[superchris]

The provision of a proper Y+ product is frankly the only USP most carriers have against the Gufies right now.

The Gulfies, for reasons completely unknown to me have completely shunned the very suggestion of a Y+ product and work hard to upgrade C / downgrade Y with alarming speed.

I applaud AA’s decision to implement a proper Y+ cabin and if United had any sense they would be doing the same.

[SimonS1]

I suspect the ‘reasons unknown’ are that the ME airlines can fill regular Y seats, even with 10 across. I’d be surprised if there was a business case for Y+.

[MrMichael]

Am on the fence on this one. I think the ME3 are heavily supported by their respective governments, but so are some European Airlines such as AF, LH, to the extent they can borrow cheap, the lenders knowing the respective governments would not let them default. The American carriers are indeed whiners, but in this case maybe, just maybe, have something to moan about. BA, what a great company, my shares doing very well, market share on routes is good, product a solid 3/4 star, only invest when they see a return, no chavvy bling to be seen. To be honest EK reminds me of Vicki Pollard……..am I bovered!

[PhilbLND]

I know this is a contentious issue and my view on it are as follows:
1) the legacy carriers in Europe and US have reduced their product offering to such a low level it is not a surprise customers are now less loyal and will shop around – this is only the fault of these airlines no one else
2) as someone who is gay and given the extremely poor record of both the governments and the airlines from the Middle East on this area I do genuinely have an issue with spending my hard earned money with a company / govt. that actively would discriminate me and especially their own workers and citizens who happen to be gay
3) I do also think there is some truth in the argument that the ME3 have certain financial benefits by being based where they are.
I had a quick look at the most recent full year annual statements from BA (not IAG) and also Emirates. Top level numbers look as follows:
BA
Sales 11719m
Employee costs 21% of sales
Cost per employee 57k
Fuel 30% of sales
Profit before tax 859m 7.3% of sales
Tax 157m 18% of profit

Emirates (converted to GBP at today’s rate5.6)
Sales 15487m
Employee costs 14% of sales
Cost per employee 37k
Fuel 31% of sales
Profit before tax 852m 5.5% of sales
Tax 8m 1% of profit

As you can see there are very big variances on employee costs and also tax paid.

This makes sense given lower salaries for crew, not social charges like national insurance and finally no corporate tax. clearly certain advantages and we also know there borrowing costs for new planes are generally on more favourable terms through state support.
I would argue it is not a level playing field but until the legacy carriers up their game customers will continue to vote with their feet (bums).

[BEYbrit]

I have two previously unmentioned reasons why EK is so popular in the UK (and QR too – especially with it’s expansion to BHX as well as MAN and EDI)

1. People who just fly them for vacation actually like flying long haul from their ‘own’ airports – they like the cachet of being on the ‘luxury’ flight and enjoy the fact that such an airline has brought such a product to their doorsteps.

2. If you have to break your journey somewhere – and let’s face it, flying long haul from the UK regions ALWAYS means doing that – then you may as well transfer somewhere where there’s good shopping, a bit of exoticism, good customer service, modern facilities…anything is better than the schlep across FRA or CDG….

Anyway, voila my two penneth.

[LuganoPirate]

Very interesting figures Philb. It rather quashes the myth that EK receive fuel at preferential rates. Yes, they have a lower staff cost, but if you take into account much lower social premiums, 1% in UAE v 12% (I believe) in the UK, lower cost of living and low/no tax on salary, then I’d wager the EK take home wage is similar to the BA one?

[LuganoPirate]

Someone also mentioned shareholder value. I wonder where the value is in so annoying your customers they go to the competitor? Surely it’s better to offer excellent service, clean modern cabins, friendly crew and good victuals thus keeping your customer base and adding many more? That surely adds shareholder value!

[LuganoPirate]

Absolutely correct BEYbrit. This is especially so when the flight is all Y and your long haul is in a premium cabin, and you get all the restrictions on your cabin bags such as one piece only even though your onward flight allows 2 pieces of carry on.

[canucklad]

Morning BEYbrit
A reply to your point about the regions, as someone who has used various methods to fly long haul eastwards I’ve come to the conclusion that a short hop, followed by one long haul is preferable to 2 long haul flights. I personally find DBX & IST horrendous, but preferable than CDG. Having said that you’re totally right, the foreign carriers who have set up shop are being rewarded by the local populace, and I’ve no doubt building a loyal following for those Scot’s that frequently travel overseas. As Kevin Costner discovered , Build it, and they will come.
Was really hoping CX would consider a triangle routing via EDI when they announced LGW!

Morning PhilbLND
Cheers for the figures, very interesting. And here’s my take. EK will invest their profit margin in maintaining their small touches to make flying with them more pleasurable, but BA, driven by IAG shareholder obsession will continue to cut, and invent new ancillary charges to increase their profit margin. Because BA can’t afford to only make 750m next year otherwise the city analysts will deem them as having a bad year. It’s a bonkers economic philosophy, but BA is now trapped in it, whereas EK isn’t.

[PeterCoultas]

As a paying passenger I don’t want BA etc to charge substantially more than it costs the airline to transport me – why should I pay their grasping shareholders if I can benefit from heavily subsidised flights (better food, comfort etc) on other carriers? The only problem is that the gulf stop-over hardly appeals..

[PhilbLND]

LuganoPirate, I think you would probably be correct regarding the take home pay for staff. Probably similar as for uk staff but at a much lower gross cost to the airline.

With regards to fuel costs I just looked at top level numbers and one would need to look further at fuel costs per km flown for example to see the real true costs. But on the simple % of sales metric looks comparable to BA.

Canucklad, totally agree. IAG is right to prioritise shareholder returns but when the shareholder(s) of your competitors are happy to re-invest those profits, to build more loyal customers, and you are not doing that then in the long term there is a very high probability of declining returns for your shareholders.

[FDOS_UK]

TominScotland – 10/12/2015 18:18 GMT

Remind me which country was at #5 in the league for executions in 2014?

Which country also used waterboarding to interrogate prisoners?

Now tell me that this is not human rights abuse.

http://www.amnesty.org.uk/world-executions-death-sentences-2014

[FDOS_UK]

BEYbrit – 11/12/2015 06:44 GMT

Just to add to your point, some of us travel to the ME from regional airports (MAN in my case) and EK/EY/QR all offer direct options, whereas London Airways mandates a connection.

Better product, direct flight……

[TominScotland]

FDOS_UK, of course these are very much abuses of human rights, I am not condoning them in any sense.

However, I was talking about human rights abuses in the workplace from which companies directly or indirectly benefit – either by employing people in a way that contravenes their human rights (certainly the case with at least one of the ME3) or makes active use of facilities built on the back of near-slave labour, where the basic health and safety of construction workers was systematically ignored – ME3 airlines are not the only beneficiary of this but are the main partners of the airports in question.

[FDOS_UK]

So what about the employment practices of some European airlines?

– arbitarily reducing senior cabin crew wages with the alternative of redundancy
– refusing to recognise or negotiate with unions

These seem to be pretty abusive action sin the workplace, don’t they?

[Author]

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