News and notes from around the interweb:
- American, Delta, and United are tweaking their new pricing strategy (that you can beat easily).
- Behind the scenes at a hotel hosting an NBA team (HT: Brandon S.)
- LAX plan could give Delta access to twice as many gates (leapfrogging United and American)
- 49 people were killed in a tragic TransAsia crash in 2014. Investigators blame both the pilots of the aircraft, who died in the crash, and air traffic controllers. “The pilots will not be prosecuted…”
- Top 10 airlines for revenue and profit in 2015. Note that the 4 airlines with the greatest profit in the world are the 4 largest US airlines.
The top 3 are the ones that want to the government to raise airfare prices and lower consumer choices by limiting flights to the US by Emirates, Etihad, and Qatar. Note also that those 3 US airlines claimed (with a fraudulent paper) that Emirates isn’t a viable business. It’s one of the 10 most profitable airlines in the world..
Credit: Airline Weekly
AA at over 15% profit, pretty impressive – and all it took was expert usage of the bankruptcy code, a federal government with a soft shoulder to shrink the marketplace for them and a 60% drop in full prices.
While you REALLY want to believe Emirates is profitable, the reality is that nobody except Sheik Maktoum and his inner circle know. But the odds that they are profitable by traditional accounting standards seems extremely low. Their books are not audited in the manner that a real, public corporation would be audited, and they clearly get BILLIONS in “gifts” from their gov’t that no other airlines in the world get (other than their Middle East brethren). Things like $8 billion terminals, where they don’t have to pay anything like fair market rent.
http://www.prnewswire.com/news-releases/emirates-confirms-billions-in-government-subsidy-for-airport-terminal-300134208.html
Other than leaked documents, the only thing we really know is that their business strategy runs contra to everything done by successful airlines that do have private shareholders and transparent accounting. Like they’ve ordered 142 A380s. — six times more than any other airline. Other airlines don’t buy these planes because they can’t make money filling so many seats on long haul flights. And these other airlines also have more origin/destination traffic than Emirates (aka, passengers who will pay more for nonstop service instead of lower paying connecting traffic), so you have to believe that Emirates manages to make money with a business strategy that fails everywhere else in the world. And you also have to suspend belief that this highly improbable strategy would also work when three other airlines (Qatar, Etihad and Turkish) do almost the exact same odd thing in the same neighborhood. Oh, and that the collapse of oil prices reduces travel demand in places like Houston, but not in places like Dubai (even though Dubai is also suffering from a crippling over-valuation of the Dirham because it is linked to the strong US dollar, when almost all the revenue Emirates is collecting is from weakening currencies).
You can believe this. I can also believe in Santa Claus and the Tooth Fairy. But make-believe won’t make your facts right.
You’re citing a press release from the lobbying front group which was caught doctoring its white paper?
@garyleff — you make that “doctoring” claim, but your’re just repeating the talking points of Emirates.. For hard-to-explain reasons, you are behaving toward the Middle East airlines like Drudge is currently behaving toward Donald Trump. You keep writing about their “grievances,” and everything you write about them falls squarely within the realm of propaganda. Why?
Personally, I would love to see a world where airlines could fly huge double-decker aircraft to all obscure and distant points on the earth, offering low fares and extravagant in-flight service. And all this would be possible because new management techniques somehow made this profitable, and that competitors who couldn’t learn these strategies fell by the wayside. But no one who knows this industry could possibly believe that’s what’s happening in the Middle East right now. It is as plain as day that the rapid expansion of those airlines has nothing to do with a great business plan and superior management skills and everything to do with billions in government subsidies. It’s certainly OK to support that, and you have every right to enjoy your fancy pants trips to far flung destinations on other people’s money. But it’s very wrong to disparage the individuals who run traditional, for-profit companies who are just trying to figure out how to compete against businesses that are getting billions in handouts and don’t have any of the constraints of a normal free-market enterprise.
@iahphx I am not “repeating the talking points of Emirates” I am linking to a professor who demonstrates his work was taken out of context, mangling his conclusions. It was academic fraud for a white paper.
Just look at how profitable AA was and you’ll see why it was a no-brainer that they devalued their currency. They’re practically minting money.