Emirates splashing the cash!!

I don’t suppose there’s any pressing reason a person from California would know about the IOM, but a person from 100 or 200 miles away certainly should. That’s what gets to me.

Likewise, I never knew Macedonia was a Greek region as well as a country.

Mongu, before I came in here, I had never even heard the words, “Isle of Man,” and I consider myself pretty knowledgeable in Geography, as I did rather well in it back in the day, plus I enjoyed it. When I flew KLM in 1989 from LAX-ATH via AMS, they had the inflight maps on the 743’s.

Contrary to popular belief, I don’t think the US is any worse than the rest of us in the geographical ignorance stakes. I vividly remember an A-level Geography class where nearly half my class couldn’t place the Firth of Forth on a map of the country (and an Economics class where about 5 people couldn’t work out percentages)

The Isle of Man is often missed off maps of the British Isles in the media. The local paper has a “Miss Isle of Man” section to draw shame and scorn on the errant broadcasters. The BBC often scores badly with the usual London-centric attitude (no offence Ren!)

Other times, someone asks where I’m from and I tell them. 5 minutes later “you’re from the Isle of Wight aren’t you?”. I could happily brain such people!!

When the volcanic events on Montserrat forced mass evacuations a few years ago, one of the papers suggested that the majority of people didn’t know where it was (despite it being one of the last colonies we have). The sheer geographical ignorance of a lot of people is infuriating.

It is no doubt one of the things airlines need to do – educate the culturally impoverished (I was going to add “masses” but thought better of it). Things like map displays on the cabin TVs are a good step in this direction and I would like to thank some of the UK charter airlines – they started doing that before the major airlines did, I remember seeing a detailed map on the screens on Monarch in the late 80’s.

Sure they’ll do that Mongu. They pretty much just did that with the ex SIA A340’s. And you’re right about the U.S. perception (or lack thereof) of Dubai. Most people in the U.S. haven’t never even heard of the place. But then again, it’s not marketed out here at all, so you really can’t blame us. Hell, people ask me where I’m going on my honeymoon, and I tell them “St. Maarten’s.” The response I’ve heard about 90% of the time has been, “Where’s that?” And that’s not even in the Mid. East!

Dubai IS a tourist destination. Half the people I know have been there for holiday. I think it is a different matter in the US as the place is probably tarnished with the “middle east” brush. Shame, as having grown up in the middle east I can attest that Dubai is about the freest and most fun place in that region. Abu Dhabi is positively drab by contrast.

Ditto house deals; there is no such clause on my house, and I’ve never heard of it happening to anyone else. One of the main reasons to buy a house is to sell it on for a profit in 3 or 4 years time. The only time you get restrictive covenants about resale is generally when you are buying your place with a government grant or state subsidised loan, or some such. Again, maybe the US property market is different to here.

What do you expect Airbus to do – say to EK “sorry, you have to sign this clause saying you can’t sell the aircraft on”? No chance – EK would go to Boeing instead. Anyway, what if Emirates did sign such a clause then broke it anyway? Airbus would have a tough time enforcing the contract and would certainly loose future sales from a big customer if they tried to.

Mongu,

Good point as well, however, I just bought a new home, and the builder had strict language in the contract concerning prohibitions about selling my home/land to somebody else. I’m sure Airbus has similar restrictions. If not whats to stop any large airline from negociating a discounted price then turning them over for a quick profit?? This could pull the rug out from under Airbus/Boeing. Back to the original thread, Dubai may be positioning itself as a tourist mecca….just find it hard to believe,
“Come on kids pack your bags were going to Dubai!!!!!”

I concur, Mongu. I guess you could say they would be gaining market control by doing that. I’m sure Airbus isn’t complaining, considering the more firm orders they have, the more cashflow they have, plus less worries about the project getting to the break even point. How many airframes would they need to roll out before they broke even, doesn anybody know a rough figure?

Thank you kindly!

That was the most insightful thing ive heard in a while, deep thinking! That makes perfect sense aswell!

Originally posted by mongu
At first glance, this order doesn’t make sense – it’s too large.

However I think you can understand it better if you consider the following.

1. Nobody would be surprised to see SIA order a total of 40 A380’s. In the long term, how is Emirates any different? Their growth is focused in the same direction.

2. As one of the few cash-rich airlines around right now, they can safely order all these aircraft – in the knowedlge that it will tie up A380 production. They can then sell their delivery slots at a premium to other airlines. Or even sell options on the slots.

3. Emirates might have a different attitude to risk than Airbus. There are airlines out there which Airbus will not give firm slots to, because of doubts over their ability to pay. Emirates might be willing to place the order on their behalf.

4. You can be certain that Emirates got a good discount for a bulk purchase. They could probably turn a profit by selling some aircraft on for a price that exceeded what they paid (hence the profit) but at a price less than what other airlines planning to order only a small number might otherwise pay.

Well summerised mongu!

At first glance, this order doesn’t make sense – it’s too large.

However I think you can understand it better if you consider the following.

1. Nobody would be surprised to see SIA order a total of 40 A380’s. In the long term, how is Emirates any different? Their growth is focused in the same direction.

2. As one of the few cash-rich airlines around right now, they can safely order all these aircraft – in the knowedlge that it will tie up A380 production. They can then sell their delivery slots at a premium to other airlines. Or even sell options on the slots.

3. Emirates might have a different attitude to risk than Airbus. There are airlines out there which Airbus will not give firm slots to, because of doubts over their ability to pay. Emirates might be willing to place the order on their behalf.

4. You can be certain that Emirates got a good discount for a bulk purchase. They could probably turn a profit by selling some aircraft on for a price that exceeded what they paid (hence the profit) but at a price less than what other airlines planning to order only a small number might otherwise pay.

BA have over 50 744’s, but think about how many Intl long haul destinations they serve. In North and South America alone, is it safe to say they serve 30-40 gateways? I’m not even counting Asia and the S. Pacific. How many long haul destinations does Emirates serve? None in N. and S. America, that’s for sure. Yes, some of these aircraft will open up new markets, but they’re going to have to start serving quite a few new destinations in order to justify such a huge order, not even counting the 40 A380’s. I really hope they do. Emirates is a fantastic airline, and it would be great to be able to fly them not only to travel to the Middle East, but perhaps they could be a choice for flying from the U.S. to Europe, as well. I’d be all over that.

Kabir, ok they may not have the home Market they are establishing themselves as one of the worlds classiest airlines, which Travellers enjoy flying!

40 A380s initially sounds excessive, but remember BA fly OVER 50 B747-400s. They will end up using A380s to feed the hub from the likes of LHR for connections throughout the world, and the A380 may also do away with stops at Singapore for the Far Eastern/Oceanic markets

ah ok……i dont see any sense fr Emirates to have 40 A380s.

I think that is the number altogether. Might be less but still it is a large number!

40 A380s!!!:eek: Exactly what the hell will they do with 40 A380s!:confused:

I think the size of this order might be to do with building up another industry in the country rather than just oil. If you can build up tourist and commerce industry, which seems to be quite fulfilling in Dubai at the moment, then they would be protected themselves for the future and would have another industry to rely upon when the oil runs out.

Dubai, a tourists dream, fantastic hotels, attractions, beaches and that new palm development for wealthy celebrities. If you start building up the airline now then you will be prepared. The amount of aircraft they have currently ordered may sound a lot (where the hell will they fly over 40 A380s?) but in the future it will be a necessity with a growing tourist industry and an excellent hub for connections. Buying these aircraft now is going against logic in the aviation world but Emirates are profitable and will continue to be so such an order would end up being a very good deal.

I think most Americans are unaware of what places like Dubai have to offer. I, for one, would like to go there. Even so, how would Americans be received in the Middle East? Dangers aside, we are VERY FAR from there, to begin with. Why spend 20 hours on a plane to go there, when you can spend 10 to go to Europe, or a lot less and go to the Carribean, Mexico, or Hawaii?

I to am amazed at the size of these orders, Are there many Europeans who travel to the Emerates and Dubai? I know there is virtually zero interest on the American side for a vacation in the middle East. Can these countries become tourist destinations?

Operating cost is only half the issue, Kabir. Acquisition cost is the other half.

It may well have paid off to operate both A346 and B773ER in that context. Delivery flexibility (or lack thereof) also has an inherent cost. The finance cost will be slightly different for each aircraft too – in terms of fees, interest rates, penalties and the maintainence of a good credit relationship with a given bank or finance house.

There is a theory called “economic re-order value” in accounting which tries to quantify excatly what should be order and when, for a given set of variables – and there are lots.