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erikgrinsvall
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EK's possible future?

Fri May 01, 2020 8:41 am

It is with no doubt the everyone is feeling the substantial impacts of the COVID outbreak, thus what is to be felt. However, for some it is different, and the road might be longer towards financial stability than for others. 9/11 and the volcanic eruptions were single events, where as the COVID is open ended, on-going and un-contained, which leaves airlines no other choice than to consider reconstructing their operations.

EK - which is a transit giant, equips it's routes primarily with their fleet of (115)A388/ (132)77W/(10)L's (+-118.000 seats collectively), and as they do not operate any domestic routes, the are solely dependent on global behavior from other countries, especially from the high revenue markets like India, UK, U.S. and Australia. Once boarders eases their restrictions and air travel resumes towards a "daily basis', we will be looking at record low pay loads, which is predicted to last for a few months, some fear a year.

At this stage - around 40 of their 132 B77W's are operating as cargo flights, with a few outbound and inbound (only for GCC nationals) "pax-integrated" repatriation flights along with the cargo services. The remaining B77W and all A388's at majority are stored at DWC and some at DXB. Prelimenary dates of some daily scheduled flights will recommence in July, operated by B77W.

There are other carriers that are facing similar situations, however, EK are one of the few that have ignored the narrow body path for their operations, which has been a debatable topic through the year.

At this stage, the salaries at EK have variously been cut according to grades and unpaid leave have been issued to a minority. Initially, the government "officially" announced that they were to inject liquidity into the airline.

Share your thoughts

/E
 
VSMUT
Posts: 4228
Joined: Mon Aug 08, 2016 11:40 am

Re: EK's possible future?

Fri May 01, 2020 9:05 am

Dubai has long since reached a stage where it will remain relevant as a regional trade center. It isn't going away. There will always be a need for air transport to and from Dubai. That said, I believe it will shrink, both the airline and the city.
For Emirates, I see a smaller future where connecting Dubai and the UAE to the world is going to make up a bigger part than connecting Europe and Asia.
They will still hold a massive advantage in the developing world. In markets such as Africa to Asia and ME to anywhere they hold stronger cards than pretty much any other airline.
 
Toinou
Posts: 257
Joined: Sun Apr 14, 2019 8:21 am

Re: EK's possible future?

Fri May 01, 2020 9:18 am

Is India really considered a "high revenue market"?
 
PANAMsterdam
Posts: 249
Joined: Thu Jun 27, 2019 7:45 am

Re: EK's possible future?

Fri May 01, 2020 9:32 am

I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.

Pan Am had a massive problem on its hands in the early 70's when the oil crisis begun: gigantic aircraft with not enough passengers to carry, making their operations severely unprofitable. They had too many 747's on their hands, and too many on order. Pan Am had miscalculated the industry, they thought the industry could/would only grow and never shrink. But the oil crisis swept them off their feet, and many agree that the $530 million order for 25 747's aimed to make Pan Am bigger, was ironically the first nail in their coffin.

Now EK has consolidated its fleet structure around two massive aircraft: The 777 and A380. Which makes sort of sense in good times (given their geographical location), but no sense in lesser times let alone in bad times. EK has plenty of regional destinations that would be served well with a 737/A320 (Iraq / Iran / Saudi Arabia and so on). But now that the the demand has fallen 95%, EK has suddenly the same problem as Pan Am had: gigantic aircraft to fill with not enough passengers. And this low passenger number will likely not recover in the foreseeable future.

Other airlines like QR or KL can (re)start/continue their operations with their narrow body fleet & smaller wide bodies like the A350 or 787 while parking or converting their 777's (for freight). EK can't do that. And the smallest wide body they had, the A330, left the fleet a few years ago. Now EK has realized that, by ordering A350's and 787's but far too late to help them in this corona crisis.

Additional problem for EK is that they are located in a country that lives on and breathes oil. But the unthinkable has happend: the world is suddenly not hungry for oil anymore. So that source of income for Dubai's rulers has (almost literally) dried up and makes it harder to find cash to invest in EK. They will find a way, since the growth of EK and Dubai goes hand in hand, and because Dubai isn't suddenly a poor country. But together they grew, but it seems like together they are falling too.

Always remember: anything is possible even when people are telling you it can't be! The Titanic was unsinkable, the oil price could never be negative, American Airlines would never lose money again.

History proved them all wrong.

Given recent negative experiences here on A.net I would like to state that this is just my opinion. Feel free to agree or disagree with me but please use arguments not attacks or sarcastic commentary. Thank you :pray:
Every country has an airline. The world has Pan Am.
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Fri May 01, 2020 9:36 am

VSMUT wrote:
Dubai has long since reached a stage where it will remain relevant as a regional trade center. It isn't going away. There will always be a need for air transport to and from Dubai. That said, I believe it will shrink, both the airline and the city.
For Emirates, I see a smaller future where connecting Dubai and the UAE to the world is going to make up a bigger part than connecting Europe and Asia.
They will still hold a massive advantage in the developing world. In markets such as Africa to Asia and ME to anywhere they hold stronger cards than pretty much any other airline.

Their future is probably smaller more efficient aircraft which is why they were maybe interested in A330's and A350's. Emirates and other hub carriers will always have a presence in Europe, and a significant one because of how aviation is structured. Hubs are still king because even the biggest European carriers cannot justify flying point to point and long haul from some of the smaller airports.

So long as there is a premium to fly non stop, and the middle east/Asian carriers offer cheaper one stop options, there will be a significant market that they can tap onto going forward. Not to mention that their service is top quality.
 
IWMBH
Posts: 613
Joined: Tue Apr 17, 2018 5:01 pm

Re: EK's possible future?

Fri May 01, 2020 9:47 am

PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.

Pan Am had a massive problem on its hands in the early 70's when the oil crisis begun: gigantic aircraft with not enough passengers to carry, making their operations severely unprofitable. They had too many 747's on their hands, and too many on order. Pan Am had miscalculated the industry, they thought the industry could/would only grow and never shrink. But the oil crisis swept them off their feet, and many agree that the $530 million order for 25 747's aimed to make Pan Am bigger, was ironically the first nail in their coffin.

Now EK has consolidated its fleet structure around two massive aircraft: The 777 and A380. Which makes sort of sense in good times (given their geographical location), but no sense in lesser times let alone in bad times. EK has plenty of regional destinations that would be served well with a 737/A320 (Iraq / Iran / Saudi Arabia and so on). But now that the the demand has fallen 95%, EK has suddenly the same problem as Pan Am had: gigantic aircraft to fill with not enough passengers. And this low passenger number will likely not recover in the foreseeable future.

Other airlines like QR or KL can (re)start/continue their operations with their narrow body fleet & smaller wide bodies like the A350 or 787 while parking or converting their 777's (for freight). EK can't do that. And the smallest wide body they had, the A330, left the fleet a few years ago. Now EK has realized that, by ordering A350's and 787's but far too late to help them in this corona crisis.

Additional problem for EK is that they are located in a country that lives on and breathes oil. But the unthinkable has happend: the world is suddenly not hungry for oil anymore. So that source of income for Dubai's rulers has (almost literally) dried up and makes it harder to find cash to invest in EK. They will find a way, since the growth of EK and Dubai goes hand in hand, and because Dubai isn't suddenly a poor country. But together they grew, but it seems like together they are falling too.

Always remember: anything is possible even when people are telling you it can't be! The Titanic was unsinkable, the oil price could never be negative, American Airlines would never lose money again.

History proved them all wrong.

Given recent negative experiences here on A.net I would like to state that this is just my opinion. Feel free to agree or disagree with me but please use arguments not attacks or sarcastic commentary. Thank you :pray:


The main difference between EK and Pan Am is that Pan Am wasn't the only airlines in the US, far from it in fact. So their bankruptcy had a minimal effect on the US economy and other airlines stood in line to take their place. The UAE doesn't have that, EK is vital in their growth plans. If they have the capability to save EK I'm sure they would.

That said, with the oil price it is hard for Dubai to support their businesses. And, I know that Dubai itself doesn't produce oil but the countries in de region al depend on it and it will have an effect on their economy. I think the only way for EK to survive is to get some loans off grants from the government.

If they don't then they will face bankruptcy. But, I don't know how the UAE's legal system works. If they can do a ''chapter 11'' they can shed most of their leases, orders and expensive staff and emerge as a much smaller airline.
 
KFLLCFII
Posts: 3547
Joined: Sat Sep 11, 2004 7:08 am

Re: EK's possible future?

Fri May 01, 2020 9:51 am

Have they found a feasible use for recycling GLARE yet? There's gonna be alot of feedstock coming soon.
"About the only way to look at it, just a pity you are not POTUS KFLLCFII, seems as if we would all be better off."
 
VSMUT
Posts: 4228
Joined: Mon Aug 08, 2016 11:40 am

Re: EK's possible future?

Fri May 01, 2020 10:06 am

PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.


Emirates isn't Pan Am. Pan Am was a big, private owned airline in a competitive market with multiple competitors. Emirates is a state owned flag carrier and almost has a monopoly in the regions biggest trade hub. The only real competitors are Qatar Airways and Etihad. Qatar is blockaded and Etihad is in a dire situation.


Gremlinzzzz wrote:
Their future is probably smaller more efficient aircraft which is why they were maybe interested in A330's and A350's. Emirates and other hub carriers will always have a presence in Europe, and a significant one because of how aviation is structured. Hubs are still king because even the biggest European carriers cannot justify flying point to point and long haul from some of the smaller airports.

So long as there is a premium to fly non stop, and the middle east/Asian carriers offer cheaper one stop options, there will be a significant market that they can tap onto going forward. Not to mention that their service is top quality.


I think they will have to go even smaller. The 787/A330neo/A350 interest was from before the crisis. If measures remain permanent and cost of travel prohibitive, along with a lack of willingness to travel, they may even have to look into absorbing FlyDubai's 737MAX fleet. 787-9s and A350s are still going to remain relevant to big cities, but they have a massive network to Africa, the Middle East, Pakistan and India where many destinations might only be viable on a 737.
 
B777LRF
Posts: 2686
Joined: Sun Nov 02, 2008 4:23 am

Re: EK's possible future?

Fri May 01, 2020 10:16 am

Just a point of order: Dubai has no oil or gas worth mentioning.

You need to think of Dubai as a corporation, where the biggest sources of income stems from their ability to attract foreign companies who hires expat workers in their hundreds of thousands, and tourism.

The first part is exceedingly important, and is the reason why Ek have not laid off staff. Should they do so, the expats would forfeit their residency permit and would leave in huge droves, torpedoing large parts of the service economy and wrecking havoc with real estate business. Ipso facto, if companies in Dubai starts laying off staff in large numbers, the Dubai economy would completely implode.

Dubai can survive on a reduced number of tourists (having been in there numerous times on business, the attraction as a tourist destination utterly escapes me, but I digress), but it cannot survive without millions of expats. That EK makes most of its money being a transit carrier, where only a small portion of their pax actually visit Dubai, only speaks to the size the airline has managed to grow into; it can survive on a much smaller scale, catering mainly to the expat and tourist business.

For that reason alone EK will have to survive, albeit not necessarily in its present form.
Signature. You just read one.
 
ewt340
Posts: 1245
Joined: Tue Jul 10, 2012 7:22 pm

Re: EK's possible future?

Fri May 01, 2020 10:45 am

Well, the answer might be cargo. With cargo compatible configurations currently available, this might be a good strategy, and again, Dubai location is just in the middle between Asia and Africa/Europe. Many of the flights are short enough for them to maximize the cargo payload using long-range aircraft like B777-300ER.
 
AsoRock
Posts: 173
Joined: Wed May 31, 2006 4:00 pm

Re: EK's possible future?

Fri May 01, 2020 10:48 am

Emirates is not going away but will vastly come out of the tunnel a wholy different looking airline. Perhaps with half or less of its original A380 fleet, the 77W and new A350/787.

It will also require massive assistance and I suspect either Abu Dhabi or the Saudi Public Investment Fund (PIF) will come to the rescue with the latter searching for bargain deals to take advantage of the situation. Emirates is the crown jewel of Dubai’s whole being and existence, both economically and strategically. Dubai’s government will not allow them to fold under any circumstance especially considering the airline has been one of the best run airlines in the world delivering profits , no matter how you look at it.

With the business model having been turned upside down they will just have to go back to the drawing board and innovate like they’ve always done. There will be more focus on premium economy travel and less on high end travel where lounges and lavish premium cabin service onboard won’t be the reality for a while.

Cheers
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Fri May 01, 2020 11:19 am

PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.

Pan Am had a massive problem on its hands in the early 70's when the oil crisis begun: gigantic aircraft with not enough passengers to carry, making their operations severely unprofitable. They had too many 747's on their hands, and too many on order. Pan Am had miscalculated the industry, they thought the industry could/would only grow and never shrink. But the oil crisis swept them off their feet, and many agree that the $530 million order for 25 747's aimed to make Pan Am bigger, was ironically the first nail in their coffin.

Now EK has consolidated its fleet structure around two massive aircraft: The 777 and A380. Which makes sort of sense in good times (given their geographical location), but no sense in lesser times let alone in bad times. EK has plenty of regional destinations that would be served well with a 737/A320 (Iraq / Iran / Saudi Arabia and so on). But now that the the demand has fallen 95%, EK has suddenly the same problem as Pan Am had: gigantic aircraft to fill with not enough passengers. And this low passenger number will likely not recover in the foreseeable future.

Other airlines like QR or KL can (re)start/continue their operations with their narrow body fleet & smaller wide bodies like the A350 or 787 while parking or converting their 777's (for freight). EK can't do that. And the smallest wide body they had, the A330, left the fleet a few years ago. Now EK has realized that, by ordering A350's and 787's but far too late to help them in this corona crisis.

Additional problem for EK is that they are located in a country that lives on and breathes oil. But the unthinkable has happend: the world is suddenly not hungry for oil anymore. So that source of income for Dubai's rulers has (almost literally) dried up and makes it harder to find cash to invest in EK. They will find a way, since the growth of EK and Dubai goes hand in hand, and because Dubai isn't suddenly a poor country. But together they grew, but it seems like together they are falling too.

Always remember: anything is possible even when people are telling you it can't be! The Titanic was unsinkable, the oil price could never be negative, American Airlines would never lose money again.

History proved them all wrong.

Given recent negative experiences here on A.net I would like to state that this is just my opinion. Feel free to agree or disagree with me but please use arguments not attacks or sarcastic commentary. Thank you :pray:


1. Oil is not negative. What happened is that producers usually sell to speculators in the oil futures markets. The said speculators then usually look to sell to someone else; in this way, oil producers get paid regardless of where the oil price goes. It is in the futures market that problems exist, and the futures market only in the USA. This is because in prior times, you had to have storage for fuel you bought, but deregulation of this industry meant that you could speculate without having storage.

So long as there was demand, this was never an issue because oil would always find a home. When the demand tanked because of Covid 19, the expiry of these futures contracts meant that oil needed to be delivered at the contracted date. These speculators, not having a place to store the oil needed to pay someone to take it off them. It is this that people think is oil being negative when in reality it is not, and consumers have no way of taking advantage of this........because like speculators, where are you going to store oil?

2. Demand for oil an petroleum products will go up once economies worldwide start again. Travel will take time to come back online, but this is not an issue that is isolated to Emirates, it is an issue that is going to be faced by every airline that has significant wide body coverage along the network. Even narrow body fleets that traverse different countries will have issues when it comes to how staggered countries will open their airspace to international travel.

Every single hub carrier will run into these issues, and point to point carriers albeit running smaller jets may struggle to even see that type of demand that makes their ventures profitable.
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Fri May 01, 2020 11:58 am

VSMUT wrote:
PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.


Emirates isn't Pan Am. Pan Am was a big, private owned airline in a competitive market with multiple competitors. Emirates is a state owned flag carrier and almost has a monopoly in the regions biggest trade hub. The only real competitors are Qatar Airways and Etihad. Qatar is blockaded and Etihad is in a dire situation.


Gremlinzzzz wrote:
Their future is probably smaller more efficient aircraft which is why they were maybe interested in A330's and A350's. Emirates and other hub carriers will always have a presence in Europe, and a significant one because of how aviation is structured. Hubs are still king because even the biggest European carriers cannot justify flying point to point and long haul from some of the smaller airports.

So long as there is a premium to fly non stop, and the middle east/Asian carriers offer cheaper one stop options, there will be a significant market that they can tap onto going forward. Not to mention that their service is top quality.


I think they will have to go even smaller. The 787/A330neo/A350 interest was from before the crisis. If measures remain permanent and cost of travel prohibitive, along with a lack of willingness to travel, they may even have to look into absorbing FlyDubai's 737MAX fleet. 787-9s and A350s are still going to remain relevant to big cities, but they have a massive network to Africa, the Middle East, Pakistan and India where many destinations might only be viable on a 737.
I can tell you for a fact that in Africa they will have a viable business with the wide body fleet. They do not have much in way of competition and route network coverage. In this area, even Ethiopian does not compete when it comes to a one stop strategy or the multitude of bunks that Emirates operates.

Their competition in India isn't great either, or in Pakistan when it comes to routing to Europe, the America's or even Africa when you consider who the full service carriers are, and how their service is sometimes lacking.

They will keep the A380's for some time, there is no way for them to untangle themselves from it. Plus people forget what it does for them especially in slot constrained airports......they will keep them flying as they wait for demand to pick up. To do any different is to cede market share to competition.
 
tayaramecanici
Posts: 255
Joined: Sat Sep 09, 2006 5:03 am

Re: EK's possible future?

Fri May 01, 2020 12:00 pm

PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet. .

Always remember: anything is possible even when people are telling you it can't be! The Titanic was unsinkable, the oil price could never be negative, American Airlines would never lose money again.

History proved them all wrong.

Given recent negative experiences here on A.net I would like to state that this is just my opinion. Feel free to agree or disagree with me but please use arguments not attacks or sarcastic commentary. Thank you :pray:


Fully agree with everything you say, i left EK in Dec 1999. The fleets was less than 35 aircrafts then. This story of the largest airline in the world started in 1998, Noel Forgeard visited dubai and met Sheikh Mohammed, he was then only a crown prince, immediately the day after the meeting AIRBUS announced the plan for the A380 programme taking off the drawing board.
In 1999 or There about Jiang Jemin had visited Dubai. EK had 2 x dailies to HKG. The sheikhs of dubai had sold their souls to the communist red devils and created this huge monolith. The sheikh of Dubai was enamoured by the CCP.

Real estate registrations was allowed for expats in DXB from 2002, same as in CCP China. In 2002 immediately after the 9/11 EK put in its large order costing $20B, the GDP of Dubai was less than $60B then. In 2003 US invaded Iraq. In 2004 Haliburton moved their HQ to DXB, The rest as they say is "history with $100+/bl". Every small time sheikh was investing his money in the new BEIRUT (ala Paris of middle east) i,e Dubai.

The day i saw Jiang Jemin in Dubai, i had mentioned USA will destroy china. The USA has taken his time.............but done a lot good for the world in the mean time.There will be some collateral damage alongside.
''You are as good as your nearest competitor'' Bob Crandall.
 
tayaramecanici
Posts: 255
Joined: Sat Sep 09, 2006 5:03 am

Re: EK's possible future?

Fri May 01, 2020 12:20 pm

B777LRF wrote:
Just a point of order: Dubai has no oil or gas worth mentioning.

You need to think of Dubai as a corporation, where the biggest sources of income stems from their ability to attract foreign companies who hires expat workers in their hundreds of thousands, and tourism.

The first part is exceedingly important, and is the reason why Ek have not laid off staff. Should they do so, the expats would forfeit their residency permit and would leave in huge droves, torpedoing large parts of the service economy and wrecking havoc with real estate business. Ipso facto, if companies in Dubai starts laying off staff in large numbers, the Dubai economy would completely implode.

Dubai can survive on a reduced number of tourists (having been in there numerous times on business, the attraction as a tourist destination utterly escapes me, but I digress), but it cannot survive without millions of expats. That EK makes most of its money being a transit carrier, where only a small portion of their pax actually visit Dubai, only speaks to the size the airline has managed to grow into; it can survive on a much smaller scale, catering mainly to the expat and tourist business.

For that reason alone EK will have to survive, albeit not necessarily in its present form.


There will be massisve changes in the middle east.
EK, infact the state of Dubai's creation was the doing of the UK Foreign Office. They, UKFO supported Dubai all the way since its foundation. Right now the state of UK is facing its own survival and there will be limited support from the UKFO.
The big brother AbuDhabi, might make a move on taking over all the the 7 emirates into its fold. Sheikh Mohammed of DXB has been wounded lately in the UK crown courts. I do agree with your analysis, AUH soveright fund might take over EK and the state of Dubai.
Don't be surprised if Qatar joins this new state alongwith UAE.
Saudi are wasted lot, Their future is dependent of Israel.
Iran, Iraq and Syria will have another Desert Spring revolution with the major religion reduced in these countries.
Aviation will take a break in this time.
''You are as good as your nearest competitor'' Bob Crandall.
 
User avatar
b727fan
Posts: 257
Joined: Mon Apr 26, 2004 8:54 am

Re: EK's possible future?

Fri May 01, 2020 1:15 pm

"jaws music" and then Abu Dhabi strikes!!
Financial power in the UAE is in Abu Dhabi and with the Expo 2020 revenues now projected even less than expected, coupled with the fact that Dubai is still in major debt (mostly to the Zayed family) take over as in merger of Etihad / Emirates is possible.
 
dtw2hyd
Posts: 8272
Joined: Wed Jan 09, 2013 12:11 pm

Re: EK's possible future?

Fri May 01, 2020 1:23 pm

If Bill Gates predictions were to come true, international travel will be very restricted in near future. He expects severe visa restrictions and quarantines on non-citizens to continue at-least for next five years.

I personally think for domestic markets will recover, next P2P international travel and Super Hubs will be the last ones. Mixing passengers from 100 countries and sending them anywhere is a nightmare for contact tracing.

Having said that EK is doing few good things, crew PPE and testing passengers will definitely help.
All posts are just opinions.
 
SurlyBonds
Posts: 383
Joined: Mon Nov 02, 2015 10:24 am

Re: EK's possible future?

Fri May 01, 2020 1:26 pm

erikgrinsvall wrote:
9/11 and the volcanic eruptions were single events, where as the COVID is open ended, on-going and un-contained...


The volcanic eruptions, yes -- but I disagree with respect to 9/11. At the time, many analysts thought that 9/11 was but the first wave of attacks. People described the struggle against Islamic terrorism as a "generational struggle" that would last as long as the Cold War. By and large, that was a dog that didn't bark, although it did yap -- remember the shoe bomber and underwear bomber, Madrid, the London attacks, Beslan, New Delhi, and, as late as 2015, Paris and the truck attacks elsewhere, to say nothing of the rise of ISIS. Although Iraq had little to nothing to do with 9/11, the Iraq war exacerbated regional uncertainty.

Then there is shi'a Iran. It feels like decades, but only four short months ago, the US was on the cusp of a regional war there, albeit one largely of our own making.

By contrast, we have a pretty good sense of how most pandemics end. I think we can state with a high degree of confidence that two years from now, the COVID-19 pandemic will be over, either via herd immunity or a vaccine. I think it is more likely than not that it will be over, or mostly over, one year from now.

None of this, of course, is to forget the terrible human toll -- far worse than 9/11 in terms in lives, though not destroyed infrastructure -- that the pandemic has exacted. And the short-term economic effects of COVID-19, particularly for air travel, have been worse than 9/11. But in terms of certainty for scenario planning, I would argue that 9/11 was worse.
 
SurlyBonds
Posts: 383
Joined: Mon Nov 02, 2015 10:24 am

Re: EK's possible future?

Fri May 01, 2020 1:30 pm

dtw2hyd wrote:
If Bill Gates predictions were to come true, international travel will be very restricted in near future. He expects severe visa restrictions and quarantines on non-citizens to continue at-least for next five years.


Where did Bill Gates give a five-year timeframe? (I'm not asking this question in a contentious way; I'd like to read the source myself.)

I personally think for domestic markets will recover, next P2P international travel and Super Hubs will be the last ones. Mixing passengers from 100 countries and sending them anywhere is a nightmare for contact tracing.


During the pandemic, perhaps. After herd immunity, I don't think you're going to see long, thin routes recover as quickly as trunk routes. If you want to, say, Dubrovnik two years from now, the PHL-DBV flight probably won't be an option. That means hubs.
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Fri May 01, 2020 1:40 pm

dtw2hyd wrote:
If Bill Gates predictions were to come true, international travel will be very restricted in near future. He expects severe visa restrictions and quarantines on non-citizens to continue at-least for next five years.

I personally think for domestic markets will recover, next P2P international travel and Super Hubs will be the last ones. Mixing passengers from 100 countries and sending them anywhere is a nightmare for contact tracing.

Having said that EK is doing few good things, crew PPE and testing passengers will definitely help.
I would honestly pay more sense to him if he were an epidemiologist or from the medical field. He is not, and that makes one wonder why he is drumming all of this.

Worldwide trade and industry needs travel, governments need revenue. They will try and get a cure, and eventually in two or so years, a stable vaccine if the virus is not mutating. How long do people honestly think that governments are going to bail out the airline industry? Or keep whole industries dependent on tourism, or business trade that involved trade locked?
 
SurlyBonds
Posts: 383
Joined: Mon Nov 02, 2015 10:24 am

Re: EK's possible future?

Fri May 01, 2020 1:47 pm

B777LRF wrote:
EK, infact the state of Dubai's creation was the doing of the UK Foreign Office. They, UKFO supported Dubai all the way since its foundation. Right now the state of UK is facing its own survival and there will be limited support from the UKFO.


I assume, here, that you mean the UK is "facing its own survival" because of Scottish independence in the wake of Brexit. The pandemic may take some of the wind out of the SNP's sails. Even if it doesn't, the Brexiteers seem to have a neo-"East of Suez" strategy, looking to boost trade in places like the Middle East, India, Singapore, and Southeast Asia. If anything, that means more diplomatic focus on the UAE, not less. (And it's not the post-colonial 1950s; the UAE is hardly a puppet of the UK anymore, even if the relationship continues to be of outsized importance.)

B777LRF wrote:
There will be massisve changes in the middle east.
The big brother AbuDhabi, might make a move on taking over all the the 7 emirates into its fold. Sheikh Mohammed of DXB has been wounded lately in the UK crown courts. I do agree with your analysis, AUH soveright fund might take over EK and the state of Dubai.
Don't be surprised if Qatar joins this new state alongwith UAE.


I agree that there will be massive changes in the Middle East, and indeed that you could see a second Arab spring. However, if the price of oil remains low (and some of the price collapse preceded the pandemic), that weakens Saudi and Abu Dhabi, which is extremely dependent on oil revenues, vis-a-vis Dubai, which, as noted above, has very little oil and has prospered by diversifying its economic. That suggests a power play by Abu Dhabi within the UAE, or vis-a-vis Qatar, will ultimately be unsuccessful.

I suppose that for aviation, this means that greater cooperation between EK and EY might be in the cards, particularly if EK makes some face-saving concessions, whether that's operating some routes out of AUH or shifting some traffic to DWC.

This still assumes a contentious relationship between Saudi Arabia and Russia. They do seem to be locked in a prisoner's dilemma right now, which prevents them from colluding to raise oil prices. They do have an incredible incentive to find a way out in the medium term, though.
 
SurlyBonds
Posts: 383
Joined: Mon Nov 02, 2015 10:24 am

Re: EK's possible future?

Fri May 01, 2020 1:50 pm

dtw2hyd wrote:
I would honestly pay more sense to [Bill Gates] if he were an epidemiologist or from the medical field. He is not, and that makes one wonder why he is drumming all of this.


The Gates Foundation has been working on pandemic prevention for a long, long time. That means Bill Gates has legitimate expertise in public health, and he certainly has epidemiologists and other credible scientists advising him.
 
SurlyBonds
Posts: 383
Joined: Mon Nov 02, 2015 10:24 am

Re: EK's possible future?

Fri May 01, 2020 1:57 pm

Everyone who is predicting the end of wide-bodies is forgetting that the "frequency is king" arguments will hold far less water over the next, oh, two or three years. It will make less sense to run hourly 737s between LA and San Francisco, or seven daily A330s between London and Dubai, when a lot of those empty flights can be consolidated into full single flights.
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Fri May 01, 2020 2:08 pm

SurlyBonds wrote:
dtw2hyd wrote:
I would honestly pay more sense to [Bill Gates] if he were an epidemiologist or from the medical field. He is not, and that makes one wonder why he is drumming all of this.


The Gates Foundation has been working on pandemic prevention for a long, long time. That means Bill Gates has legitimate expertise in public health, and he certainly has epidemiologists and other credible scientists advising him.

I have a degree in Biochemistry, I have worked in public health, I have worked in research and vaccination drives, the stock market. A lot of what he says is doomsday material, and a lot does not make any sense. If we listened to this, the worldwide economy would be in perpetual closure. Maybe they need to really tell us what they really want, and I know of how vaccinations have been botched in the developing world in ways you could never see in the developed nations.

There are tests that are carried out when it comes to traveling to certain countries, some are not even contagious e.g. STD's or yellow fever, the latter one would need to get a vaccine on. A few years ago, someone traveled to Africa and got typhoid, brought it to the US, infected some people before it was contained.

We live in a world where globalization has taken root, a world of global supply chains, and a world where business needs travel more than it ever did. Want to get some clothing done in South East Asia or China? You have to travel, sort out the quality of fibre you want, have some samples made. You want some prototype made for an electric gadget? You travel to Shenzhen because it is cheaper and faster to get work done there. No one is going to send samples by plane or ship, back and forth when you could travel and be done with it faster, in a more efficient and cheaper manner.

Will there be diseases? Yes, and a lot because humans see a need to mess about with things that they ought not to be messing with. There will be disaster like this because travel has made commuting between cities so much easier and so much cheaper. But so long as we keep researching (and some on wild animals) or consuming them, while mishandling them, these are things that will continue to happen.
 
dtw2hyd
Posts: 8272
Joined: Wed Jan 09, 2013 12:11 pm

Re: EK's possible future?

Fri May 01, 2020 3:14 pm

Gremlinzzzz wrote:
...
Worldwide trade and industry needs travel, governments need revenue. They will try and get a cure, and eventually in two or so years, a stable vaccine if the virus is not mutating. How long do people honestly think that governments are going to bail out the airline industry? Or keep whole industries dependent on tourism, or business trade that involved trade locked?


Global outsourcing model reached its apex, the pendulum will move towards the other extreme before it settles down. Yes, essential business travel will pickup first with vaccines and quarantines, but many countries won't be welcoming foreign tourists, essential for EK business model to succeed.

A380s can be reconfigured with all air tight F-Suites, if the theory of premium cabin makes an airline run and cattle classes are just coming along for the ride.

BTW, my posted started with an "If".
All posts are just opinions.
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Fri May 01, 2020 3:59 pm

dtw2hyd wrote:
Gremlinzzzz wrote:
...
Worldwide trade and industry needs travel, governments need revenue. They will try and get a cure, and eventually in two or so years, a stable vaccine if the virus is not mutating. How long do people honestly think that governments are going to bail out the airline industry? Or keep whole industries dependent on tourism, or business trade that involved trade locked?


Global outsourcing model reached its apex, the pendulum will move towards the other extreme before it settles down. Yes, essential business travel will pickup first with vaccines and quarantines, but many countries won't be welcoming foreign tourists, essential for EK business model to succeed.

A380s can be reconfigured with all air tight F-Suites, if the theory of premium cabin makes an airline run and cattle classes are just coming along for the ride.

BTW, my posted started with an "If".
Global outsourcing exists because labor is cheaper elsewhere. People manufacture in China and Asia in general because we are in a deflationary world where you have to be cheap to move volume. This always involves the movement of people to ensure that the desired quality is achieved in every step of production.

Someone in Asia will travel the world looking and negotiating the best price for cotton......you have to go and physically view the product and see how it will get shipped or have a local partner. This is then sold to secondary middle men or factories. If you are trading commodities like rice/coffee, cocoa, wheat e.g. Cargill, you have to have local offices in areas where you source grains or beans, and be a middle man eating the margin. People really do not understand just how much international trade relies on transport and logistics. This is why you see even firms from the US moving east.....they wont compete if they did it at home.

I used to see people go to Asia daily to get clothing, electronics, building materials, furniture and looking to trade it back in Africa, I know it happens a lot in USA and Europe too. This is where Ethiopian and Emirates really do great in Africa, you are one stop away from the final destination. This manifests itself in import duty, sales tax and employment worldwide.

What we see in trade is essentially the exchange of production and services. Transport and logistics is what holds it together. You can travel by air and bring good home via ship because it is cheaper. However, for this trade to happen, you have to travel and shop and this is where airlines come in. This is why you see governments trying their best to save national carriers.

Cheap air travel even in Europe is a success to whole towns that have now been linked by the likes of Ryanair, Easyjet, Wizz etc. The world needs aviation, but government pockets are not so deep as to keep aviation grounded indefinitely without negatively impacting local business and their own tax revenue.
 
2travel2know2
Posts: 2942
Joined: Mon Apr 26, 2010 3:01 pm

Re: EK's possible future?

Fri May 01, 2020 4:20 pm

Lets assume:
EH takes over EK (and FZ),
Emirate of Abu Dhabi builds high-speed rail link between AUH and DXB (likely via DWC).
DXB is that new airline hub, AUH keeps only its main O/D routes; charters, LCC and any airline not willing to pay to operate either DXB or AUH flies to DWC, also 1-2 DXB major market might get its own DWC flight with "the new airline".
The airline coming out of the EH, EK and FZ might well be named "Emirati".
I'm not on CM's payroll.
 
dtw2hyd
Posts: 8272
Joined: Wed Jan 09, 2013 12:11 pm

Re: EK's possible future?

Fri May 01, 2020 4:48 pm

Gremlinzzzz wrote:
Global outsourcing exists because labor is cheaper elsewhere. People manufacture in China and Asia in general because we are in a deflationary world where you have to be cheap to move volume. This always involves the movement of people to ensure that the desired quality is achieved in every step of production.

Someone in Asia will travel the world looking and negotiating the best price for cotton......you have to go and physically view the product and see how it will get shipped or have a local partner. This is then sold to secondary middle men or factories. If you are trading commodities like rice/coffee, cocoa, wheat e.g. Cargill, you have to have local offices in areas where you source grains or beans, and be a middle man eating the margin. People really do not understand just how much international trade relies on transport and logistics. This is why you see even firms from the US moving east.....they wont compete if they did it at home.

I used to see people go to Asia daily to get clothing, electronics, building materials, furniture and looking to trade it back in Africa, I know it happens a lot in USA and Europe too. This is where Ethiopian and Emirates really do great in Africa, you are one stop away from the final destination. This manifests itself in import duty, sales tax and employment worldwide.

What we see in trade is essentially the exchange of production and services. Transport and logistics is what holds it together. You can travel by air and bring good home via ship because it is cheaper. However, for this trade to happen, you have to travel and shop and this is where airlines come in. This is why you see governments trying their best to save national carriers.

Cheap air travel even in Europe is a success to whole towns that have now been linked by the likes of Ryanair, Easyjet, Wizz etc. The world needs aviation, but government pockets are not so deep as to keep aviation grounded indefinitely without negatively impacting local business and their own tax revenue.


Detailed discussion of global outsourcing is out of scope of current topic, but world is not going to blindly go back to old way of doing things.

The brilliant minds handling(globe-trotting) outsourced supply chains had no clue how deep they were in this ..., had no clue how vulnerable they were and how can it be manipulated.

COVID-19 proved complete outsourcing is not good for any country.

Yes it is a lot of fun to buy 1000 resistors for $10 shipped directly from China for an Arduino project, it is not fun if a missing resistor/capacitor/valve stops a country from producing a life saving ventilator when needed.
All posts are just opinions.
 
hohd
Posts: 901
Joined: Sat May 17, 2008 1:03 am

Re: EK's possible future?

Fri May 01, 2020 4:55 pm

Toinou wrote:
Is India really considered a "high revenue market"?

Many of EK flights especially from US primarily connect to India, without India, I doubt EK can operate more two or three cities in US, and without that feed from US other connecting flights suffer too. India is a medium revenue market, the load factors on India routes are generally healthy, but the huge number of economy class passengers are what which fills EK planes. And the same analogy goes to QR too.
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Fri May 01, 2020 5:29 pm

dtw2hyd wrote:
Gremlinzzzz wrote:
Global outsourcing exists because labor is cheaper elsewhere. People manufacture in China and Asia in general because we are in a deflationary world where you have to be cheap to move volume. This always involves the movement of people to ensure that the desired quality is achieved in every step of production.

Someone in Asia will travel the world looking and negotiating the best price for cotton......you have to go and physically view the product and see how it will get shipped or have a local partner. This is then sold to secondary middle men or factories. If you are trading commodities like rice/coffee, cocoa, wheat e.g. Cargill, you have to have local offices in areas where you source grains or beans, and be a middle man eating the margin. People really do not understand just how much international trade relies on transport and logistics. This is why you see even firms from the US moving east.....they wont compete if they did it at home.

I used to see people go to Asia daily to get clothing, electronics, building materials, furniture and looking to trade it back in Africa, I know it happens a lot in USA and Europe too. This is where Ethiopian and Emirates really do great in Africa, you are one stop away from the final destination. This manifests itself in import duty, sales tax and employment worldwide.

What we see in trade is essentially the exchange of production and services. Transport and logistics is what holds it together. You can travel by air and bring good home via ship because it is cheaper. However, for this trade to happen, you have to travel and shop and this is where airlines come in. This is why you see governments trying their best to save national carriers.

Cheap air travel even in Europe is a success to whole towns that have now been linked by the likes of Ryanair, Easyjet, Wizz etc. The world needs aviation, but government pockets are not so deep as to keep aviation grounded indefinitely without negatively impacting local business and their own tax revenue.


Detailed discussion of global outsourcing is out of scope of current topic, but world is not going to blindly go back to old way of doing things.

The brilliant minds handling(globe-trotting) outsourced supply chains had no clue how deep they were in this ..., had no clue how vulnerable they were and how can it be manipulated.

COVID-19 proved complete outsourcing is not good for any country.

Yes it is a lot of fun to buy 1000 resistors for $10 shipped directly from China for an Arduino project, it is not fun if a missing resistor/capacitor/valve stops a country from producing a life saving ventilator when needed.
1. Emirates is like any long haul carrier. If they get help from the government, they will be ok.
2. All airlines are having issues, all of them. If you leased planes, you have to pay for them, if you have employees, you are bleeding cash if you do not have state guarantees.
3. All airports are going through a downturn with planes parked and travelers at home.
4. So long as you have a global economy, businesses will look for the lowest cost base where competition is global. Even in aviation, it is somewhat a race to the bottom most of the time. How else were the gulf carriers, or the low cost carriers able to get more business from the established flag carriers?
I also think that in crisis, people tend to overthink stuff. You do not have a lot of ICU or HDU beds in hospitals for a reason, you don't half the hospital capacity as isolation wards, or stock up on protective equipment unless you need them. It is poor allocation of capital, same applies to ventilators. They cost more money in terms capital cost and maintenance. This would not change even if you had the capacity at home. People that think opposite have no idea what they are talking about. So businesses put money in areas that move more units as is always the case.
 
dtw2hyd
Posts: 8272
Joined: Wed Jan 09, 2013 12:11 pm

Re: EK's possible future?

Fri May 01, 2020 6:29 pm

Gremlinzzzz wrote:
1. Emirates is like any long haul carrier. If they get help from the government, they will be ok.
2. All airlines are having issues, all of them. If you leased planes, you have to pay for them, if you have employees, you are bleeding cash if you do not have state guarantees.


EK is not like other long-haul carriers, it is a city-state owned sixth freedom carrier with zero domestic and very little international O&D market. Sure all city-state owned sixth freedom carriers will have problems. DXB 100 Million with two-digit growth is history.

We have different view of the same topic, I will leave at that.
All posts are just opinions.
 
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DocLightning
Posts: 21813
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Re: EK's possible future?

Fri May 01, 2020 8:22 pm

PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.


While I agree, PA didn't have an Emir backing it up.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
strfyr51
Posts: 4899
Joined: Tue Apr 10, 2012 5:04 pm

Re: EK's possible future?

Fri May 01, 2020 8:54 pm

I see sentiments that EK as TOO Big TOO fast, But? Could they have even competed had they NOT used the A380? Europe really had not much of a choice but to tolerate them since they were making Grand theft money selling them the A380's. The USA? Not so much. At first they were welcomed in, Then they abused their welcome. They sought preferential treatment we didn't give even out long time friends like British, Lufthansa, Japan Airlines, Singapore or Air France. It was that lack of respect that caused EK to have problems in the US with the fact that the A380 needed upgrades to airports to even fly in at all! Some of the bigger airports made the upgrades at the Public's expense But many others didn't. Why? There was nothing in it for them. The same way there was nothing in it fir any of the USA majors to even buy the A380. We didn't NEED a bigger airplane! We already Had the 747-400 and only 2 majors even flew that in Passenger service. Had the A380 come 12-15 years earlier? The story could have been different. BUT? That's water under the Bridge now. EK came along with the stance they needed and the airplane that made them stand out. Was it the right airplane? For me? No. But I damn sure took Notice when the came! The A380 would still be going strong I think if they had a purpose built freighter.
 
2travel2know2
Posts: 2942
Joined: Mon Apr 26, 2010 3:01 pm

Re: EK's possible future?

Fri May 01, 2020 8:54 pm

DocLightning wrote:
PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.


While I agree, PA didn't have an Emir backing it up.
Also, never in Pan Am history, the airline was a one-hub airline.
I'm not on CM's payroll.
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Sat May 02, 2020 1:25 am

dtw2hyd wrote:
Gremlinzzzz wrote:
1. Emirates is like any long haul carrier. If they get help from the government, they will be ok.
2. All airlines are having issues, all of them. If you leased planes, you have to pay for them, if you have employees, you are bleeding cash if you do not have state guarantees.


EK is not like other long-haul carriers, it is a city-state owned sixth freedom carrier with zero domestic and very little international O&D market. Sure all city-state owned sixth freedom carriers will have problems. DXB 100 Million with two-digit growth is history.

We have different view of the same topic, I will leave at that.

British Airways was privatized in 1987.
Lufthansa was state owned until 1994.
Air France started privatization in 1999.

Many flag carriers that were privatized started off as state owned airlines. I also think that you miss effectively miss what a hub carrier is supposed to do. Most of the traffic into any large hub anywhere is always connecting traffic. This is why Heathrow, Frankfurt, CDG, Schipol, Changi, Chep Lap Kok, Narita etc all exist. Emirates simply made use of their location to link the Americas, Africa, Europe, Asia and Oceania through a well placed Dubai hub. Dubai then used this to establish an emirate that can attracting business and commerce (something other Arab nations are trying to copy) and also became a tourist hot spot.

The hub and spoke design through which most big airlines work is not going away because major hubs bring in competition, push through a lot of options, and bring about the most long haul passengers. Emirates only problem is that they operate the A380, and it will take time for demand to get back. Dubai is not lacking when it comes to operating another low cost carrier in FlyDubai to complement Emirates.

The issues Emirates is facing are being faced by every airline, even your low cost airlines that traverse Europe.
 
Sokes
Posts: 1259
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Re: EK's possible future?

Sat May 02, 2020 4:15 am

The political dimension is missing. Emirates used to absorb the growth. European airlines didn't like and lobbied, but they could carry on. Until demand is back to normal I see three scenarios once traffic picks up again:
a) both European airlines and Emirates fly half empty. Tickets will be so costly that demand will reduce.
b) Emirates stops operations until traffic recovered. European airlines can fly profitable.
c) European airlines stop long haul towards east until traffic recovers and Emirates can fly profitable.

I believe that's a political question. As there is hardly any traffic at the moment and as European airlines want government help now, the issue is not raised. One can't argue that one is critical infrastructure if one has at the same time this discussion. Once traffic picks up it will be discussed. European airlines will lobby to give Emirates less traffic rights.

Oh, I forgot Turkish Airlines with their much more flexible fleet.

Doesn't the ever increasing narrow-body range favor small airport-hub-small airport over small airport-hub-hub-small airport? Add the lower salaries Emirates has to pay.
I believe Emirates is well advised to avoid the discussion I predict. They can do this by adding hundred narrow-bodies and increase sold capacity in line with growing traffic, but delayed by a few months. In exchange European airlines would have to agree to shrink capacity a bit.
Again I forgot Turkish. I believe a lot of quarrels lie ahead.

@Panamsterdam: Interesting post.
Why can't the world be a little bit more autistic?
 
Gremlinzzzz
Posts: 68
Joined: Fri Jan 24, 2020 4:28 am

Re: EK's possible future?

Sat May 02, 2020 4:34 am

Sokes wrote:
The political dimension is missing. Emirates used to absorb the growth. European airlines didn't like and lobbied, but they could carry on. Until demand is back to normal I see three scenarios once traffic picks up again:
a) both European airlines and Emirates fly half empty. Tickets will be so costly that demand will reduce.
b) Emirates stops operations until traffic recovered. European airlines can fly profitable.
c) European airlines stop long haul towards east until traffic recovers and Emirates can fly profitable.

I believe that's a political question. As there is hardly any traffic at the moment and as European airlines want government help now, the issue is not raised. One can't argue that one is critical infrastructure if one has at the same time this discussion. Once traffic picks up it will be discussed. European airlines will lobby to give Emirates less traffic rights.

Oh, I forgot Turkish Airlines with their much more flexible fleet.

Doesn't the ever increasing narrow-body range favor small airport-hub-small airport over small airport-hub-hub-small airport? Add the lower salaries Emirates has to pay.
I believe Emirates is well advised to avoid the discussion I predict. They can do this by adding hundred narrow-bodies and increase sold capacity in line with growing traffic, but delayed by a few months. In exchange European airlines would have to agree to shrink capacity a bit.
Again I forgot Turkish. I believe a lot of quarrels lie ahead.

@Panamsterdam: Interesting post.

You do not make long term plans based on short term shocks like adding a hundred narrow bodies.

I also do not foresee a situation where nations cut frequencies by one of the biggest airlines in the world to try and protect their own. This is stuff you do before the fact, not after. If they did this, it would set a dangerous precedent across the globe.
 
Sokes
Posts: 1259
Joined: Sat Mar 09, 2019 4:48 pm

Re: EK's possible future?

Sat May 02, 2020 5:18 am

Gremlinzzzz wrote:
You do not make long term plans based on short term shocks like adding a hundred narrow bodies.

True. I assumed a more diversified fleet would be useful anyway and now it's a good time to get them cheap.
Maybe Emirates makes sure that minor airports have access to air-freight? If yes, I'm wrong anyway.

Gremlinzzzz wrote:
I also do not foresee a situation where nations cut frequencies by one of the biggest airlines in the world to try and protect their own. This is stuff you do before the fact, not after. If they did this, it would set a dangerous precedent across the globe.

I hope you are right.
Why can't the world be a little bit more autistic?
 
PANAMsterdam
Posts: 249
Joined: Thu Jun 27, 2019 7:45 am

Re: EK's possible future?

Sat May 02, 2020 6:31 am

DocLightning wrote:
PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.


While I agree, PA didn't have an Emir backing it up.


True! But i didn't meant it like that. I meant that they were the trend setting, global airline every other airline looked up to.

2travel2know2 wrote:
DocLightning wrote:
PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.


While I agree, PA didn't have an Emir backing it up.
Also, never in Pan Am history, the airline was a one-hub airline.


True, although JFK is synonymous with Pan Am they also had hubs at Miami, LAX, SFO, FRA and so on.
And wasn't Pan Am the biggest foreign airline at LHR for a while? And isn't EK the biggest foreign airline at LHR now? I can't find the numbers, but i see that DXB is the biggest international destination at LHR behind JFK.
Every country has an airline. The world has Pan Am.
 
Toinou
Posts: 257
Joined: Sun Apr 14, 2019 8:21 am

Re: EK's possible future?

Sat May 02, 2020 8:01 am

Gremlinzzzz wrote:
There are tests that are carried out when it comes to traveling to certain countries, some are not even contagious e.g. STD's or yellow fever, the latter one would need to get a vaccine on. A few years ago, someone traveled to Africa and got typhoid, brought it to the US, infected some people before it was contained.

STD's not contagious? So I'm wondering what the "T" stands for...
Not airborne, OK. Not contagious, stop kidding.

Gremlinzzzz wrote:
Global outsourcing exists because labor is cheaper elsewhere. People manufacture in China and Asia in general because we are in a deflationary world where you have to be cheap to move volume. This always involves the movement of people to ensure that the desired quality is achieved in every step of production.

Someone in Asia will travel the world looking and negotiating the best price for cotton......you have to go and physically view the product and see how it will get shipped or have a local partner. This is then sold to secondary middle men or factories. If you are trading commodities like rice/coffee, cocoa, wheat e.g. Cargill, you have to have local offices in areas where you source grains or beans, and be a middle man eating the margin. People really do not understand just how much international trade relies on transport and logistics. This is why you see even firms from the US moving east.....they wont compete if they did it at home.

I used to see people go to Asia daily to get clothing, electronics, building materials, furniture and looking to trade it back in Africa, I know it happens a lot in USA and Europe too. This is where Ethiopian and Emirates really do great in Africa, you are one stop away from the final destination. This manifests itself in import duty, sales tax and employment worldwide.

What we see in trade is essentially the exchange of production and services. Transport and logistics is what holds it together. You can travel by air and bring good home via ship because it is cheaper. However, for this trade to happen, you have to travel and shop and this is where airlines come in. This is why you see governments trying their best to save national carriers.

Cheap air travel even in Europe is a success to whole towns that have now been linked by the likes of Ryanair, Easyjet, Wizz etc. The world needs aviation, but government pockets are not so deep as to keep aviation grounded indefinitely without negatively impacting local business and their own tax revenue.

What you're saying is that cheap air transport is indispensable for the current model of globalization. This is largely disputable as is the assertion that video-conference would never take a large share of face-to-face meetings which proved suddenly baseless a few months ago. This model would need to adapt but it could absolutely do.
And this is considering that this situation of extreme goods globalization is to stay as is, which I have no idea about.

And if history teaches us anything it is that anything that is supposed permanent, definitive or unchangeable is set to change sooner or latter. So I guess that all people saying how things will be because of how they were may have a think about it.
 
User avatar
Chipmunk1973
Posts: 256
Joined: Tue Jun 28, 2016 10:23 am

Re: EK's possible future?

Sat May 02, 2020 9:19 am

The future of EK is in many ways a reflection of the UAE, in general, in terms of how it will prosper into the future. That means it will analyse the changes to societal and economic structure and adapt accordingly. In historical terms, the Arab Emirates was, for all intents and purposes, a backwater Arabian nation that relied on fishing and pearling industries. The discovery of oil enabled it to begin prospering in the riches of the monies earned from oil sales. But what really set it apart from several of it’s neighbours is to how that wealth was dispersed and where.

The seven states that form the Emirates determined that the new wealth would be used to provide education, healthcare, and develop new industries such as finance, tourism, and construction. Also, the more moderate approaches of religion from an Islamic nation would add to their successes, but that is a subject I will not cover.

Financially the UAE, and consequently it’s many state owned industries, remain in good economic health. According to worldoil.com and the UAE government, about 100 billion barrels of oil are still to be extracted from existing reserves. Even with a depressed oil price of approximately US$20/barrel, that equates for at least two trillion US dollars. And we still haven’t taken into account the fact that the UAE has the tenth highest known reserves of natural gas.

Emirates, the airline, grew out of an economy that transitioned from one way of life to another. It recognised the desire for people to travel from one point one the globe to the next. It banked it’s ability through premium and quality service and also the ability to distinguish itself from others making it highly desirable. Much like what Dubai and Abu Dhabi have done through the last thirty to forty years.

The pandemic of 2019/2020 will be a challenge to Emirates, no doubt. It will take for some time for passengers to return to business related and leisure travel. However, the Australian Co-Vid19 response has shown that while people have forsaken some personal liberties, they continue to be avid consumers and that demand for freight and logistics has actually increased. Given the expanse of the Emirates network, this will be a helpful subsidy in lieu of its passenger operations. And I think that this same response has also been demonstrated across some parts of the world.

I am of the opinion that the bigger threat to Emirates, and Etihad, will actually come from Saudi Arabia. Whatever your personal opinion of Crown Price Mohammed bin Salman is, he is certainly an opportunist of wealth. Whilst being controversial in many respects, he has seen to changes to liberalise Saudi society. By no means, this is not UAE 2.0, but it certainly has some semblance at this point in time. Women are allowed to drive, lashings of minors now prohibited, and the world’s tallest buildings planned for some of Islam’s holiest of places, purely for tourism.

Interesting times lay ahead.
Cheers,
C1973
 
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scbriml
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Re: EK's possible future?

Sat May 02, 2020 9:39 am

PANAMsterdam wrote:
Additional problem for EK is that they are located in a country that lives on and breathes oil.


Since we're talking about EK, we should limit the discussion to Dubai and not the UAE as a whole.

Dubai certainly doesn't "live on and breath oil". Oil and gas now represents less than 5% of Dubai's GDP, from a high of around 50% in the early '90s. The days of being reliant on black gold have long gone.
Time flies like an arrow. Fruit flies like a banana!
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Chipmunk1973
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Re: EK's possible future?

Sat May 02, 2020 9:50 am

scbriml wrote:

Since we're talking about EK, we should limit the discussion to Dubai and not the UAE as a whole.




Apologies, I became a bit enthusiastic.
Cheers,
C1973
 
Toinou
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Re: EK's possible future?

Sat May 02, 2020 9:55 am

scbriml wrote:
PANAMsterdam wrote:
Additional problem for EK is that they are located in a country that lives on and breathes oil.


Since we're talking about EK, we should limit the discussion to Dubai and not the UAE as a whole.

Dubai certainly doesn't "live on and breath oil". Oil and gas now represents less than 5% of Dubai's GDP, from a high of around 50% in the early '90s. The days of being reliant on black gold have long gone.

This is true but still a good amount of the money flow in Dubai is coming (in one form or another) from other emirates and other parts of the Gulf region and this would be lower (probably by order of magnitude) if they was no oil in the region. So it may be true strictly speaking that Dubai wealth is not coming from oil, without oil Dubai would be a lot poorer and less developed than it is at the moment.

Chipmunk1973 wrote:
Whatever your personal opinion of Crown Price Mohammed bin Salman is, he is certainly an opportunist of wealth.
I would tend to think that wealth is not its main goal. Like every aspects you mentioned, I think that all these are tools to give him what he really wants: power, political one.
You explained how he's liberalizing some aspects of Saudi society. It fits well in this explanation: the Al-Saud's had a variable relationship with conservative clergy depending of their needs. MBS seems to think that they now are more of a burden than an effective tool and that liberalizing some aspects can help its goals.
 
brindabella
Posts: 620
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Re: EK's possible future?

Sat May 02, 2020 12:47 pm

Gremlinzzzz wrote:
VSMUT wrote:
PANAMsterdam wrote:
I see EK as the Pan Am of my time. They are the airline everybody looks up to and compares itself to. The 747 was Pan Am's icon, as is the A380 for Emirates. But just as Pan Am, EK seems to have made the same mistake about their fleet.


Emirates isn't Pan Am. Pan Am was a big, private owned airline in a competitive market with multiple competitors. Emirates is a state owned flag carrier and almost has a monopoly in the regions biggest trade hub. The only real competitors are Qatar Airways and Etihad. Qatar is blockaded and Etihad is in a dire situation.


Gremlinzzzz wrote:
Their future is probably smaller more efficient aircraft which is why they were maybe interested in A330's and A350's. Emirates and other hub carriers will always have a presence in Europe, and a significant one because of how aviation is structured. Hubs are still king because even the biggest European carriers cannot justify flying point to point and long haul from some of the smaller airports.

So long as there is a premium to fly non stop, and the middle east/Asian carriers offer cheaper one stop options, there will be a significant market that they can tap onto going forward. Not to mention that their service is top quality.


I think they will have to go even smaller. The 787/A330neo/A350 interest was from before the crisis. If measures remain permanent and cost of travel prohibitive, along with a lack of willingness to travel, they may even have to look into absorbing FlyDubai's 737MAX fleet. 787-9s and A350s are still going to remain relevant to big cities, but they have a massive network to Africa, the Middle East, Pakistan and India where many destinations might only be viable on a 737.
I can tell you for a fact that in Africa they will have a viable business with the wide body fleet. They do not have much in way of competition and route network coverage. In this area, even Ethiopian does not compete when it comes to a one stop strategy or the multitude of bunks that Emirates operates.

Their competition in India isn't great either, or in Pakistan when it comes to routing to Europe, the America's or even Africa when you consider who the full service carriers are, and how their service is sometimes lacking.

They will keep the A380's for some time, there is no way for them to untangle themselves from it. Plus people forget what it does for them especially in slot constrained airports......they will keep them flying as they wait for demand to pick up. To do any different is to cede market share to competition.

Very reassuring analysis.

However as the rest of the world seems to be dumping what little remains of the A380 fleet; I would appreciate some context as to why you think the EK A380 fleet has a future.

:boggled:

cheers
Billy
 
Gremlinzzzz
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Re: EK's possible future?

Sat May 02, 2020 1:39 pm

Toinou wrote:
There are tests that are carried out when it comes to traveling to certain countries, some are not even contagious e.g. STD's or yellow fever, the latter one would need to get a vaccine on. A few years ago, someone traveled to Africa and got typhoid, brought it to the US, infected some people before it was contained.
STD's not contagious? So I'm wondering what the "T" stands for...
Not airborne, OK. Not contagious, stop kidding.

What you're saying is that cheap air transport is indispensable for the current model of globalization. This is largely disputable as is the assertion that video-conference would never take a large share of face-to-face meetings which proved suddenly baseless a few months ago. This model would need to adapt but it could absolutely do.
And this is considering that this situation of extreme goods globalization is to stay as is, which I have no idea about.

And if history teaches us anything it is that anything that is supposed permanent, definitive or unchangeable is set to change sooner or latter. So I guess that all people saying how things will be because of how they were may have a think about it.
1. STD's do not pose the threat a Covid 19 does. You get tested, most of the time no one will deny a visa. There are few cases where someone will get a STD without sex, but they are few and far between, and they will not stop whole economies.

2. I am saying that commerce has always depended on travel, and will continue to depend on travel. There are things that you cannot teleconference. As such, airlines will always be viable businesses. We have had 9/11, the .com bubble, the 2008 recession and now covid which is likely to be followed by another deeper recession. Once debt gets to manageable levels, economies will grow, travel will come back. This is a constant.
 
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lightsaber
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Re: EK's possible future?

Sat May 02, 2020 6:25 pm

Gremlinzzzz wrote:
Toinou wrote:
There are tests that are carried out when it comes to traveling to certain countries, some are not even contagious e.g. STD's or yellow fever, the latter one would need to get a vaccine on. A few years ago, someone traveled to Africa and got typhoid, brought it to the US, infected some people before it was contained.
STD's not contagious? So I'm wondering what the "T" stands for...
Not airborne, OK. Not contagious, stop kidding.

What you're saying is that cheap air transport is indispensable for the current model of globalization. This is largely disputable as is the assertion that video-conference would never take a large share of face-to-face meetings which proved suddenly baseless a few months ago. This model would need to adapt but it could absolutely do.
And this is considering that this situation of extreme goods globalization is to stay as is, which I have no idea about.

And if history teaches us anything it is that anything that is supposed permanent, definitive or unchangeable is set to change sooner or latter. So I guess that all people saying how things will be because of how they were may have a think about it.
1. STD's do not pose the threat a Covid 19 does. You get tested, most of the time no one will deny a visa. There are few cases where someone will get a STD without sex, but they are few and far between, and they will not stop whole economies.

2. I am saying that commerce has always depended on travel, and will continue to depend on travel. There are things that you cannot teleconference. As such, airlines will always be viable businesses. We have had 9/11, the .com bubble, the 2008 recession and now covid which is likely to be followed by another deeper recession. Once debt gets to manageable levels, economies will grow, travel will come back. This is a constant.

Our productivity is down 60%. The aerospace industry needs face to face meetings to keep up a normal pace. I'm sure other industries need travel to perform.

There will be a market. The debate is how many A380s will fill up enough to be viable. We each have our opinions, but I see LHR, JFK, SYD, DEL, BOM, PEK, PVG, BKK, FRA, CDG, and HKG post crisis filling A380s. Probably a few more I overlooked. This means, mid-term, 30+ A380s.

If air travel doesn't return, the economic disaster will create mass starvation. At some point, we must get back to work and accept those with risk factors isolate. Look at all the crops being plowed under and meat not being processed.

Lightsaber
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Vicenza
Posts: 82
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Re: EK's possible future?

Sat May 02, 2020 8:20 pm

[quote="IWMBH"]

The main difference between EK and Pan Am is that Pan Am wasn't the only airlines in the US, far from it in fact. So their bankruptcy had a minimal effect on the US economy and other airlines stood in line to take their place. The UAE doesn't have that, EK is vital in their growth plans. If they have the capability to save EK I'm sure they would.

You seem to be confusing Dubai and UAE. Dubai is only a part of UAE and there are several airlines who could take the place of EK if it were necessary. EK is the largest airline certainly, but not the only airline.
 
Aither
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Re: EK's possible future?

Sat May 02, 2020 11:28 pm

Relative to other airlines EK could actually become much stronger. They may be monitoring the guys saying "they will be smaller", and how they will be able in a few months to capture their O&Ds.
In absolute terms it will depend of the economy.
Never trust the obvious
 
Gremlinzzzz
Posts: 68
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Re: EK's possible future?

Sun May 03, 2020 1:44 am

lightsaber wrote:
Gremlinzzzz wrote:
Toinou wrote:
There are tests that are carried out when it comes to traveling to certain countries, some are not even contagious e.g. STD's or yellow fever, the latter one would need to get a vaccine on. A few years ago, someone traveled to Africa and got typhoid, brought it to the US, infected some people before it was contained.
STD's not contagious? So I'm wondering what the "T" stands for...
Not airborne, OK. Not contagious, stop kidding.

What you're saying is that cheap air transport is indispensable for the current model of globalization. This is largely disputable as is the assertion that video-conference would never take a large share of face-to-face meetings which proved suddenly baseless a few months ago. This model would need to adapt but it could absolutely do.
And this is considering that this situation of extreme goods globalization is to stay as is, which I have no idea about.

And if history teaches us anything it is that anything that is supposed permanent, definitive or unchangeable is set to change sooner or latter. So I guess that all people saying how things will be because of how they were may have a think about it.
1. STD's do not pose the threat a Covid 19 does. You get tested, most of the time no one will deny a visa. There are few cases where someone will get a STD without sex, but they are few and far between, and they will not stop whole economies.

2. I am saying that commerce has always depended on travel, and will continue to depend on travel. There are things that you cannot teleconference. As such, airlines will always be viable businesses. We have had 9/11, the .com bubble, the 2008 recession and now covid which is likely to be followed by another deeper recession. Once debt gets to manageable levels, economies will grow, travel will come back. This is a constant.

Our productivity is down 60%. The aerospace industry needs face to face meetings to keep up a normal pace. I'm sure other industries need travel to perform.

There will be a market. The debate is how many A380s will fill up enough to be viable. We each have our opinions, but I see LHR, JFK, SYD, DEL, BOM, PEK, PVG, BKK, FRA, CDG, and HKG post crisis filling A380s. Probably a few more I overlooked. This means, mid-term, 30+ A380s.

If air travel doesn't return, the economic disaster will create mass starvation. At some point, we must get back to work and accept those with risk factors isolate. Look at all the crops being plowed under and meat not being processed.

Lightsaber
The worldwide economy is going to take years to get back to where it was. My estimation is that the coronavirus situation is going to be followed by a recession because there is too much leverage in the system, and coming off this situation, not enough demand.

In such situations, the airlines with the biggest jets have the biggest problems, but the bigger jets also have the needed range for some of their networks. That said, not all business can be done by teleconferencing; in fact, most business cannot be done in this manner. If you are in the clothing business, you have to travel to ascertain the quality of goods. If you are an art dealer, you have to travel, if you deal precious metals, you have to do the same. If you are dealing agricultural produce, if you design electronics.........most businesses that are not service oriented demand this.
When you are in the service industry, say software, and you state that we are in the new age and you do not want to travel because you can skype or zoom. You will lose most big contracts. If you are an ad agency, travel is part of the business expense, if you are a bank or fund management that is looking to land that huge business, you do not cut corners. This is where I disagree with the new age teleconferencing view seeing that this is something that has been there, yet businesses are averse to using it. Even seminars that can be done online will almost always not be done that way when it comes to science, health or finance, and there are a lot of practical reasons why this is the case.

At current moment, most business that need people to travel are dead. Dead because there is no travel, dead because there is no demand, dead because people are at home. Production will come up as demand comes up, airlines that needed jets, will defer orders until they think they are on solid enough ground. EK will struggle initially, possibly cut some frequencies in the medium term. The other stuff though, is an overreaction.

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