Emirates In Diplomatic Spat With South African Gov

JoKeR · Thu Oct 30, 2014 7:53 pm

EK's fourth daily flight into JNB has caused a storm so to speak - with the deputy chief suspended, court orders being shoved around and the spat escalating into a diplomatic wrangle...

Seems that Africa is trying to show its teeth to EK... though a tad too late IMHO. The article suggests broad incompetence of the South African government...

Will be interesting to watch this one...

THE dispute between Emirates and the Department of Transport over the airline’s introduction of a fourth daily flight from Johannesburg to Dubai on Monday is now being pursued through diplomatic channels, the department says.

Last week, Emirates took the department to the High Court in Pretoria in a bid to force it to allow the introduction of the flight in line with a 2007 bilateral agreement between the governments of SA and the United Arab Emirates.

However, while the department adhered to the court order that the flight must go ahead, there has been much diplomatic and internal fallout. Last week, the United Arab Emirates (UAE) wrote to Transport Minister Dipuo Peters asking for an explanation.

Full story: http://www.bdlive.co.za/business/tra...row-moves-into-diplomatic-channels

[Edited 2014-10-30 12:55:32]

jetwet1 · Thu Oct 30, 2014 7:56 pm

At some point there is going to be a push back against the ME3, i'm not saying if it's right or wrong, but it's going to happen.

migair54 · Thu Oct 30, 2014 8:08 pm

I don't fully understand the situation, if the bilateral allows the flight, and it seems it does, how can they just not allow the flight??

It's very impressive to go 4th daily, soon QR will start CPT also and with SAA almost in bankrupt the situation in SA is becoming crazy, plus all the heavies from Europe. It's goingbto be hard for SAA to recover.

Will SAA be the next one to Join the EY global group??

Quoting jetwet1 (Reply 1):
At some point there is going to be a push back against the ME3, i'm not saying if it's right or wrong, but it's going to happen.

It's happening already, maybe they can use the same reason India gave to TK, theybwant direct flights and no transfer hubs.

9252fly · Thu Oct 30, 2014 9:35 pm

Considering EK currently operate 3 X JNB , 2 X CPT and 1 X DUR for a total of 6 dailies to DXB vs SA total of zero, I could see some concern at the siphoning of traffic. The bilateral looks tipped somewhat in EK favor. It's probably too late for SA to recover it's lost international market as the damage has been done.

TC957 · Thu Oct 30, 2014 10:32 pm

Quoting migair54 (Reply 2):
Will SAA be the next one to Join the EY global group??

Seeing how EY seem to love throwing their dirhams at struggling carriers, then SA would indeed be a good fit in their portfolio.

dtw2hyd · Thu Oct 30, 2014 10:38 pm

What kind of ASA they have with UAE? Healthy competition is always good, problem is when foreign carrier tries to decimate local carriers in the name of competition. ASAs are perpetual, service is not.

Quoting migair54 (Reply 2):
how can they just not allow the flight??

Chinese and Indians will be happy to help. After all, SA is part of BRICS.

Byrdluvs747 · Thu Oct 30, 2014 10:42 pm

What is the process for ending a bilateral agreement?

VCEflyboy · Thu Oct 30, 2014 10:56 pm

EK is being treated as the proverbial scapegoat here.
It's easier to point fingers at EK with their 4 flights than at SA's mismanagement for bankrupting the airline.

zeke · Thu Oct 30, 2014 11:19 pm

Quoting migair54 (Reply 2):

I don't fully understand the situation, if the bilateral allows the flight, and it seems it does, how can they just not allow the flight??

Bi-laterals are the foundation, other limits maybe in place like airport landing slots, seats or frequency limits. For example the bi- lateral between hkg and australia has no seat or frequency cap, however hkg carriers are limited to 70 frequencies a week in total to mel, SYD, bne, per by the Australian goverment.

Gemuser · Fri Oct 31, 2014 12:26 am

Quoting Byrdluvs747 (Reply 6):
What is the process for ending a bilateral agreement?

It's generally specified in the agreement. Usually it is one years notice from either party.

Gemuser

brahmin · Fri Oct 31, 2014 3:41 am

This is probably due to bribing Govt. officials and the national airline as what happened in India.

PanHAM · Fri Oct 31, 2014 6:12 am

Quoting VCEflyboy (Reply 7):
It's easier to point fingers at EK with their 4 flights than at SA's mismanagement for bankrupting the airline.

Mismanagement is one side of the coin. 6 daily flights between a country that has nothing to offer reciprocally is the other side. SAA could not justify a single flight to DXB, not even in a 737. While EK is syphoning off traffic to and from Europe as well as Asia. The bilaterals had been negotiated when no one could imagine that state subsidized carriers build up networks like EK.This will be an interesting topic for the future, not only in South Africa

GRUIAD · Fri Oct 31, 2014 8:34 am

Bilateral air transport agreements are like any other treaty between two states, they can be renounced at any time by either party. In this case RSA owes the UAE nothing, Emirates success is hinged on this patchwork of liberal agreements.

BreninTW · Fri Oct 31, 2014 8:38 am

Quoting GRUIAD (Reply 12):
Bilateral air transport agreements are like any other treaty between two states, they can be renounced at any time by either party. In this case RSA owes the UAE nothing, Emirates success is hinged on this patchwork of liberal agreements.

However, South Africa -- as a country -- is heavily dependent on tourism. If RSA were to cancel the bi-lateral with the UAE, it would end up hurting the South African economy far more than it would end up hurting EK or the UAE.

SA does not have the capacity to replace the seats that EK offers to RSA at the prices EK offers, nor does the RSA government have the funds or the appetite for bank-rolling the aircraft purchase that would be necessary.

PanHAM · Fri Oct 31, 2014 9:22 am

The problem EK amd the 2 others will gface is reciprocality. The UAE have nothing to offer in return to make it viable for SAA to fly to DXB.Handling over the traffic to EK EY QR is like hjanding over the key to your house to strangers

Air services are a vital part of a national infrastructure and any country should have some control over that. The size of an airline should be in some relation to the size of the national economy. Take mismanagement away, in the RSA we face a situation where the bulk of the traffic is siphoned off by the ME3, the rest is internal African/nieghbouring countries, North America (even that can fly via DXB) and South America. The rest is taken by the cherry pickers.,

That cannot be the spirit of a bilateral agreement.

.

Lufthansa · Fri Oct 31, 2014 10:49 am

Quoting PanHAM (Reply 14):
That cannot be the spirit of a bilateral agreement.

Bingo! You once again my german friend have hit the nail on the head! The ME3 just aren't
sensitive enough to the international politics of it and whats required. It's gonna sound crazy
but it's almost like their theme song is the old Abba song " the winner takes it all".
While even if it is true, You have to be gracious about doing it. And know when to stand back
strategically. After all they've wined and dined the public like a secret date in the penthouse suite of
an arab prince doing god knows what for so long... even I at times have fallen victim to their charm.
But one can only push things so far if you still want an invitation to dinner. You can't steal the hosts
wife and still expect to be welcomed with open arms to drink their wine. (just ask BA, lol

)

Though as a German Australian... I really can't judge. We gave up and become part of the Harem.
But if they push it too far, it will cost them. Countries that don't manufacture aircraft don't have much
to loose. If there is that bigger demand... there's plenty of other international carriers, perhaps not at the
same standard... but still wanting a shot at the market... and if they go the yields will probably go up.

jetblastdubai · Fri Oct 31, 2014 11:52 am

Quoting PanHAM (Reply 14):
The UAE have nothing to offer in return to make it viable for SAA to fly to DXB.Handling over the traffic to EK EY QR is like hjanding over the key to your house to strangers

Excellent point and it leads to the question of why did SA, as well as many other countries, sign bilaterals in the first place. They had to know their own national airlines would be hurt by the Middle East carriers with their financial resources and operational advantages.

2travel2know2 · Fri Oct 31, 2014 3:39 pm

Would SA had reacted as viciously as it did with EK if EK had added its 4th Johannesburg flight to HLA instead of JNB.?

boysteve · Fri Oct 31, 2014 3:45 pm

Quoting PanHAM (Reply 11):
While EK is syphoning off traffic to and from Europe as well as Asia. The bilaterals had been negotiated when no one could imagine that state subsidized carriers build up networks like EK.This will be an interesting topic for the future, not only in South Africa

Err not correct. EK is not state subsidized!!!! OK, so they received two second hand B727's and a small amount of cash in 1985 but nothing since. I believe that EY and QR maybe state subsidized but to claim that EK is also is to be incorrect.

PanHAM · Fri Oct 31, 2014 4:08 pm

Errr, yes, but they have working conditions any European or North American carrier would dream about. Their owners own the airline, the handling companies, the aviation board, the country. Most of their employees pay no taxes whoch means, that the airline does not have to earn the taxes their employees have to pay. Good, they pay some perks, but that's about it.

When LH pays an employee a gross salary of € 3K, it costs them about twice as much with mandatory social insurances, holidays, sick days average. Subsidies do not have to be monies paid oiut, subsidies can be expenses the company doe snot have.

b747400erf · Fri Oct 31, 2014 4:30 pm

Quoting Boysteve (Reply 18):
EK is not state subsidized!!!!

How much do they pay for DXB expansions or DWC? In most countries, airports do not get built overnight by the government without airlines chipping in. And the government allows a business climate of little worker rights. The country itself is reliant on the oil rich nations using Dubai as a financial hub, which allowed EK to start expanding in the first place. Everything revolves around oil and government protectionism in that region.

PW100 · Fri Oct 31, 2014 4:40 pm

Quoting PanHAM (Reply 14):
The UAE have nothing to offer in return to make it viable for SAA to fly to DXB.Handling over the traffic to EK EY QR is like hjanding over the key to your house to strangers

Classic thinking, but mostly wrong, or at least significantly incomplete.

What UAE have to offer is thousands and thousands of seats into South Africa, bringing in many many tourists. The income of those tourists may far outweigh the "damage"** done to SA. There is no way that SA would be able to bring in the same number of tourists for that ticket price. Most of tourists will simply stay away for SA ticket price.

Additionally UAE offer very good connections, offering many city-links to South-Africa, which will benefit South-African international business.

South Africa, and SA in particular should worry about their own problems, and stop wasting time blaming someone else.

** Ironically, the "damage" is mostly self-inflicted.

Rgds,
PW100

dtw2hyd · Fri Oct 31, 2014 4:41 pm

Quoting Boysteve (Reply 18):
EK is not state subsidized!!!! OK,

Its not some a.netters claiming, Delta Air Lines in a congressional testimony called it a state sponsored, subsidized, wealthy airline. So some version of it has to be true.

[Edited 2014-10-31 09:46:45]

kaitak · Fri Oct 31, 2014 6:08 pm

Quoting PW100 (Reply 21):
Classic thinking, but mostly wrong, or at least significantly incomplete.

What UAE have to offer is thousands and thousands of seats into South Africa, bringing in many many tourists. The income of those tourists may far outweigh the "damage"** done to SA. There is no way that SA would be able to bring in the same number of tourists for that ticket price. Most of tourists will simply stay away for SA ticket price.

Additionally UAE offer very good connections, offering many city-links to South-Africa, which will benefit South-African international business.

South Africa, and SA in particular should worry about their own problems, and stop wasting time blaming someone else.

** Ironically, the "damage" is mostly self-inflicted.

I agree; you have to see the big picture. SAA is not as it is today because of EK. It's as it is today because of mismanagement. I also think you can draw parallels between SAA and QF, in the sense that both are at the end of their respective routes - the terminating point, if you will, and don't have the opportunity to create or act as hubs like EK, SQ and others have. Bottom line, however, is that 4 EK flights to JNB, one to CPT and one to DUR brings a lot to the SA economy. Don't just think of the tourist numbers it brings in, think also of how much cargo is going out each day in the belly of those 777s and how important that is to SA exporters - and jobs. SA still has quite a significant unemployment problem.

I have v. little sympathy for SA in this matter. If they hadn't agreed to the fourth daily, it would be a different matter, but they had and EK is taking advantage of it. And while that mightn't suit SAA, it is good for SA itself. Live with it and move on.

claytonk · Fri Oct 31, 2014 7:28 pm

Interesting though as SAA codeshares with EK at least on DXB-JNB... and often the codeshare is cheaper than the price is on Emirates metal! (I had to fly them for work a couple times last year from DXB and was usually on the codeshare as it was cheaper...)

Even if SAA were to fly to DXB the point would be moot as EK is able to connect passengers from all over Europe, the subcontinent, Asia, and Australia.

infinit · Sat Nov 01, 2014 9:13 am

I usually don't believe in protectionism and I'm not familiar with SA to comment on their operations but I think there really needs to be some restrictions worldwide on the ME3.. how can any international airline be expected to compete with airlines that get significantly lower costs of fuel, the largest cost factor by far for airlines?

par13del · Sat Nov 01, 2014 1:07 pm

Quoting PanHAM (Reply 11):
SAA could not justify a single flight to DXB, not even in a 737. While EK is syphoning off traffic to and from Europe as well as Asia.

What is needed is the good ole WA from the USA, ensure that flights to and from SA are sold with no thru tickets to third countries thus forcing the pax to purchase two round trip tickets.
The cost would increase and that would assist in current EU carriers offering of direct service to SA

Quoting PanHAM (Reply 19):
but they have working conditions any European or North American carrier would dream about.

So these countries need to be re-colonized by Europe to level the playing field?
Working conditions in these countries were of little concern when their air carriers were small and European carriers had the bulk of the traffic and offered service if and when they desired.
The working environment in country is the work of the respective governments, if the EU environment is not conducive to competition it may well be that the government does not intend it to be so

parapente · Sat Nov 01, 2014 1:26 pm

Not that I know alot about SAA,but I would have thought that they would be better off concentrating their energies to destinations that don't cross the path of ME3.Flights to North and South America,Australia,some Far East destinations such as Singapore? and local African destinations.There is plenty they can do.A code share with Emirates is probably the best they can hope for flying North I would have thought.

dtw2hyd · Sat Nov 01, 2014 2:03 pm

Quoting parapente (Reply 27):
Not that I know alot about SAA,but I would have thought that they would be better off concentrating their energies to destinations that don't cross the path of ME3.Flights to North and South America,Australia,some Far East destinations such as Singapore? and local African destinations.There is plenty they can do.A code share with Emirates is probably the best they can hope for flying North I would have thought.

Like others posted up-thread, when you are already operating in a high cost, highly restrictive environment, to top it, foreign carrier cherry picks and dumps traffic on few profitable routes, there is no way to survive.

Some one should have told these poor governments in 1930s, don't start your own airline, miracle is going happen in 1985.

kl911 · Sat Nov 01, 2014 2:21 pm

Who says SA needs a national ( longhaul) carrier? There are hardly any transfer options for most pax from Europe, Asia etc. Just a few regional cities. SA is located too far south to become an Hub airline.

speedbored · Sat Nov 01, 2014 3:03 pm

Quoting infinit (Reply 25):
airlines that get significantly lower costs of fuel

Do you have any evidence to support this assertion?

This is a claim made by so many people here and I have yet to see one shred of evidence to support it. I have, so far, seen absolutely no evidence to suggest that any of the ME3 airlines do not buy their fuel on the same international markets as almost every other airline does. Were this not the case then you can be sure that the competition authorities in many countries would be carrying out "unfair competition" investigations.

RyanairGuru · Sat Nov 01, 2014 3:20 pm

Quoting PanHAM (Reply 14):
The problem EK amd the 2 others will gface is reciprocality. The UAE have nothing to offer in return to make it viable for SAA to fly to DXB.Handling over the traffic to EK EY QR is like hjanding over the key to your house to strangers

Sorry, this is flat out wrong, as it shows an incredibly narrow view to bilateral negotiations. Bilateral treaties are (generally - take a bow Canada) not negotiated in a zero sum vacuum, but rather by considering the broader impacts across the entire economy as opposed to the absolute number of airplanes flying. This is especially true if conceding ground on aviation matters greases the wheels somewhere else (a defence contract for example). More significantly, EK does reciprocally offers something that is simply invaluable: a massive volume of air traffic. Sensible, progressive governments look at the impact across the entire economy and determine that connection to the global economy is significantly more valuable than protecting one single industry.

Quoting Lufthansa (Reply 15):
I really can't judge. We gave up and become part of the Harem.

And thank God we did.

Delta777Jet · Sat Nov 01, 2014 3:29 pm

Quoting PanHAM (Reply 19):

Errr, yes, but they have working conditions any European or North American carrier would dream about. Their owners own the airline, the handling companies, the aviation board, the country. Most of their employees pay no taxes whoch means, that the airline does not have to earn the taxes their employees have to pay. Good, they pay some perks, but that's about it.

When LH pays an employee a gross salary of € 3K, it costs them about twice as much with mandatory social insurances, holidays, sick days average. Subsidies do not have to be monies paid oiut, subsidies can be expenses the company doe snot have.

This is the standard EK bashing, also Lufthansa has a share in Fraport, has big government support, own a maintenance, handling and not too recently also a catering company.

When Ryanair hit the market, it was an so called unsafe airline and everybody at Lufthansa tried to defend. Now it became one of the biggest in Europe. Lufthansa missed so many opportunities, for example purchasing Wizz Air many years ago when they were out for finding a new investor and could not pay their maintenance bill to Lufthansa Technik. If at that time they would have opted to invest, today they would have a real contra party for Ryanair.

Even with the high cost in Germany, Lufthansa could have opened a subsidiary company in a Middle Eastern country with same benefits and could have done exactly the same business, but instead they opted to stay calm, not risk too much, watch a long long time and eventually let the business pass them. Even in Turkey they have a company with shares in it called Sun Express. Never used for developing business into the right direction. Also a share swap with Turkish Airlines was a possibility recently discussed between German and Turkey government.

It's all about the right business decission, a right balancing of taking risks into consideration to develop the business.

hohd · Sat Nov 01, 2014 4:02 pm

It is in the best interest of SA to have an open bilateral but restrict the frequencies to JNB and CPT. If EK wants to fly to other small cities in SA, then it would be a win win situation for both.

PanHAM · Sat Nov 01, 2014 5:03 pm

Quoting delta777jet (Reply 32):
This is the standard EK bashing, also Lufthansa has a share in Fraport, has big government support, own a maintenance, handling and not too recently also a catering company.

The government support of LH must be a hidden value, it does not show. anywhere. Comparing the 5% shares of LH in Fraport is an investment and cannot be compared with the full ownership of the UAE government of anything around anything in that country. LH has one voting seat in the supervisory board of Fraport which is nothing. It is simply an uneven playing field, not only in Europe but much more in weaker countries, like the RSA.

I have made my points many times about this subject, no reason to repeat myself. My prediction is that EK and the other 2 have come to the point where their business model is challenged more and more.

ElPistolero · Sat Nov 01, 2014 6:08 pm

Suppose RSA were to ban EK from South Africa. Would it result in SAA and other carriers adding an equivalent number of seats to the market to accomodate the pax currently flying those EK planes (adjusting, of course, for seats that always go empty)?

Or would it simply result in less seats and higher prices?

My guess is that it would result in the latter, unless SAA goes on a major buying spree (that I'm not convinced it can afford - never struck me as a particularly well-run airline). What then? Higher airfares and a more comfortable existence for SAA and the Euro carriers serving the region, I suppose. At what cost? Less people travelling to and from South Africa? Who is that good for: airlines benefiting from higher airfares, or the economy writ large?

Its a simple enough issue: do airlines exist for carrying passengers to where they want to go to in the manner that affords them the best value-for-money/efficiency, or do they exist mostly to give the 'local airline industry' something to do?

Suffice it to say, RSA losing seats (whoever they are provided by) doesn't strike me as a winning proposition for RSA (SAA nothwithstanding).

infinit · Sun Nov 02, 2014 1:03 am

Quoting speedbored (Reply 30):
Do you have any evidence to support this assertion?

This is a claim made by so many people here and I have yet to see one shred of evidence to support it. I have, so far, seen absolutely no evidence to suggest that any of the ME3 airlines do not buy their fuel on the same international markets as almost every other airline does. Were this not the case then you can be sure that the competition authorities in many countries would be carrying out "unfair competition" investigations.

The United Arab Emirates is the 6th largest exporter of oil. No, the Dubai government is going to make their fully state-owned airline pay a premium on fuel

And on Emirates being fully state owned- a state owned company doesn't have to declare anything of the sort, so good luck ever getting any evidence either way.

[Edited 2014-11-01 18:04:28]

AirIndia · Sun Nov 02, 2014 4:07 am

Quoting infinit (Reply 36):
he United Arab Emirates is the 6th largest exporter of oil. No, the Dubai government is going to make their fully state-owned airline pay a premium on fuel

Just a few things. UAE is the the 8th larget oil producer and its mostly from Abu Dhabi. So as much as Dubai owns EK, they dont have any oil of their own to provide to EK. Also, USA is the 3rd largest producer of oil, does that imply that DL, UA and AA should be flying with subsidized oil?

Quoting infinit (Reply 36):
And on Emirates being fully state owned- a state owned company doesn't have to declare anything of the sort, so good luck ever getting any evidence either way.

EK publishes it financials every year with details including fuel bills.
http://www.theemiratesgroup.com/engl...h/facts-figures/annual-report.aspx

dtw2hyd · Sun Nov 02, 2014 12:32 pm

Everyone buys ATF in international market. An airline under Family Discount Plan plus Volume Discount Plan doesn't pay same as other airlines at same airport.

Same with financing,leasing,catering,maintenance and ground ops. List goes on.

speedbored · Sun Nov 02, 2014 3:45 pm

Quoting infinit (Reply 36):
The United Arab Emirates is the 6th largest exporter of oil. No, the Dubai government is going to make their fully state-owned airline pay a premium on fuel And on Emirates being fully state owned- a state owned company doesn't have to declare anything of the sort, so good luck ever getting any evidence either way.

So your fuel subsidy claim is entirely your own opinion, backed up by absolutely zero evidence?

Have a look at some of Emirates financial statements or accounts and you will find that you are wrong - EK do not get subsidised fuel from Dubai, or anywhere else. Nor do they get subsidised finance, loans or other monetary gifts. EK do so well because they are a very well managed airline based in a very fortunate location.

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