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 Europe - 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 Berlin Air Show 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, Germany, 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/Airbus, 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