8/8/2019 Emirates - Canada Myths Facts
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Emirates Airline is seeking to provide daily service fromDubai
to Toronto, a city currently capped at just three flights
a week. Emirates also wants to offer daily service to Calgaryand
Vancouver. Additional flights would generate significanteconomic
benefits for Canada and are endorsed by hundredsof Canadian
stakeholders. Emirates proposed flights have beencharacterised by
Air Canada as capacity dumping. Howevereven with the sought
increase, Emirates would still be one ofthe smallest international
operators to Canada behind Lufthansa,British Airways, Air France
and Swiss - and would represent lessthan 2% of Canadas
international air services. While Emiratesrespects the governments
recent decision to deny additionalflights, we must rebut the myths
of Air Canada in its attempt todeny choice to Canadian consumers
and protect itself from fair
and reasonable competition.
Myth: Emirates is subsidised.
Fact: Emirates has been profitable in every year but one sinceit
began its operations 25 years ago. It is fully audited annuallyby
PricewaterhouseCoopers, the worlds largest accounting
firm,attesting to its transparency and non-subsidised
credentials.Our accounts and annual reports have also been
reviewedand substantiated by leading analysts from major
internationalinvestment banks such as UBS and JPMorgan. By
comparison,many other airlines including Air Canada and others in
the StarAlliance have relied on government subsidies or
aeropoliticalprotection in recent years.
Many of my European counterparts will bitch and moan aboutthe
way the Middle East carriers operate; they think that it isunfair
competition. I dont buy into that... I just got a copy of[Emirates]
its accounts the other day, and they look like a normalset of
accounts to me... and have no doubt that they acted in arational,
commercial way in every way that I have seen. - CEOof British
Airways Willie Walsh.
Myth: Emirates is seeking to dump capacity inCanada.
Fact: Emirates is currently limited to operating three flights
perweek to Canada. Those flights have been operating at near
fullcapacity since their launch in October 2007. Emirates
currentmarket share as a proportion of all international bookingsto
and from Canada is 0.5% - in comparison to Star Alliancesmarket
share which is 41%. With a daily A380 service to Toronto,
Emirates market share of international traffic to Canada
wouldgrow slightly to only 1%. It is projected that with a daily
service
to Toronto and a daily service to each of Calgary and
Vancouver,Emirates market share of international traffic to Canada
wouldstill be less than 2%.
Myth: Emirates will steal traffic from Air Canadaand divert it
over its mega-hub in Dubai.
Fact: Currently 98% of passengers on Emirates Toronto
flightsoriginate or depart from Dubai and other points to whichAir
Canada does not fly directly. By securing daily flights to Toronto,
Calgary and Vancouver, Emirates is seeking to fillsignificant unmet
two-way demand between Canada and Dubai,the Middle East, Africa and
the Asian subcontinent - all regions
for the most part ignored by Air Canada.
This debate also raises questions about who is ultimately
beingprotected: Air Canada or its Star Alliance partner
Lufthansa?Lufthanas own website proudly states more than 80% of
itsCanadian passengers connect beyond Germany to destinations
inEurope, the Middle East, Africa and South-East Asia. Is it
Canadasduty to protect Lufthansas hubs from competition?
Myth: The current Air Transport Agreementbetween Canada and the
UAE offers adequatecapacity on the routes given the size of the
market
between the countries.Fact: Passenger volumes between Canada and
the UAE are large(growing strongly year on year) relative to the
number of weeklyflights and the point-to-point passenger numbers
flown by otherinternational carriers from Canada (see above
Lufthansa example).Of the remaining traffic going beyond Dubai,
almost all goes topoints not served by Air Canada. The current
flight restrictionsalso place a severe constraint on further export
growth to the UAE- Canadas largest export market in Middle East and
North Africa -and impose considerable inconvenience on the 27,000
Canadiansliving in the UAE and the 115 Canadian companies operating
theresince existing flights are operating at capacity.
Moreover, the days of determining traffic rights based
exclusivelyon the size of the origin and destination market of
countriesended two decades ago for most countries. If this is still
thestandard, then Lufthansas flights to Canada need to be
measuredin the same way.
Canada and Emirates AirlineBusting myths. A reasonable
request
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Myth: Since Emirates is state-owned the CanadianGovernment
should treat its request for additionalflights differently.
Fact: State-owned does not automatically mean subsidised.Canadas
Blue Sky policy does not distinguish between non state-owned versus
state-owned entities. Canada has in recent yearsnegotiated many
enhanced air access agreements with countrieswhose major carrier is
wholly or partly state-owned, including
with New Zealand, Singapore and Ireland - not to mention
thelarge number of EU States which have ownership interests intheir
respective national carriers and will benefit from CanadasAir
Transport Agreement with the EU.
Myth: Emirates entry into Australia had negativeeconomic and
commercial consequences andcaused the exit of many European
carriers fromthe market.
Fact: Emirates has been a welcome addition to the
Australianaviation market. Currently Emirates flies 70 times to
Australiaeach week, resulting in significant trade, tourism and
investment
gains. Decisions by other international airlines to exit the
marketwere prompted by their own alliance objectives and
pre-datedEmirates growth. At the same time Qantas has
progressivelygrown profits, jobs, market share and revenue since
Emiratesentered the market in 1996. Key stakeholders have
unanimouslyendorsed the success of the Emirates-Australia
partnership. In2005, Australian Prime Minister John Howard said: I
would liketo see you (Emirates) fly here more often in the
future.
In the year t o August 2010, Emirates carried 1.5
millionpassengers to Australia, 85% of whom came from points
notserved by Qantas.
The Australian Government forecasts that tourists from theMiddle
East and North Africa to Australia will contributeUS$9.4billion
between 2010 and 2020.
The same is true of other major markets like the UK, the
US,South Africa and Germany which Emirates flies to, where
thegrowth in Emirates services has been accompanied by trade
andtourism benefits - and the growth of markets for all
respectivenational carriers.
Myth: Emirates gets free fuel and discountedairport fees.
Fact: Emirates procures fuel at market rates from
multiplesuppliers at all airports to which it operates, including
at DubaiInternational Airport. Oil accounts for only 4% of Dubais
GDP, afigure which goes down every year. There is minimal oil
refiningcapacity in the UAE/Dubai, Emirates actually pays a
premiumin Dubai for jet fuel, given Singapore is the closest major
oilrefining centre - from where we source the majority of our
fuel.All carriers flying into and out of Dubai are subject to the
sameairport fees and charges.
Who benefits from protectionism?Certainly not consumers. Air
Canada does not fly to anywhere inAfrica, the South East Asian
subcontinent and only serves one city in
the whole Middle East region, Tel Aviv. It would rather its
passengersbe diverted through hubs in Europe to access these
destinations -no matter how inconvenient, costly or time-consuming.
Continuedprotection of Air Canada means less choice, higher prices
andlonger flight times for people travelling between Canada and
someof the fastest-developing economies of the world.
Why should Canadian consumers be dictated to by the
narrowinterests of Air Canadas and its fellow Star Alliance
memberLufthansa?
Consumers, and most certainly governments, should beextremely
sceptical when the dominant provider of any servicein any market
launches a vociferous plea for even greaterprotection than it
already enjoys. - Bruce Cran, President,Consumers Association of
Canada, op-ed on open skies posted
to www.consumer.ca
Where was Air Canadas opposition to open skieswith
Switzerland?Canada just concluded - without any visible opposition
from AirCanada - an open skies agreement with Switzerland. In spite
ofvery similar demographics, trade and travel patterns betweenthe
UAE and Switzerland, the new agreement with Switzerlandenables far
more air services than what is currently permittedbetween Canada
and the UAE.
What is the difference? Lufthansa owns Swiss International
AirLines and along with Air Canada, as part of the Star
Alliance,they enjoy anti-trust immunity on Trans Atlantic routes -
hencethis particular open skies deal exempts the airlines from
pricecompetition and directly benefits these three companies.
Thecomparison certainly lends credence to recent comments
fromWestJets CEO.
If youre not part of the Star Alliance, Air Canadas
alliance,youre pretty much shut out of the country. - Gregg
Saretsky,President and CEO, WestJet.
Lost economic opportunity.In 2009 the UAE was the largest
merchandise export market forCanada in the Middle East and North
Africa Region. In fact, theUAE was Canadas 17th largest export
market in the world - andfar bigger than many other countries with
which Canada hassigned open skies agreements, including the latest
example ofSwitzerland.
In 2010 Emirates released a Canadian -authored economic
studywhich found Emirates additional flights to Canada would result
in: CA$480 million in new economic activity. 2,800 additional
jobs.
CA$82.6 million in direct new tourism spending annually.
Emirates request for additional flights is supported by
numerousprovincial governments, big city mayors, business and
tourismassociations and consumer groups, who see Canadas
nationalinterests served by greater competition, choice and
connectivity.
E
mirates.2010.
Allrightsreserved.
SwitzerlandUAE
Unrestricted6Number of allowed weekly flights
to/from Canada
216Number of operated weekly flights
to/from Canada (Summer 2010)
7.8 m8.2 mHome Population
CA$1.188 bnCA$1.304 bnCanadas exports to (2009)
6,00027,000Canadians living in
45115Number of Canadian companies
operating in
http://www.consumer.ca/http://www.consumer.ca/
