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The International and
Government Affairs
Journal of Emirates
Issue 21 | May 2015
Open
Sky
In this issue …
2
Subsidy? Tosh!
4
Emirates’ single-carrier, global network
6
78 years with…an Open Skies policy
7
The handy guide to select legacy
carrier language
8
Emirates and Monte Vibiano – an Italian
perspective on growth and jobs
9
The illusory level playing field – a few
expert views
2.9 billion
$
is the estimated annual local economic
impact of Emirates services to US
airports and their surrounding regions
2 routes
on which Emirates competes
directly with Delta, United and
American airlines
849m
10
They said it best...
11
A focus on the environment
12
Incremental growth in India
13
The cost of non-Europe - in aviation
14
Sector Insight – from a US
consumer perspective
15
The economic value of cargo
16
‘A Greener Tomorrow’ initiative enters its
second year
US$
Emirates’ contribution to India’s
GDP annually
518,000
tonnes of cargo was transported by
Emirates to and from 17 EU Member
States in 2013/14
THE EMIRATES GROUP
ENVIRONMENTAL REPORT 2013-14
Airport ($m)
ENVIRONMENTAL REPORT 2013-14 | 1
Seattle
San Francisco
Los Angeles
Chicago Boston
New York
Dallas/Fort Worth
Houston
Orlando
$132m
$227m
$257m
$624m
$200m
$166m
$445m
$720m
$100m
Subsidy? Tosh!
Roughly ten years have passed since the oft-repeated anti-Emirates
smears really started to take off. An easy deduction to make today is that
we are exactly where we were then; a time loop where some competitors
repeat the same allegations again and again and Emirates proves the
allegations false. We have done that over the past ten years, and will
gladly do it again.
Today it is the three biggest US airlines – Delta, United and American – that are running a
campaign aimed at limiting the growth of Emirates, Etihad and Qatar in the US market.
These US airlines have published a white paper, in which they claim Emirates has received
billions of dollars in subsidies. It also says Emirates is competing unfairly under the terms of the
open skies agreement between the US and the UAE.
For the record, Emirates does not receive and never has received any form of subsidy from
the UAE Government. And considering that we have operated to the US since 2004, we fail to
understand how we can possibly be competing unfairly in 2015.
The real issue at hand is that the three biggest US carriers, who together with their joint venture
(JV) partners already control about two-thirds of international flights from the US, want to further
limit the international air transport choices available to American consumers, airports, local and
regional economies.
US consumers must wonder why they deserve less competition in the marketplace when Delta,
American, and United are amongst the most profitable airlines in the world, but nowhere close to
being ranked amongst the best airlines for service or product.
2
Airports, tourism boards, chambers of commerce and businesses, should in turn be asking
regulators and legislators why valuable, direct international air links - which are so important
for businesses and critical for tourism - should be limited only to a few airport hubs served by
the big three US carriers and their JV partners with whom they co-ordinate prices and capacity
under anti-trust immunity.
The US carriers allegedly took two years, and goodness knows how much shareholder money,
to assemble a stack of allegations which included wrong assumptions and leaps of logic. We are
currently working on our point-by-point rebuttal, but we can tackle the main accusations against
Emirates immediately.
Myth vs Fact
Allegation: Emirates benefited from $2.7b in subsidies from the government’s assumption of fuel hedging losses,
and the government also provided Emirates $1.6b in letters of credit.
Emirates’ response: That is untrue. All cash losses incurred by Emirates as a result of its fuel trades in place
in 2008/09 were settled in full from the airline’s own cash reserves and not paid for by the Government of Dubai.
The letters of credit mentioned in the white paper were in fact provided by Emirates to our owners, Investment
Corporation of Dubai, in support of the fuel trades novated, not the other way round.
Allegation: Emirates benefited from $2.3b in subsidised airport infrastructure since 2004, which is a “major
competitive advantage”.
Emirates’ response: Infrastructure investment is long term in its nature. The Government of Dubai has made
these investments, like other progressive emerging market economies (e.g. China, Singapore) with long term
benefits in mind. Comparably lower airport charges or charge exemptions for transfer passengers are neither a
subsidy nor discriminatory as all airlines who use the infrastructure at Dubai International (DXB) benefit.
Emirates pays the full published rates at DXB, which are highly competitive, commercially based, and in fact higher
than a number of other comparable major airports such as Kuala Lumpur (KUL).
Allegation: Gulf carriers take passengers and revenues from US carriers, and force US carriers to reduce,
terminate or forego services on international routes.
Emirates’ response: Despite what some carriers may think, air passengers are not proprietary to airlines. What
Emirates is doing is competing in the marketplace - we don’t “take” or “steal” customers. We offer a great product
at a competitive price, which appeals to the consumers who choose to fly with us. The three US carriers’ obsession
with market share makes all the more apparent what they are really after: not competition, not open markets or
Open Skies, but outright government-directed market allocation.
Rather than harming US interests as the white paper claims, Emirates’ services have increased
consumer choice, filled a gap in the market by taking travellers to numerous destinations not
served by others, and helped contribute to the US economy, trade and tourism. Importantly,
Emirates also provides a much-needed competitive alternative to the three airline alliances, with
anti-trust immunity, permitting them to keep fares artificially high.
Emirates has understood the tectonic shift in 21st century aviation and despite being a
transparent, efficient and commercially run carrier, we recognise that our steady growth and
success has made us the scapegoat of choice among the few that prefer less competition –
particularly when the competition comes from business models different to their own.
The unintended consequences of this could well be intra-industry polarisation that challenges
the make-up of the traditional alliances and splits airline trade bodies. The Association of
European Airlines (AEA) has seen a number of carriers quit the group after fundamental
disagreement on airline competition. Within Airlines for America (A4A), member views also differ
drastically on that topic.
The few will continue their gross misrepresentations about us to serve their narrow interests. We
have nothing to hide and we welcome appropriate discussion on our activities. In the meantime,
our partners, regulators and decision-makers in the aviation sphere, need to consider whether
artificially protecting three carriers on the basis of questionable allegations is worthwhile if it
leads to higher prices, limited choice, poor service and unrealised economic activity. Erecting
barriers does not create value. More competition, more connectivity and more choice for
consumers and businesses does.
3
Emirates’ single-carrier,
global network
Far too often, many US carriers have been content to play it safe with
long-established, trans-Atlantic and trans-Pacific routes, and either ignore
new and growing markets such as India and Africa, or simply hand over
passengers to their European alliance partners.
The leading US airlines have been busy consolidating through domestic mergers and practising
“capacity discipline,” and in the process have ignored many opportunities in emerging markets.
In contrast, Emirates – which is independent of traditional alliance partners and not beholden to
feed an alliance network that often inconveniences passengers with circuitous routings, multiple
connecting stops and longer travel times – has since 1985, built a network to capitalise on these
emerging traffic flows and better serve the requirements of passengers.
Emirates’ unique global
connectivity to the US
• Emiratescommencednon-stop
passenger flights between Dubai
and New York City in June 2004 and
has since expanded to eight more
destinations - Houston, Los Angeles,
San Francisco, Dallas, Seattle,
Washington DC, Boston, and Chicago,
operating a total of 84 passenger flights
per week. Services to Orlando, Emirates’
10th US destination will commence in
September 2015.
• EmiratesfliestheBoeing777tofiveofits
US destinations and operates the Airbus
A380, powered by US-made GE GP7200
engines, to Dallas, Houston, Los Angeles,
New York and San Francisco.
Emirates has created a hub in Dubai that allows passengers in any of the nine US cities it serves
to fly one-stop to 15 different Middle Eastern destinations; 23 African destinations; and 35 Asian
destinations – all with connections optimally timed for passenger convenience. In contrast, the
three US network airlines only serve a combined four points in Africa and four in the Middle East
(not including overlapping points).
Emirates’ links from the US to emerging markets – for example 305 weekly flights to the five
BRICS countries and 94 weekly flights to Pakistan and Bangladesh – will further drive American
economic growth, trade and US job creation. However, the three leading carriers, along with their
European partners, offer only modest air services in several of these markets, limiting consumer
choice and sacrificing lucrative business.
The table below demonstrates Emirates’ strong commitment to these emerging markets with the
number of points served directly, compared with the three leading US carriers.
Middle East
15
2
4
0
Africa
23
4
1
0
Asia
35
13
13
• Emirates’flightscarrytravellersfrom
the US to 57 destinations in Africa (19
points), Asia Pacific (26 points) and
the Middle East (12 points) that are not
served by any American carrier, and we
do this with just one plane change
in Dubai.
• Since2004,11.3millionhigh-yield
tourists and business passengers have
travelled on our US flights coming from
and going to important developing
markets in the Middle East, Africa
and Asia.
• Thehighaverageseatloadfactorsof
over 80% in 2014 on our US flights
demonstrate the customer demand for
Emirates’ services.
• Emirates’flightsbetweentheUSand
Dubai have carried over 518,000 tonnes
of high value goods since 2004.
• Therehasbeena442%growthinUS
exports to the UAE since Emirates
started services to the US in 2004, and
today the UAE is the #1 market for US
exports in the Middle East.
Seattle
San Francisco
Los Angeles
Chicago Boston
New York
Dallas/Fort Worth
Houston
Orlando
Estimated annual local
economic impact of
Emirates operations
Source: Economic impact studies from respective airports or regions.
Data not available for Washington DC
4
5
Airport ($m)
$132m
$227m
$257m
$624m
$200m
$166m
$445m
$720m
$100m
Total impact:
$2.9bn
Route network comparisons
The maps below show that Emirates is providing vital routes to the US, via its hub in Dubai,
that the three leading US carriers do not offer. So despite their claims that Emirates is “stealing
passengers,” these maps illustrate that in reality there are very few network similarities between
Emirates and the big three US carriers United, Delta and American Airlines.
Many of Emirates’ routes are to developing markets which are not currently served by American
carriers. These air links facilitate US foreign trade and open up new markets for US exporters,
helping to further drive American economic growth, trade and job creation.
Delta Air Lines
Emirates
United Airlines
Emirates
American Airlines
Emirates
Glen Hauenstein Delta Air Lines, Inc Chief Revenue Officer
answering a question on
competition between Delta
and Middle Eastern carriers
during an investor relations call,
December 2013:
“I think there are two components
to your question. One is the third
and fourth freedoms, which would
be the traffic from the United
States and from Europe into the
Indian subcontinent and Asia.
Delta has never been a big player
in that market. Our partners, Air
France and KLM, were probably
not as heavily invested as
Lufthansa or British Airways for
that matter. So they probably
have a little less impact although
it’s significant, because those are
traffic pools that they were relevant
players in. The thing about their
location is they are about halfway
around the world from us, and
that’s kind of the good news and
the bad news. The good news
is they are halfway around the
world from us and we don’t really
participate in a lot of the flows that
they have the primary gateway for.
The second piece is, if you look at
their order books it’s hard for us to
imagine that those aircraft could
all be delivered in the same time
frame to the same region without
imploding all of them.”
Source: OAG Analyser
5
Open Sky usually features a ‘60 seconds
with…’ section to provide readers with
a snapshot overview of the dynamics in
a given market. This issue’s snapshot is
dedicated to Dubai’s longstanding Open
Skies policy which has been in place since
1937. We call it ‘78 years with…’
78 years with…
an Open Skies Policy
Dubai’s Open Skies policy is a key component of its economic and trade
policy. It calls for liberalised rules and regulations to foster a market forcesdriven, competitive environment for aviation to attract airlines and enable
them to operate freely.
1985
Many recognise the
benefits of Dubai’s
forward thinking
aviation policies:
2015
How did it all start? The “Dubai Commercial Air Agreement” on July 22, 1937 triggered the Open
Skies policy of Dubai. That agreement gave the British Government landing permission en route
to India and elsewhere.
It was quickly evident that it helped strengthen Dubai’s position as an important trading outpost
in the Gulf. In the 1950s, HH Sheikh Saeed bin Maktoum Al Maktoum, the ruler of Dubai at the
time, decreed a policy of open seas, open skies and open trade, in part to help eliminate the
dependence on oil resources.
This was one of the first contributions to building the business-friendly Dubai of today which
subsequently has been complemented with the creation of free zones and other business
investment friendly incentives. Today oil revenue constitutes a mere 1.8% of Dubai’s GDP,
whereas aviation related activities and tourism make up approximately 30%.
Nicholas E. Calio
President and CEO of A4A
on the growth of non-US carriers,
specifically discussing the “integrated
aviation eco-system” in Dubai in his
remarks before the International Aviation
Club, October 2014.
“I’m not being critical, I’m being clinical.
This is brilliant. This infrastructure enables
the carriers growth, lowers flight delays
and costs, and delivers newer and higher
quality infrastructure. The closely integrated
Dubai aviation sector strives for maximum
throughput since costs for one segment is
revenue for another. The bottom line is that
Middle Eastern carriers benefit from smart,
forward-looking governmental strategies
to stimulate passenger growth by setting
low airport fees, low corporate taxes and
minimal passenger-related fees and taxes
which drives significant economic benefit
to the host countries.”
6
Considering how protectionism within national airspaces has been a typical, historical norm –
and still is in places – Dubai’s Open Skies policy has remained virtually unchanged for close to
80 years. This has encouraged competition amongst airlines, and as a result multiple foreign
carriers have enjoyed the ability to pick up and drop off passengers in Dubai for onward flights.
Currently more than 130 airlines operate to and from Dubai generating revenue for Dubai’s
economy and supporting its commercial activities, whilst also putting constant competitive
pressure on Emirates.
H.E. Mohammed A Ahli
Director General,
Dubai Civil
Aviation Authority
“Dubai is one of the true pioneers of aviation liberalisation
having adopted an open skies policy as one of the
cornerstones of its economy ever since late Sheikh Saeed bin
Maktoum Al Maktoum O.B.E signed the Dubai Commercial Air
Agreement with His Majesty’s Government in July 1937, long
before Emirates was established in 1985. Access to Dubai, one
of the world’s largest and fastest-growing hubs, allows carriers
of the world to grow their services and also boost exports and
trade to their own markets. For Dubai it gives consumers more
choice, stimulates traffic growth and is good for business.
Considering that ICAO predicts there will be 6 billion people
travelling by air in 2030 compared to 3 billion today, Dubai is
well-placed to capitalise on this growth. I am confident that
Dubai’s steadfast commitment to Open Skies is a source of
inspiration for other countries.”
28
Fair
Competition
•
[fai r]
[kom-pi-tish-uhn]
1. Competition rules defined by
legacy carriers. 2. A fair and equal
opportunity to compete, which
ignores geography, different
market realities and government
policies, and supersedes the
consumer’s right to choose.
U nfair A d vantage • [uhnfair] [ad-van-tij] 1. Situation in
which a non-legacy carrier takes
advantage of natural competitive
advantages
like
geography,
progressive aviation policy, low
tax regimes or supportive airport
conditions such as 24 hour
flying or affordable parking and
handling charges.
Capacity Dumping • [kuh-pas-i-tee] [duhmp-ing] 1. When a
non-legacy carrier provides more
seats between two countries
than a legacy carrier to meet
the demand at profitable and
competitive rates. 2. When third
country airlines serve routes that
have long been neglected and
deemed unprofitable by legacy
carriers. 3. When an airline offers
the consumer an alternative
option by creating connections
through non-traditional and nonlegacy carrier hubs.
Theft of passengers • [theft]
[ohv] [pas-uh n-jerz] 1. When
passengers, as a result of
competitive prices, connectivity
and superior service, choose to
travel with non-legacy carriers
from the home of a legacy carrier.
2. Also assumes prior ownership
of said passengers by said
legacy carriers.
Level playing field • [levuhl] [pley-ing] [feeld] 1. An
aviation industry in which the
rules are set by and acceptable
to some EU legacy carriers. 2.
Competition that ignores market
realities and the consumers right
to choose.
o
t
e
id
u
g
y
d
n
a
h
e
Th
SELECT
LEGACY
R
E
I
R
R
A
C
LANGUAGE
7
Emirates and Monte Vibiano –
an Italian perspective on
growth and jobs
With operations to Europe since 1987 and annual investments in products
and services amounting to € 4.3 billion in 2013/14, Emirates has
long-standing relationships with a large number of European businesses
and suppliers.
Next to providing connectivity and direct employment, this large-scale economic activity
through purchases of goods and services has a multiplier effect which creates indirect and
induced employment.
The report, ‘Emirates’ Impact in Europe’ by Frontier Economics, quantifies Emirates’ operational
impact in Europe and provides detailed coverage of these impacts in all of the EU Member
States that Emirates operates to.
In Italy for example, Emirates’ direct, indirect
and induced impact from its operations
amount to 10,270 jobs and €747 million in
GDP contribution.
The indirect impact can be narrowed down
further: in Italy’s agricultural heart, amongst
Umbria’s rolling hills, is a 500 hectare farm
which is a recognised premium olive oil
and wine producer. Castello Monte Vibiano
Vecchio is known for supplying Emirates with
the small olive oil and balsamic vinegar bottles
served at meal times in the premium cabins.
Emirates has procured olive oil from Castello
Monte Vibiano Vecchio since 2003 and this
business relationship is just one among many
examples of how Emirates’ direct expenditure
and the consequential multiplier effect
together contribute to economic activity and
job growth in Italy.
For Emirates, the on-board consumption of
extra virgin olive oil with balsamic vinegar in
2013 was 3,703,000 bottles and in 2014, it grew to 3,816,000 bottles. 307,000 bottles of extra
virgin olive oil were also consumed in 2013, a number which grew to 453,000 bottles in 2014.
This supply makes up 25% of Castello Monte Vibiano Vecchio production and contributes
to sustaining a niche supplier of a quality product. It has also had a measurable effect on
employment – Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the
number of employees had grown to 70.
Emirates and Italy – fast facts
Lorenzo Fasola Bologna
CEO of Monte Vibiano
“Our long-standing partnership
with Emirates now spans more
than a decade and it has not
only helped Monte Vibiano gain
global recognition, but also
played a significant role in our
ability to gradually expand our
production and hire new staff.”
•In 2008, Emirates entered into a partnership with Bvlgari for the supply of products and
bags for First and Business class amenity kits. In 2013/14 more than
2 million of
these kits were given to First and Business class passengers.
76,000 bottles of Italian wine were consumed on Emirates flights.
•Emiratescurrentlyemploysmorethan800 Italian nationals.
•In2014morethan
•In2013/14Emiratesprocuredmorethan
200 million euros worth of goods from
Italian businesses.
•EmiratesprovidespassengersflyingtoandfromMilan,RomeandVenicewith
8 unique one-stop connections that no other carrier or alliance can offer.
8
The illusory level playing field –
a few expert views
Jaap de Wit
Professor of Transport Economics,
University of Amsterdam
The concept of a level playing field
is not unique to aviation, nor is the
debate around the feasibility of it.
Open Sky asks three industry experts
their perspective... is the level playing
field illusory?
If we apply the level playing field
concept to international markets it not
only means equal rules for international
trade between states, but also identical
economic and institutional conditions
within states.
The existing diversity in national,
institutional and economic arrangements
already underlines that the international
playing field is not level. Despite these
inevitable differences, substantial efforts
have been undertaken in the context of
ICAO to harmonise safety, security and
economic regulation in the global
airline industry.
However, differences among states with
regard to fiscal policy, labour policy and
bankruptcy conditions will have an ongoing impact on competitive conditions
in the international airline industry.
Moreover, in politics the role of the
airline industry in society is perceived
in different ways by individual states.
The political emphasis can range on
one hand, from fostering the national
airline as an instrument that enables
economic development through optimal
international accessibility by air, and on
the other hand to an ordinary standalone economic activity subject to the
full internalisation of its external costs
and additional taxes.
These different political perspectives
among states can fundamentally affect
the playing field in international air
transport markets, as illustrated by the
EU, the US, China and the Gulf states.
However, what makes the level
playing field fundamentally unlevel
in the international airline industry
is not politics but geography. The
geographical location of a state on
the globe determines its Ricardian
comparative advantages in developing
an international air transport network.
For example, the location of Emirates’
hub in Dubai has been decisive in the
development of a full-scale long-haul
hub-and-spoke system. Such a network
provides optimal cost advantages
derived from aircraft size economies
and average distance flown. Since hub
location of European airlines dictates
the need for costly short haul feeder
systems, the playing field with the Gulf
carriers is inevitably unlevel.
John Balfour
Consultant, Clyde & Co, London
“Fair and equal opportunity” is a
familiar concept in bilateral air services
agreements, but it has not been
much tested under the traditional,
uncompetitive, international air
transport system. However, increasing
liberalisation and competition requires
that airlines should be able to compete
under fair competitive conditions,
although this is easier said than done.
Airlines start with differing advantages
and disadvantages depending on
the factual and historical matrix, e.g.
geographical location; size and wealth of
home market, and potential connecting
passenger market; the historical legacy
of traffic rights and established markets;
and differences in home state laws - in
particular labour and tax laws.
One topical issue is state aid - rightly,
given the competitive distortions it
can cause, but rules appropriate on an
international basis are not easy to agree.
In the EU during the 1990s airlines were
allowed to receive over €10 billion of
state aid, principally in order to help
them restructure to meet the new
competitive environment, although a
much stricter approach is now taken. A
strict approach may not be appropriate
for airlines in other parts of the world, at
different stages of need or development.
For example, the US was a stern critic of
EU practice during the 1990s, but took a
different view to requests by its airlines
for aid post 9/11 - and the EU then
became the critic.
The more liberalisation stimulates
competition in international air transport,
the more important it is for airlines
to have fair and equal opportunity to
compete. This is not easy, but the effort
must be made if competition is to be
ultimately sustainable.
Alan Khee-Jin Tan
Professor of Aviation Law,
National University of Singapore
In the grand sport of aviation politics,
the playing field is seldom level to begin
with. Nor is it always possible to try
levelling it. States are simply not born
equal. Some have superior geography,
others have a big population base for
their airlines to benefit from.
Through the decades, it is the
successful, well-run airline from the
small, strategically-located country that
has maximized its advantages, often
in tandem with a government willing
to provide airport hub infrastructure
and other incentives. KLM, Singapore
Airlines, Korean Air, Emirates, Qatar
Airways, Ethiopian Airlines and Copa fit
that bill to varying degrees.
These sixth-freedom carriers are able
to maximize (some say exploit) their
advantages to collect and funnel
passenger “feed” from other countries
through their well-located and efficient
hubs. The success of this strategy
depends largely on geography, of
course, but also generous or unlimited
third-and-fourth freedom rights
exchanged with other countries. Such
rights are often withheld by larger
countries seeking to protect their own
carriers’ business and yes ... to level the
aero-political playing field.
But the airline from the small state is
seeking to level the field too – by using
its comparative advantages to make up
for the lack of a domestic base. So if all
are trying to level the field to their own
advantage, there may be no level field
in the end. For what’s really happening
is that one side is working to deny the
other’s advantage.
In the process, we ignore the interests
of those who count for more: the
passengers, exporters, and national
economies as a whole – in terms of how
these will benefit from more competitive
fares and greater connectivity.
9
They said it best...
Open Sky brings you the best quotes on liberalisation, alliances,
aeropolitical protection, free and fair trade, economic policy and
global business.
Jim Compton,
United Airlines Vice Chairman
“Our industry is ferociously
competitive… Middle East carriers
benefit from positive rather than
detrimental national aviation
policies.” September 2014
If airlines want to ask for less regulation, then why are they also asking for the
government to intervene when they see competition from certain regions? It’s
no wonder governments think they’re getting mixed signals from airlines.” Brian Havel, director of the International Aviation Law Institute at Chicago’s
DePaul University
“It is also worrying to see protectionism rearing its head again, notably in the US where
some carriers complain the Open Skies arrangements are benefiting non-US airlines, most
particularly the Gulf carriers.” - Willie Walsh, CEO of International Airlines Group
“What India needs is a complete policy reversal in aviation. We should go for unbridled open
skies, with global airlines free to operate any number of flights at any Indian airport. This will
help improve the local economy, employment, investment and tourism. Sixty-seven years of
protectionism has got Indian aviation nowhere. It is time to test new ideas.” - Amber Dubey,
partner and India head of aerospace and defence at global consultancy KPMG
“Britain has benefited from being home to the world’s largest port or airport for the last 350
years, connecting British business people and their exports to the world’s markets, but lack
of capacity at Heathrow means we have lost our crown to Dubai. It is hard to find a serious
economic player that doesn’t aspire to having what London has taken for granted, which is
why Istanbul, Dubai, Chicago, Hong Kong and Beijing are investing in their hub airports. It’s
not too late: We can have the vision and confidence to develop Heathrow into the world’s
best connected airport if we take decisions now.” - John Holland-Kaye, Heathrow CEO
“Delta’s work groups have rejected nine proposals to unionize, making us the only major
airline outside the Middle East that is largely non-unionized.” - Richard Anderson, Delta Air
Lines CEO
“… airlines do themselves no favors if they play the game of (rightly) rejecting regulation
where it is not necessary, but (wrongly) seeking it when it suits them….Requesting help to
keep out competition sends mixed signals to Washington and opens a back door to the era
of heavy-handed economic regulation. Remember when CAB defined what could count as a
“sandwich”? These same US carriers are turning to the Asia market and transpacific routes
to get a bigger slice of that fast-growing market; one made possible through Open Skies.
If US carriers seek regulatory help to fend off Gulf competition in North America, then they
have no recourse should Asian flagships do the same to them.” - Karen Walker, Executive
Editor, Air Transport World
“Our position on some important policy issues is not aligned with some other AEA legacy
airlines. In particular, we believe global liberalization of our industry is fundamental to
our future growth and we are not willing to compromise on this fundamental matter.” International Airlines Group (IAG) in an emailed statement
“Lufthansa who would rather limit traffic rights of Gulf carriers through political lobbying, is
complaining about government aid, even though Lufthansa has long benefited from it - most
recently the Austrian state has paid the old debts of Austrian when Lufthansa took over
Austrian.” - Sueddeutsche Zeitung, one of Germany’s leading daily newspapers
“The Gulf countries have recognised the value of aviation for an economy. I would also like to
see Europe to understand this value too.” - Carsten Spohr, Lufthansa CEO in
an interview with the German newspaper Sueddeutsche Zeitung
10
A focus on the environment
Emirates recently released its 4th annual Environmental Report, covering
the financial year 2013-14. The report, which is verified by PwC, presents
environmental data and case studies covering both air and ground based
operations across the Emirates Group.
Fuel
THE EMIRATES GROUP
ENVIRONMENTAL REPORT 2013-14
Fuel efficiency is central to Emirates’ business: reducing unnecessary consumption not only
reduces the environmental impact, but also has a direct benefit on the bottom line. As the
network and fleet expand, Emirates continues to develop efficiency and environmental initiatives
which help to balance this growth.
During the reporting year, capacity grew 14.6% in available seat kilometres and 14.4% in
available tonne kilometres through the addition of 18 passenger aircraft and two freighters,
which increased overall fuel consumption.
Thanks in large part to the young and efficient fleet - 6.2 years average fleet age compared with
the IATA wide-body fleet average of 11.7 years* - Emirates’ fuel efficiency improved 0.5% yearon-year to 0.3089 litres per tonne kilometre and remained 14.5% better than the IATA average.
Fuel efficiency for the freighter fleet improved a substantial 8.2% to 0.190 litres per freight
tonne kilometre.
Noise
Since Emirates started reporting on environmental performance the fleet has become steadily
quieter. This year, the noise footprint per tonne kilometre of payload improved 2.4% for take-off
and 10% for landing. All of Emirates’ aircraft comply with the most stringent ICAO Chapter 4
noise standards**.
Ground operations
At Dubai International Airport, dnata cleaning crews collected more than 1,700 tonnes of used
newspapers and magazines for recycling from Emirates’ aircraft. dnata’s Aircraft Appearances
team, who are responsible for washing the exteriors of Emirates’ aircraft, initiated a water
consumption measurement programme that helped save 333,500 litres of water.
Details of all of these projects and the corresponding environmental data are in the
Environmental Report 2013-14, available at http://www.emirates.com
*IATA – WATS 58th Edition.
**Excludes two wet-leased Boeing 747-400 freighters.
6.2 years
14.5 %
8.2 %
Emirates’ average fleet age compared with the
IATA wide-body fleet average of 11.7 years
ahead of the IATA industry average in terms
of fuel efficiency
improvement in fuel efficiency for our freighter fleet
ENVIRONMENTAL REPORT 2013-14 | 1
Case Studies
Partnerships in the air
Partnerships with air traffic
management (ATM) providers enable
aircraft to fly shorter routes and take
advantage of favourable winds, as well
as making use of other operational
enhancements. Emirates expanded
its participation in international ATM
collaborations by joining the Asia and
South Pacific Initiative to Reduce
Emissions (ASPIRE) programme,
adding to the existing membership in
the counterpart Indian Ocean regional
programme, INSPIRE. The results of
the INSPIRE programme indicate
potential savings of 740 kg of fuel, or
2.3 tonnes of CO2, per flight across the
Indian Ocean.
Reducing emissions
Flight crews use a variety of procedures
to help save fuel and reduce emissions
where it is safe and practicable to
do so. The use of idle reverse thrust
saved 4,129 tonnes of fuel, equivalent
to 13,006 tonnes of CO2. Shutting one
engine down while taxiing saved 1,947
tonnes of fuel, or 6,133 tonnes of CO2.
Conservation
Emirates’ contribution to conservation
projects has continued at the Dubai
Desert Conservation Reserve and at
Emirates One&Only Wolgan Valley
in Australia.
A total of 15,000 indigenous ghaf trees
were planted in the Dubai reserve,
irrigated by solar-powered pumps, and
1,000 endangered houbara bustards
were released into the wild.
Wolgan Valley renewed its carbonneutral certification with carboNZero,
and deepened its wildlife research
collaborations with university partners.
11
Incremental growth in India
Prime Minister Modi has set a target for India’s international aviation market
to expand from its current position as 10th largest in the world, to third
largest, with 85 million international passengers by 2020.
Based on Airports Authority of India 2013/14 data, international passenger capacity will need
to grow by more than 80% over the next 5 years. This is achievable, but cannot be done by
domestic carriers alone.
In February 2014, the aeronautical authorities of India and Dubai negotiated the first expansion in
market access since 2008. The implementation of Emirates’ share of this capacity commenced
in the summer 2014 schedule, and will gradually increase until the summer 2015 schedule. This
capacity will be used to replace older aircraft with modern larger capacity aircraft, including the
deployment of a daily Airbus A380 service to Mumbai.
The impact of this increase has been modelled by India’s National Council of Applied Economic
Research (NCAER). Building on the results from their 2014 interim report, they found that
once the additional capacity is fully implemented in 2015, Emirates’ operations will contribute
US$848.6 million to India’s GDP and support 86,254 jobs on an annual basis.
NCAER also predicts that Emirates will facilitate 673,544 foreign tourist arrivals per year and
generate US$1.75 billion in Foreign Exchange Earnings (FEE).
The following table shows Emirates’ economic and employment impact figures from the 2012
NCAER report compared with the new modelling NCAER have completed incorporating the
capacity increase. The results clearly show that the capacity increases will stimulate investment
and growth in India.
Year
Seats
Direct
economic
impact
Total
economic
impact
2012
54,200
US$274 m
2015
60,200
US$371 m
Total
jobs
supported
No. of
foreign
tourists
per year
Foreign
exchange
earnings
US$596 m
72,323
529,928
US$1.15 b
US$849 m
86,254
673,544
US$1.75 b
Emirates currently connects 10 Indian cities, via one stop, to 15 cities in the Middle East, 23 in
Africa, 37 in Europe and 13 in the Americas. 80% of Emirates’ destinations in these regions are
not served by any Indian carrier.
Oslo
Stockholm
St. Petersburg
Oslo
St. Petersburg
Stockholm
Moscow
Glasgow
Copenhagen
Newcastle
Hamburg
Manchester
Dublin
Moscow
Glasgow
Copenhagen
Newcastle
Amsterdam
Birmingham
Warsaw
London
Dusseldorf
Dublin Manchester
BrusselsHamburg
Prague
Liege
Amsterdam
Birmingham
FrankfurtWarsaw
Paris
Vienna
London
Dusseldorf
Basel
Brussels
Munich Budapest
Prague
Geneva Zurich
Frankfurt Vienna
Paris
Lyon
MilanVenice
Munich Budapest
Nice
Geneva Zurich
Zaragoza
Rome
Lyon
Istanbul
MilanVenice
Barcelona
Madrid
Nice
Athens
Lisbon
Rome
Tunis
Istanbul
Algiers
Barcelona
Madrid
Malta
Larnaca
Casablanca
Athens
Lisbon
Tunis
Algiers
Malta
CairoLarnaca
Seattle
Seattle
Toronto
Boston
New York
Washington, DCBoston
Toronto
San Francisco
Chicago
New York
Washington, DC Atlanta
Los Angeles
San Francisco
Chicago
Los Angeles
Dallas/Fort Worth
Houston
Dallas/Fort Worth
Houston
Mexico
Casablanca
Orlando
Dakar
Ouagadougou
Dakar Conakry
Conakry
Quito
Erbil
Medina
Jeddah
Baghdad
Basra
Kuwait
Dubai
São Paulo
Buenos Aires
Buenos Aires
Khartoum
Bangk
Chennai
Bengaluru
Mumbai
Hyderabad
H
Kozhikode
Kochi
Chennai
Bengaluru
Thiruvananthapuram
Colombo
Phuket
Kozhikode
Kuala Lumpur
KochiMalé
Sin
Thiruvananthapuram
Djibouti
KhartoumAddis Ababa
Accra
Abuja
Lagos
Addis Ababa
Eldoret
Entebbe
Nairobi
Accra
Luanda
Viracopos
São Paulo
Muscat
Kano
Abuja
Lagos
Luanda
Tehran
Dammam
Bahrain
Doha
Riyadh
Abidjan
Abidjan
Middle East Network
Beirut
Amman
Dubai
Dubai
Cairo
Orlando
Entebbe
Dar es Salaam
Nairobi
Seychelles
Dar es Salaam Lilongwe
Lusaka
Harare
Seychelles
Mauritius
Lusaka
Harare
Johannesburg
Rio de Janeiro
Rio de Janeiro
Johannesburg
Cape Town
Peshawar
Islamabad
Sialkot
Lahore
Delhi
Karachi
Dhaka
Guang
Delhi
Ahmedabad
Kolkata Chittagong
Karachi
H
Mumbai
Ahmedabad
Hyderabad
Kolkata
Kabul
Mauritius
Durban
Durban
Cape Town
Orlando commences in September 2015
12
----
Ja
The cost of non-Europe –
in aviation
The European Parliament recently released ‘The Cost of Non-Europe in the
Single Market (Cecchini Revisited)’. This report, requested by Members
of the European Parliament, assesses the barriers, gaps and market
inefficiencies that plague the European tourism and transport sectors, and
quantifies the benefits of finalising the single market in the transport sector.
After 20 years of action, the common transport market remains incomplete, making the sector
vulnerable to external shocks and subject to unnecessary cost inefficiencies. According to
the report, some of the main obstacles in finalising the single market come from difficulties and
variable implementation of new legislation - as well as stakeholders’ opposition and
vested interests.
The report advocates that a better control of state aid to EU carriers will be key in unlocking the
potential for growth in the aviation sector, and notes that the new 2014 guidelines on state aid
rules for airports and airlines “will still allow current market distortions and potential misuse of
public resources for at least five more years.”
The findings recommend that the EU should also ensure optimal use of airport capacity by
ensuring non-discriminatory slot allocation, improve ground handling services, harmonise airport
charges, and better invest in intermodal infrastructure.
Rather than focusing on the effect of global competition on EU carriers, the report foresees
that the removal of internal barriers, matched with the gradual opening of the market to
non-European air carriers through Open Sky agreements, would result in a more balanced
distribution of intercontinental gateways in Europe.
Based on these assumptions, the report estimates that the average annual benefits from
completing the single market in air transport would be between €910 million and €1.8 billion.
This would, in turn, benefit the tourism sector and ultimately support economic and
employment growth.
Emirates very much agrees that a more integrated and efficient European aviation environment
would enhance the competitiveness, cost-efficiency and environmental performance of all air
carriers, for the benefit of European businesses, customers and tourists from all over the world.
Direct quantified gains
Complete Single Market
Improved efficiency
Market opening and
harmonisation
Internalisation of environmental
externalities
Lower operational
costs,travel time
and fuel consumption
Improved infrastructure and
cross-border links
Geographical balance
Expected
annual savings between
€0.9 and 1.8 bn
Enhanced competition
Length efficiency
Reduced environmental
impact
Source: The Cost of Non-Europe in the Single Market (Cecchini Revisited).
13
Sector Insight
Charles Leocha is Chairman of ‘Travelers United’ (formerly Consumer
Travel Alliance), which advocates for travellers to US legislators, regulators
and industry associations. The US Secretary of Transportation
has appointed Mr. Leocha to the Advisory Committee for Aviation
Consumer Protections because of his in-depth knowledge of issues faced
by travellers.
How in your view has Open Skies benefited
consumers? Do you see downsides?
Charles Leocha
Chairman of ‘Travelers
United’ (formerly Consumer
Travel Alliance)
From the point of view of American travellers,
Open Skies has been a boon for international
travel and trade. More US cities have nonstop flights to foreign destinations than ever
before. This connectivity has encouraged
more international tourism travelling to the
US and has made the rest of the world more
accessible for Americans.
Plus, with Open Skies, airline competition can
flourish as airlines add routes to the US from
new cities. And, that helps keep international
airfares in check and improves the interaction
between the US and other parts of the world
both interpersonally and through business
and trade.
As an advocate for passengers, are you
concerned by calls by some airlines and
unions for the US to reverse course on its
Open Skies policy, including reopening
some existing Open Skies agreements and
applying a different policy prospectively?
Our organisation, Travelers United, has been
steadfast in our belief that airline consumers
need truth in advertising and a free market
that will ultimately work to the passengers’
benefit. The airline and labour unions calls
for limitations on Open Skies agreements are
pure protectionism.
These efforts are attempts to roll back
decades of negotiations between the US and
foreign governments. That is not in America’s
interest. And, it does not allow for the free
market and free trade to operate and grow.
As a result, consumers would be harmed by
less competitive choice and less passengerfriendly innovation which is spurred by
greater competition. More open skies
agreements rather than protectionist
regulatory limitations are clearly in the interest
of American consumers as well as our travel
and tourism industry.
Emirates has been operating services to
the US for 10 years. In a global aviation
market increasingly characterised by
consolidation and three expanding alliances,
how important are non-aligned carriers to
ensuring competitive choice for consumers?
This competition is extremely important, as I
noted above. However, even more important
is the streamlined access that airlines such as
14
Emirates provides to south Asia and Africa.
The countries in these parts of the world,
largely unserviced by US carriers, are the
areas with the greatest growth of the middle
class and emerging businesses. They will
only become more important in the future. It
is increasingly in the US national interest, and
vital to US exports and export-related jobs, to
have efficient and competitive air service links
with these dynamic markets.
Do you worry that competitive choice for
passengers is under threat?
Travelers United has been clear about the
threat to consumers by airline consolidation.
In the US, we have just finished (hopefully)
with consolidation of our major domestic
carriers. We now have four carriers that
control more than 85% of the national market.
Internationally, the three US network airlines
have formed huge alliances, many with antitrust immunity, that operate as one airline with
coordinated routes, schedules and airfares.
These three alliances control more than 80%
of international airline traffic between the
US and the rest of the world. That kind of
concentration is not healthy for consumers,
either in the US or elsewhere in the world.
If the US had not pursued Open Skies, how
do you think the global air service landscape
would look for passengers today?
Without Open Skies agreements, hub and
spoke networks focused on a handful of major
gateways would have become even more
dominant. There would not be as many nonstop connections between smaller countries
and the US, or foreign countries and US cities
that are not network airline hubs. Plus, the
focus would have remained on the already
developed US-European routes with a system
of feeder networks that would move US
passengers to the rest of the world.
Open Skies allowed the opening of new and
more economical routes, such as those
flown by Emirates, that are changing the
economic shape of the world, especially the
developing nations in Asia and the southern
hemisphere where economies are growing
and natural resources are plentiful. Open
Skies-related competition also has fuelled
consumer-friendly service innovation which,
without such competition, would have been
unlikely because airlines would have had
significantly less commercial imperative to
improve their products.
...from a US consumer perspective
An Open Skies environment, government
recognition that aviation spurs economic
growth and a favourable geographical
position support Emirates’ ability to tap
into the 21st century travel flows. Is this
unfair competition?
The exponential growth of Emirates is not
being fed by poaching air traffic from other
established airlines, but because of a major
shift in demographics and economies.
Emirates finds itself in a strategically important
position as economic and middle-class growth
has moved the travel, trade and tourism
centre of influence from an almost exclusively
Euro-American-Japanese affair, to a shared
21st century matrix where countries below
the equator are developing and the economic
focus of the world is shifting.
Being able to take advantage of changing
demographics and economics is a part of
competition. A large portion of Emirates’
success has come about because the major
US and European airlines did not change their
networks as the new economies developed.
I expect to see the three major airline alliances
make serious efforts to shift their networks
and expand capacity to take advantage of
the emerging developing world. This is what
competition is all about — and it’s not unfair.
The economic value of cargo
The Frontier Economics report ‘Emirates’ economic impact in Europe’
highlights the value of the unique connectivity provided by Emirates,
especially to secondary cities.
This unique connectivity is beneficial not
only to passengers – it helps facilitate the
movement of cargo benefiting the overall EU
economy. Frontier’s analysis showed Emirates
offers 21 unique direct connections and 199
unique one-stop connections which cannot
be offered by any other airline or alliance
partner. Additionally Emirates offers 119 more
frequent connections, providing consumers
with greater choice.
In 2013/14, Emirates transported over
518,000 tonnes of cargo to and from 17 EU
Member States, 58% of which was exports
from the EU. Nearly 77% of the total exports
carried by Emirates came from Germany, the
UK, Italy, Spain and France.
In 2014, Emirates was the third largest mover
of UK origin cargo, with a 9.72% share of the
UK export market – behind British Airways
and Virgin Atlantic. Items exported included
horses, livestock, luxury cars and vehicles,
foodstuff including salmon and shellfish,
specialised engineering products, ships and
aircraft spares, aero-vehicle-marine engines
and building materials. These items were
bound for Dubai and onward destinations
such as Shanghai, Singapore, Hong Kong
and Kuala Lumpur.
Glasgow
Manchester
Dusseldorf
Lyon
Barcelona
Madrid
Hamburg
Lahore
Dubai
Manila
Durban
New Silk Road
Automotive and
Textile, yarn, footwear,
auto/ship parts to Perth silk etc to Adelaide
Pharma and
biologicals to Lahore
Perth
Brisbane
Adelaide
Sydney
Aircraft spares and
parts to Manila
Chemicals, dyes,
resins etc to Durban
Machinery, equipment,
tools etc to Brisbane
Perishables - Foodstuﬀ,
beverages to Sydney
Milan accounts for more than 50% of the exports that Emirates carries from Italy. As one of
the leading fashion capitals of the world, the types of goods carried include made-in-Italy high
fashion items such as garments, bags and shoes and valuable cargo such as gold and jewellery.
Foodstuffs including cheese and vegetables, machinery and spare parts, furniture and chemicals
find their way to destinations such as Melbourne and Johannesburg as well as Dubai.
With ten freighters a week from Amsterdam, the Netherlands ranks sixth in terms of volume of
cargo exported by Emirates from the EU. Items carried include plants and flowers, ship spares
and pharmaceuticals to Dubai and points beyond – Sydney, Brisbane and Baghdad for example.
The unique connectivity that Emirates provides allows the businesses, shippers and freight
forwarders alike to move items quickly and with ease, getting goods to market in the shortest
time possible.
15
‘A Greener Tomorrow’ initiative
enters its second year
On the back of its successful debut project, Emirates has announced
the continuation of its ‘A Greener Tomorrow’ initiative, allocating US$
150,000 raised through Emirates’ internal recycling programmes, to
support environmental or conservation-based not-for-profit organisations in
safeguarding their local environment.
The recipients of last year’s awards addressed
a diverse range of issues, from fuel-efficient
cooking in Malawi, eco-villages and
sustainable farming practices in Pakistan, and
the conversion of Manila’s iconic ‘jeepneys’
into battery-operated versions that reduce
emissions in the city.
When the project was first launched, more
than 400 organisations globally were
nominated for the award by passengers,
Emirates’ social media network, universities,
environmental and conservation organisations
and the general public. Applications came
from countries across the Emirates network
and beyond, and spanned environmental
initiatives such as animal, land and tree
conservation, biogas, environmental research,
and green transportation.
Organisations are now invited to submit project
plans describing their project and the impact it
will have on the local environment. Application
forms must be submitted by 7th May 2015.
Individuals who wish to nominate an
organisation for the award can send
the organisation’s name, email address
and contact telephone number to:
greenertomorrow@emirates.com.
More information about the initiative and
application criteria can be found at:
www.emirates.com/greenertomorrow.
To read more about last year’s projects,
please visit: http://www.emirates.com/english/
environment/greener-tomorrow/a-greenertomorrow-2013.aspx
Fast
Facts
Aircraft in fleet
No. of destinations
Passengers*
Cargo*
Passenger Seat Factor*
Employees - Airline*
Emirates flights daily
*2013-14
233
144
44.5 million
2.3 million tonnes
79.4%
52,000
472
Financial Auditor
Financials (Airline)*
Fuel Costs (Airline)*
First flight
New passenger routes in 2015
A380 fleet
Boeing fleet
Oslo
Stockholm
St. Petersburg
Glasgow
Copenhagen
Newcastle
Dublin Manchester Hamburg
Amsterdam
Birmingham
Warsaw
London
Dusseldorf
Brussels
Prague
Liege
Frankfurt Vienna
Paris
Basel
Munich Budapest
Geneva Zurich
Lyon
MilanVenice
Nice
Zaragoza
Rome
Istanbul
Barcelona
Madrid
Seattle
Toronto
New York
Washington, DC
Chicago
San Francisco
Los Angeles
Boston
Lisbon
Atlanta
Dallas/Fort Worth
Houston
Algiers
Tunis
Malta
Casablanca
Moscow
Larnaca
Ouagadougou
Conakry
Abidjan
Quito
Beirut
Amman
Medina
Jeddah
Baghdad
Tehran
Dammam
Bahrain
Doha
Muscat
Buenos Aires
Seoul
Tokyo
Osaka
Malé
Seychelles
Shanghai
Taipei
Hong Kong
Manila
Bangkok
Ho Chi Minh City
Phuket
Kuala Lumpur
Singapore
Jakarta
Bali
Lilongwe
Mauritius
Rio de Janeiro
Johannesburg
Durban
Dubai
Chennai
Bengaluru
Kozhikode
Kochi
Thiruvananthapuram Colombo
Eldoret
Nairobi
Dar es Salaam
Lusaka
Harare
Viracopos
São Paulo
Djibouti
Addis Ababa
Accra
Luanda
Basra
Kuwait
Riyadh
Khartoum
Entebbe
Middle East Network
Erbil
Kano
Abuja
Lagos
Peshawar
Islamabad
Sialkot
Lahore
Delhi
Karachi
Dhaka
Guangzhou
Ahmedabad
Kolkata Chittagong
Hanoi
Mumbai
Hyderabad
Kabul
Dubai
Mexico
Dakar
Beijing
Athens
Cairo
Orlando
PwC
Revenue $22.5bn, profit $887m
$8.4bn
25 October 1985
Bali and Orlando
60 (on order 80)
147 (on order 199)
Cape Town
Route Map
April 2015
Brisbane
Perth
Adelaide
Melbourne
Passenger Routes
Freighter Routes
Passenger & Freighter Routes
---- Upcoming Passenger Routes
Please visit our website for more information on Emirates’ International, Government and Environment Affairs department
www.emirates.com or write to us igea@emirates.com
16
Sydney
Auckland
Christchurch