fleet, if the resale is less than the depreciated value that airline must take a charge to dispose of the aircraft.

Since the desire to rotate fleets often happens during times of economic stress... Most airlines, in particular publicly traded airlines, are not in a position to take a charge of $10 to $20M per aircraft for a large fleet of aircraft.

EK also works to keep the debt near the depreciated value. (Hence their huge number of leases.) This eases aircraft trades.

Quoting HiJazzey (Reply 31):
Accruing a larger depreciation charge on your income statement every year (and corresponding drop in the balance sheet) just to book a larger profit on disposal doesn't make sense to me.

It provides flexibility. SQ does this too. By depreciatign (and paying off) aircraft quickly, EK and SQ in effect stay 'nimble' on aircraft replacement. While cash is king, it has a habit of being spent. Forcing a fast amortization rate disciplines EK, SQ and other fast depreciating airlines to keeping their other costs in line. Do note this is only a 2% or 3% in CASM!

This is why SQ was able to replace 77Es with more efficient (for the regional mission) A333s recently. Now EK leases the bulk of their aircraft. But by having the leased aircraft on a fast depreciation scheme, it means that EK has pre-negotiated the option to buy back the aircraft and re-lease it if more favorable terms are available. EK seems to do this with a dozen aircraft a quarter! So in effect, a faster depreciation scheme allows EK to take advantage of:
1. Dips in interest rates
2. Higher resale values of airframes (e.g., the recent two A332 sales)
3. Extending the depreciation schedule during tough times.

SQ took option #3 during the 'Asian flu' crisis.

It also helps when an airline buys the wrong aircraft. For example, I expect EK to scrap the A345s when their D-checks come due in 2013/2014. By depreciating the aircraft quickly, recovering the 'D-check fund,' and selling the parts for what the market will bear... EK's charge shouldn't be too horrid. Their cash outlay will probably only be about $10M per A345 or $100M for the fleet. That cash outlay, in 2014, is less than the added costs of flying the type. Please look at the missions EK is flying the A345. The A359 (heck, the A333) will be a far better aircraft for those missions.

I personally do not undestand why the A343s remain in EK's fleet. I was under the impression the original leases expired in 2011. Does anyone know any more details?

Quoting hal9213 (Reply 35):
The EU is darn blocking themselves.

I've posted again and again that artificial constraints at the European hubs enabled the mid-east hubs. Oh, my words have varied... but the idea is the same.

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"They did not know it was impossible, so they did it!" - Mark Twain