Report Says Gulf Airlines Got $39B (With More to Come) in Illegal Subsidies

The subsidies come in forms including cash grants, interest-free loans and favorable contracts with airports, vendors and suppliers funded and generally owned by the governments, the report said. They inevitably reflect close relationships between governments and the airlines, which are often led by the same families and the same individuals.

http://www.thestreet.com/story/13051...-to-come-in-illegal-subsidies.html

This report was funded by AA, DL, and UA. Bad blood? The truth?

If this is all the US3 have, their case is rather weak. All of it, was already known. Most of it, is perfectly allowable in the USA and under WTO. And many of their complaints would be equally damning for several of their alliance partners. Are they concerned at all about collateral?

Quoting clickhappy (Thread starter): This report was funded by AA, DL, and UA.

And it tells them exactly what they wanted to hear? I'm shocked!  

Meanwhile, what's to stop US3 competing with ME3 on all the routes that ME3 fly to the US?

Quoting scbriml (Reply 2): Meanwhile, what's to stop US3 competing with ME3 on all the routes that ME3 fly to the US?

Yield and stats to make shareholders happy.

Quoting clickhappy (Thread starter): This report was funded by AA, DL, and UA. Bad blood? The truth?

Carriers who are always hiding behind chapter 11and abusing employee / suppliers and investor money.

Quoting scbriml (Reply 2): Meanwhile, what's to stop US3 competing with ME3 on all the routes that ME3 fly to the US?

Most of the people flying those routes are connecting again on to another destination. The ME3 are leveraging their location to create connecting hubs, often charging substantially lower prices than US carriers can charge for the direct flights. And it's not as if US airlines can get the same kind of financial incentives to set up their own hubs in the middle east.

I've been reading the various threads regarding the US carriers versus the Middle East 3 over the past few days, and I decided to do a brief, not very scientific comparison of the two carriers of the United Arab Emirates and another small (ish) country that allows open skies, Singapore, and how they compare as nations. I have left Qatar out of this because it would complicate the comparison (and because I'm lazy).

Population (2014)
Singapore 5.4 million
UAE 9.2 miliion
UAE approx 70% more populous

Total GDP (2013)
Singapore 297.9 Billion USD
UAE 390 Billion USD
UAE approx 31% higher GDP

And just for the heck of it, let's take a look at the Office Vacancy Rate for the CBD (data from Jones Lang LaSalle; don't know who they are, but they have a professional looking website, and the was good enough for me).

Singapore 6.1%
Dubai 29.0%
Abu Dhabi 39.0%

This is a basically meaningless comparison (doesn't take in to account total sq footage, etc), but I thought it would be interesing anyway.

Then, I compared the airlines of the two countries (fleet info from Airfleets.com).

Singapore Airlines
Established 1972 (1947 if you include Malayan Airlines predecessor)
Fleet ~ 107 (widebodies) including 19 A380

Emirates
Established in 1985
Fleet ~ 230 (widebodies) including 58 A380

Etihad
Established in 2003
Fleet ~ 108, including 78 widebodies plus 1 A380

Singapore Airlines has been around about as long as the other two airlines combined.

Total Home-based Fleet
Singapore 107
UAE 338
UAE has a fleet 216% larger than Singapore (serving a population 70% larger)

Yes, I know...total fleet doesn't take in to account generally recognized measrements, like ASMs or seats available per dept. Again, I'm lazy.

Well, does the traffic justify the larger fleet? (Total PAX, 2013 (AUH 2014))
SIN 53.7 million
DXB 66.4 million
AUH 20.0 million

So, the two carriers of the UAE have a fleet that's more than 200% larger to serve a population that 70% larger and passenger traffic that's 61% larger.

Both countries are geographically well positioned at the crossroads of both human and commercial movement, albeit somewhat different flows.

Singapore Airlines serves 4 cities in the United States, while Emirates and Etihad serve 13 (some are the same). Yes, Singapore is further from the US than the UAE.

At a glance, it would seem the larger population, GDP and passenger numbers of the UAE versus Singapore doesn't justify the much larger fleet size of the two carriers of the UAE. I know...this quick glance leaves out load factors, RASM, fifth freedom traffic, etc. I'm sure someone can poke all sorts of holes in to this.

But it still raises questions, at least for me.

Particularly the one about financing.

Quoting LawnDart (Reply 7): But it still raises questions, at least for me.

Take that same analysis to the Netherlands and KLM. They are about on par with the ME3 in the context of TATL traffic. Very much outsized in regards to the size of their home market (the Netherlands). And this was much before the EU decided to roll up their aviation markets into a single one.

The reality is that aviation matters to some countries substantially more than others. The argument being made, when suggesting that the size of the aviation sector should be proportional to population, is that every country should develop along the same economic model. That's, prima facie, just not realistic. And it will be very hard to argue, at places like the WTO, that this should be the case. It'll be shot down pretty quick. Employing comparative advantage (in the case of the ME it's location) is a foundational principle of economic development. China deployed vast sums of cheap labour in manufacturing. Singapore used strategic location in the Malacca Straits to become a regional shipping powerhouse, and then later an aviation hub. America has always used capital and intellectual property. I struggle to see how someone could then argue that the Middle East should not use the majaor advantage they have: location.

Quoting YTZ (Reply 3): Yield and stats to make shareholders happy.

The passengers are clearly there, as Tim Clark said, the US3 need to up their game.

Quoting silentbob (Reply 6): The ME3 are leveraging their location to create connecting hubs

How dare they! But, they're not doing anything the US3 aren't doing from their own hubs. The ME3 just have a massive geographical advantage. That doesn't make it unfair.

Quoting silentbob (Reply 6): And it's not as if US airlines can get the same kind of financial incentives to set up their own hubs in the middle east.

I don't believe there's anything to stop any of the US3 setting up a hub in Dubai and enjoying exactly the same advantages EK does.

Quoting LawnDart (Reply 7): At a glance, it would seem the larger population, GDP and passenger numbers of the UAE versus Singapore doesn't justify the much larger fleet size of the two carriers of the UAE. I know...this quick glance leaves out load factors, RASM, fifth freedom traffic, etc. I'm sure someone can poke all sorts of holes in to this.

But you're kind of missing the point. All these airlines are connecting large masses of population via their geographically ideal hubs. Singapore started it and the ME3 (especially EK) have taken that idea and expanded upon it. So the size of their home populations and GDP really has no bearing on the numbers of passengers they're moving from A to B via their mega hubs.

Quoting LawnDart (Reply 7): At a glance, it would seem the larger population, GDP and passenger numbers of the UAE versus Singapore doesn't justify the much larger fleet size of the two carriers of the UAE.

I am not sure population is any kind of measure in this context. Nations do not share all businesses on equal basis. Some do more business on aviation, others more on iPad production, yet others more on car manufacture.

And we are not talking about travel to the place, we are talking about a transport service from point A to point B in the world. This is particularly true of things like flight services across a hub. The hub location doesn't matter... it can be anywhere, like DXB or RKV or HEL or LHR... the point is to provide a service. If someone is good at selling iPads or cheap flights, they will gain market share in the world. And if you do not believe in this model, why do we allow things like Frankfurt or Heathrow to exist? They are taking over an unfair share of the continent's traffic! 

Now, if someone was gaining market share on some product because they got a lot of money from the government to take over the market... that would be bad. But I'm not sure that is what is happening here. What if someone was making a good business because they had cheap labour and good infrastructure... that would be just natural, and exactly what is happening in various businesses around the world, in your country and mine. And UAE. All the power to them.

Cheers,

AirlineCritic

I'm curious about the tax issue. How much do the ME3 pay in taxes? How much do US airlines pay in taxes?

Quoting scbriml (Reply 9): How dare they! But, they're not doing anything the US3 aren't doing from their own hubs. The ME3 just have a massive geographical advantage. That doesn't make it unfair.

I never said that it was unfair. However, it does show why US airlines are unable to compete directly.

Quoting scbriml (Reply 9): I don't believe there's anything to stop any of the US3 setting up a hub in Dubai and enjoying exactly the same advantages EK does.

Are the governments in those nations going to subsidize the infrastructure and operations for the US3 as well? If so, then I agree with you. Perhaps then they will be able to take advantage of the Ex-Im loans as well.

Quoting silentbob (Reply 13): Are the governments in those nations going to subsidize the infrastructure and operations for the US3 as well? If so, then I agree with you. Perhaps then they will be able to take advantage of the Ex-Im loans as well.

All airlines are using EXIM-style finance, whether for the entire aircraft or components. If they are not, they need to review their finance.

If EXIM-style finance is not having the desired impact / benefits, change the qualifying rules. Don't complain that customers are using your rules, to access the benefits offered.

For example, if you were ill, and your health insurance permitted home cleaning and maintenance, up to USD1,000 a week for 3 months, even if you didn't need it, I'm sure 99% of the population would take up the offer. Or when the Government ran the car scrapping scheme, you would find yourself a worn out runner to get the extra discount on a new car.

Change the rules if you don't like how they are used.

Quoting silentbob (Reply 13): Are the governments in those nations going to subsidize the infrastructure and operations for the US3 as well? If so, then I agree with you. Perhaps then they will be able to take advantage of the Ex-Im loans as well.

I am sure that a US airline flying to Dubai will use the same infrastructure as EK. Did US3 build all these airport in US?

At the end of the day, all of this comes down to corporations' usual desire to maximize their profits by reducing the competition and screwing the consumers in the process.

As for this subsidy talk, I have not read one single concrete example of what they are so far.

[Edited 2015-02-20 14:20:27]

Quoting planesmart (Reply 14): For example, if you were ill, and your health insurance permitted home cleaning and maintenance, up to USD1,000 a week for 3 months, even if you didn't need it, I'm sure 99% of the population would take up the offer. Or when the Government ran the car scrapping scheme, you would find yourself a worn out runner to get the extra discount on a new car.

Actually, I didn't try to game the system to get an extra discount when they ran that program, nor would I apply for an insurance benefit that I didn't need. I seem to have a different ethical standard than some other people.

Quoting PacificBeach (Reply 15): I am sure that a US airline flying to Dubai will use the same infrastructure as EK.

I would expect that as well. My reference was to the interest free loans and covering losses until the operation becomes profitable.

Quoting silentbob (Reply 17): I seem to have a different ethical standard than some other people.

Quite a few here become very ethical when it comes to the ME3. What I disagree with is the insistence that such ethics should be imposed on others. How is that different than imposing religious views on others?

I'm a guy who buys groceries at farmer's markets, occassionally buys locally made clothing, etc. Should I be arguing that imported produce and clothing should be banned?

Quoting silentbob (Reply 17): I would expect that as well.

I have long said, that the Western carriers could easily set up subsidiaries there and take advantage of cheaper labour and lower taxes and use that to fly to South Asia and other places. Why not call the ME3 bluff?

Quoting silentbob (Reply 17): My reference was to the interest free loans and covering losses until the operation becomes profitable.

When was the last time EK got an interest-free loan or was unprofitable? Serious question. I might buy the argument for EY and QR. But with EK? I think they've basically been profitable since day one. They have a massive core market (Dubai-South Asia) that should be profitable all year round.

Going to the actual substance of this report.

How exactly are they going to argue that infrastructure investment by a government, low corporate taxes, and volume discounts are subsidies?

That's what I'm curious about.

Quoting YTZ (Reply 19): How exactly are they going to argue that infrastructure investment by a government, low corporate taxes, and volume discounts are subsidies?

Well now we are cooking. Any one with any amount of enterprise sales know that high volume customers do get crazy discounts.

So why EK claiming they are paying same as others at DXB?

Now that we agree on volume discounts, how about EK's subscription to family discount plan.Can UA/DL or AI qualify for the family discount plan???


Many would/should not have any issue with the benefits ME3 receive.
Most benefits like volume discounts are common even in free/open markets.
Some benefits are common for state owned entities.


The unfettered forever denial is getting on every one's nerves and now every one digging for details.

While trying to create an utopian world of magical airline management kingdom, they dug themselves deeper.

Quoting dtw2hyd (Reply 20): Quoting YTZ (Reply 19): How exactly are they going to argue that infrastructure investment by a government, low corporate taxes, and volume discounts are subsidies? Well now we are cooking. Any one with any amount of enterprise sales know that high volume customers do get crazy discounts. So why EK claiming they are paying same as others at DXB? Now that we agree on volume discounts, how about EK's subscription to family discount plan.Can UA/DL or AI qualify for the family discount plan??? Many would/should not have any issue with the benefits ME3 receive. Most benefits like volume discounts are common even in free/open markets. Some benefits are common for state owned entities. The unfettered forever denial is getting on every one's nerves and now every one digging for details. While trying to create an utopian world of magical airline management kingdom, they dug themselves deeper.

You have a Bee in your Bonnet. For the airport DXB to give Emirates discounts is like moving money from your left pocket to your right pocket. The airport is owned by "Dubai corporation", Emirates is owned by "Dubai Corporation". It would only make the outcome better for Emirates on the cost to have a worse outcome at DXB. Null sum game.
Again, Emirates will be one of the corporations in Dubai bringing in the money to do things like airport expansion.
Where should Dubai find the money in a post oil economy?

Quoting dtw2hyd (Reply 20):

I just lol'ed at the crap you posted

Quoting scbriml (Reply 9): I don't believe there's anything to stop any of the US3 setting up a hub in Dubai and enjoying exactly the same advantages EK does.

The UAE might allow this, but not so much the other countries involved. Why would Australia allow Delta to fly between Australia and the UAE? Obtaining these Seventh Freedom rights in any meaningful amount are the issue.

Quoting YTZ (Reply 16): The US3 just aren't happy about losing the free gravy that comes from channeling lots of these pax through their JV partners and making easy money.

And here I believe we have a winner. The US3 might see the upcoming A380 from Milan to JFK as a threat to their current JV gravy train and if the other 2 airlines join the fray the free ride they have enjoyed, with their partners, will be over and competition will lower fares.

Quoting LawnDart (Reply 7): Both countries are geographically well positioned at the crossroads of both human and commercial movement, albeit somewhat different flows.

Yes, but DXB is better located for traffic from India to the US. The also have flights from the EU to Africa and US to Africa, where Singapore cannot compete. I think both SIN and DXB/AUH has great benefits due to their location, but the ME3 edges it by having more routes that they are able to serve.

Quoting YTZ (Reply 18): Quite a few here become very ethical when it comes to the ME3. What I disagree with is the insistence that such ethics should be imposed on others. How is that different than imposing religious views on others?

That response was to the question directed at me, not in regards to the ME3.

Quoting YTZ (Reply 18): I have long said, that the Western carriers could easily set up subsidiaries there and take advantage of cheaper labour and lower taxes and use that to fly to South Asia and other places. Why not call the ME3 bluff?

I believe that the contracts with the pilots (and perhaps other workgroups) prohibit that with the US carriers. I don't know what the European contracts are like, but I would assume that there would be similar issues. I believe that the entire industry will get more creative if the Norwegian dispute gets resolved in their favor.

Quoting YTZ (Reply 18): When was the last time EK got an interest-free loan or was unprofitable? Serious question. I might buy the argument for EY and QR. But with EK? I think they've basically been profitable since day one. They have a massive core market (Dubai-South Asia) that should be profitable all year round

My understanding is that it is no longer an issue with EK. However, I was under the impression that they were heavily subsidized by the government in the formative years and the access to cash is what allowed them to grow so rapidly and reach the economy of scale that allowed them to be profitable.

Quoting YTZ (Reply 19): How exactly are they going to argue that infrastructure investment by a government, low corporate taxes, and volume discounts are subsidies?

They're simply throwing everything they can think up at the wall to see what, if anything, sticks.

Quoting mjoelnir (Reply 21): Where should Dubai find the money in a post oil economy?

And there is the reason for it. Dubai is trying to build up the infrastructure to support the area once the oil dries up. They are simply doing to try and survive as a relevant nation.

I'm not against the ME3 or any other carrier for that matter. What they have done is impressive, to say the least. My only issue is that Open Skies treaties should only be signed when it benefits the people of both nations equally and I don't feel that there is nearly as much benefit to having that type of agreement with the UAE (among others).

Quoting strfyr51 (Reply 12): So it's a matter of service is it? HARDLY!! with airlines like Jet Blue and Virgin America taking YEARS and losses to gain market share the ME3 just bought airplanes had a HUB built For them and are trying to BULLY their way into Everybody ELSE'S Markets as they have NONE of their OWN. It's not a matter of Service While AofA (airlines of America) Have to make a profit and look at sustaining themselves in Competition, The ME3 Carriers Are trying to use straight financial threats to get into markets with Excess capacity they can sell CHEAP. Solely because they don't have the market in their OWN region they can count on to sustain them.. And if you Doubt me? Let them NOT fly to the USA and see how long they Last. We ALL know who caused 9/11 and where they came from. They didn't need a free ride when they had plenty of oil. No NEED for a free ride NOW!!

I don't know where to start. What utter horsecrap.   

Quoting dtw2hyd (Reply 20):

See above.

Quoting YTZ (Reply 19): Going to the actual substance of this report.

You have it? Please share with us. A google search for it returned nothing to me.

Quoting silentbob (Reply 25): And there is the reason for it. Dubai is trying to build up the infrastructure to support the area once the oil dries up. They are simply doing to try and survive as a relevant nation.

For Dubai it has already dried up. At least the last ten years there has not been oil money to spend on an money loosing airline. The USA lives to a higher percentage of oil than Dubai.
Yes Qatar has oil and Abu Dhabi has oil.

Quoting silentbob (Reply 25): My understanding is that it is no longer an issue with EK. However, I was under the impression that they were heavily subsidized by the government in the formative years and the access to cash is what allowed them to grow so rapidly and reach the economy of scale that allowed them to be profitable.

My understanding is, EK got there initial investment, yes the investor was the Government, and has made money ever since.

Quoting silentbob (Reply 25): Quoting YTZ (Reply 19): How exactly are they going to argue that infrastructure investment by a government, low corporate taxes, and volume discounts are subsidies? They're simply throwing everything they can think up at the wall to see what, if anything, sticks.

But that is the big part of the quoted 39 billion so called "subsidies", infrastructure projects

Now I read all this thread that is about a report claiming that the Gulf Airlines have got 39 Bio $ subsidies.

Not a single reply has questioned any of the numbers adding up to this sum, so please, either tell us which subsidies are legal, or accept that that the Gulf Airlines have got 39 Bio $ subsidies, ending the discussion about this topic once and forever.

Until it is proven that this report contains only false numbers, and please show this to us, for me it is clear that these giant subsidies are not for buisiness purposes, but for the political purpose of getting control of base infrastructure of the free world into the hand of Arabic dictators.

Quoting Enzo011 (Reply 24): Quoting LawnDart (Reply 7): Both countries are geographically well positioned at the crossroads of both human and commercial movement, albeit somewhat different flows. Yes, but DXB is better located for traffic from India to the US.

Plus that the UAE have a lot of desert space in which to expand their airports. The planned mega-airports would be hard to duplicate in Singapore, or any other densely populated part of the world (with the possible exception of China).

The gulf states in my perspective runs a intelligent policy.

What do we do the day the oil is over or to low in price to support us. I wished someone told Mr Putin to do the same and Russia today would not stand and fall with oil price and be so unstable politically.

Norway has created a fund like Dubai for the rainy day that invests in projects on behalf of Norway. Chile with Corfo do the same etc.

If ME3 and the whole Arab world become3s integrated in trade with a high standard middle class the countries will be more stable and even bigger market for USA and EU trade.

In face most countries moving into developed world has been doing the same: Sweden for example sold Iron and invested into industry.

With time and development middle class, women etc in these countries will demand human rights, a living standard and health care for their children that is in level with USA, EU but we need to accept 15-20 years until we are there.

I think considering this that what ME3 is doing is great and we will avoid civil war when the oil is not there any more and we can invite them into world trade on equal basis.

Quoting clickhappy (Thread starter): Report Says Gulf Airlines Got $39B (With More to Come) in Illegal Subsidies

I wonder if this is the type of report that makes the likes of Richard Anderson wet himself before commenting on the ME3?  

Quoting Burkhard (Reply 30): Now I read all this thread that is about a report claiming that the Gulf Airlines have got 39 Bio $ subsidies. Not a single reply has questioned any of the numbers adding up to this sum, so please, either tell us which subsidies are legal, or accept that that the Gulf Airlines have got 39 Bio $ subsidies, ending the discussion about this topic once and forever. Until it is proven that this report contains only false numbers, and please show this to us, for me it is clear that these giant subsidies are not for buisiness purposes, but for the political purpose of getting control of base infrastructure of the free world into the hand of Arabic dictators.

I just challenged the numbers, one up from your reply. For the biggest part they include infrastructure. Is building and expanding airports in Germany, infrastructure, a subsidy for Lufthansa or Air Berlin? Can we write the cost of BER as subsidies to Air Berlin and the cost for building and expanding FRA and MUC as a subsidy on Lufthansa?

If this are subsidies, than not one country is not subsidising its airline or airlines. This report is rubbish.

Quoting clickhappy (Thread starter): Report Says Gulf Airlines Got $39B (With More to Come) in Illegal Subsidies

Yawn, this is news why? Everyone knows ME carriers get highly favorable financial incentives, starting with the fact that they don't pay taxes. Move on, nothing to see here.

Quoting mjoelnir (Reply 21): You have a Bee in your Bonnet. For the airport DXB to give Emirates discounts is like moving money from your left pocket to your right pocket. The airport is owned by "Dubai corporation", Emirates is owned by "Dubai Corporation". It would only make the outcome better for Emirates on the cost to have a worse outcome at DXB. Null sum game.

It is Zero Sum Game for Emirates or for the family. Not for other competing airlines @DXB.

"Assume" EK has 20% less aircraft acquisition costs and 30% less operations cost over competition @DXB.

So on DXB-LHR A380 route BA is at significant disadvantage over EK.

"Assume" destination airport like DFW/MIA offers incentives to foreign carriers at their airport.

Any us carrier trying to operate DXB-DFW/MIA will have bloated cost structure compared to EK.

Again this whole thing started with "efficient management" crap EK spinning as the main reason for its success, while reaping hidden benefits.

"We pay same as others at our hub airports" is also a blatant lie ME3 and its paid PR promoting for years.

So what if they got $38B in subsidies? How is that affecting the consumers or these three airlines anyway? Is anyone or anything preventing these airlines from operating more flights to the ME. The few flights they have are always full so I do not understand all this complaining. I wish they would add another flight to DXB from Newark instead of having to go through IAD.
Finally how can you possibly complaint about your competitors when you have 8 seats across in Business.

Quoting strfyr51 (Reply 12): It's not a matter of Service While AofA (airlines of America) Have to make a profit and look at sustaining themselves in Competition, The ME3 Carriers

And the airlines of America are making a profit. There's been a thread posted about each one each quarter it seems.

It's not much that they're losing to the ME3 anyways! You have the low yield India stuff (which let's be frank, DL and AA failed that since they didn't have connections within India to the fairly dispersed populations, or did they? UA is doing fine since they have 9W and now AI). And then you have DXB/AUH/DOH, and then what else? Maybe some southeast Asian stuff? Maybe a handfull of other middle eastern destined passengers?

So they got $39B. I say: Good for them! Their governments value the benefits that the airline brings, including giving people a nonstop option to their nation rather then having to do some absurd connection in LHR or FRA, and giving another much higher quality alternative to some nations beyond. They serve a niche and they serve it extraordinarily well. The consumer is the one that benefits by getting a lower price on a superior product to that niche, and I'll bet that the US Government knows this quite well, and that if EK is driven out, then we're left without any good options other than some other silly connection.

Quoting dtw2hyd (Reply 36): "Assume" EK has 20% less aircraft acquisition costs and 30% less operations cost over competition @DXB.

Lets not assume

Quoting dtw2hyd (Reply 36): "Assume" destination airport like DFW/MIA offers incentives to foreign carriers at their airport.

Airports the world over want more airlines flying international routes - and they offer route subsidies to get them. Nothing new, nor hidden on this.


Airlines right around the world are subsidised in one way or another by their governments. US government workers can only fly US carriers for example. The chinese subsidise airlines and routes for regional development in a far less opaque way than what happens in the gulf - so why don't A for A go after them? (afraid to - thats why!) - lets not get started on India. Who pays for the development of Atlanta at lower than private return on investment rates for example - Georgia!

The whole tax arguement is crap - should all countries with lower tax rates than the US be banned from operating?

Quoting dtw2hyd (Reply 36): Quoting mjoelnir (Reply 21): You have a Bee in your Bonnet. For the airport DXB to give Emirates discounts is like moving money from your left pocket to your right pocket. The airport is owned by "Dubai corporation", Emirates is owned by "Dubai Corporation". It would only make the outcome better for Emirates on the cost to have a worse outcome at DXB. Null sum game. It is Zero Sum Game for Emirates or for the family. Not for other competing airlines @DXB. "Assume" EK has 20% less aircraft acquisition costs and 30% less operations cost over competition @DXB. So on DXB-LHR A380 route BA is at significant disadvantage over EK. "Assume" destination airport like DFW/MIA offers incentives to foreign carriers at their airport. Any us carrier trying to operate DXB-DFW/MIA will have bloated cost structure compared to EK. Again this whole thing started with "efficient management" crap EK spinning as the main reason for its success, while reaping hidden benefits. "We pay same as others at our hub airports" is also a blatant lie ME3 and its paid PR promoting for years.

Could you give just some titzi tiny little bit of evidence for the nonsenses that you are spouting?

In other related news, from Politico: on Tuesday, the President will host the Amir of Qatar, His Highness Sheikh Tamim bin Hamad al Thani, at the White House.

I wonder if any of these pending issues will be brought up. My guess is no.

I oppose the lower taxes in US over what we have to pay in EU; that's clearly a subsidy.

Also, there is no justice in that central European airports are at the centre of the continent, whereas places like HEL are on the edges, and not very convenient for intra-EU travel. Blatant favouritism by geography.

I have also experienced many airports that have been built (gasp!) before the airlines that now use them were founded. It should only be legal to use infrastructure that you have yourself created, and paid for.

Quoting mjoelnir (Reply 38): Could you give just some titzi tiny little bit of evidence for the nonsenses that you are spouting?

Really? Isn't this thread about recently found evidence??

The evergreen non-sense is Harry Potter's sorcery AKA "efficient airline management", is the single reason for EK's success.

Now that myth is busted.

Quoting dtw2hyd (Reply 41): Quoting mjoelnir (Reply 38): Could you give just some titzi tiny little bit of evidence for the nonsenses that you are spouting? Really? Isn't this thread about recently found evidence?? The evergreen non-sense is Harry Potter's sorcery AKA "efficient airline management", is the single reason for EK's success. Now that myth is busted.

If you accept building and expanding of infrastructure, in this case airports, as evidence for subsidies.

Can we just conclude that Wall Street is getting a dose of its own medicine?
They want Boeing to sell airplanes. Then they complain about flights to India not being profitable enough for the US carriers. Then they want Airbus to sell planes. Then they complain about ME3 conquering Earth.

I thought 787 was the medicine against ME3? Flyover sandbox country. What gives?

Get to work US3. Stop your Soviet era Aeroflot style political meddling! It's getting creepy!

Quoting planesmart (Reply 13): All airlines are using EXIM-style finance, whether for the entire aircraft or components. If they are not, they need to review their finance.

I don't think that's true. US and EU airlines cannot use the corresponding Exim bank financing for purchasing Airbus and Boeing planes respectively. That's part of DL's gripe - Exim financing is available to the ME3 to buy both Airbus and Boeing planes, but it's not available to the US3 for either.

Quoting dtw2hyd (Reply 41): Isn't this thread about recently found evidence??

It's about a report that was commissioned by the US3 and tells them exactly what they want to hear.

So, let me ask you - have you read the report yourself? Otherwise all you have is an online article about a report.

Quoting scbriml (Reply 44): Exim financing is available to the ME3 to buy both Airbus and Boeing planes, but it's not available to the US3 for either.

Just to be clear Qatar never used US EXIM finance. I cannot recall about EY.

Quoting scbriml (Reply 44): So, let me ask you - have you read the report yourself? Otherwise all you have is an online article about a report.

This report is not public yet, but report about aircraft acquisition is already available.

EK pays ~3.41%
Market finance - ~6.17%

About airport handling charges for a 77W (DXB retail as base, not EK discounted price)

DXB - 100%
SIN - 127%
DEL - 230%

This is based on latest LeighFisher study.

DEL a $2 Billion privately owned and operated airport has to charge so much more than DXB ($17 Billion investment).

Quoting dtw2hyd (Reply 18): The unfettered forever denial is getting on every one's nerves

And your unfettered claims to the contrary aren't?

Quoting silentbob (Reply 23): However, I was under the impression that they were heavily subsidized by the government in the formative years and the access to cash is what allowed them to grow so rapidly and reach the economy of scale that allowed them to be profitable.

You mean when they started, and service providers, parts suppliers, airports and offshore fuel suppliers insisted on payment up front / no credit / no discounts? How fortunes have changed.

Quoting dtw2hyd (Reply 45): This report is not public yet, but report about aircraft acquisition is already available.EK pays ~3.41%Market finance - ~6.17%

Surprise, surprise, not all borrowers enjoy the same margins due to risk, management, projections, politics.....

Quoting peanuts (Reply 43): Can we just conclude that Wall Street is getting a dose of its own medicine? They want Boeing to sell airplanes. Then they complain about flights to India not being profitable enough for the US carriers. Then they want Airbus to sell planes. Then they complain about ME3 conquering Earth. I thought 787 was the medicine against ME3? Flyover sandbox country. What gives? Get to work US3. Stop your Soviet era Aeroflot style political meddling! It's getting creepy!

Boy, talk about conflation! Is it Wall Street? Is it Boeing? Is it the Big Three U.S. airlines? Why not through in Airbus??
The bogeyman is everywhere!   

yeo

Quoting yeogeo (Reply 47):

That's just it! It's al related. Everyone sleeps with everyone so to speak. The mighty buck stops at the financial markets. Boeing is there for the investor. US3 is there for the investor. Period.
The rest is all noise. You're being played.
Airlines crying wolf? Pfff...

It's the investor that has their hands in all of it that wins. And here we argue...the suckers that only have a one sided stake in it. Go figure.

Quoting YTZ (Reply 1): If this is all the US3 have, their case is rather weak. All of it, was already known. Most of it, is perfectly allowable in the USA and under WTO. And many of their complaints would be equally damning for several of their alliance partners. Are they concerned at all about collateral?

Reading that, the case against EK is EXTREMELY WEAK. I think even the simplistic outside observer can see that QR can't make money with no local market at all and EY can't have the money to buy up all these other airlines with market rate loans. Having said all of that, this is par for the course. The Chinese airlines have unlimited access to capital and another airline is bailed out globally every week.

Quoting silentbob (Reply 6): Most of the people flying those routes are connecting again on to another destination.

DXB is not more heavily connecting than CLT, DOH is like 97% connecting.

Quoting scbriml (Reply 9): I don't believe there's anything to stop any of the US3 setting up a hub in Dubai and enjoying exactly the same advantages EK does.

They can;t operate a real hub there because they don't have rights beyond because we won't give their airlines rights beyond the USA, but I agree the rates are likely the same there.

Quoting YTZ (Reply 16): When was the last time EK got an interest-free loan or was unprofitable? Serious question. I might buy the argument for EY and QR. But with EK? I think they've basically been profitable since day one. They have a massive core market (Dubai-South Asia) that should be profitable all year round.

I think the attempt here is to use guilt by association against EK. EK has clean hands and is the real target. EK is demonstrably profitable. The others are much more questionable.

Quoting YTZ (Reply 17): How exactly are they going to argue that infrastructure investment by a government, low corporate taxes, and volume discounts are subsidies?

I said this in another thread, but DXB has massive revenue from duty free. I'm surprised there is any rent at all for the airlines.

Quoting dtw2hyd (Reply 18): So why EK claiming they are paying same as others at DXB?

Rates are not equalized even in the USA. UA just got a huge abatement in DEN that 90% only benefited them.

Quoting mjoelnir (Reply 26): My understanding is, EK got there initial investment, yes the investor was the Government, and has made money ever since.

Or at least it has been a long time since they were unprofitable. The U.S. carriers had their pensions taken over by the U.S. govt since EK probably last lost money.

Quoting mjoelnir (Reply 42): If you accept building and expanding of infrastructure, in this case airports, as evidence for subsidies.

Isn't the State of NY paying for building new terminals in New York because the Port of NY/NJ wouldn't/couldn't?

Quoting dtw2hyd (Reply 45): This report is not public yet, but report about aircraft acquisition is already available.

I'm surprised they pay anything on the A380s. No interest loans are not any more unusual on airplanes than on cars. That's how you sell these things routinely.