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

Thu Sep 05, 2019 4:32 pm

TObound wrote:
But Thailand is not close to India poor.....so to speak.

True. But Thailand is not a developped economy either. In fact, India is way more industrialized & top-tech, have the A-bomb, launch satellites, even produce airplanes under Russian licence. Not trying to twist metrics, the point is most of SE-Asia still fits the "third world" definition way more than it does that of "first world" or of developped economy. With the exceptions of course of Tiger Singapore, an anomaly in the Malay peninsula ( in many respects, like if LA or all of CA seceded ), which funnily enough belonged to the KIngdom of Thailand before the Brits set out to invite themselves all over at gun point. Malaysia may now be in the developped club, but not TH up north.

TObound wrote:
I find it hard to accept that BKK and Thai's focus is connections and not the massive inbound tourist demand.

I never said that. DMK & BKK, and now tiny UTP, all serve the wider BKK region with focus on inbound tourism. But both because of lower fares ( compared to SIN ), better geography & booming connecting traffic, BKK is now on the connector's map.

TObound wrote:
Have visited all of those. And have family in several of those places. I wouldn't consider DEL or BOM easy stopover vacations by any count. Unless of you're of Indian descent, the place would seem insanely chaotic compared to IST, DXB, AUH or DOH. Just think of getting around in all those cities or food safety. Then tell me it doesn't require a fairly adventurous spirit to choose DEL or BOM over the rest for a short stay.

You lived in the swiss-like aeseptic UAE while I was brought up in SEAsia, one learns one ways & adapts to local culture.
Foodwise, there is no problem if one is used to local cuisines, I for one chronically get stomach aches in the US because food is so enriched with carbs & other "delicious molten butter" horrors. As you know, Thai, Viet, Lao, Malay or indonesian foods are healthy in everyway, rich & diverse.
As to India, yes, avoid any street food, "touch nothing but your own body" says a rule. But there is no need to be adventurous with stall-surfing to not enjoy all the touristic spots BOM, DEL and most big indian cities have. The world is not a clinic, the French eat frogs & moss-enriched cheeses that Scandinavians pasteurize & sell in void sealed plastic, the Chinese eat 100 days rotten eggs, Mexico & all of Asia eat seasonned insects ( not just crickets ), India's food is actually excellent, India is a millenia-old civilization like China, the kind first world citizens often look down upon while extolling their junk-food chains & cancerigenous processed fattening foods.
 
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 4:50 pm

TObound wrote:
Spiderguy252 wrote:
TObound wrote:
I have. And you think ET @ ADD is a superconnector?

With 80+ destinations served across all continents bar Australia with dozens and dozens of narrow and widebody aircraft, yes.

If the number of destinations and continents served is the definition than all of the major American carriers or discount carriers like Norwegian are superconnectors. Yet I doubt anybody would classify them as such.
I would argue that the percentage of revenue that is derived from international to international connections is what defines superconnectors. And on that front, there's only a handful.

ET operates from one single base . . . how about Norwegian?
Immigration officer: "What's the purpose of your visit to the USA?" Spotter: "Shooting airliners with my Canon!"
 
DWC
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 5:00 pm

patrickjp93 wrote:
DWC wrote:
I am aware of that, but read those threads before replying on an impulse.

No need to be a dickhead.
EK won't keep the A380s that long, no way. There may be SOME routes for which it makes sense, but not 30+ of them.

Likewise. Please save us your clichés, for again, you are not reading the threads pointed out to you & sticking to personal opinions.

A dedicated thread yesterday is precisely on STC just stating he is keeping them that long..

He or his successor may change that anytime, true, but because of the EK model, specifically, it makes sense to keep those frames flying longer as there are no available replacements. EK & DXB are thus adapting fast to a new environment.
You may have been lurking here more than the 2 weeks your profile says, but we have been discussing the evolution of EK, DXB & DWC for years and do see how Dubai's mirrific dreams are drastically adapting. Their recent announcements, dwindling profits, 80% loadfactors, STC's own sable-rattling, CN3 growth, QF bypassing their fellow in bed EK, all point to serious problems needing strong, fast & clear-cut changes.
 
patrickjp93
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 5:15 pm

DWC wrote:
Likewise. Please save us your clichés, for again, you are not reading the threads pointed out to you & sticking to personal opinions.

A dedicated thread yesterday is precisely on STC just stating he is keeping them that long..

He or his successor may change that anytime, true, but because of the EK model, specifically, it makes sense to keep those frames flying longer as there are no available replacements. EK & DXB are thus adapting fast to a new environment.
You may have been lurking here more than the 2 weeks your profile says, but we have been discussing the evolution of EK, DXB & DWC for years and do see how Dubai's mirrific dreams are drastically adapting. Their recent announcements, dwindling profits, 80% loadfactors, STC's own sable-rattling, CN3 growth, QF bypassing their fellow in bed EK, all point to serious problems needing strong, fast & clear-cut changes.

STC is known for rattling sabres to get better deals, but with Air France, BA, Singapore, Etihad, and Malaysia looking to offload their A380 fleets by 2026-28, the only big maintenance customer left will be Emirates, which won't be enough to keep those maintenance centers all over the world turning a profit, which means higher prices by Airbus, GE/PW, and RR for service, which means higher ticket prices or lower margins on the A380 flights for Emirates, so it's in a death spiral. Nothing cliche about it. The calculus does not support the A380s flying en masse for another 15 years for Emirates, just on just a few routes. The 777X will replace every single frame as it departs while up-gauging the appropriate 777-300ER routes and the A350 replaces the other 777-300ER routes (777-8 probably dead in the water without Project Sunrise unless it's a standalone freighter variant).

I don't care what STC says. People say crap all the time, bluff all the time, try to get better deals all the time. That's the world of business politics. I care about the facts and figures that drive his industry, and those numbers and their projections say he's full of crap.
 
DWC
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 5:40 pm

patrickjp93 wrote:
I don't care what STC says. People say crap all the time, bluff all the time, try to get better deals all the time. That's the world of business politics. I care about the facts and figures that drive his industry, and those numbers and their projections say he's full of crap.

You've made it very clear you don't listen to others.
Yet they matter as much as facts, because they state other facts that lead them to word things in certains ways.
Because you care about figures, you must visualize why keeping the A380 actually simplifies EK woes a lot & helps them not to move to DWC which, if it ever happens, as things stand today, will be after the A380 era.

More to the point, EK service their own frames.
They will buy in advance all they need before Airbus eventually shuts down all parts manufacturing.

I don't particularly appreciate some of STC's ungentlemanly behaviour, but I can tell this much : he is no crap. He means everything he says. Both OEMs have not been to his standards, which led STC & AAB to raise their tone. I have been following STC for some time, I deem all he says is rational & directly to the point : "you are not delivering to the specs, that causes me great troubles, I'll throw in a tantrum until you do & in public for good measure to make sure you do not forget & mend the problems fast".
With Airbus & Boeing ( courtesy GE & RR ) underperforming in that respect, there is little else he can do other than being vocal to speed things up, there are no other manufacturers he can turn to at this point.

But Dubai was in talks to have Airbus have a FAL in DWC - didn't happen
But there also were talks to have one with the Russians : could FZ be eying the MC-21 ? or EK the 929 ? ( that I doubt ).
Dubai wants to have aircraft manufactured on their territory because aviation is their key to economic sustainability.
Point is STC & successors are playing a life & death game for Dubai's economy, they think much further than most CEO's, they have proven they will do everything possible to maximize their stakes. EK alone is proof of that. FZ is another. DXB by all means. DWC shows how big they dreamt. The whole of Dubai is an economic miracle (not one I condone), I flew there as a kid, was not impressed & never saw it coming to what it is today.
 
patrickjp93
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 5:59 pm

DWC wrote:
You've made it very clear you don't listen to others.

I listen, and I have a fairly good BS detector. He means what he intends, not what he says. He's incredibly straightforward with his actions, but his words often don't match.
Yet they matter as much as facts, because they state other facts that lead them to word things in certains ways.
Because you care about figures, you must visualize why keeping the A380 actually simplifies EK woes a lot & helps them not to move to DWC, which if it ever happens as things stand today, will be after the A380 era.

It wouldn't. Unless you've got a crystal ball that says fuel prices are going to go back down to, and stay, at $50/barrel within the next 5 years and stay for another 10, Emirates' fuel hedging is about to run out. The profitability of the A380 is falling out of the sky for all parties involved except ANA.

Yes it keeps their 2-frame fleet, but maintenance-wise they still pay both RR & PW money they wouldn't have to if they shifted to an all-Boeing fleet, and that's on top of 30% worse fuel economy. Better to lose a LITTLE business to Etihad and Qatar now than have all of your cash go up in flames and leave you paralyzed and helpless to affect strategic change. Those two can't even make profit right now.
More to the point, EK service their own frames.

Using contractors hired full time from the above parties, not actual internal staff.
They will buy in advance all they need before Airbus eventually shuts down all parts manufacturing.

No one is that good.

I don't particularly appreciate some of STC's ungentlemanly behaviour, but I can tell this much : he is no crap. He means everything he says. Both OEMs have not been to his standards, which led STC & AAB to raise their tone. I have been following STC for some time, I deem all he says is rational & directly to the point : "you are not delivering to the specs, that causes me great troubles, I'll throw in a tantrum until you do & in public for good measure to make sure you do not forget & mend the problems fast".
With Airbus & Boeing ( courtesy GE & RR ) underperforming in that respect, there is little else he can do, there are no other manufacturers he can turn to at this point.

But Dubai was in talks to have Airbus have a FAL in DWC - didn't happen
But there also were talks to have one with the Russians : could FZ be eying the MC-21 ? or EK the 929 ? ( that I doubt ).
Dubai wants to have aircraft manufactured on their territory because aviation is their key to economic sustainability.
Point is STC & successors are playing a life & death game for Dubai's economy, they think much further than most CEO's, they have proven they will do everything possible to maximize their stakes. EK alone is proof of that. FZ is another. DXB by all means. DWC shows how big they dreamt. The whole of Dubai is an economic miracle (not one I condone), I flew there as a kid, was not impressed & never saw it coming to what it is today.[/quote]
GE hasn't messed anything up for STC. The 777X is still slotted for its original Q4 2020 delivery as long as GE delivers the updated test engines in early Q1. STC is making much ado about nothing when it comes to GE. RR though deserves every tongue lashing they get. I'm shocked Boeing hasn't yet sued them or publicly accused them of sabotaging the Dreamliner in order to shelter the european plane maker from competition. For the T7000 and XWB to have launched perfect but the 1000 to be in its abysmal shape even now is utterly unacceptable and smells of sabotage.
 
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 6:14 pm

patrickjp93 wrote:
No one is that good.

The EK group are very good, they are an integrated service Zaibatsu. One that is gathering market share in Europe & elsewhere ( like Dnata ).
Even Dubai are very good at predicting their development, the only thing is that they are cash-strapped because they often spend more than they expect to get : economic downturns, IST rumping up, war in Yemen, glitches, CN3 playing catch up, EU capping their bilaterals, etc.

Because no one has yet matched the speed & scope of development of both EK & emirate Dubai, I can tell you as an economist they are way above most governements. The only close example with a comparable population is Singapore, but then it is a different animal. much more diversified in terms of services & industry, plus is amongst the top 3 ports worldwide. What can DXB port do ? service Irak ? Iran & Saudi Arabia don't need it. Qatar & Bahrain can fly everything in.
So having an economic boom through one Airline Konzern is nothing short of wondrous.
While the EK & the EK group are run commercially ( some say not, but they are ), the very owners & the integration of the EK group as a whole to the local economy is that of one government where the EK group would be the powerful combined Ministry of Economy & Transport. Aviation alone yields some 25% of Dubai's GDP.

Back to the thread, DWC.
What are they going to do with it ?
They obviously wanted to corner QR and stunt some of EY.
But with EY curtailed to a boutique airline á la Oman Air, QR growing faster than EK, what are their next moves ?
I tell you, halting DWC for now makes sense. But they bet their future on aviation & all that flies with it : what cards to they have up their sleeves ? Don't anyone say they haven't, because Dubai had their plans up their sleeves a decade before it really broke out to the world. They have been building & thinking further ever since, it is us who are lagging behind.
 
patrickjp93
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 6:45 pm

DWC wrote:
The EK group are very good, they are an integrated service Zaibatsu. One that is gathering market share in Europe & elsewhere ( like Dnata ).
Even Dubai are very good at predicting their development, the only thing is that they are cash-strapped because they often spend more than they expect to get : economic downturns, IST rumping up, war in Yemen, glitches, CN3 playing catch up, EU capping their bilaterals, etc.

Because no one has yet matched the speed & scope of development of both EK & emirate Dubai, I can tell you as an economist they are way above most governements. The only close example with a comparable population is Singapore, but then it is a different animal. much more diversified in terms of services & industry, plus is amongst the top 3 ports worldwide. What can DXB port do ? service Irak ? Iran & Saudi Arabia don't need it. Qatar & Bahrain can fly everything in.
So having an economic boom through one Airline Konzern is nothing short of wondrous.
While the EK & the EK group are run commercially ( some say not, but they are ), the very owners & the integration of the EK group as a whole to the local economy is that of one government where the EK group would be the powerful combined Ministry of Economy & Transport. Aviation alone yields some 25% of Dubai's GDP.

Back to the thread, DWC.
What are they going to do with it ?
They obviously wanted to corner QR and stunt some of EY.
But with EY curtailed to a boutique airline á la Oman Air, QR growing faster than EK, what are their next moves ?
I tell you, halting DWC for now makes sense. But they bet their future on aviation & all that flies with it : what cards to they have up their sleeves ? Don't anyone say they haven't, because Dubai had their plans up their sleeves a decade before it really broke out to the world. They have been building & thinking further ever since, it is us who are lagging behind.


A lot of that economic rear kissing is hogwash. Dubai is on the hook with the Chinese for so much underwriting of its development it'll collapse if they're not extremely careful. Let's not forget Berge Kalifa and other iconic buildings having to be renamed because Abu Dhabi bailed out the Dubai government mid-project. Dubai developed as an airline hub because of its very lucky geographic location in addition to its common sense development of their natural resources. Building a lavish tourist trap was common sense as well. It's hardly brilliance. If you put the population of Singapore in the UAE before DXB was built it would be an economic power equivalent to the entire EU by now, or at the very least EU minus the UK.

We know EK, EY, and QR are getting fuel subsidies from their governments, but that won't stave off the economic realities of the price of jet fuel refining and its scarcity forever now that the U.S. is keeping OPEC on a leash. You can't hide behind fuel subsidies if the national profits on crude oil are in the pits. Emirates has demonstrated a unique command of air travel economics, but between the ability to transfer FF points to other airlines in the same alliance who have direct flights now vs. 10 years ago, the falling tourism demand of the UAE, and the local tensions under the current U.S. regime, I'm sorry but I don't see STC's brilliance in managing the real economic drivers of the airline industry.

Just as with ancient mainframe technology, sure, you can eventually get 3rd party fabricators to come along and replace parts, at a premium, but that's worthless if the product being maintained can't turn a profit for more fundamental reasons.

If the A380 falls out of the EK fleet at the rate it's expected to, DXB won't be able to refurbish their terminals for their E-sized replacements nearly quick enough to keep landing slots and gates open for them. DWC will become a necessity. The only way that doesn't happen is if demand to travel via Dubai collapses to the point you don't need 2 planes to replace every A380 flight. In that event, Dubai's economy itself will collapse, which is a topic for another thread.
 
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 8:14 pm

patrickjp93 wrote:
If the A380 falls out of the EK fleet at the rate it's expected to, DXB won't be able to refurbish their terminals for their E-sized replacements nearly quick enough to keep landing slots and gates open for them. DWC will become a necessity. The only way that doesn't happen is if demand to travel via Dubai collapses to the point you don't need 2 planes to replace every A380 flight. In that event, Dubai's economy itself will collapse, which is a topic for another thread.


Good summary of the discussion at hand. This is why I don't see the sense in stopping construction on the new airport. They are going to get capped out on movements at DXB eventually. Unless they don't see that growth coming. But broadly, I would still think consolidating EK, EY and FZ into a single operation at DWC makes sense.
 
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Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 05, 2019 11:21 pm

Let us wait for the Dubai Air Show, me might get additional information.

And no, not everyone knows they are getting "subsidies", i.e. real gov money, their accounts are audited, you can check them if you wish.
But, there are no taxes on oil, no meaningful corporate taxes, all of which technically work as a hidden subsidy ( thinking of Boeing's Tax Breaks & military subsidies ), there is no doubt it is intended that way, but legally they are not. The argument is that any airline flying to DXB can purchase fuel at the same price as EK, which might get a discount considering the volumes they buy - a standard commercial practice for most items sold anywhere in the world.

While that is rationale most buy, it is spurious, because to the rest of the world, next to no taxes is unfair competition. I see no reason why destination countries would not tax EK to put their service costs at the level of their airlines, that is allowed with WTC rules and would settle matters once & for all. Add to that lower salaries to FAs ( compared to the EU legacies at least ) & ground personnel, and the economic unfairness widens. Now, FAs & pilots do get sizable advantages in Dubai : no taxes, no consumer taxes, free health insurance, free medical care, FAs get free shared appts, I heard pilots are entitled to handsome houses with a private beach, all of which EK like to highlight, it is therefore to each expat to weigh benefits & trade-offs. Facts are that EK has grown dramatically, essentially since the late 1990s, but that today their workforce turnover is strong & intended that way ( dont want mature & opinionated personal, that's unwieldy ), they had a pilots shortage not long ago, not to mention the CN3 offering pilots very handsome salaries.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 12:56 am

[quote="patrickjp93"] Better to lose a LITTLE business to Etihad and Qatar now than have all of your cash go up in flames and leave you paralyzed and helpless to affect strategic change. Those two can't even make profit right now.
[quote]
EK is in survival mode as profits of 2% leave them vulnerable. Dubai *needs* cash from EK (Emirates the airline subsidizes the Emirate of Dubai, not the other way around). To keep the rest of Dubai economy going, EK must increase profits.

Oh, I think TK and ET will take the little bit of business, Etihad and Qatar will continue to struggle.

We have another thread where EK is going to peak at 115 A380s and then downsize to 90 to 100 by 2025 and then retire the A380 fleet by 2035:
viewtopic.php?f=3&t=1430669

The strategic turn has begun.
So we can expect DWC to be a bit of a ghost town. I see the ~1 million passengers per year being sustainable with cargo, but not much else (current surge only due to DXB runway closure).

Connecting yield is worsening. That means shrink to a higher share of O&D.

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patrickjp93
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 1:07 am

DWC wrote:
Let us wait for the Dubai Air Show, me might get additional information.

And no, not everyone knows they are getting "subsidies", i.e. real gov money, their accounts are audited, you can check them if you wish.
But, there are no taxes on oil, no meaningful corporate taxes, all of which technically work as a hidden subsidy ( thinking of Boeing's Tax Breaks & military subsidies ), there is no doubt it is intended that way, but legally they are not. The argument is that any airline flying to DXB can purchase fuel at the same price as EK, which might get a discount considering the volumes they buy - a standard commercial practice for most items sold anywhere in the world.

While that is rationale most buy, it is spurious, because to the rest of the world, next to no taxes is unfair competition. I see no reason why destination countries would not tax EK to put their service costs at the level of their airlines, that is allowed with WTC rules and would settle matters once & for all. Add to that lower salaries to FAs ( compared to the EU legacies at least ) & ground personnel, and the economic unfairness widens. Now, FAs & pilots do get sizable advantages in Dubai : no taxes, no consumer taxes, free health insurance, free medical care, FAs get free shared appts, I heard pilots are entitled to handsome houses with a private beach, all of which EK like to highlight, it is therefore to each expat to weigh benefits & trade-offs. Facts are that EK has grown dramatically, essentially since the late 1990s, but that today their workforce turnover is strong & intended that way ( dont want mature & opinionated personal, that's unwieldy ), they had a pilots shortage not long ago, not to mention the CN3 offering pilots very handsome salaries.

Audits are nearly worthless. My ex housemate worked audit for 15 years for EY, PWC, and others, and outside the actual financial services industry, they're not remotely qualified to be auditing the books of any outside industry. That's why the turnover rate in audit is so high. No one can build that kind of experience with the machinations of these companies to hide money in purchases, sub-divisions of transactions, and inflated figures.

Fooling auditors is extraordinarily easy.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 1:09 am

DWC wrote:
Let us wait for the Dubai Air Show, me might get additional information.

And no, not everyone knows they are getting "subsidies", i.e. real gov money, their accounts are audited, you can check them if you wish.
But, there are no taxes on oil, no meaningful corporate taxes, all of which technically work as a hidden subsidy ( thinking of Boeing's Tax Breaks & military subsidies ), there is no doubt it is intended that way, but legally they are not. The argument is that any airline flying to DXB can purchase fuel at the same price as EK, which might get a discount considering the volumes they buy - a standard commercial practice for most items sold anywhere in the world.

While that is rationale most buy, it is spurious, because to the rest of the world, next to no taxes is unfair competition. I see no reason why destination countries would not tax EK to put their service costs at the level of their airlines, that is allowed with WTC rules and would settle matters once & for all. Add to that lower salaries to FAs ( compared to the EU legacies at least ) & ground personnel, and the economic unfairness widens. Now, FAs & pilots do get sizable advantages in Dubai : no taxes, no consumer taxes, free health insurance, free medical care, FAs get free shared appts, I heard pilots are entitled to handsome houses with a private beach, all of which EK like to highlight, it is therefore to each expat to weigh benefits & trade-offs. Facts are that EK has grown dramatically, essentially since the late 1990s, but that today their workforce turnover is strong & intended that way ( dont want mature & opinionated personal, that's unwieldy ), they had a pilots shortage not long ago, not to mention the CN3 offering pilots very handsome salaries.

You do realize EK subsidizes the Emirate of Dubai, right? EK's profits go to fund the Emirate. The Emirate is hurting for cash (e.g., stopping construction at DWC).
Dubai couldn't afford to subsidize EK, the number 1 business. The main income of the Emirate, besides EK group, is hotel taxes. So in many ways, the whole thing is tied together.

I don't understand the angst. Connecting yield is poor, so EK cannot grow. EK would benefit from more China or India bilateral air service rights, but no one is expecting that near term. Because of the poor profits last year (2%), the STC is having to adapt.

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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 1:42 am

patrickjp93 wrote:
Audits are nearly worthless. My ex housemate worked audit for 15 years for EY, PWC, and others, and outside the actual financial services industry, they're not remotely qualified to be auditing the books of any outside industry. That's why the turnover rate in audit is so high. No one can build that kind of experience with the machinations of these companies to hide money in purchases, sub-divisions of transactions, and inflated figures.
Fooling auditors is extraordinarily easy.


You have no idea how much I agree with you, Enron & Arthur Andersen's demise come to mind.
I am trained in accounting & the things I have seen in "window dressing" are mind-blowing.
And yet these are the so-called guarantees called for by the so-called market forces.

Last, it is company boards who choose their accountant companies, it is them who pays them.
There is a material & moral conflict of interest, very well known in the profession btw : accountancies want contracts & want to resume them the year after. Sometimes when audits are not certified, companies go to another of the sisters, just like some change doctors who don't want to prescribe the pills or treatment they want.
So better be nice. And be smart. You can cheat but don't let yourself caught.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 2:07 am

lightsaber wrote:
I don't understand the angst. Connecting yield is poor, so EK cannot grow. EK would benefit from more China or India bilateral air service rights, but no one is expecting that near term. Because of the poor profits last year (2%), the STC is having to adapt.

It has to adapt, yes, but you miss the whole point of EK by focusing on profits only.
While it is anathema to anyone not thoroughly trained in economics, profits is not what matters really : in balance sheets, profits is what is left after all has been paid, salaries, investments, amortizations, etc. Basically most of a company's turnover goes as intermediate payments to the economy & fuels it. You can perfectly have a Zero-profit company, which is the hushed aim of free market economics you gave me a warning for after people kept producing asinine proofs of what they thought cmarket & competition are about.

Profits are to pay shareholders, but that is not the model epitomized elsewhere : most Japanese & Chinese majors for instance actually limit profits & "internalize them" as actual or future investments. Singapore did & does the same with its citizens, retaining compulsory savings ( up to 40% of their salaries ) to fund the economy, the parallel being that both consumers' purchasing power & what is left as corporate profits are less important to the economy than intermediate payments & investments.

In the case of EK, as most services & payments are paid to other Dubai companies, it is immaterial if the amounts come from the bottom-line of from line items up their balance sheets. It looks good if EK post profits to pay royalties to the Emirati downpayment 33 years ago, but it can be directly done through other kinds of payments, like extending the workforce ( salaries that feed the economy ), developping their other companies, buying gov. bonds ( I don't know if they do, but it is a way ), investing in hotels, tourism, buying shares elsewhere in Dubai. In addition, EK own very few aircrafts precisely in order to free cash flow for such said payments.
Thus what matters in economic development is maximizing the whole model under constraints ( derive your yield function minus all cost functions & calculate the optima ). EK is fully integrated to the Dubai Economy, so the whole model I suspect uses many parameters out of EK only. Profit is just one variable that can be chosen to be maximized, but it's a just choice, there are other variables that can be selected. Profits is thus a matter of opinion. The wider picture integrates other variables, that is why the likes of China have been leap-frogging the West, for there are so-called leap-frogging mathematical models.

Profit maximization is a very short-term & shallow perspective, whereby a few pocket in millions instead of investing, sometimes leaving their companies in shambles ( F. Lorenzo & other raiders did marvels destroying US airlines for their own profit ). Like Ford it its time, Asian companies take a smarter strategy, investment & process maximization, of which Toyota is an industry leader : all workers are asked to share ideas to gain productivity. In the end, the Toyota model not only has the lowest costs in the car industry, but also the highest profits, things are changing in Japan too. Ford in its time paid their workers well so they could purchase a Ford T. EK do not pay their FAs that well.
Seems QR & EK reengineered the airline business using some lessons from Toyota, both airlines are known to control their costs well, I think it is even you who pointed out how lenient EK are. Their dive in profits is due to other factors : fuel costs, increased competition depressing some of the yields, but not by much, because EK does not need to lower their fares as much as QR or the CN3 ( prices US-China are now often like transcon US ) to gain market share.
Last edited by DWC on Fri Sep 06, 2019 2:26 am, edited 1 time in total.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 2:23 am

DWC wrote:
lightsaber wrote:
I don't understand the angst. Connecting yield is poor, so EK cannot grow. EK would benefit from more China or India bilateral air service rights, but no one is expecting that near term. Because of the poor profits last year (2%), the STC is having to adapt.

It has to adapt, yes, but you miss the whole point of EK by focusing on profits only.
While it is anathema to anyone not thoroughly trained in economics, profits is not what matters really : in balance sheets, profits is what is left after all has been paid, salaries, investments, amortizations, basically most of a company's turnover go as intermediate payments to the economy to fuel it. You can perfectly have a Zero-profit company, which is the hushed aim of free.market economics you gave me a warning for after people kept producing absurd proofs of what the market is about.

Profits are to pay shareholders, but that is not the model epitomized elsewhere : most Japanese & Chinese majors for instance actually limit profits & "internalize them" as actual or future investment. Singapore did & does the same with its citizens, retaining compulsory savings ( up to 40% of their salaries ) to fund the economy, the parallel being that consumers' purchasing power or corporate profits are less important to the economy than intermediate payments to investments.

In the case of EK, as most services & payments are paid to other Dubai companies, it is immaterial if the amounts come from the bottom-line of from line items up their balance sheets. It looks good if EK post profits to pay royalties to the Emirati downpayment 33 years ago, but it can be directly done through other kinds of payments, like extending the workforce ( salaries that feed the economy ), developping their other companies, buying gov. bonds ( I don't know if they do, but it is a way ), investing in hotels, buying shares in Dubai. In addition, EK owns very few aircrafts, in order to free cash flow for all these payments.
Thus what matters in economic development is maximizing the whole model under constraints ( derive your yield function minus all cost functions & calculate the optima ). EK is fully integrated to the Dubai Economy, so the whole model I suspect uses many parameters out of EK only. Profit is just one variable than be chosen to be maximized, but it's a choice, there are others. Thus profits is a matters of opinion. The wider picture integrates other variables, that is why the likes of China have been leapfrogging the West, in fact there also are leap-frogging mathematical models.

Profit maximization is a very short-term & shallow perspective whereby a few pocket in millions instead of investing, often leaving their companies in shambles ( F. Lorenzo & other raiders did marvels destroying US companies ). Like Ford it its time, Asian companies take a smarter strategy, investment & process maximization, of which Toyota is a prime example : all workers are asked to share ideas to gain productivity. In the end, the Toyota model not only has the lowest costs in the car industry, but also the highest profits, things are changing in Japan too. Ford in its time paid their workers well so they could purchase a Ford T. EK do not pay their FAs that well.
QR & EK are known to control their costs well, I think it is you who pointed out how lenient EK are.
Their dive in profits is due to other factors : fuel costs, increased competition depressing some of the yields, but not by much, because EK does not need to lower their fares as much as QR or the CN3 ( prices US-China are now often like transcon US ) to gain market share.

Without profit, Dubai goes under. This isn't a company. Instead of Taxes, the profits from Dubai fund the city state. Yes, there are other variables, but my point is without EK generating profits, they cannot subsidize Dubai. In liu of taxes, Dubai grants Dubai first dibs on profits.

They don't get taxed, they surrender the first profits to the city. So yes, maximize yield, but the way EK group is structured, profits=cash flow available to the Emirate.

China can have other parts of the economy subsidize the airlines, not Dubai.

Yes, EK must invest. But right now they are having to reduce investment (this thread, DWC) because there just isn't the cash.
The Emirate is sharply cutting investment in hotels, infrastructure, and everything else because Dubai's free cash flow is really only from two sources:
1. Emirates Group
2. Hotel taxes

The Hotel occupancy is flat, so there is no more money from that. The only way to re-invigorate growth in Dubai is more free cash (profit) from the Airline group.
Dubai did most of what you suggested, but it was funded by EK's surplus cash (profits).

Due to how EK borrows, they cannot fudge their profits as much as a Western company. Cest la vie.

Until EK's profits grow, Dubai is stagnant.

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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 2:40 am

lightsaber wrote:
Without profit, Dubai goes under. This isn't a company. Instead of Taxes, the profits from Dubai fund the city state. Yes, there are other variables, but my point is without EK generating profits, they cannot subsidize Dubai. In liu of taxes, Dubai grants Dubai first dibs on profits.

They don't get taxed, they surrender the first profits to the city. So yes, maximize yield, but the way EK group is structured, profits=cash flow available to the Emirate.

Yes, EK must invest. But right now they are having to reduce investment (this thread, DWC) because there just isn't the cash.

The Hotel occupancy is flat, so there is no more money from that. The only way to re-invigorate growth in Dubai is more free cash (profit) from the Airline group.
Dubai did most of what you suggested, but it was funded by EK's surplus cash (profits).

People conflate added-value with profits.
EK produce inmense added value that go as intermediate payments to the Dubai economy.
Consider the hypothesis that ALL of EK's turn over is actually spent in Dubai. Whether they actually post a profit or not does not change a iota, because all the money and its added-value ( of which profits is only the small part that is left ) has gone to Dubai, other than actually fueling it, the government can tap them indirectly, specially that they own pretty much every grain of sand. This hypothesis is not true, because EK do make payments abroad, but you saw their books, you see where the money goes.
In the mining industry, majors keep years of zero-profit while making huge added-value, prevents them from paying royalties & taxes, as these are indexed on profits. Money is kept in the books as investments, organic growth, acquisitions, board ballooning salaries, etc, imagination is limitless. Oil companies do the same, but up to a point, because they are so visible that it is wise to share some corporate tax with the government. There are specialized companies in precisely minimizing profits while maximizing gains. They do not need to be off-shore.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 7:33 am

lightsaber wrote:
.

Yes, EK must invest. But right now they are having to reduce investment (this thread, DWC) because there just isn't the cash.
The Emirate is sharply cutting investment in hotels, infrastructure, and everything else because Dubai's free cash flow is really only from two sources:
1. Emirates Group
2. Hotel taxes

The Hotel occupancy is flat, so there is no more money from that. The only way to re-invigorate growth in Dubai is more free cash (profit) from the Airline group.
Dubai did most of what you suggested, but it was funded by EK's surplus cash (profits).


There isn't the cash to invest? You should read Emiratess financial reports. They have $4bn or more in cash.

on hotels, you clearly haven't been to dubai. The places is packed. Sure, not everyone hotel is full, but the majority of the big chain hotels are always full and are not cheap.

plus, dubai economy not built on emirates. Theme parks, financials centre, tourist, families, gcc, intra- UAE trade, non-gcc trade - dubai economy is very diverse and strong.

Far stronger than say Istanbul, which you always hype. One terror attack in Turkey and all bets are off. Even TK is whining about the new ist airport not being fit for purpose - and you think it will overtake dubai?

Ha! No cghance.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 12:23 pm

FrenchPotatoEye wrote:
lightsaber wrote:
.

Yes, EK must invest. But right now they are having to reduce investment (this thread, DWC) because there just isn't the cash.
The Emirate is sharply cutting investment in hotels, infrastructure, and everything else because Dubai's free cash flow is really only from two sources:
1. Emirates Group
2. Hotel taxes

The Hotel occupancy is flat, so there is no more money from that. The only way to re-invigorate growth in Dubai is more free cash (profit) from the Airline group.
Dubai did most of what you suggested, but it was funded by EK's surplus cash (profits).


There isn't the cash to invest? You should read Emiratess financial reports. They have $4bn or more in cash. EK has debt, mostly against aircraft.

on hotels, you clearly haven't been to dubai. The places is packed. Sure, not everyone hotel is full, but the majority of the big chain hotels are always full and are not cheap.

plus, dubai economy not built on emirates. Theme parks, financials centre, tourist, families, gcc, intra- UAE trade, non-gcc trade - dubai economy is very diverse and strong.

Far stronger than say Istanbul, which you always hype. One terror attack in Turkey and all bets are off. Even TK is whining about the new ist airport not being fit for purpose - and you think it will overtake dubai?

Ha! No cghance.

A business holds cash on hand. Airlines, as a capital intensive Enterprise, must have billions on hand.

Hotel occupancy in Dubai has flatlined. I understand Dubai has more hotel rooms than any city, but that isn't growth. I'm sure certain hotels at the better locations are full and pricey. But the city needs more occupied to increase revenue.

I'm well aware of the theme parks. Did you note my proposal upthread that Dubai would benefit from a Disneyland?

It isn't Dubai won't thrive. They are just curbing construction to preserve cash:
http://m.startribune.com/dubai-to-curb- ... 559164532/

In the related engine thread STC is quoted that EK will peak at 115 A380 and by 2025 will be down to 90 to 100.

EK is strategically going to shrink. Transfer traffic has, today, lower yield. Premium passengers want direct flights. What is EK's O&D traffic? I estimate around 30%. Whatever it is, the LOW profits, consistently declining, are a sign that transfer traffic isn't profitable.

I talk about IST as a competitor due to the high O&D traffic enabling profitable connection addition.

I'm a fan of EK/STC overall. But that doesn't mean I don't recognize:
1. EK must cut costs to divert funds to the Emirate.
2. Their only 'easy' cost cutting is to replace current aircraft with aircraft that burn less fuel per passenger.
4. The competition from QR, EY, ET, TK and bypass won't relax.
5. EK's partner QF is desperately trying to deny sharing premium revenue by routing flights through SIN and the PER-LHR direct flight.
6. China isn't playing fair and is using high domestic fares to help subsidize bypass flights.
7. The mid-East region is in a recession, which is hurting EK's business as well as Dubai banking and wholesale distribution.

This thread is on the halt of DWC construction. For EK/FZ to progress, they must move to the new airport. But wait, construction has been halted for years, the DWC airport is already built up to handle 10x the peak traffic, and now officially done for a decade.

Dubai is being smart and strategically accepting a small recession to keep from getting too deep in debt and suffering a deep recession that could be far worse.

I personally would have preferred to see EK move over to DWC, have a Disneyland and the Dubai/Abu-Dhabi boarder, more hotels, rail to DWC, and further growth in the most Western friendly city of the region. But there is a $50+ billion USD shortfall to that pipe dream. EK must get more profitable to fund anything so the profits may be reinvested.

To paraphrase pretty woman, no money no love. Dubai isn't desperate, but I see the Emirate staying important, but treading economic water for at least a decade.

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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 12:46 pm

lightsaber wrote:
Dubai isn't desperate, but I see the Emirate staying important, but treading economic water for at least a decade.

It seems EK is making the realization that it needs to move from being a growth company to being a mature company later than it ideally would have.

Some of the factors that stopped growth were beyond its control, such as the emergence of airline and airport rivals, and a larger spectrum of aircraft capable of profitably bypassing hubs.

Yet I would suggest all were not that hard to see coming several years in advance.

The fact they weren't acted upon earlier seems to be that EK's self image is that of a growth company and anything that did not fit that image was rejected.

The transition to maturity is difficult for companies just like it is for humans.

It does come in a hurry, especially if you are not looking for signs of it arriving.

Like most humans, EK seemed to be intentionally looking the other way.

The good news for EK is that it still has rich parents and money in the bank, so it should be fine, once it gets through the awkward coping phase.

But man, that coping phase is pretty darn awkward.
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 3:20 pm

Revelation wrote:
Some of the factors that stopped growth were beyond its control, such as the emergence of airline and airport rivals, and a larger spectrum of aircraft capable of profitably bypassing hubs.
Like most humans, EK seemed to be intentionally looking the other way.

I think not. EK have proved amply they know what they are doing & have been doing all along.
We have discussed the merits of using smaller WBs instead of A380s, but they deem they will be using 115 of them until 2025 and about 90-100 up to 2035. So what I see is EK are actually streamlining their fleet to maximize yields, therefore added-value, which will translate into profits but more so into other capital expenditures.
As QR & the CN3 are not folding anytime soon, they'll leave the lower fares to them, which they have been doing for a number of years, and my current reading is that the EK group is going SIA's way, positionning EK as a more premium carrier like SQ, FZ like Scoot/Silk Air, while leaving the spoils to Sharja's AirArabia & the other airlines around ( GF, SV, WY, QR, IR ).
This means Dubai itself will have to up their game, with more high-end touristic attractions.


lightsaber wrote:
I'm well aware of the theme parks. Did you note my proposal upthread that Dubai would benefit from a Disneyland?

Lightsaber wants Mickey Mouse in the UAE.
It is typical of American thinking that the world wants to embrace such shallow pop icons. Knowing the UAE, that is not happening soon, because of image, culture, respect, etc.The case of Disney in Japan is different, because the Japanese with all their traditionnal culture are also very manga-oriented. Furthermore, anyone who's been to Tokyo Disneyland will see how the Japanese have adapted the US concept to their needs : in Japan, Disneyland is a franchise run by the Japanese, whereas EuroDisneyland as it was called at launch is still run by the US mother company. The French example may go Lightsaber's way on the surface, but there are a few things to know first, for which I think that will never happen :
1) France is the largest touristic destination worldwide, in 2018 their 67 million inhabitants saw 90 millions tourists, compared to 75 million to the US with 327 million citizens. That means that France, with their single twin hub, CDG/ORY, sees five times more tourists per inhabitant than the world's first economic power ( or Second if China has indeed surpassed it ), NCE & LYS are way behind, not to mention that to achieve their own attraction, the US have to sustain a dozen international airports. This is to put the UAE into perspective : 3 mahor hubs, DXB, AUH and way behind, Sharjah.
2) Infratructure. The French, courtesy of their taxpayers, built direct highway & extended the RER A line (express wide gauge metro ) to Disneyland, with a direct TGV line conveniently linking it to CDG, on the North-South TGV axis & on the Paris-East TGV axis. The UAE has nothing of the sort, for all practical purposes they are a desert island in the middle of nowhere, just with heavy DXB connectivity. That is far from enough.
3) The capital expenditure to build a Disneyland anywhere require some 10 million visitors minimum per annum, Disneyland Paris needs 11 million or it loses money, which it has been over many years. Dubai in 2018 had only 15,92 million tourists. As said, France has 90 million tourists, half of that goes through the Parisian region, most of them come from neighbouring countries by car or train. A small fraction only of the 11 million needed come by air. This means the UAE would have to at least quadruple their number of tourists actually visiting Dubai, for Disneyland to consider their investment worth the trouble.
4) Disneyland made a blunder when they considered the French public would flock in : the French sneer at it ( see their press ), and if they go their once, they don't come back again, it is reap-off for any family budget of 4 and beyond. Plus consumerism with inflated priced burgers is just not in their culture. Point is, culturally speaking, I doubt a fourth of the local 10 million Emiratis would visit it, and not more than once.
5) The very nature of Disneyland caters to children & families. Unless you keep a kids soul, adults themselves have nothing to do in Disneyland. Considering the UAE's low birthrate, the very expensive accommodation for any foreign family flying in from abroad, I think the case of Disney in the UAE is DOD.
6) When Disneyland Paris was selected, the only major contendor anywhere in Europe was Barcelona. But it is seasonal, Disney need year round activity. That is why Disneyland is not in upstate NY or in buzzling Seattle or Vancouver. They could open one in Harbin though. Family travel is seasonal.
7) With all their grandiloquent projects built, in Dubai or Abu Dhabi next door ( Ferrari, F1 circuit, etc ), if Disneyland were a good idea it would already be there.
8) It is my reading Dubai is now going up-market, Disney is low-end. In terms of image & profitability, there are way better ideas, including some kinds of high-end theme parks.
9) Last, the % of royalties demanded by Disney destroy any interest from local financing, if there ever was one, plus it would be islamic financing.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 6:01 pm

TObound wrote:
Spiderguy252 wrote:
TObound wrote:
Not going to happen. Who is going to want to stop off in the "third world" on their stopover. I can't think of any major hub that's in such a country.


I take it that you haven't heard of Ethiopian Airlines and Addis Ababa then.


I have. And you think ET @ ADD is a superconnector?



Yes, ET @ADD is a superconnector, the best thing there is for a continent that is devoid of consistent air travel options. ADD overtook DXB as the larges connector in and out of Africa. Look up the list of destinations ET serves in Africa and you will find cities that no other European/Asian airline has dared to access, yet ET serves daily using modern aircraft and seamless connections at ADD.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 7:12 pm

PW100 wrote:
TObound wrote:
Spiderguy252 wrote:
With 80+ destinations served across all continents bar Australia with dozens and dozens of narrow and widebody aircraft, yes.

If the number of destinations and continents served is the definition than all of the major American carriers or discount carriers like Norwegian are superconnectors. Yet I doubt anybody would classify them as such.
I would argue that the percentage of revenue that is derived from international to international connections is what defines superconnectors. And on that front, there's only a handful.

ET operates from one single base . . . how about Norwegian?


Those goalposts keep moving...

Again. How much of ET's traffic is transfer vs. O/D to ADD?
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 7:19 pm

berari wrote:
TObound wrote:
Spiderguy252 wrote:

I take it that you haven't heard of Ethiopian Airlines and Addis Ababa then.


I have. And you think ET @ ADD is a superconnector?



Yes, ET @ADD is a superconnector, the best thing there is for a continent that is devoid of consistent air travel options. ADD overtook DXB as the larges connector in and out of Africa. Look up the list of destinations ET serves in Africa and you will find cities that no other European/Asian airline has dared to access, yet ET serves daily using modern aircraft and seamless connections at ADD.


In my opinion this mixes up regional hub and superconnector. I would venture there's more people taking the ME3+TK from Europe to Asia and Australia then ET. Fantastic airline nonentheless. And likely to take a lot of the Gulf Carrier's Africa business.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 7:22 pm

TObound wrote:
PW100 wrote:
TObound wrote:
If the number of destinations and continents served is the definition than all of the major American carriers or discount carriers like Norwegian are superconnectors. Yet I doubt anybody would classify them as such.
I would argue that the percentage of revenue that is derived from international to international connections is what defines superconnectors. And on that front, there's only a handful.

ET operates from one single base . . . how about Norwegian?


Those goalposts keep moving...

Again. How much of ET's traffic is transfer vs. O/D to ADD?


70+% is transfer at ADD.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 7:43 pm

berari wrote:
TObound wrote:
PW100 wrote:
ET operates from one single base . . . how about Norwegian?


Those goalposts keep moving...

Again. How much of ET's traffic is transfer vs. O/D to ADD?


70+% is transfer at ADD.


In that case I stand corrected. I didn't realize it was that high.

Still not sure they are in the same category as the ME3 and TK which are global connectors, not just regional hubs. In any event, this discussion is getting tedious and all comes down to how one defines the term "superconnector". I tend to think of it as an airline and hub that makes more global connection than a regional hub. But I concede that others may see that term differently.

I sort of look at it as the balance of both sides of the hub, the way CAPA looked at it here:

https://centreforaviation.com/analysis/ ... ion-251105
Last edited by TObound on Fri Sep 06, 2019 8:05 pm, edited 2 times in total.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 7:45 pm

DWC wrote:
Revelation wrote:
Some of the factors that stopped growth were beyond its control, such as the emergence of airline and airport rivals, and a larger spectrum of aircraft capable of profitably bypassing hubs.
Like most humans, EK seemed to be intentionally looking the other way.

I think not. EK have proved amply they know what they are doing & have been doing all along.
We have discussed the merits of using smaller WBs instead of A380s, but they deem they will be using 115 of them until 2025 and about 90-100 up to 2035. So what I see is EK are actually streamlining their fleet to maximize yields, therefore added-value, which will translate into profits but more so into other capital expenditures.

We see this differently.

I think EK has proven they know what they are doing in a growth phase, but as they say, past performance is not an indicator of future performance.

To me it's not a given that they will handle maturity better than they've handled the growth phase, and they will need to, since IMO the end of the growth phase has been handled poorly.

As for A380 fleet size, the quote I have is:

“This aircraft will still be flying in Emirates in 2035. The fleet will stabilise at about 115…and then probably go down to about 90-100 by the middle of the next decade. So, the A380 will remain a major component of our fleet mix for the next 15 years at least...

My interpretation of "middle of next decade" is 2025, your seems to be 2035.

Given the last A380 is coming off the line in 2021, I don't think we'll see "90-100 up to 2035", I'm thinking we'll be at 90-100 by 2025 and glide down to a handful by 2035, given that STC's successors will have their say on the future size and shape of the airline.

Putting 90-100 A380s through their 2nd heavy check in the 2030s and paying GP7200/T900 fuel bills out to 2035+ will be eye watering expensive, IMO, and I can't see it happening, despite how we may interpret what STC may be saying today.
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 8:00 pm

Revelation wrote:
DWC wrote:
Revelation wrote:
Some of the factors that stopped growth were beyond its control, such as the emergence of airline and airport rivals, and a larger spectrum of aircraft capable of profitably bypassing hubs.
Like most humans, EK seemed to be intentionally looking the other way.

I think not. EK have proved amply they know what they are doing & have been doing all along.
We have discussed the merits of using smaller WBs instead of A380s, but they deem they will be using 115 of them until 2025 and about 90-100 up to 2035. So what I see is EK are actually streamlining their fleet to maximize yields, therefore added-value, which will translate into profits but more so into other capital expenditures.

We see this differently.

I think EK has proven they know what they are doing in a growth phase, but as they say, past performance is not an indicator of future performance.

As for A380 fleet size, the quote I have is:

“This aircraft will still be flying in Emirates in 2035. The fleet will stabilise at about 115…and then probably go down to about 90-100 by the middle of the next decade. So, the A380 will remain a major component of our fleet mix for the next 15 years at least...

My interpretation of "middle of next decade" is 2025, your seems to be 2035.

Given the last A380 is coming off the line in 2021, I don't think we'll see "90-100 up to 2035", I'm thinking we'll be at 90-100 by 2025 and glide down to a handful by 2035, given that STC's successors will have their say on the future size and shape of the airline.

Putting 90-100 A380s through their 2nd heavy check in the 2030s and paying GP7200/T900 fuel bills out to 2035+ will be eye watering expensive, IMO, and I can't see it happening, despite how we may interpret what STC may be saying today.


Well put. The competition to EK has finally arrived in earnest. TK is a beast thanks to o/d at IST. And QR is being bankrolled by a government that actually has oil wealth, while EK has to generate something for their shareholders. India and China aren't going to be as generous with slots going forward. And in the case of India, it's airlines are maturing and forming partnerships with foreign carriers that would let them bypass DXB. The new normal is going to have to be an EK that drives yield with smaller aircraft flying to more destinations at higher frequencies where possible. The question I have is whether DXB can support the frequency growth they'll need as their business model shifts.
 
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Re: Dubai World Central (DWC) expansion officially halted

Fri Sep 06, 2019 11:58 pm

Has anyone proposed anything to grow at Dubai? I saw my few ideas were shot down.
Is EK/Dubai just doomed?

Hotel occupancy is at levels last seen at the Global financial crisis, (67%). Construction is slowing.

I'm ok with my ideas being shot down. But if there is no change when there is an obvious recession coming, than just hang on for a wild ride.

https://skift.com/2019/08/29/dubai-tour ... -2020/amp/

Interesting ET is a superconnector too. My opinion is that connecting yield is dropping. Is ET profitable?

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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 12:49 am

lightsaber wrote:
Has anyone proposed anything to grow at Dubai? I saw my few ideas were shot down.
Is EK/Dubai just doomed?

Hotel occupancy is at levels last seen at the Global financial crisis, (67%). Construction is slowing.

I'm ok with my ideas being shot down. But if there is no change when there is an obvious recession coming, than just hang on for a wild ride.

https://skift.com/2019/08/29/dubai-tour ... -2020/amp/

Lightsaber


I've observed nearby Vancouver, BC do the big build up for its Expo 86 and later on the Winter Olympics. Lots of money invested into transportation and facilities for a major event that will fill the city for an extended period. Expo 2020 starts in about a year. Lots of projects done 'ahead of time' to be ready for the festival. Lots of economic activity, lots of filled hotels, etc from the Contractors building the projects. But they are now done and the projects held back to not disrupt the festival haven't started. All in the hope the Expo does great, often things like this have mixed results.

Vegas has its ups and downs, for a few years there are dead resorts halted during construction, then suddenly new projects everywhere. Dubai will surf a similar wave.
 
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 5:46 pm

Revelation wrote:
We see this differently.
I think EK has proven they know what they are doing in a growth phase, but as they say, past performance is not an indicator of future performance.

Well, yes & no. I would agree if you are speaking of EY.
EK on the other hand are taking the coming Bull by the horns, well in advance.
EK is also collaborating with FZ, two different companies yet with similar Sheik/Gov ownership.
Dubai themselves are freezing growth before the winds of change hit them worse ( so did AUH, expansion is freezed sine die ).
I also see QR well-managed, per AAB the blocus costs them 12% of traffic and more in revenue, due to premium pax they used to cater to the UAE & Saudia Arabia. Knowing the generally razor-thin profits of the sector, it is a marvel they are still around. Perhaps they are indeed subsidized, we can't see their books. Fact is they are actually growing despite the blocus & extended flights west, at a rate higher than EK's.

EY on the other hand is a classic example of a bubble that exploded on their face. I think Hogan did something remarkable considering how late he was into the game against 6 giants ( EK, QR, FZ, G9, TK, SV ), in his time traffic growth must have been in his favour or I don't see Abu Dhabi pouring that much money. "Equity Alliance" is an interesting concept when all majors are in bed elsewhere, it worked while the companies lasted. The problems with AB, AZ, 9W are structural to them, not to EY, investment looked appropriate then.
Point is EK is not in EY's dire situation, while their growth second derivative is negative, growth is still positive, i.e. they are doing well.
Less well than forecasted, but well nonetheless.

“This aircraft will still be flying in Emirates in 2035. The fleet will stabilise at about 115…and then probably go down to about 90-100 by the middle of the next decade. So, the A380 will remain a major component of our fleet mix for the next 15 years at least...

My interpretation of "middle of next decade" is 2025, your seems to be 2035.
Given the last A380 is coming off the line in 2021, I don't think we'll see "90-100 up to 2035", I'm thinking we'll be at 90-100 by 2025 and glide down to a handful by 2035, given that STC's successors will have their say on the future size and shape of the airline.
Putting 90-100 A380s through their 2nd heavy check in the 2030s and paying GP7200/T900 fuel bills out to 2035+ will be eye watering expensive, IMO, and I can't see it happening, despite how we may interpret what STC may be saying today.

Based on what STC says today, considering DWC is stunted for good & DXB constrained, he expects 90-100 around 2025 ( that's an army ! who else has a comparable gun power ??? ), half of which I do see flying around 2035. But anything can change in this business. Like in 2021, I'd like to know if the tooling of the A380 is destroyed or not, just to discard any fancy secret neoing, rewinging, extension conspiracy plans shelved for later just in case demand suddenly grew out from nowhere.
 
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 6:38 pm

FrenchPotatoEye wrote:
lightsaber wrote:
.
The Hotel occupancy is flat, so there is no more money from that. The only way to re-invigorate growth in Dubai is more free cash (profit) from the Airline group.
Dubai did most of what you suggested, but it was funded by EK's surplus cash (profits).

There isn't the cash to invest? You should read Emiratess financial reports. They have $4bn or more in cash. EK has debt, mostly against aircraft.
on hotels, you clearly haven't been to dubai. The places is packed. Sure, not everyone hotel is full, but the majority of the big chain hotels are always full and are not cheap.
plus, dubai economy not built on emirates. Theme parks, financials centre, tourist, families, gcc, intra- UAE trade, non-gcc trade - dubai economy is very diverse and strong.
Far stronger than say Istanbul, which you always hype. One terror attack in Turkey and all bets are off. Even TK is whining about the new ist airport not being fit for purpose - and you think it will overtake dubai?

The UAE are strong, I have no doubts.
But you are totally mistaken in thinking Dubai is stronger than IST.
One missile in the AUE & EK/FZ/EY/F9 will have to crum their fleet into DWC for a long while & defer all current orders.
One bomb in Istanbul will scare a % of tourists no doubt, but the economy will continue & sustain the country, specially the capital city
IST and the Marmara Sea are the major industrial region of Turkey, with 80 million inhabs. Istanbul alone (15 mill) have more people than the whole of the UAE (9,4), and considering how much of that is low paid foreign workforce, for the sake of this discussion, we can assume they compare in terms of purchasing power.

lightsaber wrote:
.Dubai is being smart and strategically accepting a small recession to keep from getting too deep in debt and suffering a deep recession that could be far worse.

There will be no recession, that means a "contraction of the economy".
What Dubai are experiencing is markedly less growth, but still positive, i.e. that are not even stagnating, they are growing & I have every reason to believe they will keep it that way.

To answer you question about their perspertives, with DXB constrained, they cannot flock in that many more passengers, but I do expect EK&FZ to maximize their synergies & capacities so as maintain their current PAX, probably even grow a bit. But that's it on that side.
So, if you can't grow by more tourists, the only solution is more added-value. Some ideas :
1) streamlining costs & eliminating duplications will already yield more
2) expand services. GDP is linked to money circulation speed, make people spend faster at you see growth immediately
3) invest in high-end tech, the path Singapore has taken : biotechnologies, aerospace ( Dubai has been courting OEMs to open a FAL in DWC )
4) export the EK group. Dnata is taking up contracts in European airports, possibly elsewhere too.
5) Education, invest in universities & R&D, a path Abu Dhabi is a leader on. Much of the growth in the US is related to Universities & R&D.
6) Become a cultural city to attract high spending culture conscious tourists expats. Abu Dhabi again opened the path with the Louvre, so did Qatar with its wonderful islamic museum. The region is archaeologically very rich, they could open an archaeological museum with works from Dilmun (Bharein), Egypt they are so pals with against Qatar, Saudi Arabia also has history, perhaps with Irak & Iran too of their relations become better. All of this means exhibitions, conventions, restaurants.
7) I am not sure the Chinese & Japanese are attracted to such forlorn deserts, but East Asia has lots of wealthy people, surely the UAE can think of something to lure some if they so wish, not just with slavic girls & duty free cognac, but perhaps with specific financial services, off-shore facilities, etc.
8) EK : become the US airline to Asia. For that, they still need the buzz on the A380, and if they are smart about it, they'll put the bar on their 77Xs, that's why premium pax fly it, per STC "it's a party up there" ( 2nd floor in A380s is premium ).
That's all for now. :)
 
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 7:24 pm

DWC wrote:
Revelation wrote:
We see this differently.
I think EK has proven they know what they are doing in a growth phase, but as they say, past performance is not an indicator of future performance.

Well, yes & no. I would agree if you are speaking of EY.
EK on the other hand are taking the coming Bull by the horns, well in advance.

To me taking the bull by the horns was best done in 2016 just as Airbus+RR were not closing the deal to do the NEO.

Pour the cold water on A380 future orders and make a public show of having Boeing come to town to discus bumping up the 777x orders, start muttering about 777-10, etc.

Enders and Leahy were still invested in A380 and still held sway within the organization.

Instead what we saw was dithering with the 50 ship A350 order that got cancelled, the 787 LOI, the "order that saved the A380" now cancelled, and even more dithering on 787, A330, and A350.

All this whilst increasing the now sunk cost of DWC.

I would not say this is taking the bull by the horns.

Based on what STC says today, considering DWC is stunted for good & DXB constrained, he expects 90-100 around 2025 ( that's an army ! who else has a comparable gun power ??? ), half of which I do see flying around 2035. But anything can change in this business.

Yes, a lot depends on fleet management going forward.

I'm not sure you want to put ships through their 2nd heavy check a dozen years after the line closes if you can avoid it.

I'm not sure how many are leased vs owned.

Like in 2021, I'd like to know if the tooling of the A380 is destroyed or not, just to discard any fancy secret neoing, rewinging, extension conspiracy plans shelved for later just in case demand suddenly grew out from nowhere.

Indeed, we already have some pretty outrageous suggestions showing up.
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 7:30 pm

musman9853 wrote:
VSMUT wrote:
PatrickZ80 wrote:
To make World Central a low-cost airport, they'd have to think differently. The originally planned World Central looked as fancy as could be, which isn't good for a low-cost airport. All that money being wasted on fancy terminals could be better spent on lower airfares. Sure they can build a cheap terminal without airbridges and use that for the LCCs. It doesn't have to look fancy, it just has to do it's job.


No airbridge? In Dubai? Are you sure? The temperatures in the summer are murderous. No airbridge means sending passengers over 45 degree ramps and leaving cabin doors open.



it's already like this for dxb. i was at dxb coming through on flydubai a few weeks ago. we parked at a remote gate and took a bus in.


it's been like that for years...I used to take the MEL-KUL-DXB flight quite often (A340-500) and it'd park remote and you'd bus it back to the terminal just in time for the connecting flight. The first time that happened to me was in 2010.
 
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 7:34 pm

lightsaber wrote:
Has anyone proposed anything to grow at Dubai? I saw my few ideas were shot down.
Is EK/Dubai just doomed?

Hotel occupancy is at levels last seen at the Global financial crisis, (67%). Construction is slowing.

I'm ok with my ideas being shot down. But if there is no change when there is an obvious recession coming, than just hang on for a wild ride.

https://skift.com/2019/08/29/dubai-tour ... -2020/amp/

Interesting ET is a superconnector too. My opinion is that connecting yield is dropping. Is ET profitable?

Lightsaber


Dubai is like anywhere else in the world...just another city, it had money pouring in and it was the place to be but like all fads it soon loses it's reason to visit.

seriously, would you take a 2 week holiday to Dubai? They built buildings to the sky and malls as big as airports themselves yet there is only so much of this rubbish you can build before people see it for what it is. I always thought to myself that this bubble has to burst sooner or later because really there isn't much there for the average Joe.
 
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 7:40 pm

DWC wrote:
FrenchPotatoEye wrote:
lightsaber wrote:
.
The Hotel occupancy is flat, so there is no more money from that. The only way to re-invigorate growth in Dubai is more free cash (profit) from the Airline group.
Dubai did most of what you suggested, but it was funded by EK's surplus cash (profits).

There isn't the cash to invest? You should read Emiratess financial reports. They have $4bn or more in cash. EK has debt, mostly against aircraft.
on hotels, you clearly haven't been to dubai. The places is packed. Sure, not everyone hotel is full, but the majority of the big chain hotels are always full and are not cheap.
plus, dubai economy not built on emirates. Theme parks, financials centre, tourist, families, gcc, intra- UAE trade, non-gcc trade - dubai economy is very diverse and strong.
Far stronger than say Istanbul, which you always hype. One terror attack in Turkey and all bets are off. Even TK is whining about the new ist airport not being fit for purpose - and you think it will overtake dubai?

The UAE are strong, I have no doubts.
But you are totally mistaken in thinking Dubai is stronger than IST.
One missile in the AUE & EK/FZ/EY/F9 will have to crum their fleet into DWC for a long while & defer all current orders.
One bomb in Istanbul will scare a % of tourists no doubt, but the economy will continue & sustain the country, specially the capital city
IST and the Marmara Sea are the major industrial region of Turkey, with 80 million inhabs. Istanbul alone (15 mill) have more people than the whole of the UAE (9,4), and considering how much of that is low paid foreign workforce, for the sake of this discussion, we can assume they compare in terms of purchasing power.

lightsaber wrote:
.Dubai is being smart and strategically accepting a small recession to keep from getting too deep in debt and suffering a deep recession that could be far worse.

There will be no recession, that means a "contraction of the economy".
What Dubai are experiencing is markedly less growth, but still positive, i.e. that are not even stagnating, they are growing & I have every reason to believe they will keep it that way.

To answer you question about their perspertives, with DXB constrained, they cannot flock in that many more passengers, but I do expect EK&FZ to maximize their synergies & capacities so as maintain their current PAX, probably even grow a bit. But that's it on that side.
So, if you can't grow by more tourists, the only solution is more added-value. Some ideas :
1) streamlining costs & eliminating duplications will already yield more
2) expand services. GDP is linked to money circulation speed, make people spend faster at you see growth immediately
3) invest in high-end tech, the path Singapore has taken : biotechnologies, aerospace ( Dubai has been courting OEMs to open a FAL in DWC )
4) export the EK group. Dnata is taking up contracts in European airports, possibly elsewhere too.
5) Education, invest in universities & R&D, a path Abu Dhabi is a leader on. Much of the growth in the US is related to Universities & R&D.
6) Become a cultural city to attract high spending culture conscious tourists expats. Abu Dhabi again opened the path with the Louvre, so did Qatar with its wonderful islamic museum. The region is archaeologically very rich, they could open an archaeological museum with works from Dilmun (Bharein), Egypt they are so pals with against Qatar, Saudi Arabia also has history, perhaps with Irak & Iran too of their relations become better. All of this means exhibitions, conventions, restaurants.
7) I am not sure the Chinese & Japanese are attracted to such forlorn deserts, but East Asia has lots of wealthy people, surely the UAE can think of something to lure some if they so wish, not just with slavic girls & duty free cognac, but perhaps with specific financial services, off-shore facilities, etc.
8) EK : become the US airline to Asia. For that, they still need the buzz on the A380, and if they are smart about it, they'll put the bar on their 77Xs, that's why premium pax fly it, per STC "it's a party up there" ( 2nd floor in A380s is premium ).
That's all for now. :)

Ahhh. We have a fundamental assumption difference. I believe Dubai is entering a recession. By having it controlled a minor recession. Not slowing growth, major job losses. I do expect expo 2020 to pull them out and by doing a re-strategy now, it isn't so horrible.

I remain a fan of EK. Just as I like Las Vegas, they go boom/bust. I believe Dubai's economy, not that it is no longer a growth economy, is going to look a lot like Vegas, just with a larger logistical branch.

Dubai/EK group must slow investment to preserve cash.

I agree EK shouldn't have topped of A380s in 2016. But that is 20/20 hindsight.

All your points Dubai/EK have tried. Bypass of flights is hurting connecting yields.

I fully expect the mass connecting hubs to have to shift to more O&D.

What EK needs is lower cost per passenger. That means A359, 787-10, and 779. My math says the 779 will make more profit per flight than the A380. Since reconfiguring the A380 appears uneconomical, it is already losing the luster for premium passengers.

Isn't the 777x the launch platform for Y+?

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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 7:41 pm

Economics & finance are not crystal ball sciences, meaning that actual environments differ the greater the original data & model.
I am just saying that Dubai & EK are not cutting routes & fleet (while EY are), they are adapting to future conditions.

People are totally wrong in thinking 80% loadfactor is only a problem. It can be a solution to different criteria :
1) says nothing of profits, 100% loadfactor is better on paper but can yield less than 80%.
i.e. better sell higher fares & book 80% than trash sales for 100%, whom you have to feed & manage for less. EK is always more expensive than EY or QR.
2) more importantly, those 20% flown empty can be the price to prevent a competitor from flying that very destination, or perhaps just additional flights
3) 20% void is better than no flight at all in order to feed the connectivity model.
4) 20% void is also a price to pay for pax faithfulness, I have flown both their A380s & 777s, the 777s are a clear let down. if 10% of pax go off their way to fly EK just to sit on the A380, that is
a) 10% more for EK
b) 10% less for competitors in terms of direct profits
c) an amplitude of 20% EK can use for its development to leapfrog their competitors in a razor thin profit sector.
5) in Economics, there is something called the "Flying Geese modell", flying first does help the ones behind - less friction ( EY & QR grew faster following EK's experience, mistakes, learning by doing ), but just flying first helps to
a) choose their paths, EK play solo, are not in any alliance other than QF & FZ
b) be at the top of people's mind. When you know the publicity budget of Nike, Coke or Benetton just to stay ahead, 20% less pax is cheaper, it's just seats not sold, but no commercials budget out.
 
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 8:39 pm

lightsaber wrote:
I remain a fan of EK. Just as I like Las Vegas, they go boom/bust. I believe Dubai's economy, not that it is no longer a growth economy, is going to look a lot like Vegas, just with a larger logistical branch.

Dubai is not Vegas, I see what you mean for a % of pax & the desert, but Dubai are actually building a country within a country with many more services & industries to be. Plus Vegas is hardly a hub, i.e. does not have the international crowd & duty free shopping Dubai has.

lightsaber wrote:
What EK needs is lower cost per passenger. That means A359, 787-10, and 779. My math says the 779 will make more profit per flight than the A380.

only because competitors are getting these newer aircrafts, EK is already pretty cost effective, specially with so many WBs & internal servicing. So they are just preserving their edge with new deliveries, I am thus not sure they will actually make more profit per se from just switching frames.

lightsaber wrote:
Isn't the 777x the launch platform for Y+?

If so, this does feed my argument they are going up market, for more added-value, by charging more for something that costs them less. With a fleet the size of EKs, whatever few Y+ they have relative to Y, will yield handsomely.

lightsaber wrote:
Since reconfiguring the A380 appears uneconomical, it is already losing the luster for premium passengers.

That's the funny part : Arabs love EK's bling-bling crammed F, J crammed until recently, plus all the lights, seat bar & booz, of which there always is aplenty. So they won't lose that many premium pax for that reason. I don't like EK's F class at all, J depends, not even their new F on few 777s ( snazzy yes, but I don't want to be a horse in a box ), I way prefer EY or QR cabins F or J.
As to flights bypassing DXB, there is very little EK can do against the CN3, CX or SQ, they all have loyal client bases, QR did a remarkable stunt with their Q-suites.
As to QF's current PER-LHR, frankly, it's more about QF paying lip-service to LHR than actually by-passing DXB. With one flight a day, on a smallish 787, what is it to EK's 10 daily whales to London ? With all the second floor premium, EK are some 10 times bigger in premium alone, the ME3 20 times bigger overall, plus SQ, TG, CN3 etc. Naturally, Project sunrise will help that, but the Kangaroo Route will remain the ME3's for 1-2 decades min, with TK soon and perhaps some EU legacies in the future. I for one will want to make a layover on such a long flight, I would never fly likewise SIN-EWR direct, a day to a week-long stop in HKG, ICN, NRT/HND is a luxury that comes in cheap & rejoices me greatly :)
 
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Re: Dubai World Central (DWC) expansion officially halted

Sat Sep 07, 2019 10:57 pm

DWC wrote:
lightsaber wrote:
I remain a fan of EK. Just as I like Las Vegas, they go boom/bust. I believe Dubai's economy, not that it is no longer a growth economy, is going to look a lot like Vegas, just with a larger logistical branch.

Dubai is not Vegas, I see what you mean for a % of pax & the desert, but Dubai are actually building a country within a country with many more services & industries to be. Plus Vegas is hardly a hub, i.e. does not have the international crowd & duty free shopping Dubai has.

lightsaber wrote:
What EK needs is lower cost per passenger. That means A359, 787-10, and 779. My math says the 779 will make more profit per flight than the A380.

only because competitors are getting these newer aircrafts, EK is already pretty cost effective, specially with so many WBs & internal servicing. So they are just preserving their edge with new deliveries, I am thus not sure they will actually make more profit per se from just switching frames.

lightsaber wrote:
Isn't the 777x the launch platform for Y+?

If so, this does feed my argument they are going up market, for more added-value, by charging more for something that costs them less. With a fleet the size of EKs, whatever few Y+ they have relative to Y, will yield handsomely.

lightsaber wrote:
Since reconfiguring the A380 appears uneconomical, it is already losing the luster for premium passengers.

That's the funny part : Arabs love EK's bling-bling crammed F, J crammed until recently, plus all the lights, seat bar & booz, of which there always is aplenty. So they won't lose that many premium pax for that reason. I don't like EK's F class at all, J depends, not even their new F on few 777s ( snazzy yes, but I don't want to be a horse in a box ), I way prefer EY or QR cabins F or J.
As to flights bypassing DXB, there is very little EK can do against the CN3, CX or SQ, they all have loyal client bases, QR did a remarkable stunt with their Q-suites.
As to QF's current PER-LHR, frankly, it's more about QF paying lip-service to LHR than actually by-passing DXB. With one flight a day, on a smallish 787, what is it to EK's 10 daily whales to London ? With all the second floor premium, EK are some 10 times bigger in premium alone, the ME3 20 times bigger overall, plus SQ, TG, CN3 etc. Naturally, Project sunrise will help that, but the Kangaroo Route will remain the ME3's for 1-2 decades min, with TK soon and perhaps some EU legacies in the future. I for one will want to make a layover on such a long flight, I would never fly likewise SIN-EWR direct, a day to a week-long stop in HKG, ICN, NRT/HND is a luxury that comes in cheap & rejoices me greatly :)

Of course competitors are getting new aircraft. We have threads on widebody production doubling. But it is more for EK to downsize aircraft as well as carry each passenger for less

EK's profits, at 2% are less than other airlines. That is not a sustainable profit margin to find growth. Time to reduce costs and surplus seats.

Hotel rates are down 10% in a year:
https://gulfnews.com/amp/business/touri ... 1.66064412


Unfortunately the trend in airfares and hotel rates shows that Dubai is not going upscale but rather having to discount. They are losing their mind share advantage. Upscale passengers do not want to connect. The highest premiums are paid for direct flights. Dubai is being bypassed or is suffering from competition from Ethiopian Turkish and Qantas.

I think STC is being wise cutting costs. at this time EK is pain to move seats that are not covering the marginal cost. unfortunately for the A380 they are so expensive to upgrade they cannot go to the upscale product.

This is a minor adjustment.

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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 12:24 am

lightsaber wrote:
EK's profits, at 2% are less than other airlines. That is not a sustainable profit margin to find growth. Time to reduce costs and surplus seats.

Please reread what I've said about profits.
Profits DO NOT FUND GROWTH, it is an elementary fact in corporate finance.
Profits is the bottom line after everything has been paid or budgeted for, including amortization & physical immobilisations for future aircraft acquisitions.
Profits are for shareholders profit or cash-flow. Any redistribution outside of the company ( as to shareholders ) in money less for growth.
Besides, you can do the maths yourself : there is no way any airline, such a capital intensive industry, can buy that many aircrafts with 2-8% profits
 
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 4:18 am

DWC wrote:
lightsaber wrote:
EK's profits, at 2% are less than other airlines. That is not a sustainable profit margin to find growth. Time to reduce costs and surplus seats.

Please reread what I've said about profits.
Profits DO NOT FUND GROWTH, it is an elementary fact in corporate finance.
Profits is the bottom line after everything has been paid or budgeted for, including amortization & physical immobilisations for future aircraft acquisitions.
Profits are for shareholders profit or cash-flow. Any redistribution outside of the company ( as to shareholders ) in money less for growth.
Besides, you can do the maths yourself : there is no way any airline, such a capital intensive industry, can buy that many aircrafts with 2-8% profits

I fully understand accounting. It seems we are discussing different terms.

I think of profit as cash generated. EK is a mature business. A mature business uses some fraction of free cash to grow. A perfectly acceptable definition of profit.


You are right on cash flow. Dubai needs cash flow. EK must reinvest in the city.

EK's revenue is barely above the costs to opperate the company. If they do not change, EK and the Emirate will be in trouble.

Dubai isn't filling aircraft.
Dubai isn't filling hotels
Property values are falling as the real estate sector is overbuilt

This is a recession for Dubai. By that I mean two or more quarters of GDP contraction.

You can debate over terms, but let us speak plainly. EK must right size or far greater pain lies ahead.

I predicted earlier in this debate EK will shrink about 10%. As enlightening as our discussion has been, I see no evidence to change my opinion. Dubai is like Phoenix in 2009, a city with a disproportionate fraction of GDP based on growth. Dubai is now a mature economy with such potential growth. Since the overbuilt, that means a contraction. But Expo 2020 should pull them out.

Dubai will correct unless they find a new project to drive new business. The status quo is over built. You pointed out why my suggestions won't work. Fine. We'll stick with the stays quo and have a milder recovery.

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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 5:29 am

Profit and cashflow are very different particularly in a growth phase where Capex >> Depreciation, ignoring all the other timing differences.

Mind you many other airlines are both profit and cashflow negative.
 
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Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 5:33 am

Huh... I was wrong. EK is expecting better profit:

https://amp.thenational.ae/business/avi ... t-1.906990

Huh... I'm willing to admit when my assumptions are wrong.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
moa999
Posts: 549
Joined: Tue Mar 13, 2018 6:37 am

Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 6:20 am

London will remain a big profit centre due to the congestion.

While direct ULH flights (like what Qantas has and has planned) will take some traffic (and mostly high margin traffic off EK) they will be limited in number and size and rely on having slots (QF has two existing and two it leases out)
Whereas say from Indian airports you just won't get sufficient slots to go direct.
And a third Heathrow runway is still a long way off.

And by its pure number of European and Asian destinations and wave strategy, Emirates will remain the quickest one-stop between many city pairs.
 
JayinKitsap
Posts: 1477
Joined: Sat Nov 26, 2005 9:55 am

Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 7:24 am

lightsaber wrote:
DWC wrote:
lightsaber wrote:
EK's profits, at 2% are less than other airlines. That is not a sustainable profit margin to find growth. Time to reduce costs and surplus seats.

Please reread what I've said about profits.
Profits DO NOT FUND GROWTH, it is an elementary fact in corporate finance.
Profits is the bottom line after everything has been paid or budgeted for, including amortization & physical immobilisations for future aircraft acquisitions.
Profits are for shareholders profit or cash-flow. Any redistribution outside of the company ( as to shareholders ) in money less for growth.
Besides, you can do the maths yourself : there is no way any airline, such a capital intensive industry, can buy that many aircrafts with 2-8% profits

I fully understand accounting. It seems we are discussing different terms.

I think of profit as cash generated. EK is a mature business. A mature business uses some fraction of free cash to grow. A perfectly acceptable definition of profit.


You are right on cash flow. Dubai needs cash flow. EK must reinvest in the city.

EK's revenue is barely above the costs to opperate the company. If they do not change, EK and the Emirate will be in trouble.

Dubai isn't filling aircraft.
Dubai isn't filling hotels
Property values are falling as the real estate sector is overbuilt

This is a recession for Dubai. By that I mean two or more quarters of GDP contraction.

You can debate over terms, but let us speak plainly. EK must right size or far greater pain lies ahead.

I predicted earlier in this debate EK will shrink about 10%. As enlightening as our discussion has been, I see no evidence to change my opinion. Dubai is like Phoenix in 2009, a city with a disproportionate fraction of GDP based on growth. Dubai is now a mature economy with such potential growth. Since the overbuilt, that means a contraction. But Expo 2020 should pull them out.

Dubai will correct unless they find a new project to drive new business. The status quo is over built. You pointed out why my suggestions won't work. Fine. We'll stick with the stays quo and have a milder recovery.

Lightsaber


A shrink of both EK and Dubai of 10% is realistic, it might even be less than that. When construction, real estate, and resort are a big chunk of the economy as things slow, they go back home, I've seen where a 5% or more population drop. Empty apartments, slow restaurants, lower hotel occupancy, less cars etc. Easy to have a 5 year hangover.

Every city, state, or country sees cycles, Dubai will see strong growth again, but it may be a while.
 
Scotron12
Posts: 138
Joined: Fri Mar 01, 2019 2:13 pm

Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 7:56 am

From UK it certainly will. EK is running A380 from MAN (3× daily) BHX..(2× daily) GLA. (1× A380 & 777 daily) Not to mention their ops from LHR & LGW. Their NCL was a A380 and now a 777. Plus daily x-EDI on 777 too. Plus not long ago they added STN!
 
worldranger
Posts: 232
Joined: Sun Jun 07, 2015 4:12 pm

Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 9:30 am

lightsaber wrote:
Huh... I was wrong. EK is expecting better profit:

https://amp.thenational.ae/business/avi ... t-1.906990

Huh... I'm willing to admit when my assumptions are wrong.

Lightsaber


Most EK flight deck will tell you, the loads this summer have been very high. The trunk routes packed. US this summer difficult to get on with STBY tickets.

Weekly updates from Flight Ops mgt indicate “higher than expected” performance. The Group target for FY 19/20 is $2.8bn. If the mid year results are > $1.4bn - it will be a good indicator.

Lots of different rumors on the Airshow - 339 still coming Q3/4 2020 according to Fleet Chiefs
 
Scotron12
Posts: 138
Joined: Fri Mar 01, 2019 2:13 pm

Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 12:33 pm

worldranger wrote:
lightsaber wrote:
Huh... I was wrong. EK is expecting better profit:

https://amp.thenational.ae/business/avi ... t-1.906990

Huh... I'm willing to admit when my assumptions are wrong.

Lightsaber


Most EK flight deck will tell you, the loads this summer have been very high. The trunk routes packed. US this summer difficult to get on with STBY tickets.

Weekly updates from Flight Ops mgt indicate “higher than expected” performance. The Group target for FY 19/20 is $2.8bn. If the mid year results are > $1.4bn - it will be a good indicator.

Lots of different rumors on the Airshow - 339 still coming Q3/4 2020 according to Fleet Chiefs


Someone else mentioned that EK were looking to get the A339 a lot sooner than expected. Probably on the EK negotiating 777X order.
 
DWC
Topic Author
Posts: 608
Joined: Mon Nov 06, 2017 7:49 pm

Re: Dubai World Central (DWC) expansion officially halted

Sun Sep 08, 2019 9:31 pm

EK are a very strong & well managed airline group, better than anything I have seen elsewhere when factoring in they fly to 6 continents with an utterly unusual fleet & size, offer consistently better service than average FSCs with exceptionnal global brand recognition. The latest announcements will only strengthen that.
Unless there is a war in the region or some unexpected downturn like in 1929 or 2001, I don't see EK or Dubai contracting.
 
digitalcloud
Posts: 109
Joined: Mon Oct 15, 2018 10:03 am

Re: Dubai World Central (DWC) expansion officially halted

Thu Sep 12, 2019 10:25 pm

Scotron12 wrote:
Their NCL was a A380 and now a 777.


Huh?

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