Emirates A380 coming into YYZ by BriYYZ on Flickr
Let’s be honest 58 A380s was never going to be enough for Dubai’s ambitions. In case you think I’m being sarcastic, I’m not. Once you get over the shock of such a massive order and start to think about it, 58 is not that many. Currently the ten strong A380 fleet serves London (LHR x2 daily), Paris (CDG), Bangkok, Toronto (x3 weekly), Sydney, Auckland (via SYD), Incheon as well as doing some intra-gulf flying mainly to Jeddah. Assuming that the current complement is well utilized that would leave (only!) 48 frames. Placing these 48 across EK’s currently served destinations will not be that difficult. Many of these destinations already enjoy multiple daily frequencies from DXB. Examining that list would be a good starting point.
Cape Town, Dhaka, Düsseldorf, Frankfurt, Gatwick, Hong Kong, Johannesburg, Karachi, Kuala Lumpur, Male, Manchester, Manila, Mauritius, Melbourne, Moscow, Singapore and Shanghai are all strong candidates to become A380 destinations. Whether all of these spots are A380-ready and whether the authorities/treaties that govern these airports will just take this lying down remains to be seen but EK’s intentions should be clear. At this point it’s just a case of guessing in what order these will come online. Add the additional 32 frames into the mix and only then will you start to struggle to find routes for EK to put them on, but even then not really. At the current dismal delivery rate natural fleet renewal will mean that older 77W frames will be finding new homes and being replaced by A380s.
Beyond the additional 32 A380s the rumored/sort-of-announced intention to order more frames at Farnborough makes things interesting. In all likelihood it will be a modest (by EK standards) 777 renewal order (yes even they acknowledge not every city on earth can support a daily A380) and/or an additional 10 A380s to bring the fleet count there to 100. Say what you will about EK they understand PR!
This “better to have it and not need it” philosophy will work for EK. After all any spares can find homes with EK’s cousin organization DAE and even Senegal Airlines (aka Sri Lankan: the sequel) could probably take one or two for flights to Paris and Marseille in a pinch. Perhaps most importantly by jamming up the order books at Toulouse. EK’s competitors will not be able to get a meaningful A380 fleet put together any time soon.
To me EK’s biggest problem is not going to be finding places to fly the A380, it’s going to be getting foreign governments to yield to their will. I have no doubt that some governments will force addendums to existing bilaterals – replacing frequencies with seat capacities – or at the very least refuse to change existing agreements. If that happens things will get very messy indeed. The UAE-India bilateral is already restricted in this way but more countries will follow suit. Already in battles of attrition with Australia, Canada, Germany and India, Emirates might have to hire as many PR and lobbyist hands as they do pilots to get all those A380s in the air.
I do not think prudent governments will yield to Emirates. They will end up with a lot of unused capacity and planes sitting on the tarmac or being used at loss to try and generate traffic at their Dubai hub.
This could lead to inability to make their loan payments. In turn this will lead to lack of guarantees from export agencies whose guarantees they are currently using to get loans from banks to finance the purchases.
Investment Corp. of Dubai (ICD) owns Emirates Airlines which is in turn owned by the Government of Dubai. According to Reuters the outstanding debt for Emirates Airlines so far is US$3.1 billion. That is fine as long as the airline makes it estimated profit of $500 Million this year.
ICD has outstanding Bonds/Syndicated loans of around US$20 billion. Over 50% of it matures in 2011 and 2012. (Pg. 49, IMF Country Report No. 10/42). There are 10 entities within ICD and most of them are property firms, banks and utilities which are suffering in the depression in Dubai. So ICD is in no position to provide financial assistance to Emirates in 2011/2012 should it require funding to rollover existing loans if it is needed.
Emirates Airlines claim to have made financial arrangements with banks for their orders up to May 2011 (according to Brian Jeffery, SVP for Commercial Treasury for Emirates) . In 2011 US$953 Million in Bonds/Syndicated Loans specifically issued for Emirates Airlines become due according to S&P. In Jun/Aug next year US$277 of the US$953 Million become due. If they default on this then they may have problems honouring their purchase agreements for the planes whose advertised combined list price is US$50 Billion with a lower privately negotiated value.
The prudent governments will see through Emirates' lobbying efforts and understand that in the end their citizens will be losers and eventually their citizens will hold them accountable by voting them out for the decisions they made.
Emirates has been unsuccessfully lobbying Germany for more landing rights similiar to what they are doing in Canada. The Lufthansa spokesperson sums it up as: Peter Schneckenleitner, a spokesman for Lufthansa, said: “This aggressive lobbying against Lufthansa clearly shows that the business of Emirates Airlines is designed to divert traffic from Germany to Dubai.”
http://www.thenational.ae/apps/pbcs.dll/article...
However what is surprising is how easily the lobbyist for Emirates can influence Premier Ed Stelmach and Gordon Campbell who have issued statements supporting Emirates without consulting independent sources.
Transport Canada needs to be careful they do not yield to Emirates and do not yield to pressure from influenced officials in the government.
Also the premiers should be ashamed of themselves for being naive and letting an unregistered lobbyist influence them.
Thanks for taking the time to post. I fully agree that capacity should be watched and dished out carefully. If it's not our aviation market in Canada will implode.
Incidentally you can add David Miller (Mayor of Toronto) to the list of politicians that – for one reason or another, possibly no real reason – are backing Emirates.