The ME3 in 10-15 years time.Back to Forum
Was interesting reading the BT article about EK scaling back its US operations. Although EK claims that this is due to decreased demand due to the US Government banning people of certain nationalities i’m more with the US carriers claims that you can only fly to so many places in the world when your smallest aircraft is a 777 and expect to fill it (and turn a profit from it).
My young cousin was recently successful in applying to EK for cabin crew. She left her job at Norwegian to be told ten days before she was due to fly to Dubai that her course had been cancelled and she’d be notified when they are training crew again.
Etihad is also well publicised in having its problems. A friend of mine is a TRM for Qatar at DOH. She says that they have up to four EY longhaul aircraft a day that just stay on the ground in DOH unused.
And Qatar – well who really knows.
I wonder how the ME3 will look in ten years time?
– one will be pretty much gone having merged into another or becoming more focused on regional flights.
– EK will have an extensive fleet of narrowbody aircraft.
Other predictions?23 Apr 2017
IMHO, the 10 year prediction will largely depend on:
1. How Britain’s trade deal looks post Brexit
2. How President Trump pans out and whether he remains in power in 4 years time
3. Terrorism and not only the future impact of travel but the solutions put in place.
4. Innovation change, its not easy to predict travel will be as necessary in 10 years, but will it?
5 – infinity………….. please add….
ME3 have invested and the mfg’s have naturally supported the growth of ME3 but I think it will take more than an economist & politician to accurately predict… what happens to ME323 Apr 2017
rferguson, interesting points.
I am just back from Dubai this morning and was working with folk who are with both Dubai Airports and Emirates. We were talking about exactly the same thing and their view was that two UAE airlines are not sustainable and that the Government of the UAE will impose a merger at some point. Given that the new airport in Dubai (DWC) is beyond Jebel Ali and so almost in Abu Dhabi, the new merged carrier could locate there with fast rail connections to both cities. DXB occupies prime real estate in the city and would be worth a fortune if the land was sold off for development.23 Apr 2017
Doubt they will change much, maybe Etihad will come the premier airline and Emirates the low cost long haul carrier and Qatar is another country and has One World links.
No reason to doubt Emirates reasons to reduce service to the USA, probably less US pax anyhow (certainly trans Atlantic) and the americans are just gloating after their recent customer service disasters.23 Apr 2017
I’m also of the opinion that Emirates and Etihad will merge. It makes sense and while I have not studied their route networks it seems they more or less fly to the same places.
I also think this will be spurred on by greater price pressure from the legacy carriers. Apart from the amazing fare I had in February with EK, pricing my recent and future travel, in almost every case EK is more expensive or perhaps a hundred francs cheaper, but that’s not enough to entice me to fly via Dubai and suffer the midnight shuffle.
If anything, I think Brexit will boost long haul travel as British companies seek out new markets, and Asian companies et al seek more business from the UK.
As for conference calls, yes, it’s possible to join in via various multi-media options, the real business is often carried out during the breaks and or lunches / dinners as people take positions and sound out ideas discreetly before putting it to the whole meeting.23 Apr 2017
The ME hub model has been incredibly ‘successful’ from a superficial passenger perspective, at least until things go wrong, or if you choose to look into the conditions under which the UAE and its carriers were built and operate. People are treated like dirt, or at best, expendable items.
EK are starting to cut back as they had overcapacity and the immigration and electronics restrictions came at a time when it was convenient for them to do so without losing face. Where people are prepared to ensure the hideous Dubai experience, for the sake of sometimes saving money, they will continue to carry huge numbers of passengers due to their advantaged position. It can’t last for ever, and sooner or later they will start cutting back on other routes. Naturally the blame will be apportioned to ‘other causes’ than their unsustainable greed and wish to dominate so many routes.23 Apr 2017
Merger is interesting, and from the outside sometimes looks inevitable, but if predictions of flows of traffic from India and China are correct, there probably is room for all three.
Emirates clarifies Etihad Airways merger reports
“There is no truth to the report Emirates and Etihad are considering a merger or have been in talks for the same,” an Emirates Airline spokesperson said in a statement.23 Apr 2017
Having lived & worked in both Dubai & Abu Dhabi & knowing quite a few “connected” people, I understand that a merger of EK/EY has been discussed. Not by “management” (who have no true deciton-making powers at this level) but by the real decision makers. The rulers of Dubai & Abu Dhabi. For now its not happening. Too much of a loss of face but could easily be on the cards for the long term. EY just don’t have the presence of EK (and are in heavy, heavy cost cutting mode) & came to the party far too late. EK made the wrong fleet choices without sufficient considerations for the long term flexibility required (changing market/political landscape) which is so typical in the region. QR, are well placed to capitalise on the EK/EY dilemma, with a clever choice of fleet & VERY deep pockets (although cost-cutting is evident to some extent). Winners? QR!24 Apr 2017
I wonder if the competition has also surprised the ME3? Five or ten years ago many were predicting there would only be two or three main european airlines left and the US carriers were generally viewed as not being competitive due to their lack of customer focus and generally what was an inferior hard product. But most of the european airlines that were predicted to disappear have adapted and in some cases expanded (eg SAS) and the american carriers have completely three-sixtied.
I’d imagine most of the ME3’s business to North America is passengers originating in India/Pakistan etc. Air India i’m sure was also predicted to pretty much not be a viable alternative and Jet was on shaky ground for a while. But again, Air India has upped their game with new aircraft and launching of non-stop flights and Jet seems pretty stable.
EK’s business model has always amazed me. When your smallest aircraft is a 777 it’s all you have to put on routes like Kochi, Kozhikode, Thiruvananthapuram, Multan, Sialkot (most with a good number of F and J seats) and try make those routes profitable.24 Apr 2017
I flew Gatwick-Dubai-Mauritius-Dubai-Gatwick last year. The first flight from LGW-DXB was completely full. Every seat taken. The other three flights, the exact opposite. Maybe 10 passengers in Business out of a 70 seat cabin at most. It made for a very pleasant flying experience, but it made me wonder about how sustainable the operation is.
Emirates have several problems I think. The first is simply their fleet size, as others have said, when a 777 is your smallest aircraft, that severely limits the routes you can operate to. But EK have also got the problem of open-skies. I believe their Indian sub-continent flights do very well, but they are at the absolute limit of what they can operate in terms of seats. They are unable to add routes to Amritsar, Pune, Jaipur, Lucknow, Nagpur, or any of the other major cities you want to name. The same is true of China. I think it was Alex Cruz said that China has cities with a population of England that nobody has even heard of. And yet EK can’t get new routes, they were given Yinchuan and Zhenzhou by the Chinese Government, but I am sure there is room for EK at Chengdu, Hangzhou, Xian or again, any of the other cities you want to name. Same is true of Canada, Germany and France – all major markets that EK simply can’t access any more than they do currently.
Then there are all the geo-political problems, Syria, Yemen, Libya, that EK just can’t fly to at the moment.
I am surprised EK couldn’t launch some more 5th freedom routes, they have Milan-JFK which sort of makes sense, and Athens-Newark which makes no sense whatsoever, but surely some flights out of Gatwick to New York, Boston, San Francisco etc would work for EK? Or is Norwegian too much of a problem now?
In short, the world in 2017 looks very different to the world 7 years back. I read a fascinating article (can’t remember where now) that said “Emirates’ slogan was once ‘Tomorrow has no borders’ how inappropriate that now seems.” Terrorism, the turn away from globalisation, volatile fuel prices, wars across the world. The world in 2017 is an unstable and unpredictable one, and EK is struggling to find its place in that world. EY doesn’t have any new routes pending, but I can’t see them becoming the massive force EK is anyway. I think they will remain a small airline, adding the odd route here and there, and growing at a ‘normal’ pace. The same for Oman Air, they have just gradually added to their network in a small, sustainable way. QR seems to be doing ok currently, as others have said, they have a good mix of planes (320s, 787s, 330s as well as the bigger 777s and 380s) adding routes all over the place, and not being shy to drop routes that aren’t performing as they should. I think they dropped Sarajevo before it even started.
In answer to your question, I don’t know what the ME3 (5 if you include Turkish and Oman) will look like in ten years. Maybe there will be mergers a-la-USA. Maybe there will be bankruptcies. Maybe the world will become more stable, and they will be able to continue their march onwards and upwards. One thing is certain though. Bubbles never seem to end well. And Emirates are increasingly looking like a bubble.24 Apr 2017
rferguson – Some airlines are fighting back against the Gulfies with JVs.
Recently we wrote about a new tie-up between the Lufthansa Group and Cathay Pacific. There are other links covering Lufthansa, SIA and Air China.
Jet Airways has gained a new lease of life with its JV with Air France, KLM and Delta. Jet will also launch additional services linking Amsterdam (its new European hub) with India and I expect the former will be scheduled for connectivity at Schiphol.24 Apr 2017
Another example of a massive reduction:
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Will be interesting to see where EY redeploys the A380 to.
Sydney!! Double daily A380 just announced.26 Apr 2017
It all seems to come down to the business models. Almost all airlines in Europe and the US are privately owned and listed at a stock exchange. Meaning they have to make a profit to keep their shareholders happy. They are competing against state owned airlines from the Middle East and Asia. They seem to use a completely different model: market dominance. With a government or through a sovereign fund behind it a company can opt to accept lower profits or even sustain losses.
My guess would be that unless governments step in, like the Trump government with thinly veiled protective measures like a laptop ban against ME carriers (but spreading to others including European carriers), some airlines will be pushed out of certain markets. It happened recently with KLM on the AMS – DOH route where competing against QR proved to be too difficult. KLM ceased flying this route.
I believe only BA is the only European carrier flying between Europe and Australia. All others have given up to see the routes taken over first by Far East carriers and now the ME bunch.
Last but not least: due to the different business models (some call it subsidies) the new carriers are not only able to offer better ticket prices, but also a much better hard and soft product.
In my mind the question should be: In this world without a level playing field: will we be able to compete with the ME3 and which of the old carriers are most likely to survive? After all they have supporters with very deep pockets.26 Apr 2017