ytz
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How Can Airlines Compete With EK?

Wed Mar 13, 2013 6:19 pm

Starting in 2014/2015 with the delivery of the A359, EK will go through a fleet renewal that will give it one of the most comfortable and efficient fleets in the business.

By the end of the decade, EK will have a fleet centred on the 359, 351, 388, 77L and 77W. They will have gotten rid of the 332, 333, 343, 345, 77A, 77E and 773. This means EK will have the most modern widebody fleet of any airline. Their CASM will be lower than today, while their planes will also be more comfortable (save maybe the 777s).

How can airlines in the West and India/South Asia compete with this? I can’t see much of a future for airlines in India under this kind of competition.
 
MaverickM11
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 6:26 pm

Quoting YTZ (Thread starter):
How can airlines in the West and India/South Asia compete with this? I can’t see much of a future for airlines in India under this kind of competition

Just like any other hub....over fly them, taking the highest yielding traffic nonstop, leaving the cheap stuff to EK.
E pur si muove -Galileo
 
A388
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 6:39 pm

That is a good question, just to correct the initial thrad, EK doesn't have the A333, only the A332.

About the topic itself, EK has the big advantage that their geographical location (Dubai) gives them the possibility to reach almost every city around the world non-stop (except for Australia/New Zealand flights of course). EK really is the one-stop option to connect the world (so are QR and EY but they are not as big as EK is). No other (single) airline really has this type of coverage. You can't just overfly them on every route they have. How do you overfly them if you want to go from HKG to GRU or from India to GRU? You can go via AMS, FRA or LHR but is that really better? Combined with the modern fleet of EK and its good in-flight product, I think EK is getting more popular worldwide because they are not expanding the way they are for no reason.

This is just my opinion so I'm open to other views and/or corrections.


A388
 
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Polot
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 6:53 pm

Quoting A388 (Reply 2):
About the topic itself, EK has the big advantage that their geographical location (Dubai) gives them the possibility to reach almost every city around the world non-stop (except for Australia/New Zealand flights of course). EK really is the one-stop option to connect the world (so are QR and EY but they are not as big as EK is). No other (single) airline really has this type of coverage.

The possibility of reaching every city worldwide nonstop doesn't suddenly make DXB an impossible location to beat. DXB is useless for flights within the Americas, Americas- Europe/Africa (although a lot of people take them to Africa because there is currently no good alternative), and for a lot of Asia-Americas flights. It is Europe/Africa-Asia where DXB is king. That is, of course, why it is generally the European and Asian airlines you hear talking about the EK threat- EK can't compete with most North/South American airline's traffic flows.

EK is doing great at growing- but eventually they are going to hit a wall if they continue with their current path- either due to running out of places to expand, or vengeful governments curbing their expansion in order to help protect the home carrier.
 
MaverickM11
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 6:59 pm

Quoting Polot (Reply 3):
EK is doing great at growing- but eventually they are going to hit a wall if they continue with their current path- either due to running out of places to expand, or vengeful governments curbing their expansion in order to help protect the home carrier.

   Plus the government has to keep sinking hundreds of millions into DXB to make it relevant, and that has already left it in plenty of hot water and in the hock to AUH.
E pur si muove -Galileo
 
A388
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 7:35 pm

Quoting Polot (Reply 3):
The possibility of reaching every city worldwide nonstop doesn't suddenly make DXB an impossible location to beat. DXB is useless for flights within the Americas, Americas- Europe/Africa (although a lot of people take them to Africa because there is currently no good alternative), and for a lot of Asia-Americas flights. It is Europe/Africa-Asia where DXB is king. That is, of course, why it is generally the European and Asian airlines you hear talking about the EK threat- EK can't compete with most North/South American airline's traffic flows.

Valid points yes, but with EK's expansion drive they will eventually serve every city in South America as well so Asia-South America will become their next area of growth. We're talking about connecting continents and not internal flights within the Americas or whatever continent because by that logic all hubs are worthless. You have to look at which continents are connected through one hub. In my opinion EK will eventually be strong in Europe/Africa-Asia and South America-Asia. I agree that North America-Europe/Asia will not be dominated to EK as the competition there is much stronger.

A388
 
airDFW
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 7:54 pm

I think there is going to be a backlash coming soon because I already see some rumbling.. DXB is too crowded already.
 
RJNUT
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 8:21 pm

a lot of US legacy carriers are cancelling their interline agreements or at least discontinuting their prorate thru- fare agreements with EK and also QR so it eliminates the feed to these flights,...they will have rely on local O/D to thrive. although markets like IAD, IAH, etc. are no brainersv
 
cmf
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 8:36 pm

Quoting YTZ (Thread starter):
How can airlines in the West and India/South Asia compete with this? I can’t see much of a future for airlines in India under this kind of competition.

By using the advantages they have. They will typically have shorter flights and better timed flights. Serving airports closer to you. Attractive flights also in directions other than somewhat toward DXB. Better loyalty programs because they are local. The list goes on.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
A388
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 8:38 pm

Quoting RJNUT (Reply 7):
a lot of US legacy carriers are cancelling their interline agreements or at least discontinuting their prorate thru- fare agreements with EK and also QR so it eliminates the feed to these flights,...they will have rely on local O/D to thrive. although markets like IAD, IAH, etc. are no brainersv

With QR now joining the OneWorld Alliance, I assume they will get more feed from the AA major hubs within the U.S.

A388
 
sandyb123
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 9:51 pm

Quoting A388 (Reply 2):
except for Australia/New Zealand flights of course

You can fly from DXB to AUS non-stop and NZ one-stop (tech) at the moment.

Quoting Polot (Reply 3):
vengeful governments curbing their expansion in order to help protect the home carrier.

I can't see this happening, at least in the western world. Look at India and their fierce protection of AI. Just damages the country, growth and commercial links long-term.

Quoting MaverickM11 (Reply 4):
Plus the government has to keep sinking hundreds of millions into DXB to make it relevant

The tie between EK and the Government of Dubai has long been over egged. EK is a commercial airline which trades on an international market. LHR and others globally have had plenty of government subsidies.

Quoting airdfw (Reply 6):
DXB is too crowded already.

Which is why DWC (Al Maktoum International / Dubai World Central) is placed to take over when DXB eventually becomes overloaded. Expect to see EK move it's entire operation there in the next 15 years.



Speaking as a Loyal EK Gold FF I can explain why I choose EK....

For long haul, all my business travel needs are East (with the exception of JNB/CPT). I choose to fly EK because they fly from a convenient local airport (GLA) and they have the best value for money vs. product IMO.

Don't get me wrong, there are better products but if I want to fly to SIN or JNB then I have to change anyway and the competition is almost always more expensive. throw in complimentary chauffeur from home / office (J & F) and miles which I can redeem on U2 flights in Europe, it makes a compelling business argument.

A great example of price comparison is an itinerary I'm flying next month MAN-DXB-JNB & CPT-DXB-GLA. BA wanted £4k J, VS didn't have the schedule so I booked EK. F suite all the way (except CPT-DXB which is the old product on 343) and the total cost was £3,300. Plus there is only 2 hours transit time at DXB, enough time for a complimentary massage!

Plus miles accelerator and tier miles means I can take Mrs Sandyb123 to BCN for the weekend in September on U2 and all I need to pay is taxes.

I'll do a trip report when I'm back  

Sandyb123

[Edited 2013-03-13 14:52:28]

[Edited 2013-03-13 14:53:15]
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ytz
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 10:13 pm

Quoting cmf (Reply 8):
By using the advantages they have.

This is my point though. Those advantages are substantially minimized in the years ahead.

Because of its fleet, EK will have the lowest CASM while offering one of the best products in the industry.

Direct flights are extremely tough. Most of us regulars here have seen LAXDESI's analysis of direct vs. connecting flights. Direct flights can really only be reserved for the most high-yielding routes. And even there, we've seen tough sledding for some (like AI's New York service).

I would think this particularly leaves India's airlines in a fix. EK/EY/QR will pretty much own a lot of the traffic into India out of Europe, North America and Africa.
 
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LAXintl
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 10:29 pm

Some airlines are seemingly competiting well against EK - take one Turkish Airlines

Its basically using the same strength of geography to quickly gain market share away from legacy carriers.
One advantage TK also has over EK is that its at the door step of market like Europe and can not only higher frequencies using smaller planes, but it can also serve many secondary markets which EK cant touch with its widebody fleet.

Anyhow, I think ultimately it really comes down to geography, network and cost.
To beat someone like EK, you need to figure out a way to produce the same offering at a low enough seat cost. Something very hard for today's legacy airlines especially in Europe.


Also I thought I would share a network profile of EK which Aviation Daily published a few weeks back.


Top Airports (excluding DXB) in revenues.
1. LHR
2. SYD
3. SIN
4. BKK
5. BOM
6. MEL
7. JFK
8. KUL
9. DEL
10. KHI
11. RUH
12. PER
13. JNB
14. CDG
15. MAN
16. LGW
17. FRA
18. HKG
19. JED
20. PEK

Average daily mainline departures - 438

Network ASM % distribution:
Asia - 15.1%
Oceania - 7.8
Americas - 6.7
Europe - 14.8
Africa/ME - 55.6

Weekly Flight distribution
Asia - 536
Oceania - 149
Americas - 87
Europe - 380
Africa/ME - 1911

Passenger growth rate %
Asia - 10.8%
Oceania - 13.1%
Americas - 16.6%
Europe - 5.9%
Africa/ME 17.1%

=
From the desert to the sea, to all of Southern California
 
cmf
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 10:39 pm

Quoting YTZ (Reply 11):
This is my point though. Those advantages are substantially minimized in the years ahead.

That the other airlines fail to exploit their advantages is their fault. That EK is great at exploiting theirs is the way it should be.

Quoting YTZ (Reply 11):
Because of its fleet, EK will have the lowest CASM while offering one of the best products in the industry

Because of the extra flying EK have additional costs. People have used the speed difference between airplanes and the few minutes of less flying time that means as a reason for why a plane consuming more fuel is more efficient. Now add two hours or more. (LHR to JNB add 4, each way)

That the local airlines don't keep up on equipment is also a self inflicted wound.

Quoting YTZ (Reply 11):
Direct flights are extremely tough.

They are an advantage, exploit it. It is a great base to get a flight started. Then you add to it. Just as EK do.

Quoting YTZ (Reply 11):
I would think this particularly leaves India's airlines in a fix. EK/EY/QR will pretty much own a lot of the traffic into India out of Europe, North America and Africa.

Yet we see TK step up. Love to see other airlines get their act together.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
ytz
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 11:15 pm

Quoting cmf (Reply 13):
Yet we see TK step up.

Sure, but TK could be lumped in with EK/QR/EY. I am wondering how AI and 9W compete or how BA, AF, LH, etc. compete. India faces a scenario where its aviation market is largely controlled from outside the country. Hardly a desirable situation for any country.
 
MaverickM11
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 11:24 pm

Quoting sandyb123 (Reply 10):

The tie between EK and the Government of Dubai has long been over egged.

I disagree--it's a defining characteristic. Long term, Dubai is EK and vice versa, and in the long term, EK needs to own the local DXB traffic, and that traffic needs a reason to be in DXB, hence the governments constant investment in turning the area into a financial and tourism hub.

Quoting YTZ (Reply 11):
Because of its fleet, EK will have the lowest CASM while offering one of the best products in the industry.

EK's product is way overstated, which is a feat for EK's PR department. I think where EK may have a challenge is 1) maintaining a local market in DXB, which goes back to government investment in Dubai Inc, and 2) with aircraft that are no smaller than a 332, that means a larger segment of its traffic flows are at risk than say an AF or BA. No one is likely to fly BKKABZ any time soon, if ever, whereas BKKMAN is a viable nonstop in the next few years, and so on.

Quoting cmf (Reply 13):
Love to see other airlines get their act together.

And do what? You take the EK model just about anywhere else in the world and it would go pear shaped instantly. What can other airlines in the US/EU for example take away from EK and incorporate into their own models? Zilch.

Quoting sandyb123 (Reply 10):
LHR and others globally have had plenty of government subsidies.

They have, but I'd say most of EK's success comes from Dubai's (in)direct support of the carrier and aviation, versus surrounding regions (EU, India, Pakistan, etc) that are intent on regulating and limiting their carriers to the point of atrophy.
E pur si muove -Galileo
 
luckyone
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 11:24 pm

Quoting YTZ (Reply 14):
India faces a scenario where its aviation market is largely controlled from outside the country. Hardly a desirable situation for any country.

Largely the government's fault when it's aviation policy has been developed around a government-owned airline, Air India.
 
Alnicocunife
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 11:35 pm

Quoting YTZ (Thread starter):
Their CASM will be lower than today,

Their cost may be quite a bit higher than today. Paying for fuel is just one cost. Paying for all of the new aircraft is quite another . How much more efficient will the new aircraft be?. Time will tell and if the A350's have any issues like the B787 or do not meet the projected savings?
 
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RE: How Can Airlines Compete With EK?

Wed Mar 13, 2013 11:58 pm

Quoting YTZ (Thread starter):
How can airlines in the West and India/South Asia compete with this? I can’t see much of a future for airlines in India under this kind of competition.

EK is unlikely to ever operate Transpacific which is a big and growing market. Few people will ever fly from North America to Japan, Korea or Southeast Asia via DXB.
 
SKY1
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 12:01 am

I've always been astonished about how deeply EK gets importance from many a.netters. Yes, they are strong carrier, yes they got a very new fleet, yes they offer many destinations in both, Europe & Asia/Oz ...but many people here are overreacting when the Emirates strategy comes for discussion and allowing themselves get dazzled for a shine which is not that blinding like they believe.

Emirates is not the solely carrier which offer seats between Europe and Asia  

Many premium pax will never change non-stop flights. There is not sense choose EK for flying LHR-NRT, CDG-ICN or FRA-PEK via DXB when taking the non-stop service is way faster.

But in any case, many people on this forum are overreacting and losing the point when talking about Emirates. The example is the title on this thread "How can airlines compete with EK"? don't deceive yourself: For europeans, indian and other asian airlines, EK is one more competitor, a big one, yes, but they are not a challenge unlike the oil prices are.
Time flies! Enjoy life!
 
dtw2hyd
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:00 am

Very simple, configure aircraft with lot of economy seats. LCs are stuck in between the LCCs and the NetJets of the world.
 
jayunited
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:20 am

Most major European airlines offer daily nonstop service to most major Asian gateway cities just like their North American counterparts so how many passengers are choosing to fly for example LHR-DXB-NRT instead of LHR-NRT nonstop?

I think the biggest problem European carriers have is flights between Europe and South East Asia, Australia, India and Africa I think this is where EK and DXB beats European airlines and where the Europeans need to learn how to compete.

As far as U.S. carriers are concerned they dont have much to fear from EK even when it comes to flights from Asia to GRU, U.S. carriers don't have must to worry about because their customer base is really rock solid and they have rock solid relations with Asian carriers who also provide feed for U.S. flights to GRU and South America.

On a side note there was a very good article yesterday in aviation week about how TK is responding to EK and how TK believes that once the new airport is built they will be able to better compete against EK and DXB and how TK believes that EK will hit a wall one day because of the fact they only have wide body aircraft which can only be used on certain routes whereas TK is able to fly more route do to the fact they have narrow body aircraft in addition to wide bodies, which once the new airport is built will go be them over options and better yield then EK. It is an interesting article you cans read it on www.aviationweek.com
 
cmf
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:23 am

Quoting YTZ (Reply 14):
Sure, but TK could be lumped in with EK/QR/EY

Lump in every airline doing well and you will have one successful group and one that isn't, but what good is it?

Quoting YTZ (Reply 14):
I am wondering how AI and 9W compete

Don't you agree they ae examples of airlines failing ti utilize just about every advantage they have?

Quoting YTZ (Reply 14):
or how BA, AF, LH, etc. compete

I know very little about AF but in my experience BA and LH provide competition. Sure they have problems but they are dealing with them.

Quoting MaverickM11 (Reply 15):
You take the EK model just about anywhere else in the world and it would go pear shaped instantly

Why on earth would anyone else take the EK model and think they will be fine? That would be the exact opposite of what I suggested, ignoring their advantages.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
justinlee
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:27 am

Every business strategy has a lifecycle, do does EK. The hub-spoke system of EK seems to be unbeatable but the innovation in aviation industry has ruined a lot of airlines in the past. EK's success is largely due to the connectivity it provides for passengers traveling from East/SE Asia - 2nd tier hub in the Europe and India - Europe(especially UK). If A/B develops a narrow-body long-haul aircraft that can efficiently do something like MAA-MAN or PEK-GLA, the golden age of M/E carriers will fade away.
 
MaverickM11
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:49 am

Quoting cmf (Reply 22):
Don't you agree they ae examples of airlines failing ti utilize just about every advantage they have?

Indian carriers are suffocated every step of the way by the Indian government, which is ironic, because if they freed up the Indian carriers to compete aggressively a good third of EK/EY/QR's traffic would disappear over night onto Indian carriers.

Quoting cmf (Reply 22):
Why on earth would anyone else take the EK model and think they will be fine? That would be the exact opposite of what I suggested, ignoring their advantages.

Most of EK's advantage comes from a government that supports aviation 100%--how can airlines replicate that?
E pur si muove -Galileo
 
cmf
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 2:49 am

Quoting MaverickM11 (Reply 24):
Indian carriers are suffocated every step of the way by the Indian government, which is ironic, because if they freed up the Indian carriers to compete aggressively a good third of EK/EY/QR's traffic would disappear over night onto Indian carriers.

Again, self inflicted wound.

Quoting MaverickM11 (Reply 24):
Most of EK's advantage comes from a government that supports aviation 100%--how can airlines replicate that?

Again, use the advantages they have. By extension it means not trying to use the advantages someone else have and you don't.

And it isn't as if airlines in other countries don't receive support. Nor is it that EK receive unconditional support. I have first hand experience what happens if you don't perform as expected. And we were not creating losses, just not as much profit as expected.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
DeltaB717
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 3:03 am

Quoting cmf (Reply 25):
Quoting MaverickM11 (Reply 24):Indian carriers are suffocated every step of the way by the Indian government, which is ironic, because if they freed up the Indian carriers to compete aggressively a good third of EK/EY/QR's traffic would disappear over night onto Indian carriers.
Again, self inflicted wound.

Self inflicted how... overzealous government regulation is not 'self-inflicted' by a commercial entity whose only other option is to cease to exist...???
 
cmf
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 3:06 am

Quoting DeltaB717 (Reply 26):
Self inflicted how

It isn't inflicted by EK...
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
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adamh8297
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 3:19 am

Quoting Viscount724 (Reply 18):
EK is unlikely to ever operate Transpacific which is a big and growing market. Few people will ever fly from North America to Japan, Korea or Southeast Asia via DXB.

Agree with you on mostly everything except the fact that East Coast US - Southeast Asia can be and is served via DXB - It may add 1-2 extra hours to your journey.
Airlines flown: A3, AA, AC, AF, AM, BA, B6, CA, CO, CX, DL, EA, EL, IB, LH, MI, MQ, NH, NW, NZ, OU, PE, QF, S4, SQ, TP, UA, US, VS, WE, WN

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yyz717
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 3:49 am

Quoting justinlee (Reply 23):
Every business strategy has a lifecycle, do does EK.

This is the key point. Every so-called ascending airline of yesteryear (or yesterday) with a seemingly bullet-proof "novel" business plan for endless growth eventually foundered on one of the following: a lack of new growth markets, market saturation, more intrepid competitors (whether same-cost or lower cost), rising costs. Some of these carriers went out of business (eg, PA, BN), others stopped growing quickly and slowly start losing their competitive edge (WN, Ryanair) and others are grappling to re-invent themselves with LCC subs (such as SQ).

EK will eventually reach a saturation point in terms of growth, and indeed its model is already being copied and attacked by EY, Qatar and Turkish.

When EK hits that saturation point of much slower growth, it might be harder hit financially that many other carriers....its large A380 and 77W fleets are similar aged and will need replacing en masse in a short time frame, without the benefit of growing revenue to help fund the replacement fleet.

....and then there is the threat of an Israel-Iran war.....which will likely cause massive traffic slumps for EK, EY and Qatar as travellers avoid the region even for simply transfers elsewhere.

The faster they rise, they faster they (can) fall.
I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Gemuser
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 5:07 am

Quoting YTZ (Thread starter):
How can airlines in the West and India/South Asia compete with this?

One way is the way QF have. QF had a problem. Most of their O&D traffic to Europe is for a city/country on the wrong side of Europe. Using LHR & BA as its main distribution hub for Europe failed. So they looked for a solution and EK came up & the deal was done. DXB/EK is now their main distribution hub for Europe, routing QF 1/2 & QF 9/10 via DXB, while still serving the main O&D point.

This has the added advantage of now allowing QF to concentrate on serving Asia and not treating it as a transit stop on the way to Europe. That's one way to compete with EK!

Gemuser
DC23468910;B72172273373G73873H74374475275376377L77W;A319 320321332333343;BAe146;C402;DHC6;F27;L188;MD80MD85
 
tommytoyz
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 5:14 am

Quoting LAXintl (Reply 12):
Some airlines are seemingly competiting well against EK - take one Turkish Airlines

Just wait till the 787 is out in numbers and starts connecting many smaller markets point to point. That would siphon off traffic. Secondly, if Istambul can build their planned new airport, the airlines based there or having a hub there will have a competitive advantage over EK in the same markets, for several very important reasons.

[Edited 2013-03-13 22:14:39]
 
justinlee
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 5:25 am

Quoting tommytoyz (Reply 31):
Just wait till the 787 is out in numbers and starts connecting many smaller markets point to point. That would siphon off traffic. Secondly, if Istambul can build their planned new airport, the airlines based there or having a hub there will have a competitive advantage over EK in the same markets, for several very important reasons.

IMHO, 787 is still too big, roughly the same size of 332, for the real P-to-P traffic. In the trans-euroasia market, most of the routes can be done by 332 is already there. 787 may change the trans-pacific market, but won't harm EK a lot. A new model of 180 seats with a range of 6000+nm may work.
 
tommytoyz
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 6:56 am

Quoting justinlee (Reply 32):
IMHO, 787 is still too big, roughly the same size of 332

It's the economics of the 787 that will make many P2P routes viable. Not the size.
 
cricket
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 9:36 am

EK isn't always the cheapest - that is a delightful myth, in fact from India as consumer preference has turned towards EK (despite the frankly cramped for me 3-4-3 on its 777's) fares are often lower on European carriers. Take myself, later this year my wife and I are travelling to Europe (France and The Netherlands) for a holiday, being a holiday we are flying Y. I'm flying LH because the open-jaw DEL-CDG AMS-DEL routing they offered was not only significantly cheaper than EK ($150 per ticket cheaper) but also in terms of timing.
Yes, EK is helpful for many Indians who don't always fly to major cities - if I have to get to LHR from DEL I'll fly 9W, AI, BA or VS but if I have to get to GLA, MAN or BHX transferring at LHR can be a pain - so EK wins there. Similarly with Germany - to FRA and MUC LH and AI offer choice; but to get to HAM and DUS my friends who have biz interests in Germany fly EK simply because they prefer not having to sit in an RJ for an hour. Also, EK is often the best way to get to many points in North America from India that are not JFK ORD or YYZ.
Would I have flown EK if they offered the best price, sure. But they're not always the cheapest and I can earn 9W FFP miles on LH (on EK I can't earn FFP on India-Dubai on 9W's JetPrivilege)
been there, flown that
 
factsonly
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 10:15 am

Thus far the Asian/Aus. and European airlines have seen the biggest impact of the rise of EK, QR and EY.

It is only in the last few years that these Asian/Aus. and European carriers have developed a strategic response, different from their initial reaction which was ......direct competition.

The more strategically developed European and Asian/Aus. carriers are looking for niche markets that are outside the ME3 influence, and at the same time are linking up with QR, EY, EK to benefit- at least partially - from the DXB, AUH, DOH success.

There are still plenty of Regional to/from Big City and Regional to/from Regional growth opportunities that are not - and will never be - served by the ME3 carriers.

Examples are:

EUROPE: ASIA:
- TRD - FUK
- AES - HGH
- SVG - XMN
- BGO - MES
- KRS - SUB
- HUY - PEN
- ABZ - PNH
- NWI - SGN
- NTE - HRB
- SXB - KHH
- BSL - VTE
- NUE - HDY
- HAJ - etc.
- BRE
- etc.

It will take good feeder hubs in Asia and Europe to connect these places with one-stop to the rest of the world. The Middle East carriers will always require two-stops to make this work.
 
Quokkas
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 10:40 am

Quoting factsonly (Reply 35):
that are not - and will never be - served by the ME3 carriers.

In your list you have SGN. EK commenced flights to SGN 04 Jun 2012, if I'm not mistaken.

Never is a long time and who can predict that far ahead? With regard to PNH, Cambodia and the UAE initialled an agreement granting rights in December, 2010. The agreement grants each of the designated carriers one daily flight with third and fourth freedom traffic rights between the two countries and the right to exercise full fifth freedom traffic rights through three intermediate points (Bangkok, Kuala Lumpur and Singapore) and to three points beyond to be freely selected by the designated carriers. When or if EK will use those rights as one of the designated carriers is open to question.
“Not to laugh, not to cry, not to hate, but understand.” Spinoza
 
Aither
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 10:49 am

To fight against Emirates just become Emirates.

Overflying/focusing on high yield just means downsizing against airlines getting bigger. The outcome is always the same, size matters: with their wider network, better loyalty programs etc. EK & alikes get more popular among the high yield pax and in the end you are out. Remember the high yield pax are also often the low yield pax when they travel for leisure with their family...

The secret of Emirates : tons of different O&Ds converging into some flights. EK is big of "small" O&Ds they manage very well. The good news is that it can be applied to many locations. There are always big O&Ds flows not far from an airline hub.

[Edited 2013-03-14 03:50:30]
Never trust the obvious
 
1400mph
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 10:59 am

No other airline will come close to EK in fleet size so it really doesn't matter.

EK do what they do through DXB and they do it very well. As far as their non-stop routes go though they are a 'one-trick wonder' i.e DXB.

How many non-stop blue-ribbon routes does EK actually operate that do not involve a transfer ?

They could have a 1000 A380's they will never be able to increase in number the answer to that question.

However, the smaller global legacies will always attract people in more than sufficient numbers (particularly frequent flyer loyalty scheme members in the premium cabins) who want to fly non-stop.

Of course people in Scotland for example will fly EK from GLA instead of BA through LHR when the amount of stops are the same. Good luck to them. However, if they did it in sufficient numbers to warrant non-stop services to all the places that EK connect to through DXB there WOULD BE a British or Scottish carrier doing it.

Just how important an O&D market is DXB as a stand-alone ? Does it rank with JFK, LHR or FRA etc

That is the crux of the matter and why other airlines maybe as successful as EK relatively in a financial way but they will never be able to compete on the scale that EK operate.

[Edited 2013-03-14 04:50:12]
 
Gemuser
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 12:04 pm

Quoting 1400mph (Reply 38):
However, if they did it in sufficient numbers to warrant non-stop services to all the places that EK connect to through DXB there WOULD BE a British or Scottish carrier doing it.

That is a mighty BIG IF!
Lets take your example from GLA.
EK currently flies to about 45 cities NE to SE from DXB, call it an area bounded by Peshawar, Beijing, Tokyo, Manila/Clarke, Brisbane, Auckland & Christchurch. Even if A or B develop an A320/B737 with 8,000 nm range how many of those 45 & GLA will ever be a large enough market to justify service? My guess is 5 to 10 in the next 100 years.
While there will definitely be an increase in such P to P flying and the A350/B787 will; encourage it somewhat its not going to stop EK, slow it down some what, yes, stop no.

Gemuser
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lhcvg
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 12:16 pm

This thread reminds me of a recent post under another topic (can't remember which) mentioning that EK will eventually fall prey to the natural cycle of the airline market. Their costs and operational complexities will eventually increase to a point where the legacy carriers are on more even footing, so the logic goes. It also seems to have a similar quality to an article about the car business from about 10 years ago where a Toyota USA exec was quoted as saying that their financial performance was excellent in large part due to the fact that their pension and other retiree costs were negligible, whereas the Big 3 had massive pensions to deal with that correspondingly weighed them down. Eventually that will catch up to EK/QR/EY et al.

Granted, there are variables on each side of that equation that can change in the mean time, but I thought that was an interesting point to bring up.
 
1400mph
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 12:20 pm

Quoting gemuser (Reply 39):

It depends how you define 'compete' ?

Do you mean which airlines perform better when comparing relative financial performance or do you mean who is bigger ?

I know which airlines i'd rather have shares in.

When other global carriers have got their houses in order and are lean and efficient and when all the dust has settled from alliances, mergers, joint-ventures etc etc......

When all this has happened......which carriers do you think will financially perform better ? Carriers that derive much of their income from non-stop long-haul O&D or carriers that derive much of their income from transferring people through their hub ?

The irony in all this is that EK (and carriers like it) will be the cause and effect of other more 'traditional' carriers becoming themselves much more competitive.

When these carriers do you reach their competitive apex will EK's yields and profit be able to support adequate re-investment in an airline of its size ?

[Edited 2013-03-14 05:21:13]
 
ozglobal
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 12:25 pm

Quoting MaverickM11 (Reply 1):
Quoting YTZ (Thread starter):
How can airlines in the West and India/South Asia compete with this? I can’t see much of a future for airlines in India under this kind of competition

Just like any other hub....over fly them, taking the highest yielding traffic nonstop, leaving the cheap stuff to EK.

Your comment only considers US - India traffic. That's a drop in a bucket. The question far broader than that. Also, on a global basis, EK are not positioned as the 'cheap' option. They invest massively in their premium product.
When all's said and done, there'll be more said than done.
 
1400mph
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 12:39 pm

Quoting 1400mph (Reply 41):
When these carriers do you reach their competitive apex will EK's yields and profit be able to support adequate re-investment in an airline of its size ?

.........will they morph into a latter day Pan Am-esque style affair ?
 
dtw2hyd
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 12:42 pm

Quoting MaverickM11 (Reply 1):
Just like any other hub....over fly them, taking the highest yielding traffic nonstop, leaving the cheap stuff to EK.

Using what equipment? G650s. As long as legacy carrier business model remains "Y is a necessary evil to provide range and comfort to (mostly) freeloaders in F & J", they cannot compete with EK/QR/EY.
 
1400mph
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:24 pm

Quoting DTW2HYD (Reply 44):
Using what equipment? G650s. As long as legacy carrier business model remains "Y is a necessary evil to provide range and comfort to (mostly) freeloaders in F & J", they cannot compete with EK/QR/EY.

For sure 'certain' markets they will dominate but only 'certain' markets.

The day will never dawn whereby the only profitable air travel is that which requires a stop.

There are still vast swathes of the economically developing globe that are not connected by their own indigenous carriers.

EK fills that void but that will not always be the case.

If it does then the future of civil aviation is a pretty grim one from a competitive point of view.
 
ytz
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:25 pm

Quoting yyz717 (Reply 29):
....and then there is the threat of an Israel-Iran war.....which will likely cause massive traffic slumps for EK, EY and Qatar as travellers avoid the region even for simply transfers elsewhere.

Oh please. I remember growing up and living in the UAE during the Gulf War. I don't remember any big hits to aviation then. Unlikely that EK/EY/QR would face large long-term hits.

Quoting tommytoyz (Reply 31):
Just wait till the 787 is out in numbers and starts connecting many smaller markets point to point.

The same technologies that make the 787 capable of P2P also make EK's aicraft (and subsequently its business model) much more efficient. People forget that.

I have a feeling the P2P model is not going to materialize as Boeing intended. Ultimately, you burn less fuel with one stop for most long-haul trips. And there are very few price-sensitive customers in most long-haul P2P markets willing to pay a premium for saving 4 hours on the stop.

Quoting Cricket (Reply 34):
but if I have to get to GLA, MAN or BHX transferring at LHR can be a pain -

This statement would imply that BA is failing at connecting you through LHR and that's why you are choosing EK and DXB.
 
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lightsaber
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:34 pm

I posted here in many threads how EK and the other mid-east carriers thrived due to the lack of expansion at the European hubs. Those hubs still have a HUGE O&D advantage and as others have noted, DXB/DWC can easily be bypassed.

EK is going to have a tough time expanding the hub banks at preferred times.


Quoting MaverickM11 (Reply 1):
Just like any other hub....over fly them, taking the highest yielding traffic nonstop, leaving the cheap stuff to EK.

   Let's take the inland China cities. They should be a fertile ground for new route growth. With well timed connections, EK would have a hard time competing with the European hubs... If they expanded.

Quoting sandyb123 (Reply 10):
Look at India and their fierce protection of AI. Just damages the country, growth and commercial links long-term.

The GoI policies have done incredible damage to Indian aviation and thus the Indian economy...   

Quoting gemuser (Reply 39):
My guess is 5 to 10 in the next 100 years.

I could name ten in China alone and another 3 in Indonesia, add Burma, 2nd city in Vietnam, 1 or 2 in Malaysia... There is more growth potential than you suggest. And since GLA was the example, there is still growth in the mid-east/Sub-continent. e.g., the 3 new cities that Pakistan just opened for air travel.

Quoting aither (Reply 37):
The secret of Emirates : tons of different O&Ds converging into some flights.

  

To everyone:
If the European hubs that are impacted just expanded, they would bowl over EK/DXB thanks to their high O&D. For example, LHR direly needs frequency to stimulate connections. The airport is down to 30% transfer traffic. But will it expand?    FRA needs night flights to enable certain connections. Will they compete?    MUC is pretty much slotted out. The only flight times available are at very non-competitive times. Where is the 3rd and 4th runway? BER isn't being opened as a 24/7 airport.    CDG has potential, but they need to ease connections. AMS needs more night flights...

And I haven't mentioned the lost potential of BOM, DEL, and MAA. All three of those airports should be mega-hubs. But the GoI hasn't focused on enabling growth. e.g., they need policy change so that the terminals enable easier connections.

The other thing everyone should do is read EK's annual reports. They SCREAM numbers run company! Other airlines must be run as a business to compete. Numbers run companies are better at adapting to:
1. Seasonality
2. Change in market size
3. Recognizing growth opportunities
4. Maximizing revenue
5. Adapting to changing Customer preferences

For example, EK and alcohol. Dubai is Muslim, but EK quickly realized it was a part of the market that had to be accommodated to be competitive. The same with lounges, limos, and hotels in the airport. While those are expenses, they are appreciate by customers more than their costs. Same with IFE. Numbers run companies spend money where customers care and cut costs elsewhere.

Lightsaber
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1400mph
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 1:36 pm

Quoting YTZ (Reply 46):
Oh please. I remember growing up and living in the UAE during the Gulf War. I don't remember any big hits to aviation then.

You're kidding right ?

Quoting YTZ (Reply 46):
This statement would imply that BA is failing at connecting you through LHR and that's why you are choosing EK and DXB.

I think it's more do with the Scottish attitude towards London than anything else.

Would the likes of Alex Salmond connect through LHR on BA rather than EK through DXB ?

Highly unlikely even if BA were cheaper !

[Edited 2013-03-14 06:40:42]
 
theaviator380
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RE: How Can Airlines Compete With EK?

Thu Mar 14, 2013 2:00 pm

EK are doing so well it's hard to compete to be honestly. Time will come like someone said above, they won't have much chance of any further expansion. I guess they will be trying hard to get permission from Indian govt. in coming years to allow their 380's in India, they can serve almost all main cities with their 380 (example - DEL/BOM/BLR/ HYD). My worry is where they going to utilize their huge 380 fleet??

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