JayinKitsap
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Re: Dubai World Central (DWC) expansion officially halted

Sat Aug 31, 2019 10:10 pm

VV wrote:
Whoever did the passenger traffic forecast for Dubai obviously screwed up.

I know, I know people would say, "Who could predict the US president would launch a trade war? Who could predict the conflict in Yemen would drag on and on? Who could predict the current tension between Qatar and other middle eastern countries?"


Whatever the reason is the traffic forecast in Dubai has been way too optimistic.


It was part of the same predictions that in 2000 indicated well over 1,000 A380's were expected to be produced and build rates of 48 per years. I recall you were one that indicated back then that this was way too optimistic.


EK was to fill up DWC enough that Airbus would build a FAL there to support the massive Real Estate investments that provided the money to pay all the construction workers that needed housing, fueling more construction. It was likely that the Real Estate / Construction work was on the order of 25% of the Dubai GDP. In Dubai much of the construction industry is expats so slowing the construction down by 10% means 10% of the construction workers are probably leaving, or 2% of the population. A drop in population basically stops construction of worker housing, causing more to leave. The laborers are part of the very poor, but the skilled trades and managers are certainly middle and upper middle class. When growth stops it is very hard to stop a decline.


EK/DXB/Dubai got its chance to exploit a big opportunity in the market. The hub is well positioned for the Middle East and India to North America & Europe, and for Europe to Asia / Australia. But even without step changes in the field, nearly every hub hits saturation where its market share flattens out. Add in the step change of point to point and that can really affect traffic. Currently DXB's median plane size is probably the largest of any airport, even with Fly Dubai there it is likely that the median is a 777. The median at LHR will soon be an A321, if not already. EK's plane size long term will probably need to shrink to the A330, A350, B777, and B787, more like the big Asian airlines.
 
migair54
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Re: Dubai World Central (DWC) expansion officially halted

Sat Aug 31, 2019 11:04 pm

I am very surprise about this, you can see some work going on, not at a crazy pace but even in google maps you can see ground movements and some kind of structure.

I think not only Dubai, but the whole UAE will need DWC to be built, maybe not in the huge scale planned but in different stages, DXB is totally full and no way you can build anything there new. So making initially 2-3 runway DWC will be a big step up, then in the future slowly expanding more. Also most of the expansion of Dubai city is towards that area and marina, so in the future DWC will be closer and convenient for most travellers in Dubai, even for many travelling to or from Abu Dhabi.
 
DWC
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Re: Dubai World Central (DWC) expansion officially halted

Sat Aug 31, 2019 11:08 pm

musman9853 wrote:
DWC wrote:
moa999 wrote:
Local economy depends on oil.. at least until it runs out.

That's a myth : the tiny emirate of Dubai does not produce oil.
It may refine some, but the big oil player in the UAE is Abu Dhabi.
Dubai is all about services, particularly finance & tourism.


im not entirely familiar with the UAE's operating structure but oil profits do go to all the emirates right? my understanding is, from people i know in sharjah, is that oil revenue does pay for infrastructure etc across the UAE, no?

no. The UAE are a confederation of fairly independent emirates, each have their head of state & economic policies.
They do have a common currency & military, I am not sure about police & customs, but other than that each emirate does as it pleases. Abu Dhabi bailed out Dubai in the past to avoid a "systemic crisis" (domino effect), as Dubai is systematically cash-strapped due to their very aggressive & expensive infrastructure expansion projects. You may know of their huge palms gained on the Gulf, but the "world continent island" project nearly bankrupted them, many of their skyscrappers are half empty.

As Zeke has repeatedly said, Dubai's development is exclusively paid for by tourism & finance, which ultimately all rely on the EK group, DXB, and FZ to a lesser extent. The present halting of DWC's expansion is a signal avowal of the problems Dubai is facing.
Qatar & Abu Dhabi tried to compete & tap on Dubai's model by respectively launching, belatedly, QR ( quite successfully, hence the blockade, which is also due to Qatar flirtations with Iran per their common Gas reserves ) & EY which was so heavily subsidized that it is now repositionned as a boutique airline.
Sharjah did the same with LCC AirArabia & is so successful that it has launched sister companies elsewhere in the Middle East.
Ras-Al-Khaimah also tried to have their own airline, but this one has folded at least twice.

So Oil is essentially a monopoly of Abu Dhabi.
Back to the FSCs, in hindsight Akbar Al Baker was right when he said over 5 years ago that of the ME3 there was at least one too many, and QR was not one of them.
 
DWC
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Re: Dubai World Central (DWC) expansion officially halted

Sat Aug 31, 2019 11:41 pm

worldranger wrote:
Discussed in the past for DXB, was a short 2200m runway to north of 30R on the Sharjah side - on the road that accesses Air Cargo City.
The traffic road would be tunneled underneath. One would imagine this would be back in play as the cost would be far lower than DWC - yet the slot expansion benefits would be significant.
For the regional heavies and narrow body flying - this size runway would suffice.

Interesting, somehow I missed that discussion.
Does anyone know if that is still a feasable option ?

zeke wrote:
DXB is like SIN, their hotels and tourism depend heavily on transit PAX.

I see that said often, but not quite.
I agree that the EK group mirrors SIA in many ways & that the two countries are financial & touristic hubs.
Yet they have crucial differences :
1) Dubai is nowhere near the worldclass port & container hub SIN built it's development on
2) Singapore has a diversified high-tech industrial base, opted for top-notch technology shift since the 1980s. Dubai is essentially limited to services.
3) Few know that Singapore has 5-year plans (or had until recently, haven't followed it of late), a one party-system ( Dubai is an absolute monarchy ) to carry out their policies in the long-term (not unlike Dubai). Now these policies differ in scope & content.
4) While both are major Dutyfree mall paradises, Singapore is green & way more diversified in terms of restaurants, clubs, architecture, which attract neighbouring tourists (Malaysia, Thailand, China, Indonesia), in ways & numbers the UAE do not their own neighbours. Even Qataris are personae non gratae in the UAE.
5) Crucially, Singapore is part of the wide Chinese diaspora worldwide, with all the connections to China, Taiwan & elsewhere the UAE does not have.
In fact, someone here pointed out China is purposedly bypassing the UAE & not expanding bilaterals. Why should they ? EK, all ME3 in fact, is nothing without the willingness of other countries to let the ME3 tap into their own markets ( chiefly India, Thailand, UK, Oz, US )
Last edited by DWC on Sat Aug 31, 2019 11:48 pm, edited 1 time in total.
 
Jefford717
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Re: Dubai World Central (DWC) expansion officially halted

Sat Aug 31, 2019 11:47 pm

The rise of points-to-point travel since the introduction of 787 and A350, IMHO is a major culprit of their recent struggle. Their smallest plane, 77W is just way too big. If the trend of point-to-point travel continues then they might have to retire their A380s a lot sooner than originally planned.
 
moa999
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 12:05 am

Dubai still has and is still producing oil - it's just got a lot less than Abu Dhabi
https://gulfnews.com/business/energy/oi ... e-1.578333
 
DWC
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 12:34 am

moa999 wrote:
Dubai still has and is still producing oil - it's just got a lot less than Abu Dhabi
https://gulfnews.com/business/energy/oi ... e-1.578333

Did you see your article is from 2010 ? and speaking of the past ? :old: It even clearly states :
Dubai’s oil production peaked in 1991 at 410,000 b/d and has been steadily declining ever since. Dubai’s oil reserves have reduced over the past decade and are now expected to be exhausted within 20 years

Last time I was in Dubai I had a conversation with an expert : Dubai's role in the oil industry is negligeable, they refine some for local consumption. All figures for the UAE are essentially Abu Dhabi's
https://tradingeconomics.com/united-ara ... production

This short wiki gives figures, whereby Abu Dhabi has over 93% of all oil reserves in the UAE, Sharjah some 1,5%, Dubai is not mentionned.
https://en.wikipedia.org/wiki/Oil_reser ... b_Emirates

Whatever reserves Dubai had left were burnt by EK's 777s & A380s. Any left by now is probably too expensive to extract ;)
 
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MillwallSean
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 4:57 am

I think another thing we miss is that EK doesnt have the ability to offer a competitive advantage anymore. When they came on to the scene they consistently offered more. Offered higher value for money. They offered a better product, better corporate conditions and cheaper ticket prices not just for business class but also for economy class and they did this from local airports.
They offered amazing connections between Africa, Middle east, Se Asia, South Asia, Oceania and Europe all with top end products and lower fares than seen before.
Everyone flocked to them. They opened destination after destination and there was a buzz about EK coming to town, they sponsored the biggest brands in sport, your Chelsea, your PSG, your AC Milan saw Emirates as their jersey sponsors. They sponsored equestrian sports, they sponsored cricket and they were even in on sailing. EK was a juggernaut. Today EK has nothing of that buzz, its a rather tired product, service has gone from excellent to at best average and staff is at best indifferent to passengers. Cabins haven't been updated for ages and the product is not unique, special or more luxurious.

QR today is usually cheaper, offers a better product, services to more places and offers better frequency. TK flies everywhere, usually cheaper. There are chinese airlines that offer amazing deals on some of the markets, the Indian market has 2 serious players, one run more efficient than other airlines and one with a lot of government clout. Both the Europeans, Ethiopian and Qantas has recovered and are starting to profitably compete with better offerings. This was EKs cash-cows and those cash-cows are no longer delivering like they used to. Periphery routes often receives to much attention here, North America to India for example, these routes are not cash-cows and we tend to severely overestimate their importance...

--------------------------------

Dubai grew exceptionally due to visionary transformational leadership. The surrounding rulers took notice but couldn't compete. Bahrain used to be the finance hub, it took Dubai a decade to virtually take over everything and expended on it. Dubai brought in money from India, Pakistan, the gulf, Iran and Eastern Africa. Tax free and every bank in the world offering financial investments. A booming property market, future demand saw no end. Multi-linguistic sales teams sold dreams and future riches. Glitz, gold and constant amazement. Some dicuss oil and Dubai, thats based on what? Dubai was as far as yo could get from a petrochemical destination even in the 1990ies.
Heck, arriving in Dubai in the late 1990ies and early 2000 was fun. Something new and amazing were always ready, a new invention, a new building, a new magnificent attraction just waited for us to look at, to try and to be amazed by. The restaurant scene exploded, the bars, the nightlife and the shopping was top notch. You went to Dubai because things happened there. The other middle eastern countries elites went there to shop and play, it was the only place I have ever been to where Arab women of more money than a normal African countries GDP would really let loose in public and splash out on everything they ever wanted, inclusive nightlife...
When the gulf women came to Dubai on Thursday nights wed brief new European staff and tell them to be careful or they'd end up in places they never thought they'd visit. Not sure how many times some Egyptian/Syrian/Jordanian helperboy informally stated the arab ladies strong desire to be accompanied by blonde and blue eyed swedes for evening dinners (I worked for a Swedish company in those days). Wild times. Today that crowd is not coming anymore. Instead they have been replaced by half poor Iraqis living in Sharjah and a plethora of middle class Syrian, North African, Palestinian pretenders without big wallets or connections but full of swagger and acting. A stark difference...
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edealinfo
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 2:35 pm

JayinKitsap wrote:
EK's plane size long term will probably need to shrink to the A330, A350, B777, and B787, more like the big Asian airlines.


If DWC doesn't come up the way it was intended, and DXB is the only option but already has a severe slot issue, why would EK want to downsize/down gauge of all things? It doesn't make logical sense.
 
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Revelation
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 3:17 pm

edealinfo wrote:
JayinKitsap wrote:
EK's plane size long term will probably need to shrink to the A330, A350, B777, and B787, more like the big Asian airlines.

If DWC doesn't come up the way it was intended, and DXB is the only option but already has a severe slot issue, why would EK want to downsize/down gauge of all things? It doesn't make logical sense.

Because EK's profit is already diving, with or without DWC in the picture.

A380 is too big and heavy an aircraft, its engines are now two generations old relative to GE9x, and it's maintenance costs are only going to go up over time.

If you don't believe me, keep in mind that it was EK itself that launched the strategic review that led to the cancellation of many A380 orders to be replaced by A330/A350 fully knowing DWC was already delayed to 2030.

The only thing that is new is that now 2030 is not even possible.
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LTCM
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 4:02 pm

It's a (loudly spread) myth that EK doesn't benefit from oil production. That's like saying EWR doesn't benefit from NYC being the world's financial center because it's in a different state.

Higher oil prices, and thusly more production investerment, is a huge tailwind for EK and Dubai.
 
Aircellist
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 4:21 pm

Building to be the biggest without seeing indications that the real fight will be against falling into irrelevancy… That reeks of Mirabel take 2 indeed.
"When I find out I was wrong, I change my mind. What do you do?" -attributed to John Maynard Keynes
 
Strato2
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 4:32 pm

Revelation wrote:
EK has set itself up so that it does not suffer the cost and down time of heavy checks, keeping old A380s that are going to get more costly to maintain after the production line stops making parts whilst competitors fly more efficient and right sized models is not a place where EK wants to be.


Taking a ridiculously expensive 777X that is a bit better (with worse passenger comfort) does not sound like a reasonable business plan if the going gets tough instead of keeping the Superjumbos flying longer and Airbus will support the A380's for decades much to the annoyance of haters. :)
 
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 4:32 pm

On the exterior, Dubai mirrors & differs from Singapore as stated in my previous post.
But there is something else : Singapore is a true nation, essentially overseas Chinese, with some well-integrated Malays & Indonesians, and all the expats. Dubai is actually a Bubble of a minority of Emirati, with a huge expat community who do not speak arabic, and with an even greater Indian & Filipino workforce treated in ways the UAE should be put to shame, none of which speak arab or contribute to the local society in a meaningful cultural or economic way, other than as cheap labour. In fact, Dubai does not look arab at all, more "something" of a huge international style CBD like Sydney's or HKG, has little to attract unless you are there in finance and all other services this needs ( hotels, big airlines, etc.). You can ski & next we hear is that they will aircondition parts of the city. It is very clean, very bling bling, as all their big hotels that cater to anything from cheapo touristic sheeple to millionaire herds, very artificial, next to no local flavour or local class as you find in Thailand or Japan. Frankly, the 7-star Burj El Arab hotel looks cheap on the inside, like some Disney coloured resort.

So past the bubble effect, Dubai loses attraction to a sizable % of visitors, I for one would not live there, though I admire how they tried to break the monotony of their skyscrappers, some designs are truly interesting. Yet it is all so cold in the middle of nowhere, with an overcrowded beach next to a hot desert, without the charms of Cairo or Lima, the world's two largest cities built on dunes.

Conversely, Abu Dhabi has taken a more cautious & culture-conscious approach, with fewer landmarks but thinking deeper into the future. Abu Dhabi is by far the biggest emirate in the UAE, that is where long-term development will actually reap fruits. Admittedly, this did not reap the benefits EY hoped for, which only underlines how hyped & shallow Dubai's boom is.

Yet I not think EK's position will dwindle : the Gulf, and Dubai in particular, are geographically ideally located to keep their PAX numbers, even if their % of marketshare is reduced with growing competitors. QF's Project Sunrise may skim some of the premium pax who used to fly EK or QF's A380 to the UK, but unless QF start a sky train ( several flights a day), the trunk routes will remain through the Middle East. On a flight that long, many will find a stopover in Dubai ( or Singapore or BKK or Hanoi or HKG ) relaxing, and Dubai can truly be a fun place for a day or two. When all said & done, DXB will remain a constrained airport given the freeze on DWC, yet it is clear that Dubai is not to be Central nor the World's aviation navel, just another major hub.

I asked in the OP about your views on new IST, 3h flight from DXB so NOT to be lumped with the ME3. Technically, IST is in Europe.
It is the only airport today that could become close to what DWC was to be. DOH & IKA have potential, but do not come even close.
 
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Revelation
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 6:22 pm

Strato2 wrote:
Revelation wrote:
EK has set itself up so that it does not suffer the cost and down time of heavy checks, keeping old A380s that are going to get more costly to maintain after the production line stops making parts whilst competitors fly more efficient and right sized models is not a place where EK wants to be.

Taking a ridiculously expensive 777X that is a bit better (with worse passenger comfort) does not sound like a reasonable business plan if the going gets tough instead of keeping the Superjumbos flying longer and Airbus will support the A380's for decades much to the annoyance of haters. :)

Taking a ridiculously inefficient A380 that will need to go through weeks long expensive heavy checks just to fly empty seats around does not sound like a reasonable business plan if the going gets tough instead of taking launch discounted 777Xs with two generations newer engines and maintenance vacations much to the annoyance of haters. :)
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lightsaber
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 7:21 pm

THS214 wrote:
then I agree with you. If DWC would have been built in time as planned, things would be different. Major part of competitors were able to expand because Emirates was not. You expect move to smaller aircraft. If DWC would be what it was supposed, Emirates would be flying also smaller planes, maybe even narrow bodies (excluding Flydubai).
.

Yes, competition took advantage of EK/FZ being unable to expand. Businesses with good growth potential and a constrained competitor will expand fast.

I expect a move to smaller aircraft as connecting yield is poor. We have another thread going on ET doubling connections to China. That is just one more example of diluting yield.

Direct flights always have more yield. While tourism has ceased the crazy growth, it is at a good baseline. EK must shrink to generate profits that sustain the city state.

Everything else is an alternative reality novel. On my evenings, I read those like anything. But my day job is risky and I am responsible for safety, salary, and even next job of dozens. When it comes to career decisions, I out make believe out to play time with my kids or losing myself in a novel. For real money it is brutal reality, with a smile and trying to make it fun and safe for my people.

That brutal reality is hitting Dubai. They are the Vegas oasis of a region that exceeds the Mid-East. I have ideas of how Abu-Dhabi and Dubai jointly investing tens of billions could turn the fate of the two around.

But no obvious 'you would prosper if you worked together' has more state pairs than I care to discuss.

Growth 101 is create opportunities to let business expand. Due to a better legal system than many countries in narrowbody range, Dubai will grow. But not enough to grow DWC meaningfully for 20+ years.

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Antarius
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 7:26 pm

Strato2 wrote:
Revelation wrote:
EK has set itself up so that it does not suffer the cost and down time of heavy checks, keeping old A380s that are going to get more costly to maintain after the production line stops making parts whilst competitors fly more efficient and right sized models is not a place where EK wants to be.


Taking a ridiculously expensive 777X that is a bit better (with worse passenger comfort) does not sound like a reasonable business plan if the going gets tough instead of keeping the Superjumbos flying longer and Airbus will support the A380's for decades much to the annoyance of haters. :)


EK's load factor average was 78%. The a380 is simply too big for their needs now. Shave 20% capacity with lower CASM and their financial situation improves.

Also, let's not get too carried away with the passenger comfort thing. No one cares except for a.net, as evidenced by the success of the 10 abreast 777. Also EK still has 2-3-2 J, hardly the product of that one associates with exceptional passenger comfort.
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enilria
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 7:44 pm

DWC wrote:
From Bloomberg, quoting "people, who asked not to be named due to the sensitivity of the topic" :

"Construction activity has been halted and finances for expansion frozen until further notice"
https://www.bloomberg.com/news/articles ... es-stumble

While this comes as no surprise given the recent economic & geopolitical downturns in the past year, it does underline some questions :
1) EK & EY are nowhere near merging
2) let alone move both to DWC
3) EK does not seem to need massive expansion soon & thus DWC, now that yields are lower & the A380 discontinued.
4) DXB therefore will have to sustain whatever growth, and
5) as DXB is constrained, that means moving other airlines to DWC to keep DXB to EK & FlyDubai.
6) How is IST influencing this ? Note that TK flies a lot of NBs
Thoughts ?

It's all #2 and #3.
 
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 7:58 pm

DWC wrote:
Yet I not think EK's position will dwindle : the Gulf, and Dubai in particular, are geographically ideally located to keep their PAX numbers, even if their % of marketshare is reduced with growing competitors.

lightsaber wrote:
While tourism has ceased the crazy growth, it is at a good baseline. EK must shrink to generate profits that sustain the city state.

Yes, this is why I spoke of "right-sizing" the airline.

https://www.bloomberg.com/news/articles ... superjumbo says:

Dubai-based Emirates has spent the past nine months “knocking down the network” to establish the optimum route profile both for itself and for the sheikdom, and is now close to the end of that exercise, President Tim Clark said at the 2019 Arabian Travel Market convention on Monday.


We haven’t been growing at the pace we used to because of geopolitical issues in the region and elsewhere,” Clark said. “But that’s given us time to take stock of what the network is going to look like in five to ten years, and what the fleet fit in that network and the type of aircraft is going to be.”


STC said this after the decision to "purchase 70 A330neo and A350 wide-bodies while cutting its A380 order to 14 planes from 53", which was decided during the nine month effort he was describing.

I know some don't want to accept that EK is "knocking down the network" but that is the exact phrase their CEO used so it is time to accept EK is changing.
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DWC
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 8:32 pm

Revelation wrote:
We haven’t been growing at the pace we used to because of geopolitical issues in the region and elsewhere,” Clark said. “But that’s given us time to take stock of what the network is going to look like in five to ten years, and what the fleet fit in that network and the type of aircraft is going to be.”

STC said this after the decision to "purchase 70 A330neo and A350 wide-bodies while cutting its A380 order to 14 planes from 53", which was decided during the nine month effort he was describing.
I know some don't want to accept that EK is "knocking down the network" but that is the exact phrase their CEO used so it is time to accept EK is changing.

There is another reading to this.
STC is no fool & if he went for 53 new whales two years ago, means he could use them even in a mild downturn. I am also confident he knew the blocade on QR was coming & that projections for DWC were not brilliant even then. Last, he must have known EY was going to a wall & bet on capturing some of their pax.

So in my eyes, "knocking down the network" also means reshuffling as much as cutting the less interesting flights, for good reasons such as :
1) their A380 will start to hit the 2nd hand market soon (none we know to exist), a major problem for the company who based much of its credibility & "goodwill" valuation on it. They have to adapt to keep up the bottom line.
2) So, how do you maximize marketshare, yields & operations with whole new sets of aircrafts ? You have to model all your network & banks again, with a number of trade-offs until you get it right, number crunching requires time & many flights will change times, assuming they get the appropriate slots.
3) Brand quality needs to be maintained, which means that premium pax must also feel confident with the airline, as before during the A380 era, i.e. maintain or develop the most convenient connections at the expense of others.The EK model needs profitability but also to maintain market share in key markets so as to maintain premium fares, else they are done for.
4) for as soon as the A380 fleet starts to get reduced, EK will either reduce capacity or maintain it with additional flights or better cooperation with FZ :
5) because of all the building & service investments in Dubai, DXB's pax figures must be maintained, or Dubai gets a painful economic crunch - in such a stack of cards Dubai's economy is, that kind of deleterious domino effect must be avoided at all cost. The further integration of FZ to EK will maximize their combined slots, by cutting overlappings & deploying bigger aircrafts when possible.
All in all, with this 9 months gestation, I expect a strong baby & EK/FZ to become more efficient in a relatively short time.
 
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lightsaber
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 9:09 pm

Revelation wrote:
DWC wrote:
Yet I not think EK's position will dwindle : the Gulf, and Dubai in particular, are geographically ideally located to keep their PAX numbers, even if their % of marketshare is reduced with growing competitors.

lightsaber wrote:
While tourism has ceased the crazy growth, it is at a good baseline. EK must shrink to generate profits that sustain the city state.

Yes, this is why I spoke of "right-sizing" the airline.

https://www.bloomberg.com/news/articles ... superjumbo says:

Dubai-based Emirates has spent the past nine months “knocking down the network” to establish the optimum route profile both for itself and for the sheikdom, and is now close to the end of that exercise, President Tim Clark said at the 2019 Arabian Travel Market convention on Monday.


We haven’t been growing at the pace we used to because of geopolitical issues in the region and elsewhere,” Clark said. “But that’s given us time to take stock of what the network is going to look like in five to ten years, and what the fleet fit in that network and the type of aircraft is going to be.”


STC said this after the decision to "purchase 70 A330neo and A350 wide-bodies while cutting its A380 order to 14 planes from 53", which was decided during the nine month effort he was describing.

I know some don't want to accept that EK is "knocking down the network" but that is the exact phrase their CEO used so it is time to accept EK is changing.

I think we agree. Dubai has the connections to sustain. The organic business will grow.

But the connecting traffic is going to have to right size and what will probably end up a very A vs. B debate is how to right size.

Lightsaber
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 9:58 pm

DWC wrote:
There is another reading to this.

Yes, as always, we discuss things on a discussion forum.

STC is no fool & if he went for 53 new whales two years ago, means he could use them even in a mild downturn.

He used them as bait to try to position RR for a NEO. In the end he found no NEO could be had and RR wasn't even meeting guarantees on this batch. When asked about the cancellation, he said he was not interested in buying the same airplanes again. To me this makes it clear he was expecting better engines by now.

I am also confident he knew the blocade on QR was coming

It helps to have the airline's owner also be the sovereign, I suppose.

that projections for DWC were not brilliant even then.

I suppose it wasn't healthy for his career to act on that info too soon?

1) their A380 will start to hit the 2nd hand market soon (none we know to exist), a major problem for the company who based much of its credibility & "goodwill" valuation on it. They have to adapt to keep up the bottom line.

Luckily for EK they seem to lease all their aircraft so the ones to feel the most pain will be their financiers. AF did the math and could not justify the cost of a new interior on its A380s. To me this suggests 2nd hand operators (if they can be found) will not modernize the interior much if at all, so if they do go into operation the A380 halo will be tarnished. Yet EK's own newer A380s should be able to offer that upper deck buzz for a while longer while they figure out what to do next with regard to their premium offerings.

2) So, how do you maximize marketshare, yields & operations with whole new sets of aircrafts ? You have to model all your network & banks again, with a number of trade-offs until you get it right, number crunching requires time & many flights will change times, assuming they get the appropriate slots.

Yes, thus the 9 months taken so far, with completion not quite achieved.

3) Brand quality needs to be maintained, which means that premium pax must also feel confident with the airline, as before during the A380 era, i.e. maintain or develop the most convenient connections at the expense of others.The EK model needs profitability but also to maintain market share in key markets so as to maintain premium fares, else they are done for.

That's a big ask.

4) for as soon as the A380 fleet starts to get reduced, EK will either reduce capacity or maintain it with additional flights or better cooperation with FZ :

As above they are only getting 78% load factor, and given the size of their airplanes, there are a lot of seats to take out of the market before worrying about capacity. Higher load factors and less overall capacity between some city pairs can drive yields up.

5) because of all the building & service investments in Dubai, DXB's pax figures must be maintained, or Dubai gets a painful economic crunch - in such a stack of cards Dubai's economy is, that kind of deleterious domino effect must be avoided at all cost. The further integration of FZ to EK will maximize their combined slots, by cutting overlappings & deploying bigger aircrafts when possible.

Sure, but flying around empty seats does no one any good. We're just talking about managing the change in the rate of growth, not a drop in pax numbers. EK/FZ integration will be helpful to maximize resources, and I am happy I can type Frank Zappa's initials from time to time as well! :-)

All in all, with this 9 months gestation, I expect a strong baby & EK/FZ to become more efficient in a relatively short time.

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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 10:19 pm

Is flydubai flying any routes from DWC at the moment?
 
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 11:36 pm

Strato2 wrote:
Airbus will support the A380's for decades much to the annoyance of haters. :)

Airbus will only support the A380 so long as the cost to do so isn't overshadowed by the savings of discontinuance, that that includes a review of contractual obligations to current operators.

That'll still be many years yet, but there's a fairly good chance that it won't be "decades," particularly considering the dearth of a secondary market, the nonexistence of a freight market, and the plurality of orders so heavily clustered around a single operator.
I myself, suspect a more prosaic motive... ~Thranduil
 
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 01, 2019 11:44 pm

Revelation wrote:
DWC wrote:
STC is no fool & if he went for 53 new whales two years ago, means he could use them even in a mild downturn.

He used them as bait to try to position RR for a NEO. In the end he found no NEO could be had and RR wasn't even meeting guarantees on this batch. When asked about the cancellation, he said he was not interested in buying the same airplanes again. To me this makes it clear he was expecting better engines by now.

I can buy that, but it still means he meant to fly the whale in at least 53 neo versions ;)
Yet STC is the kind of person to make tactic stunts, he had Leahy & Brégier comme all the way to the Dubai Air Show to slam his door on their face, I bet they never forgave STC, such a gentleman, fooling around with Continental Europeans just as Alexander de Pfeffel is.
But it is a dangerous game : MOL did just that with Airbus, pushed Leahy several times to cut down prices to the limit, Leahy agreed on the condition it be the last time, MOL called Boeing everytime, Boeing agreed to minus epsilon under Airbus offer.
In Asia that is foul play & a loss a face. Leahy, an astute man, rightfully felt abused & declared no more business with FR. That is the reason why all the fleet is 737. On the other hand, WOW & Easyjet are all A320s, so in the end that gives more fun to European AvGeeks.
Now both Leahy & Brégier are gone, guess FR can be courted again is she plays decently.

Ha ! 500 Posts, I obviously post too much !
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 12:47 am

Antarius wrote:
EK's load factor average was 78%. The a380 is simply too big for their needs now. Shave 20% capacity with lower CASM and their financial situation improves.


It doesn’t work that way, load factor tell you nothing about how an airline is performing. 78% is actually above the regional average, from IATA

“Middle Eastern carriers posted an 8.1% demand increase in June compared to the same month last year, which was well up on the 0.6% annual increase recorded in May. The timing of Ramadan which fell almost exclusively in May this year likely contributed to the strongly contrasting outcomes. Capacity rose 1.7% and load factor jumped 4.5 percentage points to 76.6%.”

From https://www.iata.org/pressroom/pr/Pages ... 08-01.aspx

konkret wrote:
Is flydubai flying any routes from DWC at the moment?


I thought they were operating FZ5143 DWC-AMM, and FZ5433 DWC-LKO. During runway maintenance earlier this year over 40 routes by FZ were moved temporarily from DXB to DWC.
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 2:33 am

All they really need at DXB is an extra runway that can run concurrently. I'd recommend using a form of imminent domain and build it out as quick as possible. It's a nice place, but 1 hour from push back to takeoff is terrible.
Keep on truckin'...
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 2:52 am

THS214 wrote:
Emirates was never a first class airline except economy (not anymore). .


So, which airlines provides a first class experience (relatively) in economy [to what Emirates used to provide when it was at its "peak"]?
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 2:54 am

hz747300 wrote:
I'd recommend using a form of imminent domain and build it out as quick as possible.


You do understand that it is a shiekdom /emirate so all it requires is an edict.
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:05 am

edealinfo wrote:
hz747300 wrote:
I'd recommend using a form of imminent domain and build it out as quick as possible.


You do understand that it is a shiekdom /emirate so all it requires is an edict.


I know. But it does seem like they try to maintain the veneer of British Common Law, if nothing else.
Keep on truckin'...
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:16 am

zeke wrote:
Antarius wrote:
EK's load factor average was 78%. The a380 is simply too big for their needs now. Shave 20% capacity with lower CASM and their financial situation improves.


It doesn’t work that way, load factor tell you nothing about how an airline is performing. 78% is actually above the regional average, from IATA

“Middle Eastern carriers posted an 8.1% demand increase in June compared to the same month last year, which was well up on the 0.6% annual increase recorded in May. The timing of Ramadan which fell almost exclusively in May this year likely contributed to the strongly contrasting outcomes. Capacity rose 1.7% and load factor jumped 4.5 percentage points to 76.6%.”

From https://www.iata.org/pressroom/pr/Pages ... 08-01.aspx

konkret wrote:
Is flydubai flying any routes from DWC at the moment?


I thought they were operating FZ5143 DWC-AMM, and FZ5433 DWC-LKO. During runway maintenance earlier this year over 40 routes by FZ were moved temporarily from DXB to DWC.


High load factors do not guarantee profits, but low load factors assuredly do not. The region is made up of several large loss making carriers - not the bar one would aspire to compete with. Also EK is largely connecting traffic, on average lower yielding than O&D. Their business model is predicated on high volume.
:

This coupled with EK's pivot to smaller aircraft clearly indicates that they see the change too. The days of throwing a large aircraft at destinations and people flocking is over.
2019: SIN HKG NRT DFW IAH HOU CLT LGA JFK SFO SJC EWR SNA EYW MIA BOG LAX ORD DTW OAK PVG BOS DCA IAD ATL LAS BIS CUN PHX SYD CVG PHL MAD ORY CDG SLC SJU BQN MHT YYZ STS DOH BLR KTM MFM MEX MSY BWI DEN
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 4:29 am

Antarius wrote:
High load factors do not guarantee profits, but low load factors assuredly do not. The region is made up of several large loss making carriers - not the bar one would aspire to compete with. Also EK is largely connecting traffic, on average lower yielding than O&D. Their business model is predicated on high volume.
:

This coupled with EK's pivot to smaller aircraft clearly indicates that they see the change too. The days of throwing a large aircraft at destinations and people flocking is over.


EK are not loss making, in fact they are very profitable.

“Emirates Group posted a profit of AED 2.3 billion (US$ 631 million) for the financial year ended 31 March 2019, down 44% from last year. The Group's revenue reached AED 109.3 billion (US$ 29.8 billion), an increase of 7% over last year's results.”
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 4:49 am

zeke wrote:
Antarius wrote:
High load factors do not guarantee profits, but low load factors assuredly do not. The region is made up of several large loss making carriers - not the bar one would aspire to compete with. Also EK is largely connecting traffic, on average lower yielding than O&D. Their business model is predicated on high volume.
:

This coupled with EK's pivot to smaller aircraft clearly indicates that they see the change too. The days of throwing a large aircraft at destinations and people flocking is over.


EK are not loss making, in fact they are very profitable.

“Emirates Group posted a profit of AED 2.3 billion (US$ 631 million) for the financial year ended 31 March 2019, down 44% from last year. The Group's revenue reached AED 109.3 billion (US$ 29.8 billion), an increase of 7% over last year's results.”


I did not say that EK was loss making.
2019: SIN HKG NRT DFW IAH HOU CLT LGA JFK SFO SJC EWR SNA EYW MIA BOG LAX ORD DTW OAK PVG BOS DCA IAD ATL LAS BIS CUN PHX SYD CVG PHL MAD ORY CDG SLC SJU BQN MHT YYZ STS DOH BLR KTM MFM MEX MSY BWI DEN
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 5:38 am

JayinKitsap wrote:
EK was to fill up DWC enough that Airbus would build a FAL there to support the massive Real Estate investments that provided the money to pay all the construction workers that needed housing, fueling more construction. It was likely that the Real Estate / Construction work was on the order of 25% of the Dubai GDP. In Dubai much of the construction industry is expats so slowing the construction down by 10% means 10% of the construction workers are probably leaving, or 2% of the population. A drop in population basically stops construction of worker housing, causing more to leave. The laborers are part of the very poor, but the skilled trades and managers are certainly middle and upper middle class. When growth stops it is very hard to stop a decline.


In short, a bubble. There are in addition three things:

- Dubai was the "hub" to reach and to evade from war-torn places like Iraq or Afghanistan. With the US and the West reducing their presence in those countries, the importance for Dubai decreases.

- The blockade with Qatar and the US sanctions with Iran have a negative impact in the role of Dubai as a trade / services center for the region.

- Dubai pictured itself as the services' hub for the region. Kind of the London of the Middle East. It was not uncommon for Western expats to be working for a company based in Dubai and fly back and forth to other countries in the region (Saudi, Qatar, Kuwait...). Those times are gone as budgets get tighter and companies are looking for cheaper and more efficient arrangements. Now those Western companies will serve Saudi directly from Riyadh with a Western-educated Arab-speaker, etc. So Dubai becomes an unnecessary layer in-between.
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 5:42 am

hz747300 wrote:
All they really need at DXB is an extra runway that can run concurrently. I'd recommend using a form of imminent domain and build it out as quick as possible. It's a nice place, but 1 hour from push back to takeoff is terrible.


DXB delays have gone down massively over the years yet traffic increased big time. Virtually no holding and if any it's just 1 hold. My average taxi time for takeoff in a month is 10 minutes.
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 8:04 am

zeke wrote:
Antarius wrote:
High load factors do not guarantee profits, but low load factors assuredly do not. The region is made up of several large loss making carriers - not the bar one would aspire to compete with. Also EK is largely connecting traffic, on average lower yielding than O&D. Their business model is predicated on high volume.
:

This coupled with EK's pivot to smaller aircraft clearly indicates that they see the change too. The days of throwing a large aircraft at destinations and people flocking is over.


EK are not loss making, in fact they are very profitable.

“Emirates Group posted a profit of AED 2.3 billion (US$ 631 million) for the financial year ended 31 March 2019, down 44% from last year. The Group's revenue reached AED 109.3 billion (US$ 29.8 billion), an increase of 7% over last year's results.”


I'm sorry, but US$631m on US$29.8b is not 'very profitable'. ~US$30b is impressive, but it's not translating into substantial profits. It's ok, few airlines do make great profits.
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 1:16 pm

hz747300 wrote:
I'm sorry, but US$631m on US$29.8b is not 'very profitable'. ~US$30b is impressive, but it's not translating into substantial profits. It's ok, few airlines do make great profits.

The problem with narrow thinking & corporate finance is that one misses the big picture, very unsophisticated.
The EK group, other than have sprung out of nothing in 33 years is a success story in itself. I don't have the figures, but 631m is way more than most airlines make. Dnata in itself is grabbing market share in Europe (Zurich amongst others)

As to the big picture : profit is only one aspect, and not much when you factor in it is after tens of thousands of salaries & investments made locally, all of which contribute to local purchasing power. You must bear in mind that billions of that turnover are actually added value to the economy. Add all the other billions PAX leave in Dubai in hotels, shoppings, banks, services, tourism.

EK & Dubai are a success story by various metrics. EK is a prime example of a successful SOE into a market economy. If you knew about economic regressions, you'd see how EK is robustly correlated to Dubai's growth in the past 33 years. EK is a fascinating example of how a microenomics model ( a corporation ) actually feeds & develops the overall macroeconomic model of a country. There are other examples in the past, more complex, like the Chaebols in SKorea. The point is you cannot look at the EK group as you would the EU3, US3 or CN3, LA, TK or QR even, the EK group are part of a much greater master plan. EK is about macroeconomy, not about shareholders, though ultimately EK have made the Emirati very rich, and not just them.

Yet I am far less impressed by the labour conditions of all the exploited Asians in Dubai. The West does not care as it does pretty much the same, delocalizing production or services to countries like China, India, Bangladesh, not to mention the tens of millions living below poverty line, specially in the US. Last, there are more intelligent ways to develop a society, Dubai's is very basic, essentially commercial & dull, talking of walking past one's life. But then you need to know about anthropology, sociology, psychology, all of which are beyond the grasp of the general public & of many decision makers, alas.
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 2:39 pm

DWC wrote:
Revelation wrote:
DWC wrote:
STC is no fool & if he went for 53 new whales two years ago, means he could use them even in a mild downturn.

He used them as bait to try to position RR for a NEO. In the end he found no NEO could be had and RR wasn't even meeting guarantees on this batch. When asked about the cancellation, he said he was not interested in buying the same airplanes again. To me this makes it clear he was expecting better engines by now.

I can buy that, but it still means he meant to fly the whale in at least 53 neo versions ;)

It's pretty clear from the trend line of EK's fleet plans and DWC's build out that EK and its owner the Emir were speculating on a grand scale, and maybe not in the wisest way.

Some here are saying the fact that the DWC build out did not track to plan is what has limited EK, i.e. with DWC EK could have scheduled more FZ flights and transferred more pax to EK long haul and vice versa, thus filling more A380s, thus perhaps justifying A380neo, thus undermining regional competitors, etc.

Others are saying Dubai itself is not as necessary in the world's aviation route network due to range improvement in current generation aircraft, declining motivation to visit Dubai, increasing investment by competing airlines and airports, etc.

I guess we will never know "what if" DWC was built on a schedule to match EK's growth plans, or why the Emir didn't shift more money towards completing this vital project rather than building palm shaped islands in the Gulf, or if the original plans ever were achievable.

All we know is the plans for DWC now are indeterminate, and EK needs to make DXB work to its best advantage.

DWC wrote:
hz747300 wrote:
I'm sorry, but US$631m on US$29.8b is not 'very profitable'. ~US$30b is impressive, but it's not translating into substantial profits. It's ok, few airlines do make great profits.

The problem with narrow thinking & corporate finance is that one misses the big picture, very unsophisticated.
The EK group, other than have sprung out of nothing in 33 years is a success story in itself. I don't have the figures, but 631m is way more than most airlines make. Dnata in itself is grabbing market share in Europe (Zurich amongst others)

The following suggests worldwide airline profits are running around 6% whereas the numbers posted above suggests it is at 2% and media reports ( https://onemileatatime.com/emirates-financial-results/ ) say 0.9%.

https://www.mro-network.com/sites/mro-n ... FETY_4.jpg

I enjoyed your post, but would ask if EK is about macroeconomy, what does it say about the wealth of the Emirati that they could not build the kind of facility EK needed to grow to its full potential?

Did they let their ambition to build a great facility overwhelm their ability to build a good facility?

Or was DWC the right facility, but just not funded on a time line to match EK's needs?
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:01 pm

Revelation wrote:

As above they are only getting 78% load factor, and given the size of their airplanes, there are a lot of seats to take out of the market before worrying about capacity. Higher load factors and less overall capacity between some city pairs can drive yields up.

5) because of all the building & service investments in Dubai, DXB's pax figures must be maintained, or Dubai gets a painful economic crunch - in such a stack of cards Dubai's economy is, that kind of deleterious domino effect must be avoided at all cost. The further integration of FZ to EK will maximize their combined slots, by cutting overlappings & deploying bigger aircrafts when possible.

Sure, but flying around empty seats does no one any good. We're just talking about managing the change in the rate of growth, not a drop in pax numbers. EK/FZ integration will be helpful to maximize resources, and I am happy I can type Frank Zappa's initials from time to time as well! :-)

All in all, with this 9 months gestation, I expect a strong baby & EK/FZ to become more efficient in a relatively short time.

It's best to turn the ship before you hit the iceberg.

If the LF is 78%, it is best to turn the ship early. The lighthouse is at a fixed location and out there for a reason.

EK must shrink. As tourism has stopped growing:
1. See what can be done to expand Dubailand. The region would benefit from a Disneyland, but Disney would have to be incentivised like never seen before. Due to the demand for alcohol, some would be in Dubai. Due to the need for money, most would be in Abu Dhabi. Disney world demand premium land, so hotels near the water and probably canals... That is the only quick jolt I can think of to stop the downward spiral.
2. Dubai is slightly overbuilt. It will reduce O&D demand, but due to the profits of EK subsidizing the Emirate, spending

A bubble is a recession due to a sudden contraction in one or more industries due to over-expansion. Right now Dubai/EK/DXB has a minor bubble. Denial is just going to make it a major one.

Traffic will need to be reduced 10% to allow for growth. C'est la vie.

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edealinfo
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:19 pm

lightsaber wrote:
See what can be done to expand Dubailand. The region would benefit from a Disneyland, but Disney would have to be incentivised like never seen before. Due to the demand for alcohol, some would be in Dubai. Due to the need for money, most would be in Abu Dhabi. Disney world demand premium land, so hotels near the water and probably canals... That is the only quick jolt I can think of to stop the downward spiral.

Lightsaber


Funny you mention this because I have always wondered why there isn't a "Disney Dubai" with the world's largest Disney Princess Castle -- to be the central attraction. Dubai should offer, say, 500 acres of land with $1 M a year lease rental for the next 99 years.................... and most importantly, 100% Disney ownership even if it means changing the local laws, or a decree/edict.

Also because of the oppressive heat and the needs for the park to operate year-round, maybe the entire park should be contained within the world largest (air conditioned) castle. Think of it -- park goers will enjoy the whole day in the cool castle with rides etc within the castle itself. Dubai will also have the bragging rights of a relative monster-sized castle to contain all the attractions. Heck, maybe with creative design they could build hotels/hotel rooms within the giant castle so one would never have to leave the Disney property during their stay.

I am not joking. The above is actually my idea. Feel free to support or criticize the idea of a ginormous "all in one" castle.
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:21 pm

lightsaber wrote:
A bubble is a recession due to a sudden contraction in one or more industries due to over-expansion. Right now Dubai/EK/DXB has a minor bubble. Denial is just going to make it a major one.

Traffic will need to be reduced 10% to allow for growth. C'est la vie.

Your post made me think of what the Bloomberg article ( https://www.bloomberg.com/news/articles ... on-dirhams ) said:

While all airline earnings are affected by the price of crude, the Persian Gulf giant is particularly sensitive to fluctuations. Too high, and rising fuel costs become difficult to manage, too low and demand for travel falls in the region’s oil-based economies. The carrier said last week that the sweet spot is between $50 to $60 a barrel, compared with the current level of about $70.

“Our performance was not as strong as we would have liked,” Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum said in the release. “Higher oil prices and the strengthened U.S. dollar eroded our earnings, even as competition intensified in our key markets.”

So, while Dubai is not a great oil producing nation, its airline is "particularly sensitive" to fluctuations in the price of crude, along with increasing strength of the US dollar. The airline itself is telling us of the sweet spot in the price of crude oil that maximizes its profits.

A lot of things seem to be working against EK these days, but at least they are still profitable, and still have the opportunity to right-size the airline along the lines of the five and ten year projections mentioned in the STC quotes given earlier.
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:25 pm

lightsaber wrote:

If the LF is 78%, it is best to turn the ship early.

Lightsaber


But, aren't most airlines operating at that load factor?

Separately, instead of reducing capacity why can't they just hold it flat, and optimize the routes so that the LF and yield increase?

Reducing capacity would mean fewer visitors to Dubai and it need tourism since it doesn't have oil. EK supports the bigger picture for Dubai and focusing narrowly, in a vacuum) on EK's finances alone (independent of the big picture), in my opinion, is a mistake.
 
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:29 pm

Revelation wrote:
Some here are saying the fact that the DWC build out did not track to plan is what has limited EK, i.e. with DWC EK could have scheduled more FZ flights and transferred more pax to EK long haul and vice versa, thus filling more A380s, thus perhaps justifying A380neo, thus undermining regional competitors, etc.
I guess we will never know "what if" DWC was built on a schedule to match EK's growth plans, or why the Emir didn't shift more money towards completing this vital project rather than building palm shaped islands in the Gulf, or if the original plans ever were achievable.

Timings & deadlines are crucial, any delays & whole strategies can go belly up.
As Chaos Theory teaches, with time paths greatly diverge from original conditions. Two cases spring to mind :
1) The delays on the A380 cost Airbus not only orders, but also momentum. The initial strategy was sound, Airbus had carried the largest market research ever. With years of delays, the A380F was cancelled, giving the 777F & 748F more market, while the ill-fated 787 got a few years to play catch up, now produced at 150 frames a year which is a feat in itself that also contributed to Boeing's case at the expense of Airbus.
2) It was discussed here that the delays at Berlin is what ruined AirBelin's grand plans, they expanded but could not use their new frames as efficiently as planned. With 10 years delay, that is enough to change a business case.

Revelation wrote:
The following suggests worldwide airline profits are running around 6% whereas the numbers posted above suggests it is at 2% and media reports ( https://onemileatatime.com/emirates-financial-results/ ) say 0.9%.

That is now, but in the US3 have gone through chapter 11, etc. Also groups cannot give an accurate picture, I am fairly sure Dnata is more profitable than EK as an airline, but some companies cannot do without the synergies of others in the same group ( differential equations ), so one needs more info to have a synoptic view. Percentages are a very crude indicator good for newspapers, bean counters & the few laymen who play armchair CEOs, corporations are actually run on much more complex sets of maximization equations, the likes of which no one here seems to have any clue, unless they are engineers & possibly pilots.

Revelation wrote:
I enjoyed your post, but would ask if EK is about macroeconomy, What does it say about the wealth of the Emirati that they could not build the kind of facility EK needed to grow to its full potential?

There is no doubt the Emirati got filthily rich. That they spend as fast or above their means is their problem, and a major problem : Dubai is not a human-friendly environment ( nor is NYC or HKG ), it's all about consumerism & bling bling, that is why there is so much stress & why most people waste their lives earning it.
One Nobel prize in Economics was given to the demonstration that money circulation speed creates wealth. That is quite a simplistic view to well-being, but it was trendy then & it still works for bean counter logic : compare 100 billions sitting in a bank, or spend them right away with recipients spending them in turn, one gets an idea of the difference between the soviet economy & the present centralized chinese development model, with contrasting results. Now, indiscriminate growth actually does destroy wealth, health, well-being, the environment, the future, with great oppotunity costs. Some economists actually use cancer development patterns to make their point in modelizing unsustainable growths, their conclusions are compelling but not well received, because most decision-makers do not see beyond their nose, beyond the bottom-line & short-term profiteering. To put it mildly, it's beyond their grasp & duck their heads under the sand.

And that is the case of Dubai : on simplistic levels they are doing well, most people still applaud like battery-powered monkeys. From a holistic standpoint however, Dubai are polluting themselves, the whole Gulf is polluted courtesy of the ME3 but also of the refineries. Dubai are also irreversably changing their pristine desert to some industrial skyscrapper forest, which needs very solid foundations given the local geology : if I recall well it's sand & granite below, so Dubai is not to sink the way Venice is, but those very foundations are changing the deeper geological layers forever : that is short-sightedness. Having a ski-resort is the kind of nuts project that draw the sheeple but think of the eskimau : if they had the money & set up a jungle under some glass green-house above the polar circle, that's laughable right ? Well, now Dubai want to air-condition parts of if under a glass dome, thus expanding their carbon imprint - which is criminal, with consequences to the region but also to the World.
Anyway, back to your question, the Emirati will keep spending because they have nothing else to keep creating "value" from, it's that "bicycle theory" for shallow development : "keep cycling or fall". Anyone in his right mind who values his Life more than money will not live in Dubai : what is there ? Nothing.
As a tourist, I enjoyed it immensely, no need to go back. Speaking of crazy frenzy Dutyfree sweetspots, Singapore & Hongkong are lightspeed more fun, sophisticated. Bangkok, Hanoi, Shanghai & Tokyo are paradises in comparison.

Revelation wrote:
Did they let their ambition to build a great facility overwhelm their ability to build a good facility?
Or was DWC the right facility, but just not funded on a time line to match EK's needs?

I assume these people are rational by their standards & that their economic forecasts sound at the beginning.
So one would have to assume they met with unforeseen glitches, or perhaps they just overspent, with the consequences discussed earlier. Either way, they made mistakes, DWC is now a huge sunk cost with a loss of credibility that all point to the shallow development ideals I mentionned. While I admire what the EK group has achieved, the whole Stack of Card Dubai has become is the model not to follow imho. But one needs to encompass the other social sciences to understand it.
Last edited by DWC on Mon Sep 02, 2019 3:45 pm, edited 2 times in total.
 
edealinfo
Posts: 1728
Joined: Mon Jan 21, 2019 7:11 pm

Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:33 pm

DWC wrote:
From Bloomberg, quoting "people, who asked not to be named due to the sensitivity of the topic" :

"Construction activity has been halted and finances for expansion frozen until further notice"


What does this mean -- let's say that if a building/structure was half constructed they just stopped completing the other half letting the first half to rot and destroy the value of that half? Or, does this mean, that they will complete all the portions that are partially constructed and not build anything for which they have not started much work.
 
edealinfo
Posts: 1728
Joined: Mon Jan 21, 2019 7:11 pm

Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:45 pm

DWC wrote:
[

Anyway, back to your question, the Emirati will keep spending because they have nothing else to create value from, it's the "bicycle theory" for shallow development, "keep cycling or fall".


Keeping environmental concerns totally aside:

Unlike other places in the Gulf, isn't Dubai what it is today because it chose to think and dream BIG. And, didn't its outlandish projects, actually aid its overall image and tourist draw? Without it, what's there to see -- a desert. Heck, if that's anyone's interest he/she would visit the Sahara.

Dubai, may not have the originality of Thailand or Malaysia, because it was designed as a dreamland...... and dreams are outlandish and over-sized -- that's essentially the attraction in itself.

Another place that is dreamland and where size, scale and glamour takes hold -- Las Vegas.
 
DWC
Topic Author
Posts: 608
Joined: Mon Nov 06, 2017 7:49 pm

Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 3:55 pm

edealinfo wrote:
Unlike other places in the Gulf, isn't Dubai what it is today because it chose to think and dream BIG. And, didn't its outlandish projects, actually aid its overall image and tourist draw? Without it, what's there to see -- a desert. Heck, if that's anyone's interest he/she would visit the Sahara.
Another place that is dreamland and where size, scale and glamour takes hold -- Las Vegas.

Many other places dreamt BIG to no avail.
Dubai is very unusual & a very recent experience in history, it's neither great nor to be condoned.
If you deem Las Vegas the epithomy of human intelligence, then we have nothing to discuss ;) But you are absolutely right to bring it up, it's another version of that bling bling lack of depth. Which reminds me the US have felled 98% of their pristine forests, in great part to grow food for the cattle. I fly to the US often, I even worked there for a whole year, never again, depressingly shallow.
Most people take nightmares for a dreamland.
BIG is not beautiful. It's vulgar.
 
Toinou
Posts: 54
Joined: Sun Apr 14, 2019 8:21 am

Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 4:00 pm

DWC wrote:
One Nobel prize in Economics was given to the demonstration that money circulation speed creates wealth. That is quite a simplistic view to well-being, but it was trendy then & it still works for bean counter logic : compare 100 billions sitting in a bank, or spend them right away with recipients spending them in turn, one gets an idea of the difference between the soviet economy & the present centralized chinese development model, with contrasting results. Now, indiscriminate growth actually does destroy wealth, health, well-being, the environment, the future, with great oppotunity costs. Some economists actually use cancer development patterns to make their point in modelizing unsustainable growths, their conclusions are compelling but not well received, because most decision-makers do not see beyond their nose, beyond the bottom-line & short-term profiteering. To put it mildly, it's beyond their grasp & duck their heads under the sand.

You compare the view of economists and the opinion of decision makers. This is probably the core of the problem. Economy is a very good descriptive science but a pretty bad predictive one: it can analyse what happened afterwards but it is absolutely not accurate to guess what will happen next. Sadly, decision makers are not economists, but more the business school kind of persons. And those believe they can predict, at least long enough to make some cash and model the system so that the expense will be on others.
This attitude is probably what led to DWC project, and probably most of Dubai. Hence, the current problems.
 
User avatar
zeke
Posts: 13995
Joined: Thu Dec 14, 2006 1:42 pm

Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 4:09 pm

edealinfo wrote:
What does this mean -- let's say that if a building/structure was half constructed they just stopped completing the other half letting the first half to rot and destroy the value of that half? Or, does this mean, that they will complete all the portions that are partially constructed and not build anything for which they have not started much work.


DWC construction is programmed into different phases (which means the construction is broken down into logical parts), the news articles in Oct last year stated that the foreign capital could not be raised for the next phase it would get delayed indefinitely. They would not stop half way through a building, they may however build a ramp which can be used for parking/remote stands while the terminal remains unbuilt.

“The second stage of financing, which was to be backed by foreign credit agencies, has been delayed indefinitely, two sources said.”

https://www.reuters.com/article/us-duba ... SKCN1MD28Z
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
DWC
Topic Author
Posts: 608
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Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 4:20 pm

Toinou wrote:
DWC wrote:
You compare the view of economists and the opinion of decision makers. This is probably the core of the problem. Economy is a very good descriptive science but a pretty bad predictive one: it can analyse what happened afterwards but it is absolutely not accurate to guess what will happen next. Sadly, decision makers are not economists, but more the business school kind of persons. And those believe they can predict, at least long enough to make some cash and model the system so that the expense will be on others.
This attitude is probably what led to DWC project, and probably most of Dubai. Hence, the current problems.

Well, it is THE question, isn't it ?
Economic modelling is always a simplication, else you would need a whole parallel universe to create all the conditions of the first one.
What I am pointing at is that some robust predictions that can be made are actually overlooked, and more crucially, that swaths of evidence is dismissed. Criticism is not tolerated in Dubai as in just about any other place : rest assured that what I have said here is standard conversation in academic circles interested in these matters, but publish it in emirati public press at your own expense.

As Zeke pointed it out, all big projects come in installments, in successive phases : it is true of AUH ( also halted ) as of IST.
The Bloomberg headline news I used is problematic in that it is not yet official. But it is consistent with EK annoucements in past years : they are not moving to DWC anytime soon as originally planned. And there is little enthusiasm by other airlines or even companies to set up business there. The New efficient WBs should also help Asian ( and some European ) airlines to bypass the ME3 hubs & regain market share. So to me, the news sounds true, compounded by the down-gauging of future EK WBs.
 
JayinKitsap
Posts: 1485
Joined: Sat Nov 26, 2005 9:55 am

Re: Dubai World Central (DWC) expansion officially halted

Mon Sep 02, 2019 5:23 pm

edealinfo wrote:
lightsaber wrote:
See what can be done to expand Dubailand. The region would benefit from a Disneyland, but Disney would have to be incentivised like never seen before. Due to the demand for alcohol, some would be in Dubai. Due to the need for money, most would be in Abu Dhabi. Disney world demand premium land, so hotels near the water and probably canals... That is the only quick jolt I can think of to stop the downward spiral.

Lightsaber


Funny you mention this because I have always wondered why there isn't a "Disney Dubai" with the world's largest Disney Princess Castle -- to be the central attraction. Dubai should offer, say, 500 acres of land with $1 M a year lease rental for the next 99 years.................... and most importantly, 100% Disney ownership even if it means changing the local laws, or a decree/edict.

Also because of the oppressive heat and the needs for the park to operate year-round, maybe the entire park should be contained within the world largest (air conditioned) castle. Think of it -- park goers will enjoy the whole day in the cool castle with rides etc within the castle itself. Dubai will also have the bragging rights of a relative monster-sized castle to contain all the attractions. Heck, maybe with creative design they could build hotels/hotel rooms within the giant castle so one would never have to leave the Disney property during their stay.

I am not joking. The above is actually my idea. Feel free to support or criticize the idea of a ginormous "all in one" castle.


West Edmonton Mall was the largest mall in the world until 2004. The same company also did the Mall of America near MSP. It has a theme park, a water park, a full sized hockey arena, along with more shoe stores than one can imagine (like 75 in the mall).

http://www.wem.ca/#/play/theme-parks-at ... galaxyland

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