This week’s featured link:
Emirates president pledges to ‘tough it out’ as airline struggles – Financial Times
I try not to post articles that are behind a paywall too often, but this one is a very good read about the troubles facing Emirates. Of the big three Middle East carriers, Emirates is the largest, the most financially viable, and more concerning right now, the one with the most gigantic aircraft on order. Unlike what you may hear from entities in the US, Emirates doesn’t just have a bottomless pit of money and it does have to respond to market conditions. So what’s it doing? It’s doing the same thing that airlines in the US and Europe have done for years. Emirates is working on cost-cutting, and it’s adding ancillary fees. This is the right response but it’s one that will certainly tarnish the airline’s image to some extent, as has happened to carriers in the US and Europe.
If you can’t access the article, you may want to consider searching for the title online and you should find a way in.
Two for the road:
Webjet Sees Positive Results – Travel Press
I realize this is a couple weeks old, but it’s still worth sharing. Webjet is an online travel agent that did an experiment with Routehappy where it showed product details beyond the usual price and schedule garbage you see on most online travel agents. The result? A big increase in people who purchased the travel. This should be obvious, right? But the more we can get solid data showing the value to online travel agents if they start doing a better job of selling flights, the better chance they’ll change their ways.
Why Airlines Use Tape to Fix Their Planes – Condé Nast Traveler
I love little explainer pieces like this. You’ve undoubtedly seen at least one social media photo showing someone using tape to fix an airplane. It’s not duct tape, and it’s perfectly safe.
5 comments on “3 Links I Love: Emirates Having a Rough Ride, The Power of Rich Content, Fixing Airplanes With Tape”
I don’t think the US airlines ever said that Emirates had a bottomless pit of money to draw on but they have said the ME3 are subsidized. The current woes of Emirates and now esp. Qatar (whether they will admit it or not) doesn’t “undo” whether those carriers were subsidized or not but rather that their governments weren’t willing to increase their subsidies. It is certain that the Middle East travel ban is affected travel and now the split among Middle East countries is having an even larger impact. The ME3 were built in a period of relative stability in a region that hasn’t been stable for millennia and many people in the rest of the world would just as soon avoid flying into a region where planes have to fly around countries that don’t like each other. Add in that parts of each carriers’ route systems have been shut off, and there will be an impact.
The reason why the US3 will keep the pressure up is because Open Skies between the US, Europe, and the UAE and Qatar will continue to allow the ME3 to move planes to US-Europe routes where the market is far more stable. Until that door is closed, the US3 won’t let up.
Their funding is COMPARATIVELY BOTTOMLESS, that’s the problemo … Emirates is ridiculously over extended … a hybrid parasite …
If you go to new.google.com and enter the title of the Emirates article you can get around the paywall.
The article is interesting to have reported news that there really are chinks in the armor of the ME3. I’ve always said that their “back-of-the-bus” product isn’t enough of a differentiator to pull me away from US or European based airlines and I’ve seen on other message boards that their prices aren’t always lower either – many times against European carriers that have direct flights to places in Asia. So…in that sense why would I endure a layover in DXB especially if I’m paying more?
Another perspective I was discussing with a fellow airplane dork is the Emirates fleet and how it is the modern day equivalent of Pan Am having 50+ 747’s in the mid-1970’s. Worked great for PanAm when they had a monopoly on international travel but when they didn’t they needed the feed from non-exsistant domestic operations. Well Dubai isn’t going to provide any feed for that fleet. Not even the entire middle east will so they have to compete on price to get pax out of Europe and N. America.
Emirates fanboys aside (and heck, if I had experienced a shower and private suite on an A380 maybe I’d be a fan too) I think Emirates has to provide ridiculous cheap seats to maintain the monstrosity they are. Can that be profitable too? I’m skeptical.
The thing I don’t like about the Economist’s reporting on the Middle Eastern airlines is that — like other publications — they seem to take their “profitability” claims at face value. Most people in the industry know that’s ridiculous. Emirates “profitability” is very different from profitability achieved by publicly-traded airlines in the rest of the world. Heck, this week I saw several publications report — without eye-rolling — that Qatar Airways just made $538 million. Is there anyone reading this thread who thinks that’s actually true under anything resembling Western accounting standards? This is the kind of profitability you can achieve if I give you $4 billion and you don’t blow through all of it.
With regard to Emirates, nobody — except maybe the Sheiks — knows what their true p&l is. We do know that they do things that would lose absurd sums of money if done anywhere else in the world. That would be flying a massive number of huge aircraft to a hub with a small population, compete against a large number of heavily-subsidized airlines in the same geographical region doing the same thing, offer very low fares but very high levels of premium service, fly ultra-long haul “thin” routes with very large aircraft, and go on a massive growth spree even though all signs point to a slowing local economy. So I think you have to suspend common sense to think Emirates is truly “profitable.” I mean, do you really think that their management is so smart and their business model so fabulous that they can make mega profits on the A380 when nobody else will even touch that aircraft these days? My belief now is that their losses are simply escalating — partly driven by their huge expansion and even worse business conditions — such that even the Sheiks want to stop some of the financial bleeding. Nobody truly has unlimited money to throw at something.
I would also add to the list of woes for the Gulf carriers the emergence of the B787 and A350 which significantly improve the economics of long and thin routes, allowing more nonstop Europe-Asia links to exist at the expense of connecting flights via the Persian Gulf.