SInGAPORE_AIR
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Emirates - Debunking Myths Over Subsidies

Sat Apr 28, 2012 8:20 am

I was sent this document today which has been prepared by Emirates:

Airlines and Subsidy: Our Position

The document appears to be well-researched and some key highlights (it is definitely worth reading in full) are:

  • Examples of recent airline subsidies including AI, JL, JK, CY, OK, AZ and MA

  • Rebuttals to quotes from: AC, Association of European Airlines, AF KLM, OS, LH, Australia Workers' Union and Athena Aviation

  • A timeline of some notable airline state support events including: EI, AF, AZ, BA, IB, LH, OA, QF, TP and LX

  • Supporting quote from their auditors PwC

  • Accusing Star Alliance member airlines of taking subsidies totalling €6.8bn, of which LH Group comprises €3.125bn

  • Explanation of Emirates' sourcing of finance (US$26bn over the last 15 years)

  • A comparison of airline costs and airport costs

  • An explanation of Emirates' oil procurement including quotes from Chevron, BP and Shell





  • The compelling document will make uncomfortable reading for those that insist that Emirates is subsidised. Further, it shows that some of the most vocal airlines who claims such as these are the ones who have themselves received financial and aeropolitical subsidies.

    Subsidies aside, the graphic showing unit cost comparison just shows how competitive Emirates is.

    I think it's a very well-researched document that deals in facts rather than hyperbole.
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    RyanairGuru
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 8:38 am

    I think you should sell tickets to watch this thread   this is going to be fun....


    Personally I agree with your sentiment. The report makes for fascinating reading.

    A couple of points:

    1) EK's labour costs are higher than SQ and MH.

    2) EK has 46% market share in DXB. That means that 54% of passengers are flying other carriers, putting to bed any claims that DXB's market is "totally artificial" with limited O&D and survives on connections.

    3) EK's fuel costs are pretty much average. Incidentally on this point, I've never understood those who purport that EK receives subsidised oil because even if they did get it in DXB, how do they get free oil in SYD?

    4) Some of the vitriol posted by other groups (lead by Air Canada) is unbelievable. Honestly, I have no idea why EK have never sued for libel given that some of their competitors allegations (which they make with no evidence in hand) are pretty damning. Incidentally some of the people should just have kept quiet. For example, I can't figure out why the Australian Workers Union chimed in. The only work group at QF which AWU represents are the engineers and they should be much more concerned by the fact that QF can perform their functions for less in Asia than the extent of competition (fair or otherwise) which QF is faced with on flights to Europe.


    Just my 2c. I know others will disagree.
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    gkirk
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 8:47 am

    This should be fun to watch  
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    boeing773W
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 8:54 am

    Quoting SInGAPORE_AIR (Thread starter):
    I think it's a very well-researched document that deals in facts rather than hyperbole.

    It was prepared by Emirates. What else did you expect them to say?!?

    They've engaged in a campaign of trying to portray other airlines in a bad light for receiving various funds/bailouts, which according to EK amount to subsidies. Are and are they trying to use that as an excuse for something?!?

    Also, with respect, but a quote "from their auditors PWC" means nothing. Of course their own auditors will confirm EK's story. An auditor's report is effectively an opinion and nothing more. Most aren't worth the paper they're written on frankly (think back to Arthur Andersen's "audits" of Enron and you get the picture).

    This whole thing from EK reminds me a bit of the old saying 'Do as I say, not as I do'.

    [Edited 2012-04-28 01:56:23]
     
    mdavies06
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 9:12 am

    Quote:

    Mr Spinetta describes the Gulf region in broad
    terms that distort reality. Dubai has none of
    the oil wealth of its neighbours, which is why
    it pioneered service-based companies such as
    Emirates. As a result, Emirates is unique in the
    Middle East for having consistently produced
    profits due to our strong commercial mandate.
    We have been run in this way since October
    1985. There is nothing secondary about
    profitability for Emirates, which taps international
    lenders for its financing needs and thus needs to
    operate on a profitable basis in order to service
    these loans.

    Dubai as a emirate could not afford its expansion without Abu Dhabi. I did not see this mentioned at all in this document. Its benefit from its oil neighbor is very broadbased across its entire economy.

    DXB and EK would not have had their successes without the Abu Dhabi subsidy. They are very interlinked in my view. Without the bailout in 2009-2010 Dubai as a emirate would have had to seek help from the IMF. I would love to see how this all benefitted EK but sadly this document did not mention it. Obviously a scenario which would have played out was for the Dubai emirate to sell its state assets including EK but as it was eventually bailed out this scenario did not happen.

    Without the bailout the cost base would have gone up by means of higher land acquisition cost, higher airport charges, overall increase in tax level across the society which feed through as higher operational cost, a decrease in city infrustructure investment in all levels.

    The issue of tax was a one pager, page 25, with very little statistics...the villa looks nice though as crew housing.

    The document's conclusion in page 27 is almost unreadable in light of the above.

    [Edited 2012-04-28 02:25:25]
     
    PanHAM
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 9:25 am

    A subsidy is only a subsidy when it is used to support current operations or to keep a defunct company alive.

    I just take 2 items - the € 800 Million Lufthansa pension fund - LH was government owned and had a public service pension scheme vs. the regular pension scheme in which private companies pay onthly as do the employees.

    Going public means that the privatized company cannot assume the liabilities of the old company, otherwise the IPO would not have been accepted. The pension fund is a liability of the previous owner, not the new company.,

    AUA - besides the fact that LH has assumed some old debt of AUA, who in his right mind would take over the liabilities of a defunct company? That is the previous owners liability and if the bride is so ugly that she can be married only with a solid dowry. The alternative would have been bancruptcy and a clean sheet company, like Swissair / Swiss.

    That would have been much more expensive for the Austrian state.


    True, many countries subsidize airlines, India is a good, better, a bad example. However, this pamphlet is biased and the bottom line is what the airline wanted to read.
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    AeroWesty
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 9:28 am

    Interesting reading. On page 4, they state: "Emirates acknowledges that some airlines in the Middle East are indeed government subsidised ... " Other than a passing reference to Saudi Arabian later in the document, they don't list which ME carriers are benefitting from these subsidies, nor the amounts, while at the same time they go to great lengths to detail what they believe to be gov't subsidies for airlines outside of the region.

    It would be interesting to see the figures for subsidies given to their neighboring competitors in the same detail.
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    rogercamel
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 9:28 am

    Quoting SInGAPORE_AIR (Thread starter):
    I was sent this document today which has been prepared by Emirates:

    You can tailor virtually any set of statistics to meet your own aims.

    IMHO EK may not receive subsidies in the same way that state airlines have in the past. But - the business environment they find themselves in is probably favourable compared to other airlines, particularly those in the west. I doubt they have the same union issues that US and European carriers do enabling them to react quicker, and be more flexible and re-shapre their business to suit the economics.

    I'd be interested to know how EK has funded its expansion. Has it been through raising debt funding? From equity investors?
     
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    Zkpilot
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 9:40 am

    I love it how they compare historical subsidies... ie from back in the day when all airlines were pretty much subsidized so it was to be expected and when air routes weren't liberalized to the extent they are now. Emirates didn't even exist when most of these were done so I don't see why they are using them as comparisons.

    They bat away the argument about no tax as saying its a sovereign issue. It is a sovereign issue, but it is the single biggest factor that lowers their overall costs compared to other airlines (hundreds of millions of $ per annum), also factor in aircraft depreciation rates and it is worse still. But it could be argued that it is up to countries to decide what is best for them, in that case other countries should probably impose tariff fares on the likes of EK etc to operate out of their countries. Another option would be for other countries to allow their airlines tax free status themselves. Of course this just opens a big can of worms. If such a thing were to occur then likely fuel tax on jet fuel would need to be imposed at high levels (something which all airlines including EK would have to pay).
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    Ruscoe
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 9:46 am

    When it all boils down, it is about risk!!

    Having a big brother or sugar daddy allows you to take the risks necessary to grow when more prudent
    operators cannot, because of the risk to shareholders.

    It is about who are the shareholders.
    I don't know who the shreholders are at Emirates, but I would be surprised if it is freely traded.

    Fundamentally, this is the same reason Airbus was able to become the number one Commercial Airliner producer.

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    SuperCaravelle
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 10:12 am

    Quoting rogercamel (Reply 7):
    IMHO EK may not receive subsidies in the same way that state airlines have in the past. But - the business environment they find themselves in is probably favourable compared to other airlines, particularly those in the west. I doubt they have the same union issues that US and European carriers do enabling them to react quicker, and be more flexible and re-shapre their business to suit the economics.

    I'd be interested to know how EK has funded its expansion. Has it been through raising debt funding? From equity investors?

    Well, that's more a problem of the other carriers than of EK, right? You can't expect EK to adhere to policies of other countries just to keep a level playing field.

    EK might have expanded using debt funding from equity investors, but don't forget that they are competing against airlines that have enjoyed up to 80 years of regulated government support. It's not an excuse, but it puts things into perspective.
     
    PanHAM
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 10:23 am

    Quoting Ruscoe (Reply 9):
    Having a big brother or sugar daddy allows you to take the risks necessary to grow when more prudent
    operators cannot, because of the risk to shareholders.

    Bingo - not only that. Big brother is the owner, or in the case of Abu Dhabi the uncle of the owner. The owner sets the rules without any public controls. By decret there is an airline which gets all it wants, no night curfews, no obstacles, the owner is at bthe same time the state civl aviation authority. need new terminal? No problem. need new airport with 6 or so unways? Will do it. All that in a fraction of the time it takes in Europe or Norrh America where legal processes have to be observed. Not only in building infrastructure but in managing public corporations as well.
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    Quokkas
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:10 am

    Quoting boeing773W (Reply 3):
    They've engaged in a campaign

    They are engaged in a campaign and responding to frequent accusations made by some airlines that EK has "unfair" advantages and needs to be curbed. The fact that it was prepared by Emirates does not invalidate the contents, although they will of course have been carefully selected to support the company's position. It would be interesting to see actual facts and figures produced by the opponents of EK, rather than just innuendo and baseless stories.

    Quoting AeroWesty (Reply 6):
    to detail what they believe to be gov't subsidies for airlines outside of the region.

    Because the push to curb EK's growth is mainly coming from outside the region. AF, LH, AC have loudly and repeatedly made claims without evidence that EK is subsidised, receives cheap fuel, pays no fees at DXB, etc, etc. This pamphlet seeks to refute those claims so obviously it concentrates on those countries where the greatest opposition comes from. But it would be interesting to see to what extent other carriers in the region are subsidised.

    Quoting rogercamel (Reply 7):
    I'd be interested to know how EK has funded its expansion

    Through a combination of EXIM guarantees, bond issues, Islamic finance, finance leases...

    Quoting Zkpilot (Reply 8):
    I love it how they compare historical subsidies...

    Emirates has been around since 1985. Some of the "historical subsidies" referred to include 2009 and 2010.

    Quoting Zkpilot (Reply 8):
    impose tariff fares on the likes of EK

    Some bilaterals allow for that: for example Germany has threatened EK with fines if it did not raise its fares on some routes following complaints from LH.

    Quoting Ruscoe (Reply 9):
    I don't know who the shreholders are at Emirates,

    EK is part of the Emirates Group which is owned by the Dubai Investment Corporation, a government corporation.
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    rogercamel
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:11 am

    Quoting SuperCaravelle (Reply 10):
    Well, that's more a problem of the other carriers than of EK, right?

    What I was trying to say is that even though EK may not receive subsidies, it does have business advantages against other carriers. Be that through the tax policies.



    Quoting Ruscoe (Reply 9):
    It is about who are the shareholders.
    I don't know who the shreholders are at Emirates, but I would be surprised if it is freely traded.

    My thoughts too. If the investors are government owned companies they will take a different view in relation to expected returns and approach for risk.
     
    IndianicWorld
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:12 am

    Oh the EK debate again, but this time stirred up by the airline itself.

    Whatever the reason, it should just focus on itself instead of spin to further enhance its strong position.
     
    airbazar
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:39 am

    Debunking myths? Looks more like they're digging a bigger hole for themselves  
    Even if they're better than the rest, they clearly don't understand the ingrained menthality in the West: Never trust a government entity. And that's exactly what EK is, a government entity. Usually when a government entity puts out something like this it's because they're trying to hide something. Whether that's true or not for EK, it really doesn't matter because of popular perception. They should just continue to focus on what they do best.
     
    connies4ever
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:50 am

    Quoting airbazar (Reply 15):
    Even if they're better than the rest, they clearly don't understand the ingrained menthality in the West: Never trust a government entity.

    I'd say more than likely an ingrained mentality in the USA, not the West. Thanks to the GOP and Tea Party, in part. And I am not entirely convinced that statement is completely true in the USA, if I may say. In Canada, for example, there is trust in a number of government institutions, the health care system for one, justice another. Frustration at times, absolutely. It's not always done right, but usually. We rely on it.

    Off-topic, and apologies for that, but your statement is rather sweeping.
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    ElPistolero
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 12:30 pm

    Oh goody. The perfect cure for a sore-throat ravaged Saturday morning.  

    I haven't even read the article yet, but I see the same old objections are all over the place.

    From where I stand, this is a biased piece of paper. But so what? It is another voice on an issue that has been far too one-sided in the recent past. I have spent the last few days scrolling through the Canadian Senate's ongoing hearing about the state of the airline industry in Canada, and the one thing that struck me is that there are a lot of myths that are being propogated by Air Canada that are being relentlessly dismissed by academics, bureaucrats etc at the Senate. A lot of those myths appear on Air Canada related threads here. I imagine the same can be said for a lot of other criticism by other carriers.

    As far as I am concerned, this is a welcome addition to the literature on the topic, but it does not represent the whole story or the final say. It simply brings to the fore things that other airlines have been reluctant to talk about. From the perspective of a.net, I think a report like this should be welcomed, because it contributes to the overall shedding of light on the topic from a variety of angles, rather than the usual anti-EK diatribes. There is an element of self-righteousness in these debates that we should take into account - from both sides. This document, flawed though it likely will be, will contribute to perhaps a fairer assessment of the situation. Let us also consider the words of a cheeky Frenchman who famously said "The English created the idea of fairness and generously let everyone else put it into practice". Let us thank the English for their generosity and do that, shall we?

    Quoting boeing773W (Reply 3):
    They've engaged in a campaign of trying to portray other airlines in a bad light for receiving various funds/bailouts, which according to EK amount to subsidies. Are and are they trying to use that as an excuse for something?!?

    Or they're just pointing out that people in glass houses shouldn't....walk around without any clothes on. Or something to that effect.

    Quoting boeing773W (Reply 3):
    Also, with respect, but a quote "from their auditors PWC" means nothing. Of course their own auditors will confirm EK's story. An auditor's report is effectively an opinion and nothing more. Most aren't worth the paper they're written on frankly (think back to Arthur Andersen's "audits" of Enron and you get the picture).

    If auditing is such a hoax, why does anyone even bother. To be quite honest, this comment makes no sense. PWC is a global brand, not the guy down the road. Their 'opinion' is informed. They have a global presence so their quality holds some water with people. Perhaps because they generally do get it right?

    Quoting mdavies06 (Reply 4):
    Dubai as a emirate could not afford its expansion without Abu Dhabi. I did not see this mentioned at all in this document. Its benefit from its oil neighbor is very broadbased across its entire economy.

    After subsidizing EK, Abu Dhabi decided to create its own airline to compete with EK generally on the same routes. It all adds up. Or does it?

    Quoting mdavies06 (Reply 4):
    DXB and EK would not have had their successes without the Abu Dhabi subsidy.

    Again, why would Abu Dhabi subsidize EK and DXB when its entered into direct competition with them. Does the Abu Dhabi emir get kicks out of giving EK money while EY helps him lose some money? It would take a real leap of irrationality to engage in this strategy of supporting one's main competitor at the one's own cost.

    Quoting mdavies06 (Reply 4):
    Obviously a scenario which would have played out was for the Dubai emirate to sell its state assets including EK but as it was eventually bailed out this scenario did not happen.

    As opposed to the bailouts all over the world that have left many more people unemployed than employed? Selling state assets for a bailout is great, but if you can avoid it, wouldn't you? Look at unemployment rates in Greece right now.

    Quoting PanHAM (Reply 5):
    True, many countries subsidize airlines, India is a good, better, a bad example. However, this pamphlet is biased and the bottom line is what the airline wanted to read.

    I don't think it was ever meant to be unbiased. It is merely a response to the equally biased 'facts' coming out of LH.

    Quoting rogercamel (Reply 7):
    You can tailor virtually any set of statistics to meet your own aims.

    Which everyone is doing, so why not EK as well? AC famously declared that a daily EK flight to YYZ would result in tens of thousands of job losses - a claim repeated by the then-transport Minister who, as the present foreign minister, has done more to improve Canada-UAE relations than any of his predeccessors.

    Quoting rogercamel (Reply 7):
    the business environment they find themselves in is probably favourable compared to other airlines, particularly those in the west. I doubt they have the same union issues that US and European carriers do enabling them to react quicker, and be more flexible and re-shapre their business to suit the economics.

    Indeed, but that is hardly their fault. I don't care much for the labor angle. Fact is, if we did, Airlines would open themselves up for criticism given their willingness to buy products from countries with equally lax labor laws (pillows and whatnot from China etc).

    Quoting Ruscoe (Reply 9):
    Having a big brother or sugar daddy allows you to take the risks necessary to grow when more prudent
    operators cannot, because of the risk to shareholders.

    Amen, as we have seen in Canada with Air Canada and the government. But that said, most Euro legacy carriers also had sugar daddies during their inception and consolidation stages. Where would they have been witout government support in those critical early years?

    Quoting PanHAM (Reply 11):
    Bingo - not only that. Big brother is the owner, or in the case of Abu Dhabi the uncle of the owner. The owner sets the rules without any public controls. By decret there is an airline which gets all it wants, no night curfews, no obstacles, the owner is at bthe same time the state civl aviation authority. need new terminal? No problem. need new airport with 6 or so unways? Will do it. All that in a fraction of the time it takes in Europe or Norrh America where legal processes have to be observed. Not only in building infrastructure but in managing public corporations as well.

    Why does it have to be privately owneed? WHy does it have to have public controls? There are many large family owned organizations that are doing very well. Why bring external shareholders in?

    The rest of your post is about public policy. If a state decrees that something is in its strategic interest, it moves forward with it. China's astronomical growth is based on this simple rule. Dubai recognized the potential for tourism and the hub system and ran with it, in much the same way as China had little regard for peasants when it took over land and turned them into sprawling industrial zones. While the observance of legal processes is great and all, every country is entitled to do what it thinks is best for its people (we call it sovereignty). The UAE has followed a tourism and hub airport model (as well as a financial hub and shipping hub model) that has proven to be very successful. By contrast, Germany taxes like it is going out of style, though to be fair to Germany, they've never really aspired to be a tourist destination in the same league as UAE, France, or more recently, Turkey.

    China too builds factories faster than anyone else. Factories that build, among other things, Airbus aircraft and other components for airlines like LH.

    Is it unfair? No. No one is stopping Germany from adopting the same policy. Germany is choosing not to. If I insist on wearing uncomfortable shoes, can I blame you for wearing comfortable shoes and insist that you change them?

    Quoting airbazar (Reply 15):
    Debunking myths? Looks more like they're digging a bigger hole for themselves

    The problem with emotive topics such as this one is that there is a whole lot of ideology and mythology associated with it.

    Quoting airbazar (Reply 15):
    . And that's exactly what EK is, a government entity. Usually when a government entity puts out something like this it's because they're trying to hide something.

    With all due respect, that's nonsense. EK is responding to claims. If it keeps quiet, you can accuse it of trying to hide something. If it responds you can (and do) accuse it of hiding something. Damned if they do, damned if they don't, eh?
     
    SInGAPORE_AIR
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 12:36 pm

    Quoting boeing773W (Reply 3):
    They've engaged in a campaign of trying to portray other airlines in a bad light for receiving various funds/bailouts, which according to EK amount to subsidies. Are and are they trying to use that as an excuse for something?!?

    Emirates appears to have engaged in a defensive campaign to take on the throwaway lies that are insinuated or explictly given by certain airlines and their supporters (including those on this forum).

    Quoting rogercamel (Reply 7):
    Has it been through raising debt funding? From equity investors?

    Mainly from debt. Equity in 2002 was AED 692.2m (US$188.4m). In 2011 this had risen to AED 801.0m (US$218.1m).

    Page 14 of the document shows that they have raised US$26bn of finance over the last 15 years: operating leases 43%, commercial banks 19%, ExIm banks 12%, bond issuance 9%, ECA 13%, Islamic finance 4%.

    In 2011 for example, Emirates Airline raised US$1bn via a bond with a coupon of 5.125%. Singapore Airlines issued S$300m (US$ 242.6m) of bonds with a coupon of 2.15%.

    Quoting Zkpilot (Reply 8):
    I love it how they compare historical subsidies

    Many of the examples are not that historic.

    Quoting Zkpilot (Reply 8):
    It is a sovereign issue,

    Tax is indeed a sovereign issue. However, the argument many imply on this forum is that Emirates should be unfairly treated in its own country and be charged corporation tax. I do not think imposing tariffs on Emirates by other countries would be seen in a good light, particularly at the World Trade Organization. And why just middle-eastern airlines then ? Why not any airline that operates from a country with lower corporation taxes (from which all industries in that economy benefit) such as say, Singapore, Hong Kong SAR and even the United Kingdom (30%) compared to Australia.

    Quoting airbazar (Reply 15):
    Never trust a government entity

    Perhaps some dramatic cynicism there but clearly 31.4m passengers trusted Emirates to transport them in the year ending 31 March 2011.
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    AngMoh
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 1:10 pm

    Quoting rogercamel (Reply 13):
    What I was trying to say is that even though EK may not receive subsidies, it does have business advantages against other carriers. Be that through the tax policies.

    Is it the fault of EK that the tax policies are beneficial? Every country has its own pros and cons: the trick is to make best advantage of that.

    Quoting rogercamel (Reply 13):
    My thoughts too. If the investors are government owned companies they will take a different view in relation to expected returns and approach for risk.

    There are big differences in shareholders and you can not generalize. Some governments which are big shareholders want to maximize profits (Singapore), other just create jobs for their buddies (Malaysia) and even other ones are just concerned about the next election (Canada). I think in Dubai they just want more money for nicer toys...
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 1:23 pm

    Quoting RyanairGuru (Reply 1):
    3) EK's fuel costs are pretty much average. Incidentally on this point, I've never understood those who purport that EK receives subsidised oil because even if they did get it in DXB, how do they get free oil in SYD?

    IF they do receive a subsidy, sudsidized in Dubai would be a chunk of the cost, but I did say "IF".
     
    SKY1
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 1:38 pm

    While any additional competition is always welcomed, I'd like to read someday a comprehensible and truly independent audit about the EK growth.

    Quoting boeing773W (Reply 3):
    It was prepared by Emirates. What else did you expect them to say?!?

      

    I assume that nobody here could expect for a fair, search-the-truth report. EK is here as the main involved side, so this a pamphlet that selfishly try to get confusion mixing half-truth when talking about others, with no a single own mention for the very friendly-business environment they find from the government, finance easiness (way more than average in the industry) or lack of work rights/trade unions among others.

    Of course EK is not getting oil for free, it's an absurd myth ...but that piece of paper is as worthless as biased just exactly like to claim they're getting Jet A1 for free or way cheaper.

    Quoting ElPistolero (Reply 17):
    From the perspective of a.net, I think a report like this should be welcomed, because it contributes to the overall shedding of light on the topic from a variety of angles


     

    English is not my first language but I still understand that "variety" word means "The quality or condition of being various or varied" ...so, tell me how is it possible "a variety" coming from a single, very biased source.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 1:40 pm

    Quoting ElPistolero (Reply 17):
    Is it unfair? No. No one is stopping Germany from adopting the same policy. Germany is choosing not to. If I insist on wearing uncomfortable shoes, can I blame you for wearing comfortable shoes and insist that you change them?

    The difference to the mentioned countries is that, like Canada, Germany is a democracy, ruled by the law and not by decret. It takes 15 to 20 years to build infrastructure projects. That answers your questions, I believe.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 1:57 pm

    I'm not entirely sure EK's stats on labour costs are accurate. I compiled a list from various airline reports

    http://img.photobucket.com/albums/v4...9/docpepz/AirlineEmployeeCosts.png

    You can see that SQ's costs are more like USD 83k per employee and not USD45k as EK's stats show.
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 2:01 pm

    Quoting ElPistolero (Reply 17):
    Quoting boeing773W (Reply 3):
    Also, with respect, but a quote "from their auditors PWC" means nothing. Of course their own auditors will confirm EK's story. An auditor's report is effectively an opinion and nothing more. Most aren't worth the paper they're written on frankly (think back to Arthur Andersen's "audits" of Enron and you get the picture).

    If auditing is such a hoax, why does anyone even bother. To be quite honest, this comment makes no sense. PWC is a global brand, not the guy down the road. Their 'opinion' is informed. They have a global presence so their quality holds some water with people. Perhaps because they generally do get it right?

    The Arthur Andersen &* Associates comparison is quite valid - Enron was a shell game but AA & A said it was a solid investment. Standard & Poor's rated Goldman Sachs as a solid investment only months before it collapsed. If you think these organisations are not prostituted to the fees they receive, you're smoking something. Of course PWC would say what EK wanted.

    Quoting ElPistolero (Reply 17):
    Quoting Ruscoe (Reply 9):
    Having a big brother or sugar daddy allows you to take the risks necessary to grow when more prudent
    operators cannot, because of the risk to shareholders.

    Amen, as we have seen in Canada with Air Canada and the government. But that said, most Euro legacy carriers also had sugar daddies during their inception and consolidation stages. Where would they have been witout government support in those critical early years?

    Remember that AC was privatised mid-80s. So there is no sugar daddy. As well, ACPPA and the unfortunate interventions in free and fair labour negotiations by the current government (oddly enough, which supposedly supports laissez-faire marketplace rules) have seriously hobbled AC's ability to function as a truly private entity.

    As well, during its' tenure as a Crown Corporation, AC returned more money to the crown than it lost. Significant profits in the 70s, 80s, and 90s, for example, were more common than not.

    This link to a recent Financial Post article on Air Canada may be of interest:
    http://business.financialpost.com/20...ver-lasting-effects-on-air-canada/
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 2:24 pm

    Quoting ElPistolero (Reply 17):

    ElPistolero, as always a fantastic post.

    Quoting ElPistolero (Reply 17):
    From where I stand, this is a biased piece of paper. But so what? It is another voice on an issue that has been far too one-sided in the recent past. I have spent the last few days scrolling through the Canadian Senate's ongoing hearing about the state of the airline industry in Canada, and the one thing that struck me is that there are a lot of myths that are being propogated by Air Canada that are being relentlessly dismissed by academics, bureaucrats etc at the Senate. A lot of those myths appear on Air Canada related threads here. I imagine the same can be said for a lot of other criticism by other carriers.

    As far as I am concerned, this is a welcome addition to the literature on the topic, but it does not represent the whole story or the final say. It simply brings to the fore things that other airlines have been reluctant to talk about. From the perspective of a.net, I think a report like this should be welcomed, because it contributes to the overall shedding of light on the topic from a variety of angles, rather than the usual anti-EK diatribes. There is an element of self-righteousness in these debates that we should take into account - from both sides. This document, flawed though it likely will be, will contribute to perhaps a fairer assessment of the situation.

    While my comments in post 1 probably show which side of this I stand on, I think your absolutely right: AC/LH/etc say one thing, EK say another, and the truth is in the middle. After all that is (theoretically) how the common law adversarial approach works!

    Quoting ElPistolero (Reply 17):
    There are many large family owned organizations that are doing very well. Why bring external shareholders in?

    I believe that there is a little company called Virgin...

    Quoting ElPistolero (Reply 17):
    It would take a real leap of irrationality to engage in this strategy of supporting one's main competitor at the one's own cost.

    While it is true that Abu Dhabi did bail out Dubai during the GFC, you are of course right: on the face of it it was totally irrational. The only reason I can think of was that Abu Dhabi didn't want the WTO and IMF poking around in the UAE.

    Quoting ElPistolero (Reply 17):
    every country is entitled to do what it thinks is best for its people (we call it sovereignty)

    Bingo. While western liberal countries now adhere to something called "liberal internationalism", most developing countries still strictly uphold Westphalian principles. It is entirely their right to do so.

    Quoting ElPistolero (Reply 17):
    No one is stopping Germany from adopting the same policy. Germany is choosing not to

    Correct again. If Canada wanted to give AC a 0% tax rate there is nothing (as far as I'm aware) to stop them from doing so at least from an international perspective (of course domestic politics is something altogether different)

    Quoting SInGAPORE_AIR (Reply 18):
    And why just middle-eastern airlines then ? Why not any airline that operates from a country with lower corporation taxes (from which all industries in that economy benefit) such as say, Singapore, Hong Kong SAR and even the United Kingdom (30%) compared to Australia.

    HK has a lower corporate tax rate than Australia, but your point still stands. Let's not lose sight of the fact that Ireland has (had?) a very low corporate tax rate which obviously benefited EI and (in particular) FR.

    Quoting SKY1 (Reply 21):
    so, tell me how is it possible "a variety" coming from a single, very biased source.

    I think he was referring to the fact that AC et al claim A and EK claim B ... and we can judge these competing claims.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 2:55 pm

    Quoting RyanairGuru (Reply 25):
    I think he was referring to the fact that AC et al claim A and EK claim B

    Dunno, we must to ask him, then .....but still we're talking on this thread about the "document" that has been prepared by EK, on the link provided by the initial poster.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 3:00 pm

    In a war of words, Emirate has put their best foot forward. I feel other companies would have done the same if they had any basis for their accusations statements. The key issues is: do we want free markets or not?
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 3:14 pm

    Quoting SKY1 (Reply 21):
    EK is here as the main involved side, so this a pamphlet that selfishly try to get confusion mixing half-truth when talking about others, with no a single own mention for the very friendly-business environment they find from the government, finance easiness (way more than average in the industry) or lack of work rights/trade unions among others.

    Alright, then lets put it this way: We live in an age of globalization, yes? Every multinational company is competing on a global scale, yes? People are buying products made all around the world, yes? The thing that troubles me about posts that talk about "friendly business environment", "finance easiness" or "lack of work rights/trade unions", is that if you are going to use those as key sticking points, then apply them equally. But can you? Would LH be profitable if it had to buy all of its products in Germany? Would AC's finances be better if they didn't buy products from China? Or more simply, are you typing your post on a computer without any components from China, to which those three criteria apply equally? The reason I find these arguments meaningless is because many, many westerners are buying goods from abroad because they are cheaper when they come from abroad. And they are cheaper, because they invariably benefit from the three criteria you have posted here. Should we start punishing them all? This is what the world is now about - bottom lines. If you can buy it cheaper elsewhere, then in most industries, its not only allowed - its encouraged. Why should it not apply to the aviation industry?

    Now, you could logically argue that aviation is a strategic industry. And I agree. It is. But then western governments need to start treating it like one, by trying to get those three criteria to apply to their own countries (within reason on the labor angle). What stops Germany from becoming a airline business friendly environment (it is business friendly for a number of other industries)? Why can't Britain, a financial capital, facilitate finance easiness?

    The simple truth is that aviation is treated as a cash cow. Should we be complaining about that? Or should we complaining about the UAE not treating its own airlines as cash cows? Say waht you want about EK/EY, I dont think anybody can deny that they have put the UAE firmly on the map as a major global center, not just for aviation, but for tourism and business as well. IN other words, in a results-based world, the UAE haven't done too badly.

    Quoting SKY1 (Reply 21):
    English is not my first language but I still understand that "variety" word means "The quality or condition of being various or varied" ...so, tell me how is it possible "a variety" coming from a single, very biased source.

    As opposed to the vitriol coming from AC/LH/AF etc, which, of course, is varied. Well I suppose its varied insofar as the letterhead is different, but the arguments are identical. The more the merrier, I say. It would be nice if EY, AI etc added their voices too, but for now, this will have to do.

    Quoting PanHAM (Reply 22):
    The difference to the mentioned countries is that, like Canada, Germany is a democracy, ruled by the law and not by decret. It takes 15 to 20 years to build infrastructure projects. That answers your questions, I believe.

    Fair enough. So what do you propose? That we stop trading with all non-democracies? I am all for it, as long as it applies equally. What next? Ban Chinese products and Air China and cancel all LH flights to China? The democracy angle works well as a rhetoric barb, but then you have to punish all non-democracies equally. It can't just be one but not the other.

    Quoting connies4ever (Reply 24):
    The Arthur Andersen &* Associates comparison is quite valid - Enron was a shell game but AA & A said it was a solid investment. Standard & Poor's rated Goldman Sachs as a solid investment only months before it collapsed. If you think these organisations are not prostituted to the fees they receive, you're smoking something. Of course PWC would say what EK wanted.

    Again, that proves nothing. Its neither here nor there. By this logic, we should disband all auditors. Yet they persist. Why? You can't go around flaunting a prostitute as your wife if everyone knows she a prostitute, right? So why are people still giving companies their business? And why are governments not disbanding them for engaging in fraud?

    Quoting connies4ever (Reply 24):
    Remember that AC was privatised mid-80s. So there is no sugar daddy. As well, ACPPA and the unfortunate interventions in free and fair labour negotiations by the current government (oddly enough, which supposedly supports laissez-faire marketplace rules) have seriously hobbled AC's ability to function as a truly private entity.

    ACs case is perhaps a little different to others Euro legacies, but I would still contend that on balance, former government airlines have benefitted greatly from the monopolies and advantages hoisted on them (this includes the Euro carriers of course). As hobbled as AC is, it clearly has no qualms about running to the government everytime its in a little bit of trouble, be it with competitors, or its own workers, which suggests that some beneficial close links still remain. For its part, the government occassionally acts like it owns AC (everytime AC drops a direct flight from Ottawa AC's relationship with the Govenrment of Canada occassionally borders on the absurd, I nonetheless submit that this does not necessarily apply to all the European legacies who havent faced similar pressures.

    [Edited 2012-04-28 08:20:56]

    [Edited 2012-04-28 08:22:37]
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 3:19 pm

    Quoting SKY1 (Reply 26):
    Dunno, we must to ask him, then .....but still we're talking on this thread about the "document" that has been prepared by EK, on the link provided by the initial poster.

    There are many threads on Airliners.net that carry the AC/LH/AF claims. In some cases (as on one of the currently active AC threads), some of the posters are posting, word for word, segments from AC's documents.

    Now, it would have been nice if the original poster had put them all in his opening post, but for the time being, I think it would be sensible to approach this document in the context of the statements by AC and LH and others. This is, after all, a direct response to them.
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 3:22 pm

    Quoting mia (Reply 27):
    Emirate has put their best foot forward

    Why? just for doing a .... a .....dunno how I could call it ....an advertising feature? They invent a scenario where the assertion can be taken out of context and misrepresented with the final goal of intended to mislead

    Quoting mia (Reply 27):
    The key issues is: do we want free markets or not?

    Yes, we do! (but not at any price)
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 3:25 pm

    Quoting ElPistolero (Reply 17):
    As far as I am concerned, this is a welcome addition to the literature on the topic, but it does not represent the whole story or the final say. It simply brings to the fore things that other airlines have been reluctant to talk about.

    I think this sentiment is exactly right, but just as . . .

    Quoting Quokkas (Reply 12):
    It would be interesting to see actual facts and figures produced by the opponents of EK, rather than just innuendo and baseless stories.

    . . . it would also be interesting to see some more statistics from EK in this report. Their tax "statistics" are a hypothetical. They say that they pay "the same airport handling fees to dnaka as would a similar high volume airline customer." There is no such "similar high volume airline customer" so that, too, is a hypothetical. I haven't made up my mind about the argument about EK's "unfair advantages," and, frankly, this paper doesn't really help me much.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 4:05 pm

    Quoting SInGAPORE_AIR (Thread starter):

    Airlines and Subsidy: Our Position

    Summary: Mommy, Billy's doing it too!
    Inspiration, move me brightly! Light the song with sense and color.
    Hold away despair, more than this I will not ask.
    Faced with mysteries dark and vast, statements just seem vain at last.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 4:15 pm

    Quoting ElPistolero (Reply 28):
    Alright, then lets put it this way: We live in an age of globalization, yes?

    Yeah but globalization is often used to make excuses and/or blackmail when a company wants to get one's own way. You told it: every country is entitled to do what it thinks is best for its people ...so, what's first? Globalization or sovereignty?

    Globalization is a term from sociology, sovereignty is an old term from the Public International Law.

    Quoting ElPistolero (Reply 28):
    What stops Germany from becoming a airline business friendly environment

    ...What stops Germany from becoming a airline business friendly environment "à la UAE" do u mean? What do u think? maybe the respect of Law? a different History? a different Culture? a different sociology? Germany or any Western country has nothing to do with an Isolated Peninsula between African and Asia where they were lucky enough to discover oil during the 20th century.

    Different precedents must be having into account when trying get a conclusion. Globalization doesn't mean "I'm going to do everything that I want to do"

    Sovereignty and law is above globalization, we should NOT forget that.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 4:33 pm

    Quoting ElPistolero (Reply 28):
    Fair enough. So what do you propose? That we stop trading with all non-democracies? I am all for it, as long as it applies equally. What next? Ban Chinese products and Air China and cancel all LH flights to China? The democracy angle works well as a rhetoric barb, but then you have to punish all non-democracies equally. It can't just be one but not the other.

    I do not propose anything. I just made a statement to show why a country that is ruled by decret has some "advantages" over countries where every single citizen can appeal a decision made by the executive. I would not trade that and I assume you wouldn't either.

    It does also not matter who owns a coporation, good example is DB German Rail which is 100 % owned by the government but 100% run like a private company. The same rules apply for PLCs, for family owned businesses , for the few state owned companies left and for any private citizen.

    But the statement about subsidies given to LH are plain rubbish and I hjave explained that.
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 4:33 pm

    I found the attachment interesting. However, I can already see here on a.net most already have an opinion. Dubai's economy is heavy in the service sector. Their main advantage is flexibility of work force. The other advantage is that when their main regional commercial competitor, Bahrain, suffered from the 'Arab Spring' Dubai had an influx of business and population.

    My point is how does an *oil importer* subsidize their airline?!? Dubai is dependent on EK's growth. Yes, Dubai subsidized EK early on. (IIRC purchased the 727s).

    Quoting mdavies06 (Reply 4):
    DXB and EK would not have had their successes without the Abu Dhabi subsidy. They are very interlinked in my view. Without the bailout in 2009-2010 Dubai as a emirate would have had to seek help from the IMF.

    Abu Dhabi and Dubai are rivals. There is no subsidy but rather a loan to keep the region from collapsing economically. There was some sort of agreement to leave certain business to Abu Dhabi. I don't pretend to know the details.

    http://news.bbc.co.uk/2/hi/8418013.stm

    Quoting AeroWesty (Reply 6):
    It would be interesting to see the figures for subsidies given to their neighboring competitors in the same detail.

    QR and EY certainly couldn't put out a similar document. I wonder if some of this is EK going on the offensive against their two stronger regional competitors.

    Quoting SInGAPORE_AIR (Reply 18):
    Emirates appears to have engaged in a defensive campaign to take on the throwaway lies that are insinuated or explictly given by certain airlines and their supporters (including those on this forum).

    EK/Dubai pretty much has to.

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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 4:37 pm

    Quoting ElPistolero (Reply 17):
    this comment makes no sense. PWC is a global brand, not the guy down the road. Their 'opinion' is informed. They have a global presence so their quality holds some water with people.

    As was Arthur Andersen part of the Big Six prior to the Enron fisaco.

    Quoting ElPistolero (Reply 17):
    to be fair to Germany, they've never really aspired to be a tourist destination in the same league as UAE, France, or more recently, Turkey.

    Are you seriously putting a an artifical bubble of shopping malls and skyscrapers in the middle of sun-scorched desert (aka UAE) in the same league with France or Germany? The latter despite supposedly "not aspiring to be a tourist destination" still has something like 4 times the number of visitiors to the UAE.

    Quoting ElPistolero (Reply 17):
    Dubai recognized the potential for tourism and the hub system and ran with it, in much the same way as China had little regard for peasants when it took over land and turned them into sprawling industrial zones. While the observance of legal processes is great and all, every country is entitled to do what it thinks is best for its people (we call it sovereignty). The UAE has followed a tourism and hub airport model (as well as a financial hub and shipping hub model) that has proven to be very successful.

    Standard societies based on the rule of law do not have the luxury of simply bulldozing farmland/desert and people's livelihoods to turn it within months into a assembly plant or giant airport the way oriental despocies do. No ifs not buts no questions asked no NGOs rightly or wrongly contesting the decision in an independent court. This lack of such luxury is becoming a huge competitive disadvantage on the global scale, however I don't see what you find so impressive about that.
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 5:29 pm

    ALL nations do what they perceive as being in their best interests. While international treaties (including trade agreements) are important tools of global relations-they are STRICTLY subordinate to the needs and interests of the states that engage in them. In other words-this isn't a game.

    "Fairness" is a matter of perception. Everybody does what's good for themselves. Nations make treaties. Nations break treaties... and sometimes they do a bit of both at the same time while making the truth blurry.

    It seems clear EK a vital part of Dubai's strategic plan for the future. It will do what it takes to make EK succeed.
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 5:33 pm

    Quoting SKY1 (Reply 30):
    Quoting mia (Reply 27):
    The key issues is: do we want free markets or not?

    Yes, we do! (but not at any price)

    Errr, wouldn't that, by its very nature, be a regulated 'free' market?

    Quoting SKY1 (Reply 33):
    Yeah but globalization is often used to make excuses and/or blackmail when a company wants to get one's own way. You told it: every country is entitled to do what it thinks is best for its people ...so, what's first? Globalization or sovereignty?

    Who said globalization and sovereignty are a zero sum game? China is perhaps the best example of embracing both at the same time. India and the US are not far behind. Sometimes embracing globalization is in the national interest and pursuing the national interest is,well, exercising sovereignty. Granted any state with a large welfare system will automatically be at a disadvantage, but that is a self-imposed cost.

    Quoting SKY1 (Reply 33):
    ...What stops Germany from becoming a airline business friendly environment "à la UAE" do u mean? What do u think? maybe the respect of Law? a different History? a different Culture? a different sociology? Germany or any Western country has nothing to do with an Isolated Peninsula between African and Asia where they were lucky enough to discover oil during the 20th century.

    What does any of that mean? Respect for law? Is respect for law anti-business by nature? To top it off, aren't several German businesses doing rather well in Dubai? I personally know people working for Siemens and Deutsche Bank there. And I am sure there are others. Apparently German companies are comfortable with the law situation there.

    Culture? Perhaps.

    Sociology? Don't know what that means. . I m tempted to interchange that with Culture.

    Priorities? Far more likely. Overtaxing the aviation industry has precious little to do with culture, nor does it have much to do with the law. Law does not inherently dictate that airlines should be overtaxed, though laws may certainly be passed to overtax airlines.

    Germany (and much of Europe) is overtaxing airlines because the aviation industry is not, to put it mildly, a priority.

    As for the rest, correct me if I m wrong, but wasnt the liberal bilateral between the two nations based on LH's input back in the 1980s, when EK was still an idea? I wouldn't be surprised - LH's recent record in areas "it has nothing to do with" isn't great. Championing AI for *A was ...interesting. Now they're out of 2 cities and almost out of their way from a third Indian city, no?

    Quoting L410Turbolet (Reply 36):
    Are you seriously putting a an artifical bubble of shopping malls and skyscrapers in the middle of sun-scorched desert (aka UAE) in the same league with France or Germany? The latter despite supposedly "not aspiring to be a tourist destination" still has something like 4 times the number of visitiors to the UAE.

    No, I m saying that they've done a pretty good job of making an artificial bubble of shopping malls and skyscrapers in the middle of a sun-scorched desert into a mega financial, aviation and shipping hub in what...3 decades? It takes some doing. That they manage to 25% of Germany's tourism numbers despite being what - 1/10th Germany's population is equally impressive. To top it off, they don't have Europe's rich cultural heritage either. Takes some doing, no?

    Quoting L410Turbolet (Reply 36):
    Standard societies based on the rule of law do not have the luxury of simply bulldozing farmland/desert and people's livelihoods to turn it within months into a assembly plant or giant airport the way oriental despocies do. No ifs not buts no questions asked no NGOs rightly or wrongly contesting the decision in an independent court. This lack of such luxury is becoming a huge competitive disadvantage on the global scale, however I don't see what you find so impressive about that.

    I am really not sure what you mean. All societies are based on the rule of law. How the law is promulgated (democratically or by decree) is another matter. I prefer the democratic ideal, but there's no denying that the despots have improved the lot of their people too.

    That said, are German and European countries not taking advantage of these situations, from which they benefit, in countries like China and the UAE? Do they, or do they not, operate in these countries, taking advantage of government policies.

    Therefore, please get off your high horse. Its not like German companies aren't taking full advantage of the business environments in China and the UAE. Europeans have an interesting habit of making money in these countries and then getting all high and mighty when local companies also benefit from these same conditions. Can't have it both ways.

    [Edited 2012-04-28 10:35:45]
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 5:40 pm

    Quoting SKY1 (Reply 33):
    Yeah but globalization is often used to make excuses and/or blackmail when a company wants to get one's own way. You told it: every country is entitled to do what it thinks is best for its people ...so, what's first? Globalization or sovereignty?

    Sovereignty... especially in democratic nations where opinions, perceptions, governments and agendas can change with the circumstances. If you look around the world-treaties are constantly being renegotiated... or some new exemption is under discussion.
     
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 5:44 pm

    Quoting SInGAPORE_AIR (Thread starter):

    This is an update to a document they have previously distributed. I have linked a previous version before as a source when people say EK pay nothing for fuel.

    Most of it should come of no surprise to anyone in industry, most of what they have compiled is available in newspapers and on the net.

    When you have a very modern fleet, your fuel costs are going to be lower, the A380 and 77W have the lowest seat mile costs in their class. When you are based in a region that has low corporate and personal tax, it is going to cost less to employ someone. QF were recently tanking about setting up a premium airline in Asia, one of the main factors driving this from what I understand is the very expensive Australian taxation system and workplace laws. They could employ a person with the same after tax pay in Singapore for approximately 30-40 percent of the package in Australia. If one were to reduce that even lower still like in the UAE to zero, the cost per employee reduces.

    They say they offer attractive packages, they do not offer anywhere near enough to attract me there. I enjoy my visits to DXB, it has to be the most liberal of the places in the middle east I have been, however it still is not enough, I could live there.
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    AirlineCritic
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    Joined: Sat Mar 14, 2009 1:07 pm

    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 5:56 pm

    Interesting material. Would love to see equally well crafted claims from the likes of LH, AC, and AF.

    Obviously, EK is not the cleanest example of free market operations, but what the detractors often conveniently forget is the extent of similar troubles on their home turf. I also hope that we wouldn't have to keep arguing about the silliest stuff, like cheap oil, how Dubai has oil, etc. EK is a government-private strategic initiative that is designed to put Dubai in the world's air transport map. They do benefit from a number of advantages:

    - excellent location
    - cheap labor (the document's claims notwithstanding)
    - low or non-existent taxation (similar to a number of other places in the world)
    - probably the most airport-building friendly government on the planet
    - economies of scale both in terms of the size of their operations as well as the size of their aircraft
    - capable management

    Naturally, they also have some challenges, such as protectionism from places like India and Europe, growth strategy that would probably hurt if the world took a big downturn, and so on. But so far they are doing very, very well.

    If I look at some of the other airlines in the world, they do have their own advantages and challenges as well. Just to look at some government and legal system support that is enjoyed by the world's most prestigious airlines: state ownership (too many to list but I'll just mention AY), government business preference (US airlines), governments very eager to build airports and even attract airlines to use them (all over Europe, for instance), various protectionist measures such as landing rights and quotas (AC), historical slot allocations in busy airports, the silliness that every major airline in the US can reset its debt with Ch. 11, and so on.

    Lets have the first innocent party throw the first stone!
     
    windshear
    Posts: 2258
    Joined: Tue Mar 14, 2000 4:45 pm

    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 6:04 pm

    I am sorry, but the style of writing is completely unreliable.

    This is hardly a scientific paper, but rather yet another PR move. Emotional commercials running on CNN and now emotional "fact sheets".

    Boaz.
    "If you believe breaking is possible, believe in fixing also"-Rebbe Nachman
     
    connies4ever
    Posts: 3393
    Joined: Sat Feb 25, 2006 10:54 pm

    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 7:30 pm

    Quoting ElPistolero (Reply 28):
    As hobbled as AC is, it clearly has no qualms about running to the government everytime its in a little bit of trouble, be it with competitors, or its own workers, which suggests that some beneficial close links still remain.

    Please provide unbiased evidence for this. AC's resort to CCAA in 2003 was not "running to the government". It was working within standard rules in the Canadian business sphere. Problems in the labour market have been "resolved" by government interference, not by AC asking for help -- unless you can document your assertion.

    Quoting ElPistolero (Reply 28):
    For its part, the government occassionally acts like it owns AC

    I'll agree with you on that, and not occasionally. Always. ACPPA, as long as it is in force, ensures AC will never be able to operate like a truly private entity. Queen Lisa's intervention in labour negotiations does indicate the government views AC as its' toy.
    Nostalgia isn't what it used to be.
     
    ghifty
    Posts: 885
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 8:06 pm

    Is this really from EK? The choice of words and phrasing seems to be very unprofessional at times... and the way some of the graphics are arranged doesn't seem very professional. IMO, the pdf reminds me of something one of those fake "Pan Am mk.4" airlines put out and not something one of the largest airlines would.
    Fly Delta Jets
     
    ElPistolero
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 9:00 pm

    Quoting AirlineCritic (Reply 41):
    Interesting material. Would love to see equally well crafted claims from the likes of LH, AC, and AF.
    http://www.aircanada.com/en/about/media/facts/industry/emirates.html

    Quoting connies4ever (Reply 43):
    Please provide unbiased evidence for this. AC's resort to CCAA in 2003 was not "running to the government". It was working within standard rules in the Canadian business sphere. Problems in the labour market have been "resolved" by government interference, not by AC asking for help -- unless you can document your assertion.

    I've posted this several times now on various threads:

    "Air Canada came to us during the ... global (economic) crisis, and asked specifically for government assistance in a number of areas because of the dangers shutting down the airline would represent to the Canadian economy," Harper said. "I'll be darned if we will now sit by and let the airline shut itself down.

    http://www2.canada.com/story.html?id=6282149

    "While the federal lobbying register shows that Air Canada executives are often in the offices of senior cabinet ministers, it also shows that the pilots union is active on Parliament Hill as well, especially compared with other labour organizations."

    One can only wonder what the AC executives are doing there. Saying hello, I suppose.

    http://www.cbc.ca/news/politics/stor...anada-pilots-unions-relations.html

    The Senate's Study is on this site - navigate through it to read what everyone has to say about AC. Let me put it this way, most people outside of AC have said AC is involved with the government. Are provincial air leads biased? I don't know.

    http://www.parl.gc.ca/SenCommitteeBu...arl=41&ses=1&Language=E&comm_id=19

    I don't know if this link will work. It is the lobbying register.

    https://ocl-cal.gc.ca/app/secure/orl/lrrs/do/cmmLgPblcSrch?frmps=true&searchType=true&clientId=217669&registrantId=735259&startDate=2012-03-15&endDate=&sMdKy=1335647109170
    Calin's boys are there quite often to discuss, among other things, pensions.

    [Edited 2012-04-28 14:07:49]
     
    solarflyer22
    Posts: 1453
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 10:51 pm

    This is an interesting document but there are a few key gaps that aren't addressed in much detail if you read it closely.

    1) Its the Persian Gulf not the "Arabian Gulf". Nice try Shiek. lol
    2) Taxes - Its astounding to me that a mere 1 page is devoted to taxation and they draw illogical analogies instead of breaking down what they pay vis-a-vis a competitor. Bottom line - they pay no corporate income tax even when profitable.

    They say they have to pay more for expatriate pilots (~30%) but turn around and graph labor costs about half that of BA or UA.

    A lot of the subsidies they call out their competitors on were basically during bankruptcy and sometimes date back to the 90s or earlier. I think they do a good job of trying to eliminate myths (free gas etc. ) but whether its 5% or 10% I think they do get some government cheese. Its not the 40% as some would claim though.
     
    Viscount724
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    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:17 pm

    Quoting solarflyer22 (Reply 46):
    Bottom line - they pay no corporate income tax even when profitable.

    And their UAE-based staff (which must account for 98% of the total) pay no personal income taxes.

    Also, I doubt the document mentions that unions are illegal in the UAE, or mentions how much easier it is to operate at a hub where the same entity (the government) not only owns the airline but also the airport, the ground handling agent, fuel supplier, and serves as the regulatory authority (equivalent of the US FAA and DOT combined).
     
    connies4ever
    Posts: 3393
    Joined: Sat Feb 25, 2006 10:54 pm

    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:19 pm

    Quoting ElPistolero (Reply 45):
    "Air Canada came to us during the ... global (economic) crisis, and asked specifically for government assistance in a number of areas because of the dangers shutting down the airline would represent to the Canadian economy," Harper said. "I'll be darned if we will now sit by and let the airline shut itself down.

    http://www2.canada.com/story.html?id=6282149

    If this page would load, I could read it. Absent that, I can't make a comment.

    Quoting ElPistolero (Reply 45):
    "While the federal lobbying register shows that Air Canada executives are often in the offices of senior cabinet ministers, it also shows that the pilots union is active on Parliament Hill as well, especially compared with other labour organizations."

    One can only wonder what the AC executives are doing there. Saying hello, I suppose.

    http://www.cbc.ca/news/politics/stor...anada-pilots-unions-relations.html


    It would seem that ACPA are as active on parliament Hill as AC may be. So who is really the active lobbyist ?

    Quoting ElPistolero (Reply 45):

    http://www.parl.gc.ca/SenCommitteeBu...arl=41&ses=1&Language=E&comm_id=19

    Try as I might I have not seen a direct reference to AC execs being "busy" with the various committees. I'll try again tomorrow if I have a chance. There are better things to attend to tonight.

    There is no doubt, given AC's many international connections, that they will have a frequent and on-going relationship with the government of the day. This does not mean, in and of it self, that they are "running to the government". There is a responsibility to ensure that all legal obligations are met and that FAIT policies are observed (Foreign Affairs, Industry and Trade). Note also that despite observing FAIT policies, AC's commercial desire to serve YUL-BEY a few years ago was thwarted by the government the day before service was to start, no matter that hundreds of reservations had been taken. Is this a case of "running to the government" ?
    Nostalgia isn't what it used to be.
     
    mdavies06
    Posts: 318
    Joined: Fri Aug 07, 2009 10:28 pm

    RE: Emirates - Debunking Myths Over Subsidies

    Sat Apr 28, 2012 11:32 pm

    Quoting lightsaber (Reply 35):
    Quoting mdavies06 (Reply 4):
    DXB and EK would not have had their successes without the Abu Dhabi subsidy. They are very interlinked in my view. Without the bailout in 2009-2010 Dubai as a emirate would have had to seek help from the IMF.

    Abu Dhabi and Dubai are rivals. There is no subsidy but rather a loan to keep the region from collapsing economically. There was some sort of agreement to leave certain business to Abu Dhabi. I don't pretend to know the details.

    http://news.bbc.co.uk/2/hi/8418013.stm

    Thanks for the source. I don't have the details either beyond what is said in the news. What the money has been used for is unkown unless you have access to the data.

    But I would rather think they are brothers and rivals at the same time at a high level.

    Quoting windshear (Reply 42):
    This is hardly a scientific paper, but rather yet another PR move. Emotional commercials running on CNN and now emotional "fact sheets".

    Yeah. However, I do applaud EK for making the effort. Whether the data is distorted or not is obviously hard to establish unless one is in the industry. This is the reason why I have not questioned most of the numbers in the document.

    [Edited 2012-04-28 16:34:02]

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