Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
717atOGG
Topic Author
Posts: 916
Joined: Fri Feb 27, 2015 2:10 am

Is the ME3's expansion sustainable long-term?

Wed Aug 02, 2017 8:38 pm

We all know what happened to DL's CVG hub. A great connection point, but when fuel prices shot up, it was toast. What I'm worried about is if the same thing could happen to the ME3's hubs. There's very little O&D to DXB, DOH, and AUH, and the routes are dependent on connections and oil traffic. Most of this expansion has happened in the past 10 years or so. But if Middle Eastern terrorism happens or fuel prices spike, there could be a lot less Y pax, lowering yields. If something like this happens, that could stop their expansion. I guess what I'm asking is if this large expansion can be successful in the long-term and if there's a backup plan if something goes awry. Thanks for answering.
-Ian
 
LAXdude1023
Posts: 6639
Joined: Thu Sep 07, 2006 3:16 pm

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 02, 2017 9:07 pm

717atOGG wrote:
We all know what happened to DL's CVG hub. A great connection point, but when fuel prices shot up, it was toast. What I'm worried about is if the same thing could happen to the ME3's hubs. There's very little O&D to DXB, DOH, and AUH, and the routes are dependent on connections and oil traffic. Most of this expansion has happened in the past 10 years or so. But if Middle Eastern terrorism happens or fuel prices spike, there could be a lot less Y pax, lowering yields. If something like this happens, that could stop their expansion. I guess what I'm asking is if this large expansion can be successful in the long-term and if there's a backup plan if something goes awry. Thanks for answering.
-Ian


Time out.

There is very little O&D to DOH.
AUH is rich in O&D but depends on oil and gas.
DXB is chalk full of O&D and runs from oil, to finance, to tourism.
 
frmrCapCadet
Posts: 5228
Joined: Thu May 29, 2008 8:24 pm

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 02, 2017 10:08 pm

Huge growth rates are by definition unsustainable. The ME3 are at a time of consolidation of their former great business plans.
 
TerminalD
Posts: 436
Joined: Wed Apr 26, 2017 7:32 pm

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 02, 2017 10:16 pm

You are comparing DXB to CVG? Bwahahahahahah. I suggest you take a flight to Dubai. You clearly haven't been there.

DXB is about 40% local. About the same as ATL. Having said that, of course they can't keep expanding from DXB, there isn't the space at the airport and eventually they will serve all viable markets. To continue beyond that they need another hub, in a country that allows them to be an adopted home airline. Preferably somewhere in the Pacific Rim, Europe, or Central America.
 
waly777
Posts: 761
Joined: Sun Oct 07, 2012 7:11 pm

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 02, 2017 10:20 pm

717atOGG wrote:
We all know what happened to DL's CVG hub. A great connection point, but when fuel prices shot up, it was toast. What I'm worried about is if the same thing could happen to the ME3's hubs. There's very little O&D to DXB, DOH, and AUH, and the routes are dependent on connections and oil traffic. Most of this expansion has happened in the past 10 years or so. But if Middle Eastern terrorism happens or fuel prices spike, there could be a lot less Y pax, lowering yields. If something like this happens, that could stop their expansion. I guess what I'm asking is if this large expansion can be successful in the long-term and if there's a backup plan if something goes awry. Thanks for answering.
-Ian


The ME3 were very much around through the last fuel price spike as well as the last financial crisis and survived.

Secondly, Dubai is the 4th most visited city in the world and Abu dhabi had 4.4 million visitors for 2016. Your perceptions which form the foundation of your question are incorrect about AUH/DXB (UAE) at least, DOH is perhaps not that far off.

In addition, some 80% of the population are expats and most travel at least once a year as labour laws insist on a free ticket back to the home country be provided annually. The middle and upper class travel far more often than that.
 
77H
Posts: 1583
Joined: Mon Sep 19, 2016 11:27 pm

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 02, 2017 10:27 pm

TerminalD wrote:
You are comparing DXB to CVG? Bwahahahahahah. I suggest you take a flight to Dubai. You clearly haven't been there.

DXB is about 40% local. About the same as ATL. Having said that, of course they can't keep expanding from DXB, there isn't the space at the airport and eventually they will serve all viable markets. To continue beyond that they need another hub, in a country that allows them to be an adopted home airline. Preferably somewhere in the Pacific Rim, Europe, or Central America.


What country would allow EK (since you mentioned DXB) to set up a hub on their soil at the expense of their own airlines? I can't think of a single country in any of those geographic regions that would allow for such a proposal, especially Europe and East/SouthEast Asia. The EU and EA/SEA national carriers would have a sh*t fit. 5th freedom flights on select routes is one thing, but having a foreign carrier adopt (what would essentially become a mega hub) is another.

The only plausible way I see that happening would be if a developing nation allowed EK access in exchange for massive financial investment by the UAE in said country. Not sure the UAE would go along with that nor if it is legal. Not to mention possible sanctions surrounding countries may impose on the participating country for allowing it. Maybe the DPRK will allow EK to set up shop at ZKPY. Not much left to loose at this point. Though I can think of a few countries that may have a few choice words for the UAE.

77H
 
Amsterdam
Posts: 454
Joined: Thu Mar 17, 2011 12:52 am

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 02, 2017 11:39 pm

Fuel prices going up is exactly what those airlines want. They are state companies. And those states want fuel prices to go up. Fuel revenue is what makes all this possible in the first place.
 
Airlinerdude
Posts: 271
Joined: Tue Mar 30, 2010 3:07 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 1:03 am

717atOGG wrote:
We all know what happened to DL's CVG hub. A great connection point, but when fuel prices shot up, it was toast. What I'm worried about is if the same thing could happen to the ME3's hubs.
-Ian


Fuel prices increasing actually help these airlines. For one, fuel prices increasing typically means that oil is increasing too, which means greater J and F travel to the Middle East. Also, it'll mean that many routes flown by other airlines that are viable with lower fuel prices, might become unviable with higher fuel prices, pushing the less price sensitive customers through connecting hubs like DXB, AUH, or DOH.
 
SurlyBonds
Posts: 446
Joined: Mon Nov 02, 2015 10:24 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 1:08 am

77H wrote:
TerminalD wrote:
What country would allow EK (since you mentioned DXB) to set up a hub on their soil at the expense of their own airlines? I can't think of a single country in any of those geographic regions that would allow for such a proposal, especially Europe and East/SouthEast Asia.
77H


The profile would be (1) an independence- or autonomy-minded region in Europe, (2) that has a good international airport, (3) whose home country carrier underserves that airport internationally. And there are three places in Europe that easily come to mind as fitting the bill: Barcelona (BCN), Milan (MXP), and Scotland (EDI/GLA, or possibly MAN in England). I understand that Barcelona has courted carriers like this (SQ to Brazil), and there is already the MXP-JFK flight on EK. IB does not fly intercontinentally from BCN and AZ dehubbed MXP. BCN and MXP are also their countries' economic powerhouses and can sustain some O&D demand. Both are also centrally located in Europe. Candidates like this would also get local political support from independence-minded politicians.

Somewhere like Budapest (BUD) might also work, given the lack of a strong in-country intercontinental airline.
 
F100Flyer
Posts: 96
Joined: Thu Oct 13, 2016 5:50 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 1:23 am

TerminalD wrote:
You are comparing DXB to CVG? Bwahahahahahah. I suggest you take a flight to Dubai. You clearly haven't been there.

DXB is about 40% local. About the same as ATL. Having said that, of course they can't keep expanding from DXB, there isn't the space at the airport and eventually they will serve all viable markets. To continue beyond that they need another hub, in a country that allows them to be an adopted home airline. Preferably somewhere in the Pacific Rim, Europe, or Central America.


DWC is the replacement and expanded space.
 
flybaby
Posts: 252
Joined: Fri Apr 14, 2006 5:20 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 1:39 am

TerminalD wrote:
...
DXB is about 40% local...


Can you provide a reference to back up this number?
 
Aither
Posts: 1316
Joined: Mon Oct 25, 2004 3:43 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 2:48 am

F100 is right, it's around 40% local.
I think it's definitely sustainable for 3 main reasons:
- First the current market shares of EK are still low (what makes them big is because they well connect thousands of O&Ds, not because they have high market shares on each O&D)
- Secondly, around the middle east these are the markets with the highest traffic growth and the most populated area on earth.
- EK has reached such a critical mass so that they can expand to more and more markets, in an almost an exponential way thanks to cumulative feeding.
 
User avatar
RL777
Posts: 651
Joined: Thu Jul 28, 2016 1:43 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 3:25 am

Consolidation and correction of the market will occur, it remains to be seen when that will happen. Emirates have placed themselves in a pretty good spot, whereas Etihad looks to be on a downward path.
 
717atOGG
Topic Author
Posts: 916
Joined: Fri Feb 27, 2015 2:10 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 3:26 am

Ok. Thank you for correcting me. I'd like to mention though, that limited rights to India and China don't really help their case though. Also, sorry about the analogy to CVG. I was just thinking of a failed hub.
 
StudiodeKadent
Posts: 448
Joined: Mon Jul 31, 2017 8:43 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 5:26 am

It depends on what you mean by "sustainable." The long term trend is towards point-to-point travel, which naturally works against megahubs/connecting cities. Dubai, Abu Dhabi and to some extent Qatar are all working to make themselves more like Hongkong and Singapore (Dubai so far has been without question the most successful at doing this), which should increase the premium demand to and from their hubs specifically. However, the next generation of long range jets (i.e. the jets after the A350, 777X, 787, and A330neo) will almost certainly have the ability to connect any two cities on the planet (at least one model) with viable operating economics. We're already getting close to that point (with the A350-900ULR, some ULR use of even the 787-9, the 777-8 too although that's a heavy jet). Higher-yield traffic favors point to point.

The result seems to be that unless the ME3 can cultivate a large amount of premium demand to and from their hubs SPECIFICALLY... the long term trend will be bad for their yields. But they could still survive as high-volume lower-yield connecting-traffic carriers (sure, its not glamorous, but it works).
 
User avatar
Kickert
Posts: 70
Joined: Sun Sep 28, 2014 10:34 am

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 5:32 am

If I were doing a SWOT analysis on the ME3, terrorism and general instability in the southern ME would be the most significant issue to watch out for. If the UAE were to experience a rash of attacks or a turkey airport style attack, I could see a huge and sudden decrease in demand.
 
User avatar
lightsaber
Moderator
Posts: 23384
Joined: Wed Jan 19, 2005 10:55 pm

Re: Is the ME3's expansion sustainable long-term?

Thu Aug 03, 2017 4:21 pm

TerminalD wrote:
You are comparing DXB to CVG? Bwahahahahahah. I suggest you take a flight to Dubai. You clearly haven't been there.

DXB is about 40% local. About the same as ATL. Having said that, of course they can't keep expanding from DXB, there isn't the space at the airport and eventually they will serve all viable markets. To continue beyond that they need another hub, in a country that allows them to be an adopted home airline. Preferably somewhere in the Pacific Rim, Europe, or Central America.

That is something the anti-ME3 crowd fails to understand.
Dubai has a large local non-energy economy. I've seen O&D numbers from 30% to 50%, so I'd believe 40%.

Doha has some O&D, but a far lower fraction than Dubai. They just haven't changed the laws and rules as much as Dubai to attract expatriates.

Same with Abu Dhabi. But AUH seems a bit less of a wildcat operation, other than horrible investments in other airlines.

Both QR and EY require 'investment' to sustain those airlines. EK pays to run much of Dubai.

This makes EK far better off.

EY and QR are not sustainable long term if energy prices stay low.

Lightsaber
 
incitatus
Posts: 3410
Joined: Wed Feb 09, 2005 1:49 am

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 2:01 am

Even though AUH is "rich", DXB has far more local premium cabin traffic than AUH. Dubai has a much greater mass of global corporations that generate that type of traffic. EK is viable and has a healthy premium cabin business.
 
Aither
Posts: 1316
Joined: Mon Oct 25, 2004 3:43 am

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 2:50 am

StudiodeKadent wrote:
It depends on what you mean by "sustainable." The long term trend is towards point-to-point travel, which naturally works against megahubs/connecting cities. Dubai, Abu Dhabi and to some extent Qatar are all working to make themselves more like Hongkong and Singapore (Dubai so far has been without question the most successful at doing this), which should increase the premium demand to and from their hubs specifically. However, the next generation of long range jets (i.e. the jets after the A350, 777X, 787, and A330neo) will almost certainly have the ability to connect any two cities on the planet (at least one model) with viable operating economics. We're already getting close to that point (with the A350-900ULR, some ULR use of even the 787-9, the 777-8 too although that's a heavy jet). Higher-yield traffic favors point to point.

The result seems to be that unless the ME3 can cultivate a large amount of premium demand to and from their hubs SPECIFICALLY... the long term trend will be bad for their yields. But they could still survive as high-volume lower-yield connecting-traffic carriers (sure, its not glamorous, but it works).


There is no evidence that the trend is toward so called "point to point". In particular since the rise of Internet.
People would be surprised by the yields of EK. Not only the yields are ok thanks to the local demand but even the transit yields are OK. When you offer a good product at a reasonable price and a wide transcon network you end up attracting a lot a corporate accounts. Managers are increasingly being asked to look at cheaper one stop flights when flying long haul.
 
StudiodeKadent
Posts: 448
Joined: Mon Jul 31, 2017 8:43 am

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 3:59 am

Aither wrote:
There is no evidence that the trend is toward so called "point to point". In particular since the rise of Internet.


The relative success of the 787 versus the A380 is one example. Not to mention that the market generally shows a preference (ceteris paribus) for direct over indirect, which is why direct flights can charge a premium.

People would be surprised by the yields of EK. Not only the yields are ok thanks to the local demand but even the transit yields are OK.


I never said they were not OK. What I said was that in the long term, Dubai will have to make itself a large international business destination in its own right in order to maintain such yields. Dubai is currently doing this so I don't think they'll experience too much decline... Abu Dhabi and Qatar are dicier propositions.

Also, it should be pointed out that EK's jet configurations aren't often ultra-premium. Compare EK's 777-300ERs to even AA's 777-300ERs, and perhaps AF's newest 777-300ERs as well. And Cathay's 777-300ERs (especially the four class ones).

When you offer a good product at a reasonable price and a wide transcon network you end up attracting a lot a corporate accounts. Managers are increasingly being asked to look at cheaper one stop flights when flying long haul.


I'm not denying any of that. All I am saying is that ceteris paribus, people will prefer direct to indirect flights, and higher-yielding passengers are generally more willing to pay a premium for such flights. This implies that over time, as technology becomes more able to deliver point-to-point travel with smaller and longer range jets, you'll see progressively more and more fragmentation, and this will work against the hub-and-spoke model. Thus, you'll have the higher-yielding traffic taking direct flights instead of connecting ones (again, ceteris paribus), so airlines with connection-based business models will face downward pressure on yields unless they cultivate more premium demand to and from their hubs specifically.

I'm not saying that "OMG EK IS SO DOOOOOMED" or anything nearly along those lines. I actually think EK has good future prospects.
 
Aither
Posts: 1316
Joined: Mon Oct 25, 2004 3:43 am

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 4:44 am

StudiodeKadent wrote:
Aither wrote:
There is no evidence that the trend is toward so called "point to point". In particular since the rise of Internet.


The relative success of the 787 versus the A380 is one example. Not to mention that the market generally shows a preference (ceteris paribus) for direct over indirect, which is why direct flights can charge a premium.


Almost all 787s routes start from a hub.


StudiodeKadent wrote:
Also, it should be pointed out that EK's jet configurations aren't often ultra-premium.


As demonstrated by LCCs as well, there can be more money to make with poor people than with richer travelers. Poorer people being highly yield sensitive, going through a hub is not a big deal. In particular if this hub is also a good entertaining/shopping area. See what's going on in ICN, SIN, DXB etc...in term of passenger experience.


StudiodeKadent wrote:
people will prefer direct to indirect flights, and higher-yielding passengers are generally more willing to pay a premium for such flights. This implies that over time, as technology becomes more able to deliver point-to-point travel with smaller and longer range jets, you'll see progressively more and more fragmentation, and this will work against the hub-and-spoke model.


As air travel is becoming a commodity the bulk of the passenger demand is going to be low yield. Of course you may have higher margins carrying higher yield traffic on corporate jets... but you lose the ability to build a strong network and ultimately you will lose the high yield demand. Keep in mind a passenger is both high yield (when he's not paying) or low yield (when he's paying). I will always fly with an airline allowing me to use my miles to many destinations.
Long haul toutes continue to be opened because the traffic is growing, and most of these routes are opened from hubs. It's not fragmentation it's growth, and it's growth from or to hubs.
 
WPvsMW
Posts: 2252
Joined: Thu Mar 23, 2017 7:30 pm

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 5:09 am

Replace "point to point" with ULH... it doesn't matter whether the O or D is a hub or a traditional feeder, the sea change is ultra long haul. What we will see is more disintermediation. Think travel agents vs online, bank tellers vs. ATMs, Amazon vs. bricks and mortar. The ME3 will be disintermediated, because their ENTIRE business model is intermediary hub, 6th Freedom ops. When and how much will vary among EK, EY, and QR, but the writing (disintermediation) is on the wall .... or more accurately, in SolidWorks.
 
directorguy
Posts: 1417
Joined: Mon Jul 28, 2008 10:58 am

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 6:41 am

There was a time when the ME3 were adding destinations one after the other, but they have a reached a point where slower growth can only be expected. QR for example has 10 or so destinations in the US. Can they realistically add another 10? I think not.
With all the talk about point-to-point flying becoming the model for the future...I think this argument applies mainly to flying out of large or medium sized cities. There are still so many smaller destinations that need to consolidate traffic onto a single flight headed to one of the ME3 hubs.
 
frmrCapCadet
Posts: 5228
Joined: Thu May 29, 2008 8:24 pm

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 2:09 pm

[twoid][/twoid]
directorguy wrote:
There was a time when the ME3 were adding destinations one after the other, but they have a reached a point where slower growth can only be expected. QR for example has 10 or so destinations in the US. Can they realistically add another 10? I think not.
With all the talk about point-to-point flying becoming the model for the future...I think this argument applies mainly to flying out of large or medium sized cities. There are still so many smaller destinations that need to consolidate traffic onto a single flight headed to one of the ME3 hubs.


And if flying over 8 hours in Y, a two or three hour break in the middle is welcome for many of us. Decent meal, larger toilet facilities, and time to walk for 15 minutes or so.
 
gunnerman
Posts: 1272
Joined: Fri May 19, 2017 7:55 pm

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 2:37 pm

Let me pick at random two cities in EK's network: Dallas/Ft worth and Kolkata. There is probably insufficient traffic to justify even the most economical point-to-point flights, but the trip is easy with only a 1h 15m layover at DXB. EK's network is now so huge that nothing less than an exploded bomb at DXB will halt the airline.
 
User avatar
Jayafe
Posts: 1229
Joined: Mon Jun 26, 2017 3:12 pm

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 2:44 pm

gunnerman wrote:
...EK's network is now so huge that nothing less than an exploded bomb at DXB will halt the airline.


And if whoever tries, would get a typically local punishment:

http://awoiaf.westeros.org/images/thumb ... _Crown.png
 
ayoungblood2
Posts: 58
Joined: Mon Jun 12, 2017 8:48 pm

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 2:57 pm

The key for being sustainable in the long term is diversification. As a city, Dubai has more tourism, finance, and a larger population than Doha or Abu Dhabi. Abu Dhabi has a decent amount of of O&D traffic, but it doesn't have near the tourism that Dubai receives and most people traveling from their are either residents or business travelers in the energy industry. Doha, on the other hand, aside from hosting a very controversial 2022 FIFA World Cup, does not have as large of a population and relatively limited tourism, and given the current political situation in the gulf states, I think it would be safe to say that the public opinion of Qatar around the world has certainly declined and people are discouraged to travel there for leisure. I believe that DXB and Emirates are there to stay, AUH and Etihad will do fine once tourism picks up a little more, and DOH and Qatar have a very uncertain future.
 
User avatar
hongkongflyer
Posts: 901
Joined: Tue Oct 28, 2014 8:23 am

Re: Is the ME3's expansion sustainable long-term?

Fri Aug 04, 2017 4:09 pm

StudiodeKadent wrote:
It depends on what you mean by "sustainable." The long term trend is towards point-to-point travel, which naturally works against megahubs/connecting cities. Dubai, Abu Dhabi and to some extent Qatar are all working to make themselves more like Hongkong and Singapore (Dubai so far has been without question the most successful at doing this), which should increase the premium demand to and from their hubs specifically. However, the next generation of long range jets (i.e. the jets after the A350, 777X, 787, and A330neo) will almost certainly have the ability to connect any two cities on the planet (at least one model) with viable operating economics. We're already getting close to that point (with the A350-900ULR, some ULR use of even the 787-9, the 777-8 too although that's a heavy jet). Higher-yield traffic favors point to point.

The result seems to be that unless the ME3 can cultivate a large amount of premium demand to and from their hubs SPECIFICALLY... the long term trend will be bad for their yields. But they could still survive as high-volume lower-yield connecting-traffic carriers (sure, its not glamorous, but it works).


Operating a LH flights, especially the ULH (the routes where 350-900ULR designed for) are very expensive,
high enough yield, i.e. premium traffic is need to support the route.
not many routes is viable even under the current "good environment" and such routes will dead once
1) oil price goes up to certain level 2) global economy downturn which affect the high yield traffic
 
NichCage
Posts: 916
Joined: Wed Jun 22, 2016 6:43 pm

Re: Is the ME3's expansion sustainable long-term?

Sun Aug 06, 2017 4:29 am

I would consider Emirates to be a very sustainable airline. They operate a business model in which they only operate wide body planes. Smaller destinations may not be able to be served, but otherwise they serve most major destinations, with bilateral limiting them in some countries.

Etihad Airways isn't doing so good, and they have cut a lot of routes (including SFO being cut in November). However, Etihad Airways has made investments in airlines that haven't really fixed them, such as Air Berlin and Alitalia.
 
RoySFlying
Posts: 257
Joined: Sun Apr 23, 2017 8:28 am

Re: Is the ME3's expansion sustainable long-term?

Sun Aug 06, 2017 11:10 am

EK has shown itself to be adaptive. Recently it has been working towards greater integration with flydubai, offering access to markets on thinner routes or routes that can be served with greater frequency by using smaller aircraft. While there is indeed the opportunity to offer more P2P services using more efficient aircraft, the question is how many cities will an airline be able to serve profitably with projected passenger loads.

For example, BA could theorectically offer flights from GLA, MAN, BHX to points in India, for example, HYD, MAA or BLR, but would they? Those points in India are served by BA, but not non-stop from any of the UK points that I've mentioned. Passengers currently need to travel to LHR and from LHR they can fly the 787 to MAA, for example.

All this speculation is of course ignoring any bilateral restrictions that may exist.
 
ltbewr
Posts: 15935
Joined: Thu Jan 29, 2004 1:24 pm

Re: Is the ME3's expansion sustainable long-term?

Sun Aug 06, 2017 12:04 pm

Let us not forget politics, wars and major economic recessions will, and with Qatar, already show there are limits to the pace of growth. There is also the growth of airlines based in Asian countries, especially China, that low labor and capital costs as well as operating at losses sustained by local governments out of pride, employment and subsidies to the corporations. I think eventually that much like with the USA and Europe based airlines, the ME 3 will have to merge or otherwise consolidate into 1 or maybe 2. There may be a limit on how may high end customers one can have and you can't make money with low end migrant workers who's numbers will likely plateau for various reasons. .
 
mffoda
Posts: 1099
Joined: Thu Apr 15, 2010 4:09 pm

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 09, 2017 6:35 pm

The huffpost has this to say on sustainability...

"Accounting Gimmicks And Hard Realities At Etihad Airways"

"One of the things we’ve learned in recent years from waves of financial scandals is that you can’t fool the accountants. And it’s especially hard to trick forensic accountants, the professionals specifically trained to identify “cooked books.” It was thus not especially surprising that forensic accountants recently showed that the $103 million profit that Etihad Airways claimed for its 2015 fiscal year was actually an operating loss of $2.06 billion; worse, that result was after Etihad’s government owners kicked in $1.7 billion in subsidies. Those poor results followed an operating loss of $1.4 billion and subsidies of $2.6 billion in its 2014 fiscal year.

That news came on the heels of Qatar Airways’ bogus financial results for fiscal year 2017, in which the airline claimed profits of nearly $540 million but according to investigators actually lost $703 million, nearly doubling its operating loss from the previous year. And that on top of FY 2017 state subsidies of $491 million. As the baseball legend Yogi Berra once said, “It’s déjà vu all over again.”"


Read more below...

http://www.huffingtonpost.com/entry/acc ... Redirect=1
 
Planesmart
Posts: 2891
Joined: Sun Dec 05, 2004 3:18 am

Re: Is the ME3's expansion sustainable long-term?

Wed Aug 09, 2017 8:22 pm

Kickert wrote:
If I were doing a SWOT analysis on the ME3, terrorism and general instability in the southern ME would be the most significant issue to watch out for. If the UAE were to experience a rash of attacks or a turkey airport style attack, I could see a huge and sudden decrease in demand.

Some 30 plus years ago, I recall working on a SWOT analysis for an airline client of a merchant bank. Your points, plus hijacking, were among many reasons why the commercial threat of airlines growing in the region was considered a non-event.

How wrong we were, with airports, manufacturers, financiers and aviation support companies beating a path to their door, to provide services, incentives and discounts.

Airlines hoping to acquire market share from the ME3 based on your SWOT analysis, are in my opinion, similar to those whose retirement plan is winning the lottery.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos