G500
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AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 2:53 pm

I hope for European airlines' sake someone listens to this man before is too late.... things continue the way they are, Emirates will be flying A380s into every European airport some day

"Head of Franco-Dutch group says it would be suicide for European airlines if restrictions on Gulf carriers flying into European airports were removed"

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AeroWesty
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 3:03 pm

In fairness, the reasons for his remarks should be listed. Mr. Spinetta believes that there are unanswered questions regarding government subsidies for the Gulf carriers, such as lower airport user fees at their hubs, and the opportunity to tap into cheaper state-backed financing.

Quote:
He insisted the Gulf carriers must clarify these issues, so that European governments could determine whether they are competing on a level playing field with EU airlines. Only then should the EU consider a so-called open skies agreement with the Gulf states that could allow their carriers unfettered access to European airports.
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PlymSpotter
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 3:05 pm

I don't agree. I'm not saying it's all good, but if what he is saying were true...

Quoting g500 (Thread starter):
"Head of Franco-Dutch group says it would be suicide for European airlines if restrictions on Gulf carriers flying into European airports were removed"

...then why are KLM expanding into the UK regional market, partly on the basis that they are able to offer onward connections. His very airline is proof that it's still possible to find a profitable model, even in a country where competition from the Middle East carriers is at its greatest.

Personally I don't find routings via the Middle East to be that cheap, maybe a £50 difference over the 'historic' one stop options, but that's not enough to sway 90% of the people I book flights for.


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G500
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 3:18 pm

Quoting PlymSpotter (Reply 2):
I don't agree. I'm not saying it's all good, but if what he is saying were true...

I do agree with him 100%

The Gulf carriers buy lots of Boeing and Airbus and they get free reins through out the European union, and really through out the world

The Gulf carreiers and Western aircraft manufacturers are the biggest winners in all of this. The Western airlines are by far the biggest loosers of the Gulf carrier revolution...
 
SCQ83
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 3:23 pm

Is it the same company that codeshares with EY from CDG and AMS??? Or do they mean EK when they are talking about "Gulf carriers"?
 
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moo
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 3:29 pm

Between the lines, this is what he says:

"we won our passenger and freight markets the hard way - by state sponsorship, state subsidised purchases and routes, and strict regulation on competitors. But we did all that 30 or 40 years ago, so the same rules aren't good enough for others now..."
 
factsonly
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 3:52 pm

Quoting moo (Reply 5):
Between the lines, this is what he says:

"we won our passenger and freight markets the hard way - by state sponsorship, state subsidised purchases and routes, and strict regulation on competitors. But we did all that 30 or 40 years ago, so the same rules aren't good enough for others now..."

Well not entirely.............

If you go back 30 or 40 years all airlines were under the same strict government regulations everywhere. Routes, aircraft type, capacity, frequency and even fares were set by Government not by the airlines. As this was the same for all airlines it was a level playing field of sorts. This may sound strange today, but governments everywhere acted similarly and airlines knew there was no 'free' market.

Today we are in a transition phase, though many markets are liberalised and airlines are mostly free to set capacity, frequency and fares, in many countries governments still play significant roles in aviation. Mr. Spinetta is calling attention to the fact that airlines do NOT operate on a level playing field today, as Government favours are now much less obvious. He is asking the EU to pay more attention to hidden forms of support.

Spinetta knows full well, that AF/KL is still government dependent in certain markets (Latin America, Africa, Asia) where bilaterals result from negotiations, but the UAE-Europe market is mostly liberalised (an exception is Germany which still restricts Emirates)....and lets not forget UAE-Canada!!
 
LAXintl
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 4:42 pm

Just because EK or other Gulf carriers have come up with a terrifric business plan along with product that can run circles around many slow dinasour legacy carriers is hardly the reason try to restrict them.

Frankly business world is a tough place where the strong survive and the weak die.

Europe sheltering companies from competition and much needed reform is hardly a beneficial long term path.
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MaverickM11
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 4:48 pm

Quoting LAXintl (Reply 7):
Just because EK or other Gulf carriers have come up with a terrifric business plan along with product that can run circles around many slow dinasour legacy carriers is hardly the reason try to restrict them.

How is their plan any different from any other hub and spoke carrier in the world?  
Quoting LAXintl (Reply 7):
Europe sheltering companies from competition and much needed reform is hardly a beneficial long term path.

The problem isn't so much Europe "sheltering" its carriers so much as Europe constantly trying to destroy its own carriers through regulation, taxes, and restrictions.
E pur si muove -Galileo
 
kaitak
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:03 pm

Quoting g500 (Reply 3):
The Gulf carriers buy lots of Boeing and Airbus and they get free reins through out the European union, and really through out the world

For a start, this didn't help them in Berlin. America has long been pushing for Open Skies, so that is separate from their purchase of Boeings.

And what about the rest of the world, places which don't build aircraft - or build aircraft which ME carriers haven't bought?

And the fact that EK has bought lots of European aircraft didn't help EK to get rights to Berlin.

Quoting MaverickM11 (Reply 8):
The problem isn't so much Europe "sheltering" its carriers so much as Europe constantly trying to destroy its own carriers through regulation, taxes, and restrictions.

That's part of it, but another major part is that the EU flag carriers only fly from capitals/major hugs (ok, as mentioned above, they offer connections through AMS, CDG etc), but ME carriers fly to secondary cities, not yet served - or not sufficiently served.

This brings me to the core argument AGAINST restricting ME carriers. The aim of EU bilateral rights (or indeed bilateral rights anywhere) should NOT be to protect airlines, but to encourage economic growth, tourism and trade to more peripheral, less served locations. Between the ME and major EU flag carriers, the former do this much better and because they have their own metal flying to more peripheral destinations (Dublin, for example), they have an incentive to market Dublin, which the likes of LH, KL, AF etc don't.

How would this more peripheral destinations fare if ME carriers were restricted? Would it actually help the EU flag carriers? Whose interests should take precedence here?

Every two bit airline in the world wants to make their main base a hub; some do it badly, some do it very well. It just so happens that EK has done it extremely well - too well for the liking of EU carriers. Is that really a reason to restrict them? It would be a severely retrograde step if it were.
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:03 pm

Quoting LAXintl (Reply 7):

I think it's more complex than what you say... I used to think the same way you do. I do not pretend to know the answers, but are the Middle Eastern carriers actually better managed, or do they get more favorable government treatment? Is it Europe's fault, are they making it too hard for their airlines? Is the difference in culture (Europe has more unions, not saying that is bad, but it has lead to higher wages for example) that is hurting the European airlines?

I obviously am not well versed in this subject, but I doubt it is simply "all these Middle Eastern carriers found the right solution and most of the European airlines took the wrong path"
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MaverickM11
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:12 pm

Quoting kaitak (Reply 9):
That's part of it, but another major part is that the EU flag carriers only fly from capitals/major hugs (ok, as mentioned above, they offer connections through AMS, CDG etc), but ME carriers fly to secondary cities, not yet served - or not sufficiently served.

For the same reason EK doesn't fly longhaul from AUH--that's the whole point of a hub. EU flag carries fly to far more 'secondary', 'tertiary', and down right whole-in-the-wall cities than the Gulf carriers; they just do it several times a day on smaller aircraft rather than once or twice daily on a 777.

Quoting DeltaMD90 (Reply 10):
"all these Middle Eastern carriers found the right solution and most of the European airlines took the wrong path"

No one can point to a single thing the Gulf carriers differently are doing that other airlines can copy and succeed...they're all doing the same thing--the Gulf carriers just have the implicit (and arguably explicit) backing from their government.
E pur si muove -Galileo
 
lhcvg
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:28 pm

Quoting MaverickM11 (Reply 11):
No one can point to a single thing the Gulf carriers differently are doing that other airlines can copy and succeed...they're all doing the same thing--the Gulf carriers just have the implicit (and arguably explicit) backing from their government.

That makes me think of an Economist article a few years ago saying that one of the most important things China needs to learn is how let go of some of their state-sponsored/endorsed enterprises and let the private market take over (i.e., let them go bankrupt and liquidate instead of endlessly propping them up).
 
G500
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:31 pm

Quoting MaverickM11 (Reply 11):
No one can point to a single thing the Gulf carriers differently are doing that other airlines can copy and succeed...they're all doing the same thing--the Gulf carriers just have the implicit (and arguably explicit) backing from their government.

The Gulf carriers are not hubled by unions, and labor relations comittes like Western airlines... In the West, if you don't agree with something, you are allowed to say something. If you're being over-worked or they want to take a benefit away, you have the option to fight it.

In the Gulf, is their way or the highway... Plain and simple.. that's gotta to be a cheaper way of conducting business

Yes the backing of the governments also help the Gulf carriers
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:35 pm

Quoting LHCVG (Reply 12):
That makes me think of an Economist article a few years ago saying that one of the most important things China needs to learn

It's an interesting comparison, since the EU, Gulf, and China have all had their respective governments deeply invested in their carriers at one point in time or other. The EU has stifled its carriers with red tape to the point of bankruptcy, the Gulf has pretty much let them do whatever they want, and who knows what China is doing but it has ended up in a bunch of really dumb airlines, and empty 380s to LAX.

Quoting g500 (Reply 13):
The Gulf carriers are not hubled by unions, and labor relations comittes like Western airlines...

Good luck translating that to the EU carriers
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kl911
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:42 pm

I am against, let the market do its work. AF/KL etc should compete on price AND quality, and lower operating costs. Plus, ban all Unions.

With an open skies deal AF/KL can also fly from every EU airport to the gulf. Not that they will, but they can.
 
lhcvg
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:45 pm

Quoting MaverickM11 (Reply 14):
It's an interesting comparison, since the EU, Gulf, and China have all had their respective governments deeply invested in their carriers at one point in time or other. The EU has stifled its carriers with red tape to the point of bankruptcy, the Gulf has pretty much let them do whatever they want, and who knows what China is doing but it has ended up in a bunch of really dumb airlines, and empty 380s to LAX.

That's why I find intriguing about all this - will a natural middle ground evolve, or will state-sponsored Gulf or Chinese carriers just pound the European legacies into dust eventually?
 
mercure1
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:46 pm

Aviation is like any other industry in a global marketplace.

The winners will be the most efficient producers of product and services.

Unfortunately Europe has priced itself out in industry after industry and has become reliant on protections methods to prop up enterprises where it can no longer fight in global arena. Just look at all the regulations and artificial subsidy that is all over Europe.

As time pass problems will only become worse for such financially uncompetitive industry and cost to protect will become even more burdensome.
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 5:54 pm

Quoting LHCVG (Reply 16):
That's why I find intriguing about all this - will a natural middle ground evolve, or will state-sponsored Gulf or Chinese carriers just pound the European legacies into dust eventually?

I think the Gulf and EU carriers are going to sorta converge to that middle ground, but the Chinese carriers are just on Neptune--I don't think anyone is worried about them yet. The EU carriers have lots of efficiencies to root out, and I think the Gulf in general is in for some creative destruction in a lot of ways, not just in the airline industry. At least the Gulf governments knew enough to bring in people with aviation experience to run the carriers, and then (mostly) get out of the way. The Chinese carriers are just the height of incompetence, with the government ordering every airplane according to political winds, building airports where there's no demand, setting up subsidiaries with no rhyme or reason, all while nothing is really working on a network level.
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commavia
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 6:23 pm

How comical.

European carriers from (by global standards) small countries that built their networks upon connections among and between foreign markets are now complaining about Gulf carriers doing ... the same thing.

If the Gulf carriers are doing something illegal, or getting subsidies or special treatment (e.g., cheap fuel), then that's one thing. But I have yet to see any conclusive evidence of that. The Gulf carriers claim they're much more like Singapore Airlines - government-owned, but at arm's length.

And I don't remember the European carriers complaining about Singapore Airlines - another globally-recognized carrier with a strong product depending on connections over its totally-non-domestic hub.

Quoting MaverickM11 (Reply 8):
The problem isn't so much Europe "sheltering" its carriers so much as Europe constantly trying to destroy its own carriers through regulation, taxes, and restrictions.

This is the key.

By far the biggest disadvantages European carriers faced are those imposed upon them by their own governments and regulatory systems. And, on the flip side, by far the biggest advantage the Gulf carriers have over their European competitors is that their home countries have essentially made their entire national policy staunchly pro-airline.

If European governments focused effort, energy, attention and, of course, money on airports, low taxes, simplified regulation, relaxed labor laws, etc. - the European carriers would be vastly more competitive. But European governments - for a variety of social and political reasons - are uninterested in such policies. And as such, they, and European airlines, have to live with the consequences, their complaints not withstanding.
 
DTWHKG
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 6:24 pm

Quoting g500 (Reply 3):
I do agree with him 100%

The Gulf carriers buy lots of Boeing and Airbus and they get free reins through out the European union, and really through out the world

The Gulf carreiers and Western aircraft manufacturers are the biggest winners in all of this. The Western airlines are by far the biggest loosers of the Gulf carrier revolution...

That there are winners and losers in a market is not a reason to restrict someone.

You may also want to restrict Camry and Accord in the US, so they can sell more Focus and Malibu.
 
lhcvg
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 7:02 pm

Quoting MaverickM11 (Reply 18):

Well put. I do have to give the Gulf carriers credit for bringing airline experts to run them.
 
rutankrd
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 7:06 pm

Quoting MaverickM11 (Reply 18):
Chinese carriers are just the height of incompetence, with the government ordering every airplane according to political winds, building airports where there's no demand, setting up subsidiaries with no rhyme or reason, all while nothing is really working on a network level.

Totally agree with you on the smoke and mirrors that is China .

Its not a real free market as they are almost all just the CAAC is differing disguises.
 
mozart
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 9:24 pm

Oh no, not again. He (and some of his peers from other European legacy airlines) sound like a broken record.

There are "natural competitive advantages" which any company, airline or not, benefits in a certain business environment. In the UAE and Qatar that includes being geographically placed at the crossroads between Europe and large parts of Asia and Australia and between Africa and Asia, lower taxes, lower social security charges for their employees, space to build new airports or existing ones, less red tape in conducting business. In Europe natural competitive advantages compared to the Gulf carriers include its geographic position, very large and wealthy home markets (the "O" in O&D), being at the receiving end of a lot of traffic (the "D" in O&D; for instance Paris is the most visited city on the planet and France the most visited country), a pool of well developed talent right in front of the doorstep (no need to attract FAs, pilots, mechanics from around the world for a lot of money), the possibility to serve secondary and tertiary destinations with smaller planes, helfpul tax laws (tax breaks/credits for losses).

The accusation of state subsidies is ambiguous: EK got two capital injections at the beginning of its existence and since then has always been profitable. QR is a "GRE" (government-related entity) and accounts that show its profitability have not been published. However I do know from own experience that the State of Qatar is EXTREMELY generous when it comes to providing "seed" financing to new ventures so that the venture can start up and stand on its own feet, we have seen this in a number of industries the country wanted to enter. However, all investments need to go through the Supreme Council of Investment and the gentlemen there are also EXTREMELY tough when it comes to scrutinizing a business plan and usually refuse flat out any request for further money. The philosophy is "we've given you all the money you wanted to get up and running. If you're not successful enough to build your own capital or find new shareholders then that is your problem." So it's not a case of governments pouring unlimited sums of money into these companies. Plus one might argue that some decades back the European companies benefited from the same government subsidies. It's not because it's over now in Europe that others aren't allowed to use those same methods to establish their airline industry.

It is ridiculous to complain about these natural advantages, they do exist. And whilst I do not hear the ME carriers complain about the natural advantages of European companies I do hear the Europeans complain.

Then there is the more serious stuff where direct intervention happens to favour one's home airline. Whilst it has been proven many times that the ME airlines do not benefit from less expensive fuel they have the benefit of lower airport charges at their home airports. Then there are some things where European carriers and airports benefit. For instance when the state subsidizes the building of high speed rail links to airports or subsidizes parts of the network.

In the end it is naive to play in the most global of industries and to complain about people from other parts of the global using their natural advantages. It also is naive to believe that those companies only attract more customers because of their natural advantages. To take AFKL and Lufthansa (the airline, not the group): their products are just vastly inferior to what the ME3 have to offer. So customers shift their business. And not just because of price. I know plenty of people who are price-insensitive but service-sensitive who have abandoned their year-long loyalty with European legacy carriers and now do a bulk of their flying with EK, QR and EY. Therefore I find that whining from European airline CEOs pathetic and just deflecting from their own failures to offer a product that customers like (where "product" is hard product in the air and on the ground, soft product in the air and on the ground, network, schedule, etc)

[Edited 2013-03-31 14:26:11]
 
FWAERJ
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 9:39 pm

Quoting DTWHKG (Reply 20):
You may also want to restrict Camry and Accord in the US, so they can sell more Focus and Malibu.

Not a valid comparison. All of the Camrys and all of the (non-plugin hybrid) Accords sold in the US are made in American factories by American workers using mostly American suppliers.

OTOH, EK, EY, and QR may be buying Airbus products from EU member nations, but the labor, financing, and (on the flights back to the EU) jet fuel don't come from EU suppliers. I can see AF/KL's point (though I don't necessarily agree with it).
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cedarjet
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 10:01 pm

This is ridiculous, especially coming from a French airline. Emirates have placed a quarter of all orders for the A380, the pride of European manufacturing, made in Toulouse. If Emirates are hobbled by European meddling / regulation, the A380 will go with it. So if really comes down to it, which is more important - Air France or Airbus? Airbus could stop selling whales to Emirates tomorrow if they wanted to.

And in any case Emirates is not the reason Air France is suffering - AF are a horrible horrible airline - I have flown with them quite a few times in the last few years and every time I promise myself is the last time - 24h delays (twice), lost bags, missed connections, the world's most frustrating hub and to top it off, every staff member I have had contact with is rude, sometimes jaw-droppingly so. I can immediately think of half a dozen exchanges with AF personnel where I have been amazed that anyone would speak to another human in such a way, let alone in a customer service role. And I don't see Emirates having the kind of crash that a PPL student would be able to fly their way out of, again (Paris) and again (Toronto) and again (Rio). Air France have a long way to go before they start blaming others for their woes.
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DeltaMD90
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 10:37 pm

Quoting cedarjet (Reply 25):
This is ridiculous, especially coming from a French airline. Emirates have placed a quarter of all orders for the A380, the pride of European manufacturing, made in Toulouse. If Emirates are hobbled by European meddling / regulation, the A380 will go with it. So if really comes down to it, which is more important - Air France or Airbus? Airbus could stop selling whales to Emirates tomorrow if they wanted to.

What does Air France have to do with Airbus? The Air France CEO isn't the government of France speaking, or a representative for Airbus for that matter. It's possible for 2 different companies from the same government to disagree on something
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Viscount724
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 10:39 pm

Quoting factsonly (Reply 6):
and even fares were set by Government not by the airlines.

Fares were set by the airlines, often through IATA agreements (international routes only) but then had to be filed with and approved by governments.
 
cedarjet
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 10:56 pm

Quoting DeltaMD90 (Reply 26):
What does Air France have to do with Airbus? The Air France CEO isn't the government of France speaking

Oh no? The Air France CEO is asking the French government to intervene and do what the free market will not eg support Air France's crummy operation - which will be at the expense of a very well run French enterprise called Airbus, which provides the hardware for Emirates to steal AF's lunch.
fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
 
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par13del
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 10:57 pm

Quoting MaverickM11 (Reply 8):
The problem isn't so much Europe "sheltering" its carriers so much as Europe constantly trying to destroy its own carriers through regulation, taxes, and restrictions.

So the key is to ensure that since EU taxes make their airlines uncompetitive a way has to be found like the Carbon trading scheme to ensure that carriers the world over have the same taxes to level the playing field, weird I know but the principle of the thing.

Quoting MaverickM11 (Reply 11):
EU flag carries fly to far more 'secondary', 'tertiary', and down right whole-in-the-wall cities than the Gulf carriers; they just do it several times a day on smaller aircraft rather than once or twice daily on a 777.

I recall this type of operation being blasted as fictional in discussions about why the USA does not have more A380 or 4 holers in operation.

CNN has a video up on the meeting in the snow of EU leaders talking about the Euro Zone, one of the items being pushed as a way forward is a free trade agreement with the USA, go figure that free trade in one direction is a saviour but in the other direction its a non-starter.
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UALWN
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 11:09 pm

Quoting cedarjet (Reply 25):
This is ridiculous
Quoting cedarjet (Reply 25):
AF are a horrible horrible airline - I have flown with them quite a few times in the last few years and every time I promise myself is the last time - 24h delays (twice), lost bags, missed connections, the world's most frustrating hub and to top it off, every staff member I have had contact with is rude, sometimes jaw-droppingly so. I can immediately think of half a dozen exchanges with AF personnel where I have been amazed that anyone would speak to another human in such a way, let alone in a customer service role. And I don't see Emirates having the kind of crash that a PPL student would be able to fly their way out of, again (Paris) and again (Toronto) and again (Rio)

Indeed it is ridiculous. Particularly the part about a PPL student being able to fly their way out of Paris, by which I guess you mean the Concorde crash. You really have issues with AF. Yet, you "have flown with them quite a few times in the last few years." One has to wonder why. BDSM addiction, perhaps? I don't have nearly as many complaints about AF, and yet I've managed to avoid them for the last 5 years...
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DeltaMD90
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 11:16 pm

Quoting cedarjet (Reply 28):

Probably should have phrased it better, you said it was 'ridiculous coming from a French' airline, why would it be ridiculous for Air France to complain? The French government might have a dilemma (take Air France's side or supposedly Airbus') but I don't see why that creates a double standard for AF or something
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airproxx
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 11:36 pm

Quoting cedarjet (Reply 28):
The Air France CEO is asking the French government to intervene and do what the free market will not eg support Air France's crummy operation - which will be at the expense of a very well run French enterprise called Airbus, which provides the hardware for Emirates to steal AF's lunch.

I highly doubt EK would stop buying A380, even if french gov would do anything against them, simply because Airbus is the only manufacturer providing an aircraft with such capacity, and EK needs them. Your point is irrelevant.
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airproxx
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Sun Mar 31, 2013 11:40 pm

Quoting cedarjet (Reply 25):
And I don't see Emirates having the kind of crash that a PPL student would be able to fly their way out of, again (Paris) and again (Toronto) and again (Rio).

This statement is probably even less smart than what you can ear from a Beavis & Butthead show. Pathetic.
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airlinebuilder
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 12:39 am

The advantage of the Gulf Carriers is that most of the time they are backed up by the whims of the Royalties and Government, they would do anything to always have the First, Biggest and the Landmark on everything else, needless to say "never to be outdone" and they get it all the time, that is why airline CEOs on that part of the region are elated because most if not all they put on the table is acted upon and backed up
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 1:14 am

Quoting airlinebuilder (Reply 34):
The advantage of the Gulf Carriers is that most of the time they are backed up by the whims of the Royalties and Government, they would do anything to always have the First, Biggest and the Landmark on everything else, needless to say "never to be outdone" and they get it all the time,

and to get these things they hire a ton of expat workers from all over the world including Europe, purchase a ton of goods manufactured in Europe among others, so it is not as if Europe does not benefit from their "excess" to choose a term.
 
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lightsaber
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 1:49 am

What happened to it being a good thing for a government to expand roads and rail to an airport? What happened to airport expansion?

The mid east carriers thrived in an environment where the European carriers severely restricted their own airlines growth and now they complain? Why not waive the curfews? For as long as so many airports have curfews, those connecting hubs sans curfews will have a competitive advantage.

Quoting LAXintl (Reply 7):
Just because EK or other Gulf carriers have come up with a terrifric business plan along with product that can run circles around many slow dinasour legacy carriers is hardly the reason try to restrict them.

And like the old days have governments helping with growth instead of hindering.

Quoting MaverickM11 (Reply 11):
No one can point to a single thing the Gulf carriers differently are doing

For EK I can. Look at their annual reports. EK is a numbers run company like Starbucks and Home Depot. What do they do so much better than their competitors? They manage costs, growth, and product just a little better than the competition. In a low margin business, such as airlines, the numbers run company will always have a slightly higher profit margin.

QR and EY, I do not get their business model as much.

Quoting MaverickM11 (Reply 14):
The EU has stifled its carriers with red tape to the point of bankruptcy,

And there is the issue. The mid-east airlines really grew to prominence due to a lack of European and Indian airline hub growth. If the European hubs had more frequency and fragmentation it would have been far tougher for the mid-east airlines to grow. We would not have seen the spectacular growth of the mid-east carriers of the European carriers had been meeting demand from Europe to the new destinations (India, Pakistan, Africa, and Asia). There would have been some growth... but not the spectacular growth we witnessed.

Lightsaber
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Flighty
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 2:36 am

Quoting lightsaber (Reply 36):
They manage costs, growth, and product just a little better than the competition. In a low margin business, such as airlines, the numbers run company will always have a slightly higher profit margin.

My belief is that EK enjoys labor and political advantages because of where it is based, and macro trends there. Exactly as KLM and AF once did in their home areas.

Running an airline isn't _that_ hard. KLM and AF have very capable staff. My point is mgmt deserves neither the credit nor the blame for these political trends. Labor has no power in UAE. LH or AFKL would find it child's play to run EK - and EK would have a bit of trouble running its business out of 2010s Western Europe.
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 2:44 am

Quoting g500 (Thread starter):
AF-KLM CEO Calls On Restrictions For Gulf Carriers

Aww, look who can't compete. Better get the whambulance.

Quoting lightsaber (Reply 36):
The mid east carriers thrived in an environment where the European carriers severely restricted their own airlines growth and now they complain? Why not waive the curfews?

  
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 2:57 am

Quoting Flighty (Reply 37):
Labor has no power in UAE. LH or AFKL would find it child's play to run EK

I wouldn't be so sure, as Lightsaber says EK is a numbers company to the nth degree.

QR and EY are different, they are possibly "me-too" vanity projects, but people on here and elsewhere seem to underestimate how EK works. Lots of cheap airport space is great, but that isn't enough to run a profitable airline.

Michael O'Leary could probably run Emirates (a lot of his bluff is just that, and he is actually a pragmatic businessman that wouldn't trash their product). The CEO of Ikea or Zara probably could. CEO of Air France? Probably not, it's a different game.
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 3:09 am

Quoting SCQ83 (Reply 4):
Is it the same company that codeshares with EY from CDG and AMS??? Or do they mean EK when they are talking about "Gulf carriers"?

What a slap in the face to their new partner? Do they realize that EY and EK are essentially owned by the same govt?

Quoting moo (Reply 5):
"we won our passenger and freight markets the hard way - by state sponsorship, state subsidised purchases and routes, and strict regulation on competitors. But we did all that 30 or 40 years ago, so the same rules aren't good enough for others now..."

Exactly. Well said.

Quoting LAXintl (Reply 7):
Just because EK or other Gulf carriers have come up with a terrifric business plan along with product that can run circles around many slow dinasour legacy carriers is hardly the reason try to restrict them.
Quoting DeltaMD90 (Reply 10):
I used to think the same way you do. I do not pretend to know the answers, but are the Middle Eastern carriers actually better managed, or do they get more favorable government treatment?

Actually, they have geography and the lack of powerful European unions to propel them forward. Both are legitimate competitive advantages. JetA is cheap in DXB but I think the price is the same for anybody.

Quoting MaverickM11 (Reply 18):
The Chinese carriers are just the height of incompetence

Agreed
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 3:52 am

Quoting RyanairGuru (Reply 39):
I wouldn't be so sure, as Lightsaber says EK is a numbers company to the nth degree.

QR and EY are different, they are possibly "me-too" vanity projects, but people on here and elsewhere seem to underestimate how EK works. Lots of cheap airport space is great, but that isn't enough to run a profitable airline.

Michael O'Leary could probably run Emirates (a lot of his bluff is just that, and he is actually a pragmatic businessman that wouldn't trash their product). The CEO of Ikea or Zara probably could. CEO of Air France? Probably not, it's a different game.

I completely agree. IMO, Emirates' success has a lot to do with their positioning as the first truly global airline (the same way that Ikea or Zara are global brands, ubiquitous of their home country). Or like Ryanair is the truly pan-European airline. Location and government-backing are assets, but carriers like GF, KU or SV have the same advantages and have been around for much longer and they are what they are today.

I was last week in Rio and it was quite amazing to see Emirates' "Hello Tomorrow" ads in every other bus stop... with a picture of Asian women doing tai-chi and the Oriental Pearl Shanghai to advertise their flights to China. Among the crowd and traffic of Rio, it certainly made their new video look real  http://youtu.be/xG-NGPbtOOk.
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 3:55 am

I think the questions he asks are pointed and valid, but the usual crowd can't wait to ignore them as soon as possible and blame their favorite boogeymen instead, governments and unions.

And yet it is fair to ask.
-Are government owned and operated airports in AUH, DXB and DOH charging carriers well below cost? If so, while all airlines benefit obviously, it is clearly an indirect subsidy to the home carriers, much like it would be if the state of Texas took over DFW and charged every airline a $100 flat fee per landing. All carriers but American would be screaming for blood.
-Are Etihad, Emirates and Qatar Airways able to borrow from capital markets at lower rates because they are state owned? Again, if the state of Texas suddenly announced that it would guarantee AMR's loans, their cost of money would drop significantly and other carriers would complain of government interference.

I think they are valid questions that need an answer, and if the answer is positive, it needs to be quantified.

In addition, I don't think anyone can argue more clarity could be demanded of Qatar Airways' and Ethiad's financials.

Quoting MaverickM11 (Reply 14):
The EU has stifled its carriers with red tape to the point of bankruptcy

Which carriers exactly have gone bankrupt because of red tape?

Quoting g500 (Reply 13):
In the Gulf, is their way or the highway... Plain and simple.. that's gotta to be a cheaper way of conducting business

In the Gulf you may be fired at any time for any reason without any recourse. That is indeed a cheaper way of doing business, but I'd rather not see the scale tilted exclusively in favor of business.
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sierra3tango
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 4:19 am

Quoting enilria (Reply 40):
Quoting SCQ83 (Reply 4):
Is it the same company that codeshares with EY from CDG and AMS??? Or do they mean EK when they are talking about "Gulf carriers"?

What a slap in the face to their new partner? Do they realize that EY and EK are essentially owned by the same govt?

EK & EY are NOT essentially owned by the same governments. They are owned by the Governments of Abu Dhabi and Dubai respectively, totally different governments

Quoting enilria (Reply 40):
JetA is cheap in DXB but I think the price is the same for anybody.

Dubai doesn't have a refinery worth talking about, most of the JetA (think its A1) is imported by tanker from the old Caltex (now BAPCO) refinery in Bahrain. The price be discounted a bit by BAPCO for volume but that's about it
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 4:29 am

Quoting lightsaber (Reply 36):
The mid east carriers thrived in an environment where the European carriers severely restricted their own airlines growth and now they complain? Why not waive the curfews? For as long as so many airports have curfews, those connecting hubs sans curfews will have a competitive advantage.

The joke is that several of the nations now complaining helped to create the Gulf carriers.

Time was when just about every European airline flying the to the East or Australia stopped at one of the Gulf airports - DXB, or AUH or BAH.

Then the 747-400 came along and they all dropped the Guif ports like a hot potato. Guess what happened then.  

mariner

[Edited 2013-03-31 21:41:01]
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 4:39 am

Quoting SCQ83 (Reply 41):
IMO, Emirates' success has a lot to do with their positioning as the first truly global airline (the same way that Ikea or Zara are global brands, ubiquitous of their home country). Or like Ryanair is the truly pan-European airline

Good points, and I agree with you, but I was referring to their uber focus on costs and their dynanicism.

If you watch this clip (its only 3 minutes) you will see precisely what I mean, especially after 1:05: http://www.youtube.com/watch?v=qhCM0F81vEg. It's from the Australian TV show "Hungry Beast", a slightly satirical current affairs program.

Other than the bit about no advertising, I think you will be able to understand why I see parallels between Emirates and Zara. (and Ikea adopts a very similar approach as well)
Worked Hard, Flew Right
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 5:00 am

Quoting blueflyer (Reply 42):
-Are government owned and operated airports in AUH, DXB and DOH charging carriers well below cost?

Most airports in the world are not run along commercial for profit lines. Airports are large infrastructure projects which by their nature being infrastructure is a loss leader often. Just like roads, bridges, public transport etc..

Nations invest in infrastructure for a host of reasons, and even if airlines were operating for free, the fact of having the activity can produce other offsetting benefits for a nation beyond direct revenues generated at the airport.
From the desert to the sea, to all of Southern California
 
mercure1
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 5:04 am

Bit ironic that Air France which itself was government owned for majority of its life and generated massive losses and subsidy paid for by French citizens and now as private has hard time competing in the global arena, chooses to complain about probably one the worlds most efficient and well managed aviation enterprise as if being government owned is now a crime.
 
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 5:41 am

Quoting kaitak (Reply 9):
And the fact that EK has bought lots of European aircraft didn't help EK to get rights to Berlin.

EK can fly to BER tomorrow if they wish. They just have to give up DUS,HAM or FRA or MUC. EK is not restricted in Germany, there is a bilateral agreement that gives EK a choice, run 7 daily services from up to 6 cities or as many seats as you like from four cities.

Between them, the ME3 serve all the 6 economically viable destinations in Germany. They cover all regions and STR is 72 minutes away from FRA by ICE train, not a big obstacle for pax from that area and Deutsche Bahn offers interline agreements.
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sierra3tango
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RE: AF-KLM CEO Calls On Restrictions For Gulf Carriers

Mon Apr 01, 2013 5:42 am

Quoting mariner (Reply 44):
The joke is that several of the nations now complaining helped to create the Gulf carriers.

Time was when just about every European airline flying the to the East or Australia stopped at one of the Gulf airports - DXB, or AUH or BAH.

Then the 747-400 came along and they all dropped the Guif ports like a hot potato. Guess what happened then.

Agreed but at that point when the 744 came along (~1992) the traffic out of MUS/AUH/DXB/DOH/BAH was pretty limited, those calls were more like fuelling stops, most carriers stopping there had 5th Freedom rights but didn't expect to lift major volumes of PAX.

Anyway at that time (70s & 80s) there was a 'home grown' airline, remember the "5 star Tristars" on GF. The 10.00 BAH/LHR was THE flight to get, the blue riband service which was far and away superior to anything else on offer. GF had a similar business model to EK (complicated by multiple ownership, hubs & rights), it was quality back in the 80s & look where its ended up. It went downhill fast in the 90s prior to EK's major rise and QR & EYs birth.

EK seemed to really take off when they bought (firstly) the A345 and subsequently the 77L & 77W which meant they could offer Aus one stop from Europe which was the same as any European carrier could offer. IF (& a big one) an aircraft is created capable of Europe / Aus economically non stop, then I wonder if history might not repeat itself at least in part

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