Issue 7 | July 2010

Optimism and a record investment A380 order supports over 40,000 high-skill European and US jobs

In the midst of continuing economic uncertainty in - and a continuing pessimistic outlook from Europe’s legacy carriers - Emirates has announced one of the largest ever aviation fillips. The purchase announcement at the ILA of an additional 32 A380 aircraft at list prices is worth US$11.5 billion (AED42.2 billion). The order will benefit travellers, result in manufacturing jobs and is a boost to the economies of Dubai, , France, the UK and US. Billions more will be spent on engines, spares, interiors, pilots, engineers and cabin crew for the new fleet. Emirates’ total orders for this aircraft type stands at 90, representing the largest ever order by value in European civil aviation history. The decision to purchase the additional aircraft is based on Emirates strategic plan for expansion in the coming decade; optimism based on over 20 years of continuous profit and a strong financial performance since the 2009 downturn. The A380 programme supports more than 40,000 high-skill jobs in Europe. This includes over 20,000 jobs in leading aerospace companies in Germany and France (such as EADS/, Weber, Goodrich, Thales, and Messier- Bugatti, Diehl, Recaro and MTU). Airbus estimates it will inject more than one billion Euros in total into the French and German economies in 2010 via supplier contracts on the A380 programme alone. In addition, all of Emirates existing and ordered A380s are powered by US The agreement was signed at the ILA Berlin Air Show by HH Sheikh Ahmed built Engine Alliance GP7200s. Engine Alliance facilities across the US - Bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline including sites in Ohio, Connecticut and North Carolina - directly employ and Tom Enders, Airbus President and CEO and was witnessed by German over 30,000 staff. Chancellor Angela Merkel, Rainer Brüederle MP, Minister of Economy and Peter Ramsauer MP, Minister of Transport. Emirates also displayed its 10th Despite the pessimism of some legacy carriers, Emirates believes air travel A380 at the Air Show, direct from the final assembly line in Hamburg. will grow strongly in the next decade; and with many major airports worldwide operating at maximum capacity due to constraints on expansion, the A380 is key to Emirates’ plans to meet increasing passenger demand. Many parts, many national suppliers

The 90 eco-efficient A380s will also make the best use of existing airport Stade (Germany) infrastructure. This makes plans by the new UK Government to convert Getafe Air Passenger Duty into a ‘per plane’ tax, possibly based on aircraft Puerto Real weight, even more concerning. Adopting a duty formula purely based on Broughton (UK) (Spain) MTOW would penalise an aircraft like A380, give undue breaks to lighter Hamburg (Germany) but more polluting aircraft types and do nothing to reward environment Saint-Nazaire improvement, best practice and innovation. Meaulte (France) In addition to the eight existing destinations served by Emirates with the Bremen (Germany) A380, it will be deployed on services to Beijing from August, Manchester Hamburg (Germany) Gosselies (Belgium) from September and will return to service to New York JFK in October. Saint-Nazaire More and more airports in Europe, Asia, Africa and the Middle East Meaulte (France) are approaching Emirates to say that they are or will soon be ready to accommodate the A380 - contradicting the voices who question the A380’s route economics or say that there are ‘not enough places to fly them’. By Puerto Real (Spain) 2011 Emirates believes close to 100 airports worldwide will be A380 ready. Subsidy - the transparent facts

The order of 32 additional A380 aircraft These and the other 20 year old arguments remain unsubstantiated, by Emirates was of course greeted with are plain wrong and are of a mindset mired in another age. Population scepticism and annoyance by a small for example is a curious argument given the small size of countries like number of legacy carriers. Within minutes Singapore, Hong Kong, Switzerland and Australia relative to their global

Recent subsidy Subsidy. The myths and facts or support of the signing ceremony these same voices, aviation footprint. Alitalia benefits from state about Emirates and our industry aid amounting to ¤700 million over seven years via a 2008 ‘Save Alitalia Emirates believes that the issue of ‘subsidy’ is a • Emirates is the international airline of the United Decree’ passed by the including Air France, raised their perennial legitimate and important issue for any airline or Arab Emirates and its main activity is the provision of Italian Government – which multinational corporation. commercial air transportation services. amongst other support • Dnata, the ground handling agent at Dubai mechanisms, imposes Emirates believes in transparency and open discussion on the issue of Like other pro-competition and free-market voices in International Airport, has grown into the biggest an airport tax of ¤3 per our industry, we are firmly and historically opposed to airport services provider in the Middle East and now passenger on all airlines serving Italy. charge of subsidy. state aid for airlines. Such policies can only encourage has almost 30 related subsidiaries trading under its inefficiency, discourage open markets and are name around the world. JAL received ¥300 billion ultimately not in the consumer interest. aviation policy, subsidy and state aid. We are firmly opposed to state aid of fresh capital in early Emirates also provides external services like inflight 2010 from the Japanese It is therefore a concern to Emirates that unsubstantiated catering, cargo, engineering and training - as well Enterprise Turnaround claims of subsidy against our organisation continue to as being involved in hotel and resort developments. Initiative Corporation (a be perpetuated by some competitors and from other Crucially, all of these divisions are stand-alone profit state-controlled investment quarters. Despite no evidence, an oft repeated myth can centres with their own business plans, financial fund), and an additional for airlines - on the basis that such policies only encourage inefficiency, ultimately be accepted as conventional wisdom. This objectives and reporting structures. ¥600 billion line of credit from the government-owned document therefore seeks to genuinely and credibly Development Bank Specifically they argue - amongst other rebut these various allegations. This document tackles head-on the myths and the facts of Japan. related to government ownership and support, financial Let’s start first with what Emirates is, rather than what reporting, sources of finance, costs, landing fees and The European Commission discourage open markets and are ultimately not in the consumer interest. it is not. The Emirates Group consists of more than 50 charges, the environment, oil, airport infrastructure launched an investigation in specialist business units. At the heart of the group are and inter-carrier comparisons. We hope you find our February 2010 into a CZK claims - alleged government monetary Emirates Airline and Dnata. transparency thought provoking. 2.5 billion (¤94 million) loan granted to CSA - Czech Airlines in 2009 by the state- A little history… owned entity Osinek a.s. Aer Lingus ¤200 million Irish Government capital injection in 1996. support (when earlier they had argued Emirates recently released a report which sought to credibly rebut various Air France ¤300 million and ¤580 million French Government capital injections in 1991 and 1992. ¤3 billion French Government capital injection in 1994. Alitalia ¤1.5 billion and ¤1.2 billion Italian Government capital injections in 1997 and 2005. British Airways GBP160 million UK Government debt write-off pre-privatisation in 1981. Dubai had no finance left). Also they allegations related to our government ownership, financial reporting, sources Concorde US$3.5 billion development cost write-off by British and French Governments in the 1970s. Iberia ¤560 million Spanish Government capital injection in 1996. Lufthansa ¤800 million German Government contribution to Lufthansa pension fund in 1995. Olympic Airways ¤2.6 billion Greek Government accumulated debt write-off in 2008/09. Qantas AUD$1.4 billion Australia Government debt write-off in 1992. claim a country’s population should be the of finance, costs, landing fees and charges, the environment, oil and airport TAP ¤1.8 billion package of Portuguese Government aid measures in 1994. criteria for the size of an airline’s fleet. infrastructure. Read the document in the Subsidy section of our website. 1 Berlin - a capital needing connections

Opposition to long-haul air services from Berlin and Stuttgart continues with Lufthansa arguing against access to these cities by Emirates. This is despite significant support from Germany’s regions, airports, businesses and many parliamentarians. Emirates recently released a report entitled ‘Tearing down the other wall’. A positioning document outlining Emirates commitment to Germany and disputing the Lufthansa argument that competition from Emirates is against Germany’s national interest. The report cites the solid economic case and numerous German voices who have advocated long-haul flights from Dubai to Berlin’s new BBI airport and the Stuttgart region. The report also rejects Lufthansa’s claim the people of Berlin and Stuttgart should settle only for international flights from or Munich. Emirates is perplexed that after a very successful ILA Air Show in Berlin – with much talk of its future prospects as an international hub – Emirates’ attempts to offer long-haul routes from BBI remain frustrated. Read the entire document in the Germany section of our website.

Emirates year end results For the financial year 2009/10, Emirates Airline announced its profits ‘’This increase in passenger numbers is attributable not only to our position increased four-fold to US$964 million over the previous year’s $267million. at the centre of the new Silk Road between East and West, but also to our In the same period, load factor averaged 78% and it carried 27.5 million commitment in increasing our network and service standards, during a time passengers (up 21%) and 1.6 million tonnes of cargo (up 12%). This marks where many competitors were doing the opposite.” - HH Sheikh Ahmad Bin 22 years consecutive net profitability. Read the Annual Report on our website. Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline.

Result highlights also included: • Dividend of AED1.6 billion (US$424 million) paid by Emirates Emirates 093 to the Investment Corporation of Dubai, representing the highest Independent auditor’s report to the Owner of Emirates dividend ever paid. Since 1985 Emirates 093 Independent auditor’s report to the Owner of Emirates Emirates has paid a total of US$1.75 billion in dividends to the Report on the financial statements Report on the financialstatements, statements whether due to fraud or error. In makingstatements, those whether duerisk to fraudassessments, or error. In making thethose riskauditor assessments, the auditor Government of Dubai. considers internal control relevant to the entity’sconsiders preparation internal control relevant and to fair the entity’s presentation preparation and of fair presentation of We have audited the accompanying consolidated financial statements of Emirates and the financial statements in order to design audit procedures that are appropriate in the We have audited the accompanying consolidated financial statements of Emirates andits subsidiaries (togetherthe financial referred to as statements “Emirates”), which in comprise order the to consolidated design auditcircumstances, procedures but not for thatthe purpose are of appropriateexpressing an opinion in on the effectiveness of the • A new instrument used to finance statement of financial position as of 31 March 2010 and the consolidated income statement, entity’s internal control. An audit also includes evaluating the appropriateness of accounting its subsidiaries (together referred to as “Emirates”), which comprise the consolidatedconsolidated statementcircumstances, of comprehensive income,but not consolidated for the statement purpose of changes of expressingin policies used an andopinion the reasonableness on the of effectiveness accounting estimates ofmade the by management, as the purchase of new Boeing statement of financial position as of 31 March 2010 and the consolidated income statement,equity and consolidatedentity’s statement internal of cash flowscontrol. for the year An then audit ended alsoand a summary includes of evaluatingwell as evaluating the the appropriateness overall presentation of the financial of accounting statements. significant accounting policies and other explanatory notes. 777-300ER aircraft. Emirates consolidated statement of comprehensive income, consolidated statement of changes in policies used and the reasonableness of accountingWe believe estimates that the audit evidence made we haveby obtainedmanagement, is sufficient and appropriateas to provide a basis for our audit opinion. developed a financing structure equity and consolidated statement of cash flows for the year then ended and a summary ofManagement’s responsibilitywell as evaluating for the financial the statements overall presentation of the financial statements. using programs offered by the significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of these consolidated Opinion financial statementsWe in believeaccordance thatwith International the audit Financial evidence Reporting Standards. we have This obtained is sufficient and appropriate to provide U.S. Export-Import (Ex-Im) Bank, responsibility includes: designing, implementing and maintaining internal control relevant In our opinion, the accompanying consolidated financial statements present fairly, in all to the preparationa andbasis fair presentation for our of audit financial opinion.statements that are free from material material respects, the financial position of Emirates as of 31 March 2010, and its financial which raised US$413.7 million. By misstatement, whether due to fraud or error; selecting and applying appropriate accounting performance and its cash flows for the year then ended in accordance with International Management’s responsibility for the financial statements policies; and making accounting estimates that are reasonable in the circumstances. Financial Reporting Standards. tapping global capital markets and institutional investors, Emirates was Management is responsible for the preparation and fair presentation of these consolidatedAuditor’s responsibilityOpinion PricewaterhouseCoopers 29 April 2010 able to achieve substantially wider financial statements in accordance with International Financial Reporting Standards. ThisOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on coverage vs traditional financial responsibility includes: designing, implementing and maintaining internal control relevantAuditing. Those StandardsIn our require opinion, that we comply the with accompanying ethical requirements and consolidated plan and financial statements present fairly, in all to the preparation and fair presentation of financial statements that are free from materialperform the auditmaterial to obtain reasonable respects, assurance the whether financial the financial position statements are of free Emirates as of 31 March 2010, and its financial markets. This approach has from material misstatement. misstatement, whether due to fraud or error; selecting and applying appropriate accounting performance and its cash flows for the year then ended in accordance with International now become a model for future An audit involves performing procedures to obtain audit evidence about the amounts and Paul Suddaby policies; and making accounting estimates that are reasonable in the circumstances. disclosures in theFinancial financial statements. Reporting The procedures Standards. selected depend on the auditor’s Registered Auditor No. 309 transactions that will support the judgement, including the assessment of the risks of material misstatement of the financial Dubai, United Arab Emirates competitiveness of US companies, Auditor’s responsibility PricewaterhouseCoopers like Boeing, in world markets. 29 April 2010 Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. EK202 On 03 May this year there was significant media coverage of the arrest Emirates fully co-operated and responded immediately to all local and An audit involves performing procedures to obtain audit evidence about the amountsof Faisal and Shahzad Paul at SuddabyNew York’s JFK Airport. Given the individual in Federal authorities on all matters related to EK202. Emirates has also disclosures in the financial statements. The procedures selected depend on the auditor’s Registered Auditor No. 309 judgement, including the assessment of the risks of material misstatement of thequestion financial was a bookedDubai, United passenger Arab Emirates on EK202 and there were errors in some worked closely with the TSA and US Customs and Border Protection since commentary on the incident, Emirates believes it is important to state that they mandated all airlines follow a further tightened ‘no fly’ list and migrate at all times the airline was in full compliance with US regulations. our systems to ‘Secure Flight’. 2 Open Sky: they said it best… Each issue Open Sky brings you the best quotes from our perspective on liberalisation, alliances, aeropolitical protection, free and fair trade, economic policy and global business.

“Many of my European counterparts will bitch and moan about the way “We cannot allow the reduction of the airline industry to three large the Middle East carriers operate; they think that it is unfair competition. I carriers. In this environment, the carriers will concentrate their efforts don’t buy into that...I just got a copy of [Emirates] its accounts the other on fortress hubs and on the routes they dominate. There will be strong day, and they look like a normal set of accounts to me... and have no incentives to refrain from competition. There will be less service, and doubt that they acted in a rational, commercial way in every way that I fares will rise. This is the antithesis of the structure Congress anticipated have seen.” - Willie Walsh CEO of British Airways. when we deregulated the industry in 1978. The situation will be worsened by the trend towards placing international service largely ‘’The Middle East offers excellent opportunities for cooperation and in the hands of three major alliances whose members have antitrust market growth’’ - Lufthansa presentation at the German – Near and immunity. These alliances, protected by immunity from antitrust laws, Middle East Aviation Conference in Berlin. have every incentive to refrain from competing on service and fares.” - James Oberstar, Chairman US House Committee on Transportation “‘Middle East airlines are not just taking the easy option of plundering and Infrastructure, in a letter to US Assistant Attorney General Christine existing routes such as Perth-London offered by Qantas.’…Instead, for Varney on the proposed United – Continental merger. example, they are offering Perth residents six destinations in the UK via Dubai: London Heathrow, London Gatwick, Newcastle, Birmingham, ‘’The lesson is clear: open doors - rather than closed, protectionist doors - Manchester and Glasgow. The airline’s divisional vice-president hold the key to long-term economic success…Our government believes commercial, Richard Vaughan, highlights a surprising statistic: that 80 that a free and open approach to trade can help spur export activity per cent of Emirates passengers coming to Australia are from countries and create opportunities for everybody’’ - Canada’s International Trade or cities not served by Qantas. ‘We connect countries whose national Minister Peter Van Loan to the Brampton Board of Trade. airlines serve neither country,’ Mr Vaughan says. ‘The airlines of Austria, the Czech Republic, Russia, Spain and Italy, for instance, do not fly to ‘’If you’re not part of the Star Alliance, Air Canada’s alliance, you’re Australia and Qantas does not serve those countries.’” - Geoff Thomas, pretty much shut out of the country. There have been a long list of The West Australian. carriers that have come to us seeking access to the Canadian market’’ - WestJet CEO Greg Saretsky. “The net result for UK business will be increased costs, reduced service and greater unreliability – exactly the opposite of what internationally ‘’Today we are being told that the domestic airline industry can only competing UK businesses, such as pharmaceuticals or technology, support three large network airlines; how long before we’re told that need.” - Christopher Snelling from the UK Freight Transport number has been reduced to one large network airline? And how will Association commenting on plans by the UK Conservative LibDem such consolidation benefit American consumers?’’ - William McGee of Coalition Government to adopt a ‘per plane’ aviation tax. the Consumers Union in evidence to the US Senate Judiciary Committee hearing ‘United - Continental Airlines Merger: How Will Consumers Fare?’ “I would favour a mix of competition and regulation rather than the consolidation of every airline under the sun…I don’t believe we have “For too long, airlines in the traditional regions of Asia, North America an excess-capacity situation. If anything, we have inadequate capacity and Europe have refused to acknowledge the competitive threat from because 80 percent load factors are too high...Wall Street doesn’t the Persian Gulf, brushing them off as irrelevant. The reality is that even know the first thing about its own business much less about our Dubai is the true crossroads of the world and Emirates has leveraged that business.” - Ex American Airlines CEO Bob Crandall, speaking at the position to their advantage without having to rely on others to do it for American Association of Airport Executives conference in Dallas. them.” - Gerson Lehrman Group

IATA Airline Rankings – 2009

Scheduled Passengers Thousands International Revenue Millions Scheduled Freight Tonnes Thousands Passenger Kilometres (RPKs) 1 American Airlines 85,720 Emirates 118,284 Federal Express 6,399 2 Delta Air Lines 67,935 Lufthansa 118,264 UPS Airlines 4,123 3 China Southern Airlines 65,959 Air France 116,711 Korean Air 1,572 4 United Airlines 56,024 British Airways 109,402 Emirates 1,473 5 Lufthansa 53,223 Singapore Airlines 81,552 Cathay Pacific Airways 1,304 6 US Airways 50,975 Cathay Pacific Airways 81,086 United Airlines 1,273 7 Air France 47,965 American Airlines 76,301 Singapore Airlines 1,106 8 Continental Airlines 44,032 KLM 73,472 China Airlines 1,047 9 China Eastern Airlines 43,382 Delta Air Lines 70,725 Japan Airlines 1,012 10 All Nippon Airways 41,921 United Airlines 68,073 Lufthansa 987 3 Open Skies should be judged by actions, not words Open Skies is a catchy phrase with a positive and pro-consumer connotation. No wonder so many countries claim to be members of the club. Given the number of countries that purportedly embrace an Open Skies international aviation policy, there should be far fewer barriers to global air service trade and consumers should reap far more benefits then is the case. The litmus test to whether a country rightfully belongs in the Open Skies club though is: does it fully open its air service market to all comers irrespective of parochial interests and; is it willing to fully exit the business of managing air service capacity? Open Skies has made significant progress since the United States spearheaded this global air service free trade initiative in the early 1990s. However, it clearly is a work in progress. Much important work is left to be done. Not all Open Skies claims are equal and the differences among approaches are stark. The Open Skies debate reflects the challenge ahead for true freedom of the global skies. Broadly three distinct approaches to international air service policy have emerged: true Open Skies or the gold standard; selective Open Skies where, on a case-by-case basis, governments cannot resist the temptation to manage capacity; and and too often government cannot resist the temptation to usurp the outdated protectionism, which harms consumers and national economies marketplace by managing capacity by regulatory fiat. alike. A high-profile case in point is the European Union. While the EU deserves True Open Skies is unflinchingly consumer-centric, market-based and great credit for its landmark multilateral Open Skies agreements with the should be uniformly applied. It is not a perfect model - it falls short on US and Canada, its policy is not applied uniformly. Its selective, case-by- some elements such as foreign investment and control liberalisation that are case approach creates opportunities for some Member States to block indispensable for true globalisation of the airline industry – but it remains progress. EU-Gulf State aviation relations is an example. Some competition- the best available model. phobic European carriers have made clear they would strongly oppose a John Byerly, the United States’ Deputy Assistant Secretary of State for more liberal all encompassing air service agreement with Gulf States. Thus, Transportation Affairs and lead aviation negotiator for the past decade, there has been no attempt to fully open the EU-Gulf State market. summed it up well recently when he said: “Our Open Skies policy is Another example is Australia which relies on international aviation as an focused on consumers. For this reason, Open Skies agreements are offered economic pipeline and mobility maker. To its credit, Australia has sealed to other countries on a ‘one size fits all’ basis: we do not evaluate whether Open Skies agreements with key air service trading partners like the US, the airlines of the foreign partner or U.S. airlines will secure greater and allocates frequencies for other countries based on its view of future benefits.” As an example, Mr. Byerly cited the US-Ethiopian Open Skies market demand – as is the case for its agreement with the UAE, which is agreement that only Ethiopian Airlines currently relies upon. He explained: forward thinking and rewards those who have long standing links to the “Under our policy, that’s just fine: we welcome the benefits to consumers country. of Ethiopian Airlines’ service and the fact that U.S. air carriers have the opportunity to enter the market freely in the future if they decide that it Finally, there are countries which cling solely to flag carrier interest, at the makes commercial sense to do so.” expense of the interests of all other stakeholders. The contrast between this approach and the core principals of Open Skies could not be starker: Simply put, true Open Skies is a ‘come one, come all’ policy and consumers consumer interests are often overlooked because the sole focus is the are its North Star. The United States is nearing the milestone of 100 commercial interest of the flag carrier (and, by extension, its global alliance Open Skies agreements. To its credit, the US has forged onward with a partners). Rather than attempting to ensure adequate capacity, in select number of key agreements that were vigorously opposed by powerful cases the government mandates inadequate capacity because a constrained airline constituents seeking to protect incumbent positions. The United market benefits the flag carrier. This is not viable in the long-term. Arab Emirates and Singapore are two additional examples of countries whose international aviation policies are guided by core Open Skies Emirates sees Canada’s international aviation policy as a prime example principals. The welcome mat extended by the UAE Government’s aviation of a disconnect between consumer interests and wider trade policy. While policy has attracted more than 130 international carrier competitors to Canada promotes its ‘Blue Skies’ policy of openness, its nine Open Skies Dubai. Similarly, the Singaporean Government has welcomed nearly 70 agreements fall into two categories: those with small countries whose international carriers to Singapore Changi Airport. carriers pose little competitive threat to Air Canada (Ireland, Iceland, Barbados, the Dominican Republic and Costa Rica) or those facilitating The refuge for countries and political unions not yet prepared to fully closer integration between Air Canada and Star Alliance partners (the US, embrace the core principals of Open Skies is a growing group who appear EU, New Zealand and South Korea). For those countries falling outside to straddle the line between selective Open Skies and government managed these parameters Ottawa’s ’Blue Skies’ message appears to be hazy. competition. Their international aviation policies differ from true Open Skies in several fundamental respects: they are applied selectively rather The hope is enlightened policy and commercial wisdom will prevail and than uniformly; consumer interest is a factor but not the sole determinant; eventually lead to full freedom of global air service markets.

4 European vs Dubai airport investment and development As European air traffic volumes slowly recover from recent challenges, Overall, EU airports have planned for a 41% capacity increase by 2030 concerns are being raised about capacity and competitiveness at European and have committed US$147 billion to expand facilities between 2000 airports. ACI Europe recently published its vision for the future - “An and 2015. As the ACI report indicates EU airports are likely to experience Outlook for Europe’s Airports; Facing the Challenges of the 21st Century” capacity strain and feel threatened by investment spend elsewhere. - calling for both politicians and European citizens to recognise future expansion as vital for addressing competitive pressures from within and It is important to put Dubai into global aviation context. Of the world’s outside Europe’s borders. 20 largest airports by international passenger numbers, the EU - with its 500 million people - has ten airports on this list. The Middle East - with When describing the capacity challenges facing EU airports, ACI 260 million people - has just one airport on the list, Dubai International. specifically identified the Gulf region as a major threat to Europe’s airports, Expand this to the top 50 largest airports and the share for Europe suggesting that passengers from nearby emerging markets will bypass EU increases. Regionally speaking, the Middle East accounts for only 11% of airports (to fly through Dubai instead of Frankfurt or Heathrow). traffic and capacity in terms of Passenger-Kilometers flown behind the Asia-Pacific which accounts for 29% and Europe which accounts for 35%. In particular the ACI report indicated Dubai International has benefited from significantly more investment than competing EU airports. In With just one top-20 hub airport for the entire Middle East regional market comparison to the Gulf and Middle East region, EU governments are said to (and Dubai being four hours from one third of the global population), be unwilling to support or facilitate any airport infrastructure development. current efforts to increase Dubai’s airport capacity are justified. Concerns about over-representation in the region are unfounded, Dubai’s expansion Capacity constraints are the result of many factors (space, government plans are ensuring it maintains its position as a competitive and efficient policy, regulatory environment, hub carrier network, environmental hub offering choice to both airlines and passengers. Dubai is responding issues); capital investment and spending are certainly significant. to increasing demand from travellers for efficient, seamless connections to However, in the relatively recent past many EU airports and Member State their final destinations. Governments have been very willing to invest in capacity expansion for Dubai International unashamedly wants to be on the front foot when the future. In response to increases in demand and traffic after the creation it comes to accommodating growth, which is being driven by regional of the European Single Aviation Market in the 1990s European airports economics and the more than 130 carriers who operate in Dubai’s open invested heavily, as shown in the map below. skies environment.

New airport built with price tag of US$2.9 billion

Oslo Gardermoen

Construction of the new airport Invested US$9.2 billion in the building of Terminal 5 expected to cost around US$3.5 billion and improvements at the other four terminals Berlin International London Heathrow Paris Charles de Gaulle Modernised Terminals 1 and 2 and plans for a fourth Terminal and runway work undertaken for US$3.0 billion Toronto runway costing approximately US$5.67 billion

Madrid-Barajas Toledo New York Beijing San Francisco Invested US$5.4 billion in new passenger Athens Elefthérios Venizélos Seoul and cargo terminals and two new runways Tokyo Los Angeles New airport built costing a total of US$2.3 billion Osaka Shanghai Houston Taipei First flight lands at Dubai’s new airport Hong Kong

Emirates SkyCargo flight EK9883, a Boeing 777 freighter flying in from airlines have already signed on to launch flights - with passenger airlines Manila Hong Kong, was the inaugural aircraft to land at Dubai’s new Al Maktoum to follow. The development of the new airport will continue over the International airport (DWC). The 20 June flight marks the first stage of course of the next 15 years, with EK not likely to move to DWC within the the long-term project, the airport is now open to cargo airlines - 15 cargo next decade.

Singapore

Jakarta Dar es Salaam Seychelles Luanda

Lilongwe

Mauritius

São Paulo Johannesburg 5 Brisbane Durban Perth Cape Town Sydney Auckland Melbourne

Christchurch Graphic illustration only, not a complete representation or to scale. © 2010. Emirates. All rights reserved. not a complete representation Graphic illustration only, 5 June edition Super-duper-connectors from the Gulf Rulers of the new silk road

“The charges of unfair competition from the likes of Lufthansa, Air France- ‘’If Dubai, Qatar and Abu Dhabi want to put aviation at the heart of their KLM and Air Canada fail to stack up. Although it is government-owned, economies by taking the spillover from growth-constrained airports in Emirates has been profitable in every year but one since it started. Its fast- developed countries and by building networks that European and American growing fleet…is financed conventionally. It pays the same price for fuel as carriers, obsessed with stifling competition through mergers and alliances, other airlines and the same fees at its home airport. “ could not be bothered with, they deserve not brickbats but applause.’’

Aviation provides flight path to a better world

As the dust or, rather, volcanic ash settled in the skies over Europe in April, one question split public opinion: “If you stopped all aircraft tomorrow, would the world really be a better place?” The eruption of the Eyjafjallajokull volcano in Iceland prompted a six- day ban on flying across much of Europe. That had a knock-on effect in places as far afield as Kenya, where farmers depend on aviation to bring in materials used in horticulture and to export their produce. It also led to speculation about carbon dioxide emissions savings. The event dominated world news and stimulated global debate. Yet in one area there appeared to be consensus. Today, many of the benefits of air transport are so integrated into the social and economic fabric of our society that they are taken for granted. The cloud from Eyjafjallajokull made that much clear at least. Aviation facilitates economic growth and creates jobs – which in turn offers a wide range of activities and skills. But it also plays a far wider role than the immediate contribution across its supply chain. Without air travel, what As part of the air travel industry I strongly believe aviation can support this, would happen to the 33 million people who depend on the industry, the 35 not only by pioneering “greener” flight but also by mobilising its resources per cent of world trade that it moves and the US$1.5 trillion GDP it supports? around the world to build a better understanding of the actions that we all An Oxford Economics report called Aviation: The Real World Wide Web need to take to achieve this. This includes supporting those tackling the offers an interesting insight and, perhaps unexpected, answers. It is a other 98 per cent of man-made CO2 emissions – such as the 20 per cent thought-provoking read for those who, like so many, take the benefits caused by deforestation, which has a huge impact on biodiversity. of air transport for granted. We live in a single global economy driven Why should we provide such support? Because the natural environment has by aviation; on a planet more interconnected than at any time in history, been a source of inspiration for our industry ever since Leonardo da Vinci woven together by a web of flights that create ever-expanding social and started drawing plans for what today we would call planes and helicopters economic networks. some 500 years ago, which were based on his observations of the But, of course, as more people want and need to travel by air it will take natural world. Today, “biomimicry” – or biologically inspired engineering steep change advancements to handle higher demand while keeping air – continues to inspire solutions for greener flight. This is why we see travel comfortable, affordable and eco-efficient. So new concepts must take preserving biodiversity as a means of preserving the source of our own into account not only technological advances but also user demands and future innovation. respect for the environment. As lower fuel-burn means lower emissions and It’s a compelling truth; nature may itself hold the key to eco-efficient less noise means fewer curfew restrictions, quite simply, what’s good for the innovation to balance the global need for growth in air travel and its environment is good for business. catalytic benefits – to trade, investment, productivity and tourism – together But what of the speculation as to whether lower growth in air transport with environmental benefits. would automatically cut total man-made emissions? As the Oxford At Airbus, I tell my colleagues we do much more than build planes; each Economics report points out, things are not as simple as they may first and every one of us helps to build both a more connected and sustainable appear. People and goods will still want and need to travel; it’s worth world. Just as airlines do more than simply fly people from A to B, they are remembering that passenger journeys of more than 1,500km – for which part of a much bigger journey, one of discovery, cultural exchange, social no practical alternative exists – account for 80 per cent of aviation’s development, economic growth and sustainability. emissions. So too, people and economies currently dependent on aviation will need to seek alternative employment and replacement activities Rainer Ohler is Senior Vice President of Public Affairs and Communications at Airbus respectively. This will also have an impact on the environment. Whether or not a switch away from aviation would reduce emissions US$2.2 billion losses Net impact on the aviation sector when depends on a large number of factors. These include the level of emissions in the first week factoring in deferred business and leisure travel released by the alternative modes of transport and related infrastructure that replace aviation, as well as their supply chains, together with the level US$1.6 billion lost Impact on visitor spending realised by of emissions released by the replacement activity and its supply chain, revenue destinations globally too. As thousands of people travelling for days by train to Copenhagen US$490 million Productivity losses stemming from stranded demonstrated, it has become accepted “fact” that trains are better than workers planes when it comes to the environment. A couple of independent studies have already shown that this is not always US$4.7 billion loss Total impact on global GDP true, even for short-haul flights. Yet around the world there is a general US$65 million loss Estimated net impact on producers of cry to invest billions in rail travel, even though no comprehensive life cycle perishable goods in Africa evaluation exists. It seems odd that anyone would invest such sums without weighing up the facts to check if this is actually the best solution. Source: Oxford Economics 6 emirates.com

Learning from nature and using the latest technology – the Emirates A380 is eco-efficiency at its best. Using less fuel to carry more people, further and quieter than ever before. Just some of the The Emirates A380. reasons why we operate more A380s than anyone else. Uses less to move more. Fly Emirates. Keep discovering.

Low noise 25% less emissions 75g CO per 100 passenger km 25% lightweight materials 2 7 Early movers should be recognised

In Kyoto in 1997, the UNFCCC delegated responsibility for preparing and administering any emissions reductions scheme for international aviation to ICAO - just as the International Maritime Organisation is responsible for reducing emissions from shipping. Many observers have argued that ICAO has been moving too slowly. A target for improving fuel efficiency for the global fleet was finally agreed by member states at its High Level Meeting on the Environment in October last year. Despite vigorous attempts by some developing countries to derail the process, there was eventual agreement to “work through ICAO to achieve a global annual average fuel efficiency improvement of 2% over the medium term to 2020… calculated on the basis of volume of fuel used per revenue tonne kilometre performed.” Although aviation was ignored by COP15 in Copenhagen, the UNFCCC may turn to ICAO for its proposed solutions at COP16 in Cancún in December this year - if so, the new agreed target may well be adopted. Questions remain though over how to enforce this target on the global fleet, with some arguing these kinds of annual efficiency improvements will be easily met by normal fleet renewals - especially for those countries billions of dollars in the most technically-advanced, fuel efficient, low noise with operators of ageing fleets. and low emissions aircraft should not be penalised, while those with ageing fleets easily meet improvement targets through ‘business as usual’ fleet With an average fleet age of just over 5 years, Emirates already produces renewals. an average fuel efficiency rate more than 25% lower than the ICAO global fleet average. As the largest operator of cutting edge modern aircraft such Although some voices in the industry are arguing there should be no as the and the Boeing 777 families, we are already running competitive advantage between operators on the same routes. Why close to maximum efficiency. As such, Emirates, and many other operators should special breaks be given to airlines with ageing aircraft (with lower with more modern fleets, believe it is critical that ICAO (and IATA) efficiencies and lower seat factors) - while others, like Emirates have recognise ‘early movers’ in any kind of international aviation emissions US$58.7 billion invested in modern, low emissions aircraft and are flying at reductions scheme. Countries with airlines who have already invested maximum efficiency yet receive no policy recognition or incentives?

Fast facts • Aircraft in fleet 148 • Financials 09/10 Revenue US$11.8 billion, Net profit US$964 million • Number of destinations 102 • First flight 25 October 1985 • Passengers (2009) 25.9 million • Shortest flight Muscat - Dubai (1 hour) • Cargo (2009) 1.47 million tonnes • Longest flight Dubai - Los Angeles (16 hours 25 minutes) • Weekly departures from Dubai International Airport 1,116 • New 2010 routes Amsterdam, Dakar, Madrid, Prague, Tokyo • Employees (Airline) 29,905 • A380 coming routes Beijing, Manchester, New York JFK • Nationalities 158 • A380 routes Auckland, Bangkok, Jeddah, London Heathrow, Toronto, Paris, Seoul, and Sydney.

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Christchurch Graphic illustration only, not a complete representation or to scale. © 2010. Emirates. All rights reserved. not a complete representation Graphic illustration only, ©2010. Emirates. All rights reserved. ©2010. Emirates.

Andrew J Parker - Senior Vice President Public Affairs Will Löfberg - Manager Public Affairs Email: [email protected] Email: [email protected] or [email protected] 8