[SimonS1]

Came through Dubai yesterday. Very quiet at 2pm and the lounge was peaceful.

It must be development time in the GCC, new airport in Doha and big expansions in Kuwait and Jeddah.

[rodders]

LP I would not avoid HIA at the cost of flying down the back!!!
Am using it again tomorrow and Monday

[sleak76]

AnthonyDunn

I remembered your ramblings (June 4th post, page 5 here) about Al-Baker and his comments on opening up LHR 24/7 and people should just live with it.

Well, there’s a great piece of interview with Paul Griffiths (ex-LGW GM and now CEO of Dubai Airports) who seems to imply the same thing:

“I definitely think the least disruptive and most beneficial outcome would be to put a third runway at Heathrow but that could be done in tandem with a couple of other methods, such as extending the operating hours of the airport but only to the very quietest planes, and also using the existing two runways at Heathrow in a fully optimised configuration, which is not currently the practice.”

(source: http://www.arabianbusiness.com/interview-dubai-airports-ceo-paul-griffiths-554546.html)

I see his use of ‘very quietest of planes’ pretty much implies that people should/will live with it.

I wonder if you’ll enjoy bashing Griffiths now for his comments or are we just specifically targeting QR and it’s CEO Al-Baker?

Just wondering.

[AnthonyDunn]

@ sleak76 – 21/06/2014 09:07 GMT

EDITED subsequent to original posting.

It is interesting to note that the new Al-Makhtoum (DWC) airport in Dubai is, unlike the original Dubai (DXB) International airport, well to the south of Dubai city with inbound/outbound flight paths either over the sea or across the desert. The new Hamad International airport in Doha provides over-water flight-paths inbound and outbound on, what appears to be, an at least partially reclaimed coastal site.

We have had plenty of discussions on BT about airport sites around London but the one essential and incontrovertible fact is that, situated where it is, noise from LHR affects hundreds of thousands of residents in close proximity and millions from over-flights. I dare say that it is this situation for a very substantially smaller number of Dubai residents that was a significant factor in the location of the new Dubai Al-Makhtoum airport. Clearly, it is very considerably easier to build and operate an airport in a desert than in one of the most densely populated parts of western Europe but such subtle distinctions appear to have escaped both Al-Baker and Griffiths. Except that, in the case of Qatar, they have opted to build on the coast and without flight paths over Doha…. Possibly a case of “don’t do as we do, just do as we say!” from Al-Baker?

Now, if either Mr Al-Baker or Mr Griffiths were to have suggested that any expansion of LHR operations should be made contingent on an offer of noise insulation to London residents affected by expanded operations, then they might have a leg to stand on. However, neither have: the former arrogantly assumes he can pass on the externalities of his operations to his profit and other people’s cost (in terms of noise) whereas the latter appears, very quickly, to have forgotten the urban geography of his native country. That must be the mind-altering effect of so many tax-free UAE Dirhams.

There was a very revealing comment in the Arabian Business article about the expansion of Dubai’s airports:

“Overtaking Heathrow has been helped by the British government’s inability to decide how — or even whether — to expand the country’s main airport. It is running at capacity, while political infighting — a factor that is, of course, wholly absent in Dubai — has prevented any movement on a resolution”.

The difference between the UK and Dubai, Abu Dhabi, Sharjah and Ras-Al-Khaimah (collectively the UAE) and Qatar, in case you had not noticed, is that the former is a functioning (if imperfect) parliamentary democracy whereas the latter are autocratic absolutist monarchies. Little or no opposition to the ruling families is tolerated and decision making is oh, so much easier. As I have had experience, through the UK military, dating back some twenty years of “how things are” in the Emirates, I feel that this is a pretty fair description.

One other point jumped out of the article about the relative lack of financial transparency for Dubai Airports – to which could be added most of the Gulf carriers. After some 17 years of operations, QR (now fully state owned according to an FT article dated 5 May 2014) has now announced its intention to publish annual accounts. We will see just how much information Al-Baker and the Qatari government decide to reveal.

I have also seen how Emirates Air benefits from its status as a wholly state-owned concern to obtain considerably cheaper finance than can publicly quoted western airlines with shareholders who demand dividends. As was put to me by one investment manager for a major Wall Street bank, it is a statement of the blindingly obvious that Emirates (and the rest of the Gulfies) obtain cheaper loans because their governments are standing right behind them. That is how and why Emirates is just about the most heavily geared airline in the world. It is not yet possible to make any such comment about QR because, hitherto, they have refused to publish accounts. I think that it is far from inaccurate to say that the growth of the Gulfies is a direct result of state-capitalism rather than genuine free-market competition.

I think that I have addressed your rather silly final comment.

[Ahmad]

While I am not keen to flare up this off topic discussion and have no cogent arguments to offer. It seems amazing that I have, for some strange reason, been out of touch with this planet and missed news of Qatar’s accession to the Untied Arab Emirates.

[AnthonyDunn]

@ AhmadAR – 21/06/2014 11:05 GMT

Thank you for pointing out my error – now corrected. Sleak76 directly challenged me and I considered it appropriate to respond. Mind you, since when have BT threads ever and always been totally “on-topic”…?

[Ahmad]

Agreed on both counts. That is why my post was half in jest.

[SimonS1]

Interesting Anthony that you have returned to your old hobby horse of lower costs of borrowing. As you will recall despite having about 6 months to work on it and being challenged several times you have never produced a stitch of evidence to support this.

There was a significant period of time when in fact Government borrowing costs were higher than the airline’s stand alone credit cost (principally 2008-2012) so there would have been no advantage to being treated as a sovereign credit. Indeed concerns are once again surfacing about government risk and yields so this is a situation that may return.

http://www.thenational.ae/business/industry-insights/finance/concerns-for-dubai-as-borrowing-costs-rise

As you also know the airline has also denied receiving any subsidies, something several leading investment banks have confirmed.

http://www.emirates.com/english/images/airlines%20and%20subsidy%20-%20our%20position%20new_tcm233-845771.pdf

So maybe this would be a good time for you to show us the evidence you have been collecting on this subject so you can put us right once and for all. After all as I work in Investment Management and visit Dubai at least 12 times a year you wouldn’t expect me to know much about it.

[AnthonyDunn]

SimonS1

I did not follow up the matter of borrowing costs – of which I do have clear evidence to support my contention – simply because of the manner of the responses. As you may recall, several postings had to be deleted by the BT administrator because of the personally offensive nature of these.

I was one who has previously posted the Emirates’ official response to the allegations of state back-handers. At no point have I ever stated that Emirates (or any other Gulfie) is subsidised – so please do not set up straw men.

You are being rather imprecise in your reference to government borrowing costs: these vary between sovereign entities. To whom are you referring and on what basis?

[SimonS1]

Government of Dubai.

Published debt raisings (sukuk and conventional), ongoing bond yields and credit reinsurance premiums.

When you say “I have also seen how Emirates Air benefits from its status as a wholly state-owned concern to obtain considerably cheaper finance than can publicly quoted western airlines” could you give us some evidence to support this.

[AnthonyDunn]

Tell you what, why don’t we recognise other people’s preferences not to thread diverge and revert back to whichever thread this was originally on? Can you remember at this point in time?

[SimonS1]

You must have taken lessons from VK, Anthony. Make comments that you cannot support or substantiate and then try to change the subject. Impressive.

[sleak76]

AnthonyDunn

Your response back veered so much off topic with rambles on democracy, parliament, government ownership, financial data, etc. that it look like a piñata game – grab a bat and blindly hit right, left and center in hopes that at least one point may score!

Sorry AD but your battered response back makes me see just how much you’re now aware that Al-Baker’s testaments are echoed by others who are native to your homeland.

[LuganoPirate]

I believe, and correct me if I’m wrong Simon, that while (mature/stable) governments can borrow at very low rates, state enterprises, even if they carry the guarantee of government, always pay a few bips more for the slight extra risk (hassle factor I think is the technical term) in case of default.

In this case I’m sure EK would pay more for its loans, even if state guaranteed, than the State itself.

[SimonS1]

Usually the case LP but certainly not always.

In late 2008/early 2009 Government of Dubai risk was priced at around 6%. However EK would not have been paying that. Partly because it was locked into existing deals, partly because it has a long record of profitability (much longer than European carriers) and partly because it is independent of the Govt and would be priced as corporate risk on that basis.

[Author]

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