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Old 09-18-2014, 08:38 PM
 
Location: Willowbend/Houston
13,403 posts, read 21,222,532 times
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Quote:
Originally Posted by cwkimbro View Post
Some good points. Destiny is a really strong word.

I wouldn't stress the local demand as a huge factor though. Most of it is transfers on larger, less frequent long-haul flights between Asia and Europe that help cut costs between two really large markets that are geographically separated. There isn't much short-haul service at that airport and there aren't that many take-offs/landings.

Two key things to watch out for... as demand picks up more direct service flights between Europe and Asia will pick up and eventually the financial benefits for another city/airline to try to serve this rapidly growing market will pick up. That market has had rapid growth and limited competition without the use of local hubs in Asia or Europe. I suspect this will eventually change... the key thing is when/how. However, what won't change is the growth in the Europe-Asia market, even if there are hiccups a long the way.

Dubai/Emirates was just well position to take first mover position on this rapidly growing market. The market dynamics for them will inevitably change. At what point it is hard to say, but it won't get that sustained growth forever without attracting competitors elsewhere in the medium to long run.

Even Istanbul is starting to question aggressive expansion in light of the demand changes.
Indeed most of it is connections, but Dubai's tourism keeps growing and growing. Its only going upward.

Also correct in that Dubai's take offs/landings count is very low given its traffic. Its primarily more people on less planes. Thats also an upward trend given the amount of 380's they have on order.

Here is where we differ:

The Europe-Asia market is, for the most part, already mature. The 787 has opened up some smaller markets such as Chongqing and Chengdu and we've seen a destination or two added from established carriers such as Manchester-Hong Kong on Cathay Pacific, but overall its a very mature market.

The ME3 have operating costs that are so much lower than the EU carriers and even the Asian carriers. Thats why were seeing airlines like Thai Airways have their profits plummet 72%. Emirates can charge a lower fare, make more money, and offer the same high quality service. All it takes is a stop in Dubai which isn't a big deal for most.

Also Emirates/Etihad/Qatar serve many smaller European cities that cannot, on their own support service to destinations in Asia. The costs would be too high for an Asian or a European carrier to run a flight from Warsaw/Belgrade/Geneva-Asia. Because of the low costs and geography, the ME3 can. Same logic goes for smaller cities in Asia. You get service to cities like Manila, Taipei, Jakarta, etc. These are cities that have a hard time sustaining more than a couple of flights to Europe a day. Yet, all the ME3 serve them.

Also, Turkish Airlines does not belong in the same category that Emirates, Qatar, and Etihad do for a couple of reasons:

1) No plane can economically reach Australia from Istanbul.
2) Turkish Airlines has much higher CASM than the ME3.
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Old 09-18-2014, 09:34 PM
 
Location: Atlanta
6,562 posts, read 7,684,125 times
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I don't see it as a mature market at all. World wide recessionary effects aside, which are admittedly very different from location to location, that is a quickly growing market in no small part thanks to the growth we can expect from China going into the future. It will be a natural progression for them to have heavier trade relations.

When you show the year by year growth stats of dubai... it shows a rapidly growing market... not a mature one. You should also look at a decade to decade snapshot from the 70s. It grew from very little.

Yes, your right there will not be direct flights between mid-size cities, however you can't ignore that a European hub or an Asian hub doesn't serve their own secondary cities very well.

As demand keeps increasing the traditional hubs in Europe and Asia will be able to open up more flights to the major cities and hubs between the markets. They don't have to serve every secondary city, but those routes need a critical mass of demand too.

As for a snapshop of how an airline or airport is now does not matter over time. Once demand ratchets up, investors will look for ways to follow it.

Small issues about reaching Australia from Istanbul is nothing... there is plenty of business to be found between Asia and Europe that it doesn't all have to go through Dubai.


One flaw to Dubai's business model at keeping up with global demand over time will be as it grows much higher is having a long-range hub requires planes to gate park for a longer time, for passenger transfers between most markets they serve. It is why they are looking for ways to park so many A380s at one time. There are still only 1-2 flights/day between the major long-haul destinations. Where as if someone can connect through a hub more local to the final destination there are more frequent options to move the passenger from the long-haul to the shorter connection. It makes it easier to strategically plan the timing of the long-haul route for more customers and not take up much time at the gate. It can also lower layover times and give travelers more flexibility.

One thing is clear though... you got the stats, its a fast growing market, not a mature one. As the market grows investors and outside competition will follow it


Quote:
Originally Posted by peterlemonjello View Post
Don't get me wrong, ATL's traffic is amazing. But heres the deal, ATL and DXB are playing the same game: the battle for the worlds best geography. In the end thats a game Dubai will win. Not for the next few years, but given how many 380's EK has on order it will happen by the end of the decade.
Now this.... This is a bit short-sighted and it is because you're ignoring purpose of air travel and the general economy and focusing too much on total numbers of raw passenger loads.

Dubai has excellent geography to be between Asia, Europe, and Australia. That is it. There isn't much going on regionally around it outside Dubai and a hand full of city-states being tax havens and getting attention from resource extraction industries. Africa is there, but there isn't much there going on economically. Lagos and Johannesburg are the heavy hitters and for many there other better routes.

Atlanta is different. It is in a very rich country and there much more going on within the region. You'll see a great deal of domestic traffic and people taking short flights, but very frequently. Atlanta is very well connected within the region and country it is already in and it certainly doesn't depend on being a tax-haven to attract investment, so the economic impact is a different game entirely. The two airports are definitely without a doubt playing different games.
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Old 09-18-2014, 09:44 PM
 
Location: Atlanta
6,562 posts, read 7,684,125 times
Reputation: 4368
Quote:
Originally Posted by y2c313 View Post
Why in the world would someone be jealous of Atlanta?!? No hate intended, but I could see being jealous of New York or Chicago. Not Atlanta....
You make a good argument, but many people clearly are. Many people target Atlanta in many intense discussions on and off C-D.

The issue most face is Atlanta is intimidating, because it is well connected, low-cost, fairly good quality of life for the dollar, and pre-recession for -several decades- it was one of the fastest growing markets in the Country. It was a very intimidating force for many places, because so many people and companies were relocating here. Atlanta was definitely -the- city on the rise, so was Dallas and Houston.

People will eventually feel the same way about the next wave of fast growing cities, which will probably be places like Charlotte, Austin, Denver, and perhaps Seattle as they get much bigger.
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Old 09-18-2014, 11:28 PM
 
Location: Savannah GA
13,422 posts, read 16,987,669 times
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Another major war in the Persian Gulf region, and an implosion of Muslim nations, and Dubai is toast. It's at the epicenter of the most volatile region of the world. Only a fool would think it can continue on the same upward track.
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Old 09-19-2014, 05:59 AM
 
Location: St Simons Island, GA
23,127 posts, read 35,093,051 times
Reputation: 15343
Quote:
Originally Posted by peterlemonjello View Post
Yes, but that has nothing to do with the airport.

Dubai has excellent geography to connect Europe, Asia, Australia, Africa, and the Middle East with each other, they have an infinite amount of money, Dubai itself has developed into a tourist hotspot, and Emirates is arguably the most desired airline in the world.

They will be the busiest airport in the world. Its their destiny. Its just a matter of when.
What I'm suggesting is that Dubai tends to build out well beyond current and near-term capacity. An expansion there doesn't necessarily mean that the facility will be fully utilized right away (unlike Atlanta).
I totally agree re: Emirates, though.
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Old 09-19-2014, 06:25 AM
 
Location: Willowbend/Houston
13,403 posts, read 21,222,532 times
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Quote:
Originally Posted by Newsboy View Post
Another major war in the Persian Gulf region, and an implosion of Muslim nations, and Dubai is toast. It's at the epicenter of the most volatile region of the world. Only a fool would think it can continue on the same upward track.
You have no clue what you're talking about. Statements like this reek of someone who has no idea about the region or the different countries in the region. I was just there last week (India, Qatar, and the UAE) and I travel there frequently for work. Qatar, the UAE, Bahrain, and Oman are extremely stable. All of the above have freedom of religion even if Islam is the official state religion. All of the above have extremely diverse and international populaces. There is also an almost zero chance of war breaking out in any of the countries I mentioned because they don't get involved in wars.

If you think Dubai's future is dictated by what goes in Iraq or Iran, then you really need an education into the region.
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Old 09-19-2014, 06:59 AM
 
Location: Willowbend/Houston
13,403 posts, read 21,222,532 times
Reputation: 10285
Quote:
Originally Posted by cwkimbro View Post
When you show the year by year growth stats of dubai... it shows a rapidly growing market... not a mature one. You should also look at a decade to decade snapshot from the 70s. It grew from very little.

Yes, your right there will not be direct flights between mid-size cities, however you can't ignore that a European hub or an Asian hub doesn't serve their own secondary cities very well.

As demand keeps increasing the traditional hubs in Europe and Asia will be able to open up more flights to the major cities and hubs between the markets. They don't have to serve every secondary city, but those routes need a critical mass of demand too.

As for a snapshop of how an airline or airport is now does not matter over time. Once demand ratchets up, investors will look for ways to follow it.

Small issues about reaching Australia from Istanbul is nothing... there is plenty of business to be found between Asia and Europe that it doesn't all have to go through Dubai.


One flaw to Dubai's business model at keeping up with global demand over time will be as it grows much higher is having a long-range hub requires planes to gate park for a longer time, for passenger transfers between most markets they serve. It is why they are looking for ways to park so many A380s at one time. There are still only 1-2 flights/day between the major long-haul destinations. Where as if someone can connect through a hub more local to the final destination there are more frequent options to move the passenger from the long-haul to the shorter connection. It makes it easier to strategically plan the timing of the long-haul route for more customers and not take up much time at the gate. It can also lower layover times and give travelers more flexibility.

One thing is clear though... you got the stats, its a fast growing market, not a mature one. As the market grows investors and outside competition will follow it




Now this.... This is a bit short-sighted and it is because you're ignoring purpose of air travel and the general economy and focusing too much on total numbers of raw passenger loads.

Dubai has excellent geography to be between Asia, Europe, and Australia. That is it. There isn't much going on regionally around it outside Dubai and a hand full of city-states being tax havens and getting attention from resource extraction industries. Africa is there, but there isn't much there going on economically. Lagos and Johannesburg are the heavy hitters and for many there other better routes.

Atlanta is different. It is in a very rich country and there much more going on within the region. You'll see a great deal of domestic traffic and people taking short flights, but very frequently. Atlanta is very well connected within the region and country it is already in and it certainly doesn't depend on being a tax-haven to attract investment, so the economic impact is a different game entirely. The two airports are definitely without a doubt playing different games.
Ill offer the following in regards to your argument:

1) You're right in a sense that the UAE and Qatar are tax havens and thats a huge reason as to why they are booming like they do.

2) You're also correct about the amount of people taking short flights. Atlanta sees a lot more of that than Dubai does. Dubai has more people taking 7 hour + flights.

3) Service to Australia is a huge deal. LHR-SYD is one of the worlds largest and most premium oriented routes. Australia to Europe is a huge market. Qantas used to use Singapore as the transit point, but switched it to Dubai. Emirates service Perth, Melbourne, Sydney, Adelaide, and Brisbane from Dubai. They also serve Auckland in New Zealand. The fact that they can do that and Turkish Airlines cannot is a huge deal and gives them a huge advantage in the market.

4) Of course Dubai didn't grow in the 70's. Its a very recent boom.

5) As the markets grow, outside investors will try new things. However, I feel confident in saying that those things will more than likely not be able to compete with an airline like Emirates. Remember, you're talking about an airline that has a seemingly infinite amount of money and pays no taxes to their country. Who can come in and compete with that over the long term? I also pointed out that the ME3 are basically taking airlines like Thai Airways, Malaysia Airlines, Air India, and even Singapore Airlines to the cleaners. They've significantly cut into what was their bread and butter (Europe-Asia/Australia traffic flows) and their operating costs and CASM are sky high compared to the ME3. Thai Airways profits plunged 72%, they are looking at selling half their plane, and the ME3 are the culprit. Singapore Airlines and Cathay Pacific will be ok in the long run because they have Singapore and Hong Kong in their back pocket. Those destinations have much more high yielding traffic than a place like Bangkok. The EU carriers are not affected as much because they have traffic from the US to the EU to fall back on and the ME3 cannot really capture that. The ME3 don't play by the same rules as the rest of us in regards to costs.

6) You're discounting Africa WAY too much. Its not an economic powerhouse, but its a huge tourist powerhouse and Dubai captures a huge amount of traffic for it. Even from Europe, Dubai gets a lot of transit passengers bound for Eastern and Southern Africa. Dubai, Qatar, and Abu Dhabi get lots of transit passengers to the continent.

7) When I was referring to the mature market, I was referring to Europe-Asia. It will continue to grow, but at a slow steady pace. However, what is not mature is traffic to the Arabian peninsula. Also, the ME3 are taking large amounts of traffic from the EU and Asia carriers in a mostly mature and huge market.

In the end, we can agree to disagree. We've made our arguments in an informed an respectful way so only time will tell which one of us was right.
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Old 09-19-2014, 07:02 AM
 
Location: Willowbend/Houston
13,403 posts, read 21,222,532 times
Reputation: 10285
Quote:
Originally Posted by LovinDecatur View Post
What I'm suggesting is that Dubai tends to build out well beyond current and near-term capacity. An expansion there doesn't necessarily mean that the facility will be fully utilized right away (unlike Atlanta).
I totally agree re: Emirates, though.
I would agree in regards to the city for sure.

However, the stats at the airport show something different. Emirates system wide load factor is 82%. Delta's is 87%. Delta's is higher, but a system wide LF or 82% is very good and not quite symptomatic of an airline that overbuilt. As consultants, we tell our clients to worry when:

1) The LF gets into the low upper 60's to low 70's
2) If there is little premium traffic to back it up.

Im afraid Emirates has no problem on either of those fronts.
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Old 09-19-2014, 07:58 AM
 
Location: The Greatest city on Earth: City of Atlanta Proper
7,909 posts, read 12,179,752 times
Reputation: 5702
Stability-wise, Dubai doesn't have to worry about war or an overthrow. Their sheikh has done good job of paying people off.

What they really need to be concerned about is that one day the money is going to run out, and it's a lot sooner than they think. When that happens, we'll see a level of abandonment we haven't seen since ancient times in that city.

For anyone who doubts this, just look at Detroit. It once was one of the most beautiful and richest cities in the world. However, when the cash cow of it's economy began to collapse and move to greener pastures, it fell completely apart. Same thing will happen to Dubai once the oil runs out.
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Old 09-19-2014, 08:56 AM
 
124 posts, read 119,467 times
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Quote:
Originally Posted by peterlemonjello View Post

Also, Turkish Airlines does not belong in the same category that Emirates, Qatar, and Etihad do for a couple of reasons:

1) No plane can economically reach Australia from Istanbul.
2) Turkish Airlines has much higher CASM than the ME3.
I wouldnt sell the Turks short. Their geographic advantage is quite similar to the ME3 (aside from the Australian market) but they have one key advantage: population. Dubai and the others are quite tiny while Turkey is nearly the size of Germany and is more populous than France or the UK, so the opportunities for Turkish are quite enormous. While the ME3 are hopelessly dependent on fickle transit traffic, the Turks can rely on a much healthier mix of O&D and transit traffic, particularly as the Turkish economy matures.

Dubai is in a stronger position than Doha or Abu Dhabi as far as O&D goes but still pales in comparison to what Istanbul has to offer especially in the long term. The biggest threats to the ME3 are Turkish, political instability in the region, and a viable Indian carrier capable of siphoning off passengers. Of those threats only TK has really come to pass thus far.


As far as ATL goes, the title is nice but it is just inevitable that DXB or PEK will take over the world's busiest in the long run. and honestly it does not effect Atlanta's prospects one bit if airports on the other side of the world surpass it.
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