OpenSkyThe International and

Government Affairs

Journal of Emirates

Issue 22 | September 2015

2 Emirates debunks subsidy and unfair competition allegations

4 One Belt, One Road: Aviation as a conduit to economic development

5 60 Seconds with Kevin Mitchell from the Business Travel Coalition

6 Businesses call for more international flights from Stuttgart

7 They said it best...

8 Emirates: facilitating US exports

10 Sector Insight ...from a global perspective

11 New technology and citizen science – protecting Australia’s wombats

12 Emirates to launch a new service to Panama City

Fast Facts

Atlanta

Washington, DC

Dubai

Houston

Seattle

San Francisco

Los AngelesDallas/Fortworth

BostonChicago

ColumbusNew York

Orlando

Emirates SkyCargo services between Dubai and US destinations

Countries along China’s ‘One Belt One Road’ (OBOR) – Emirates’ service to/from Dubai in OBOR countries – Other airlines’ service to/from Dubai to OBOR countries – OBOR countries where there is no service from Dubai –

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Dubai

Oman

Yemen

QatarSaudi Arabia

Afghanistan

NepalBhutan

Myanmar

LaosThailand Vietnam

Malaysia

Singapore

Indonesia

Philippines

China

Kazakhstan

Belarus

Ukraine

Latvia

Lebanon

Croatia

Georgia

Egypt

IranIraq

PakistanJordan

IndiaBangladesh

Sri Lanka

Maldives

TurkmenistanAzerbaijanKyrgyzstan

Mongolia

Serbia

Russia

Romania

Czech RepublicHungary

Turkey Tajikistan

Poland

Moldova

Uzbekistan

Slovakia

Slovenia

AlbaniaArmenia

Bosnia and HerzegovinaMontenegro

Estonia

Lithuania

Macedonia

East Timor

Cambodia

Brunei

Bulgaria

Syria

Bahrain

Kuwait

In this issue …

4,000 jobsEmirates supports per daily round trip service to US destinations

C=1bnGDP impact from Emirates’ operations to and from Germany in 2013/14

17h 35 mEmirates’ new service to Panama City will be the longest non-stop flight in the world

$100bnbilateral trade between the UAE and China set to reach this year

2

US legacy carriers got the facts wrong and set their sights on an outcome that will be wrong for American consumers, communities and the national economy.

In their protectionist campaign, the three US legacy carriers – Delta, United and American - have levied a number of false allegations about Emirates. They allege that Emirates, Etihad, and Qatar are subsidised and compete unfairly. Their aim is to restrict the growth of international flights to the US operated by Emirates and other Gulf airlines. The US legacy carriers have requested their government to unilaterally freeze the growth of all three Gulf carriers’ air services into the US, and to significantly roll back the existing Open Skies agreements. Emirates’ formal response to these allegations has been submitted to the US government departments, who are currently reviewing the issue, and is also publicly available on our website: www.emirates.com/USsubsidyRebuttal.

Restricting competition would hurt US consumers, communities and the national economy The US legacy carriers have framed their complaint in terms of their own narrow interests. The reality is they favour Open Skies agreements only when they work to their financial advantage, and they seek to lock out airlines that offer consumers a competitive choice.

Emirates proudly contributes to the goals of Open Skies which are: greater competition, increased flight frequency, consumer choice, promotion of business travel and tourism, improved service, and customer-centric innovation. We do that by offering US consumers, communities and exporting companies direct flights to more than 50 cities not directly served by any US carrier. We transport tourists, business travellers and goods, connecting America to some of the fastest growing economies in the world, in Africa, Asia and the Middle East, which helps to boost tourism and trade. Emirates today operates 98 flights each week from 10 US gateways – Boston, Chicago, Dallas/Fort Worth, Houston, Los Angeles, New York, San Francisco, Seattle, Washington DC and Orlando, which commenced this month. The estimated annual economic value of Emirates’ services to these airports and their surrounding regions is $2.9 billion. In addition, via interline arrangements, Emirates has provided over 775,000 connecting passengers to US legacy carriers, producing over $133 million in financial benefits to them over the past five years.

Emirates debunks subsidy and unfair competition allegations

Emirates offers one-stop service to 57 destinations across Africa, the Middle East, and Asiathat aren’t served by any American carriers.Shouldn’t you have the option to fly there?

learn more at emirates.com/openskies

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Failure to show harm done by EmiratesThe US legacy carriers are earning record profits, while seemingly content to remain on the lower ranks of global customer satisfaction surveys. North American airlines are projected to make $15.7 billion in profits this year and are reaping the benefits from bankruptcy protection and consolidation. They claim to have lost traffic to competition, but in fact, on every route that Emirates has established to the US, overall traffic has grown significantly after Emirates’ entry.

Last month, Emirates submitted a rebuttal in response to the US legacy carriers’ additional docket submissions, including the Compass Lexecon reports. Emirates’ rebuttal focused on the US legacy carriers’ complete failure to demonstrate that any harm has been caused by Gulf carrier competition. We felt it was important to expose the mis-truths in these documents, particularly the claims that the presence of Gulf carriers in the US market causes a reduction in US employment and has a negative effect on smaller airports, when in fact the opposite is the case. Aviation experts Campbell-Hill Aviation Group have analysed the US jobs effect of Emirates’ flights to the US, and found that Emirates supports nearly 4,000 US jobs per daily round trip service.

Despite claims from the US legacy carriers that Emirates is stealing away passengers, there are very few network similarities between Emirates and the US legacy carriers. In fact we only compete directly with the US legacy carriers on two routes - Washington-Dubai and New York-Milan. Emirates allows passengers in any of the 10 US cities it serves to fly one-stop to 15 different Middle East destinations; 22 African destinations; and 36 Asian destinations – all with connections optimally timed for passenger convenience. The US legacy carriers only serve a combined four points in Africa and four in the Middle East.

Their record profits, highly successful and growing transatlantic operations, the failure to demonstrate any loss of traffic to the Gulf carriers all help to compound that no harm has been caused to the US legacy carriers

Support from a broad spectrum of US stakeholdersAs submissions to the US Government illustrate, there is a tremendous groundswell of support from across the spectrum of US stakeholders who believe the national interest is best served by maintaining Open Skies policy and not selectively unravelling it. These stakeholders, representing low cost carriers, non-legacy carrier hub cities and airports, air cargo carriers, leading hospitality and tourism businesses amongst others, are a far better barometer than the self-interested US legacy carriers.

US Airlines for Open Skies (USAOS), an influential coalition consisting of FedEx, JetBlue Airways, Hawaiian Airlines and Atlas Air Worldwide have been especially vocal on the issue, and spoken out against the US legacy carriers’ protectionist campaign. USAOS recently submitted a letter to the docket process detailing the harm that could be done to their respective businesses, consumers, and the US economy should the government comply with the wishes of the US legacy carriers.

Emirates will continue to engage in the Open Skies debate, to champion consumer choice and competition. However, we will not lose focus on what we really set out to do when our airline took flight 30 years ago – to connect people, places and opportunities - efficiently, and in the most comfortable way possible. We will keep investing in our fleet, our products, and the services that we offer to our customers – because that is what competitive, customer-centric businesses do.

Emirates’ full response and subsequent rebuttal submitted to the US Departments of State, Transportation, and Commerce, can be viewed here:

www.emirates.com/USsubsidyRebuttal

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In late 2013, Chinese President Xi Jinping unveiled a new era of Chinese foreign policy when he introduced a New Silk Road strategy – ‘One Belt, One Road’ – which will reshape and deepen China’s economic integration with more than 60 countries across three different continents. The “Belt” represents the Silk Road Economic Belt, roughly encompassing the nations of Central and West Asia, while the “Road” is the 21st Century Maritime Silk Road, which includes nations in Southeast Asia, South Asia, the Middle East, and parts of Africa.

President Xi has pledged a Silk Road Fund of $40 billion to invest in infrastructure including roads, railways, ports and airports across Central and South Asia to break the current “connectivity bottleneck”. This, along with the focus on Chinese aviation infrastructure, demonstrates the importance the Chinese Government attributes to aviation in terms of facilitating and supporting China’s economic and foreign policy ambitions.

The CAAC Administrator Li Jiaxiang has also highlighted the significant role that aviation will play in the One Belt, One Road strategy, shortening distances and travel time through more direct connectivity, promoting communication and relationships, as well as supporting business growth, trade and economic cooperation between the diverse countries of West, Central and South Asia.

Currently serving 54 cities in 30 of the 65 countries identified as part of One Belt, One Road, Emirates is uniquely positioned to support China in advancing its trade and investment links with these countries. Chinese carriers currently only serve 26% of the 75 destinations in Africa, Europe and the Middle East that Emirates offers. Although, they are expanding their international networks, this will take time.

As China looks to connect with the world through One Belt, One Road - ties between the UAE and China continue to grow stronger. Bilateral trade between China and the UAE has grown 35% annually over the past decade and is projected to reach $100 billion this year.

Emirates has been a large part of this growth story, being the first airline to establish non-stop connectivity between the Middle East and mainland China. Freighter operations to Shanghai started in 2002, followed by passenger services in 2004. Emirates currently operates 35 flights a week to mainland China and is keen to increase connectivity to secondary cities, supporting China’s economic, trade and connectivity ambitions.

With its central geographic positioning for both the Belt and the Road elements, a growing number of Chinese banks and businesses establishing branches within Dubai’s business and financial districts, and with more than 10% of its population originating from China, Dubai is set to become a hub for China’s One Belt, One Road efforts.

One Belt, One Road: Aviation as a conduit to economic development

Countries along China’s ‘One Belt One Road’ (OBOR) – Emirates’ service to/from Dubai in OBOR countries – Other airlines’ service to/from Dubai to OBOR countries – OBOR countries where there is no service from Dubai –

65302016

Dubai

Oman

Yemen

QatarSaudi Arabia

Afghanistan

NepalBhutan

Myanmar

LaosThailand Vietnam

Malaysia

Singapore

Indonesia

Philippines

China

Kazakhstan

Belarus

Ukraine

Latvia

Lebanon

Croatia

Georgia

Egypt

IranIraq

PakistanJordan

IndiaBangladesh

Sri Lanka

Maldives

TurkmenistanAzerbaijanKyrgyzstan

Mongolia

Serbia

Russia

Romania

Czech RepublicHungary

Turkey Tajikistan

Poland

Moldova

Uzbekistan

Slovakia

Slovenia

AlbaniaArmenia

Bosnia and HerzegovinaMontenegro

Estonia

Lithuania

Macedonia

East Timor

Cambodia

Brunei

Bulgaria

Syria

Bahrain

Kuwait

“One Belt, One Road is a comprehensive and magnificent blueprint, and also the biggest opportunity for the air transportation development in the region. I believe our vision for the future, spirit of practice and honest cooperation attitude, will promote the regional and global air transportation development, and contribute on connecting Asia and the world as the “Air Silk Road.” – Li Jiaxiang Director General, CAAC.

“The UAE boasts unique advantages in terms of geographic location and capital. The country is also stable and secure, with advanced infrastructure and complete legal system...these special conditions have made UAE China’s key partner in their joint endeavour to carrying out the initiative.” – President Xi, in his keynote address at the 6th Ministerial Conference of the China-Arab Cooperation Forum in 2014.

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Major US airlines missed the global market shift….Now they are in full panic mode and seek to block competition

Open Skies policy creates a free international aviation market with a focus on consumer benefits. For example, when Emirates Airline, Etihad Airways and Qatar Airways (ME3) enter markets they stimulate demand, offer more choice and pressure competitors to improve products and services.

The US government (USG) led this policy innovation and its major airlines - Delta, United and American (Big 3) - have benefitted tremendously from it, including being permitted to create immunised, fully-integrated global alliances in reliance on Open Skies. However, now that US consumers have enthusiastically embraced the ME3, the Big 3 are in full panic mode and are seeking government protection. They want to freeze ME3 expansion into the US and renegotiate agreements with Qatar and the United Arab Emirates.

The US airline industry has been the most heavily subsidised in history and the Big 3 today enjoy unmatched financial and structural competitive advantages. Nevertheless, they seem to lack the confidence, vision and leadership to respond competitively to the ME3 and choose to fall back on their worst instincts, which include a history of blocking new entry. For example, when Southwest Airlines began to grow from a small airline in Texas to the national powerhouse that it is today, major airlines sought to kill it through the regulatory process, while missing the emerging change in the market that Southwest had the vision to recognise.

Major US carriers mis-read consumer appetite for value and considered low-cost carrier (LCC) start-ups second-class competitors. In 1990, LCCs had 4% of the US market. Start-ups typically had poor business plans, inexperienced management and older planes. By 2000, however, LCCs had shiny new planes, management teams focused on service, great customer satisfaction numbers and 20% market share, which they won largely by meeting customer demand the major carriers had either missed or ignored. Indeed, Emirates partner JetBlue was able to revolutionise the LCC customer experience with a base at New York’s JFK Airport - an opportunity that the major US carriers certainly had but failed to pursue.

Having missed the LCC market shift, in self-denial, major US carriers used their time in bankruptcy courts working the lie that the tragic events of September 11, 2001 were solely responsible for their financial problems. When, in fact, the steep downward trend line for their performance was a matter of record by September 2000. This untruth supported a false narrative that allowed managements to jettison employee pensions, reduce compensation and amend work rules. It was an oppressive time to be a US airline worker.

US airlines spent years distracted by commercial reorganisation efforts and advancing proposals to radically reduce the domestic industry - to where four carriers control 80% of the market today. In the domestic market, smaller hubs such as Pittsburgh and Memphis were abandoned, non-stop flights were cut, and customers were forced over mega-hubs that allowed the Big 3 to slash costs and maximise profits - all on the backs of consumers. In the international arena, the Big 3 used Open Skies agreements to settle on a strategy of anti-trust immunised global alliances that stressed market control and pricing power, and eschewed customer service and innovation. Rather than develop rapidly growing markets to south-east Asia and the Indian subcontinent, the Big 3 and their immunised alliance partners played it safe and cozy by handing over passengers to one another, eschewing new long-haul routes, and limiting consumer choice to virtually identical, often low-quality, lowest common denominator service.

In the interim, the ME3 used Open Skies agreements to pioneer an innovative model focused on superior product and service, connectivity between once fragmented markets, efficient one-stop global transportation and, in some cases, equity stakes in partner airlines. Importantly, led by Emirates, they proactively identified market changes and emerging traffic shifts, tailoring their networks to cater to them. Consumers are rewarding ME3 vision and leadership with loyalty. The Big 3, in turn, are panicked and scrambling for government protection to avoid competition.

How will all this end? Governments can take wrong decisions. However, the US Departments of State, Transportation and Commerce know well the huge benefits Open Skies generates. Moreover, they understand that consumers demand global choice whether it’s in cars, fashion or air transportation - US companies do not own US consumers. I am betting on the Big 3 being told to adapt and compete.

60 seconds with Kevin Mitchell from the Business Travel Coalition

Kevin Mitchell

Kevin Mitchell is founder of the US-based Business Travel Coalition and OpenSkies.travel which are advocacy organisations that represent consumers of commercial air transportation services.

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A member survey published recently by the Stuttgart Chamber of Commerce found that the export-oriented economy in the Stuttgart region needs more international flight connections from Stuttgart Airport.

According to the survey, the number of companies satisfied with the offer of flights from Stuttgart has fallen by almost half since 2007. The main reason for this attitude is the inadequate offer of non-European flights meaning business travellers increasingly have to turn to other European airports to reach their chosen destinations.

Given the Stuttgart area has an export quota of more than 60%, there is a great need to be able to reach business customers in the Far East and other emerging economies regularly, and to have direct connections for this purpose from Stuttgart Airport. Almost half of respondents said flights towards East Asia - including Beijing, Shanghai, Bangkok, Hong Kong and Singapore - was a requirement.

Emirates understands the importance of connectivity for a prosperous economy, which is why we fly to a number of secondary cities in Europe, for example Hamburg, Lyon and Newcastle, and provide nearly 200 unique one-stop connections. For good reasons regional business organisations and regional governments urge national authorities to grant international carriers additional traffic rights for services to secondary airports.

Stuttgart is situated in the booming region of Baden–Württemberg in Germany’s south west. Stuttgart region is one of the most export oriented regions in Germany and the home of such world famous enterprises like Mercedes, Porsche and Bosch – to name just a few.

While the companies expressed a high degree of satisfaction with the quality of the airport and with the choice of national and European services, more than 90% expressed their dissatisfaction with the number of long-haul services available from Stuttgart.

According to the managing director of Stuttgart’s Chamber of Commerce and Industry it’s easy to conclude that - “You must break down the regulatory barriers and grant international carriers the necessary traffic rights”, otherwise “jobs are at risk.”

Only 15 weekly intercontinental flights to Africa and the Middle East are offered from Stuttgart Airport, with none currently offered to Asia, so passengers are required to transfer via a German or other European hub for most trips. A daily Emirates service from Stuttgart to Dubai would increase consumer choice, enhance connectivity and facilitate trade.

Businesses call for more international flights from Stuttgart

Emirates is a significant investor and contributor to connectivity in Germany:

• 696 million spent on German goods and services (excl. aircraft) in 2013/14

• 11,040 direct, indirect and induced jobs supported in Germany through operations alone

• Operations had a 1 billion GDP impact in Germany in 2013/14.

• The catalytic impact of Emirates’ unique and higher-frequency connectivity in 2013/14 was: 53 million in GDP, 42 million in FDI and

110 million in trade enabled

• 14,500 direct, indirect and induced jobs were supported in Germany through Emirates’ A380 deliveries in 2013/14.

Emirates first launched flights from Dubai to Germany in 1987 and now fly three times daily to Frankfurt and double daily to Munich, Dusseldorf and Hamburg (total 63 weekly frequencies). Germany is one of the key markets on our global network.

C=696millionEmirates’ spend on German goods and services

1987 The year Emirates first launched flights from Dubai to Germany

11,040 jobs supported in Germany through Emirates’ operations

C=1billionGDP impact of Emirates’ operations in Germany

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They said it best... In this edition Emirates brings you some of the best quotes from US and international stakeholders on the subject of Open Skies.

“Open Skies continues to provide significant derivative benefits to consumers and the United States economy through added travel and shipping opportunities, increased economic activity and higher US employment – in other words, broader US economic and political interests.” – William J. Flynn, President & CEO of Atlas Air Worldwide

“For FedEx, the Open Skies agreements with the Middle Eastern countries are very valuable. Under the agreement with the UAE we have established a hub in Dubai, where FedEx flights from the US criss-cross with our flights from India and Asia in order to move US products into local markets. The US should not capitulate to the interests of a few carriers who stand ready to put their narrow, protectionist interests ahead of the economic benefits that Open Skies provides to the people of the US.” – David J. Bronczek, President and CEO of FedEx Express

“The major US carriers have opposed Open Skies and reregulation all along the way, even from the word go, and yet have been major beneficiaries due to domestic consolidation and also globally in terms of market access. Protectionism is making a revival as some of the powerful national airlines exert strong pressure on their governments.” – Peter Harbison, Centre for Aviation “Now that the US Big Three airlines – Delta Air Lines, American Airlines, United Airlines – have secured antitrust immunity for their global alliances and joint ventures, and have engineered domestic consolidation, they have in recent years been aggressively attacking consumer protections, price transparency and domestic and foreign carrier new entrant competition.” – Kevin Mitchell, Chairman of the Business Travel Coalition

“IAG disputes the evidence and conclusions that unfair subsidies are being provided by the Gulf States to the Gulf airlines contained in the White Paper prepared by American, Delta and United. IAG believes the evidence and therefore the conclusions to be unreliable and wholly inappropriate as a means of informing government policy decisions. The White Paper’s arguments should be rejected as a return to international aviation policies that protect airlines from competitors instead of fostering competition.” – International Airlines Group statement

“We believe in the open-skies agreement because it is a facilitator of economic growth. Economic growth is the driver of airline manufacturing and airlines facilitate economic growth.” – Marty Bentrott, Vice President of Middle East, Russia and Central Asia sales for Boeing

“The Gulf Carriers’ flights generate ‘hundreds of millions of dollars’ in annual economic benefits for the Dallas-Fort Worth region, with Emirates being singled out as the single largest contributor with $300 million in annual economic benefit.” – John Ackerman, Executive Vice President Dallas/Fort Worth International Airport

“…Any attempt to limit or restrict existing Open Skies rights is unwise. Neither the US economy nor our economy in Central Florida can afford the Open Skies policy departure that is being urged in this matter. The Orlando area certainly cannot afford to lose the more than $100 million in new annual economic activity Emirates’ new Orlando-Dubai non-stop flight will generate, and the nearly 1,500 jobs it will support.” – Phil Brown, CEO of Orlando Airport

“Suspending capacity expansion for these international carriers by suspending our Open Skies policies undermines the Administration’s National Travel and Tourism Strategy. In 2013, the three Gulf carriers brought 140,600 international visitors to the US. These visitors spent nearly $1 billion here, which generated more than $2 billion in economic output and supported more than 15,000 American jobs. If the US government were to freeze the Gulf carriers’ frequencies, as some US carriers have requested, this would damage the success of the Open Skies agreements and send a wrong signal to our trading partners, jeopardizing the entire Open Skies framework. Open Skies has stimulated international travel and must be continued without interference by the domestic carriers.” – Rosemary Vassiliadis, Director of Aviation at Las Vegas Airport

“We are, at our heart, kind of free traders, and we believe that Open Skies exists for a reason, and we don’t think that reason has changed. We like to see free flow of trade, people, air travel, if you will, and that’s what we advocate.” – John Rice, Vice Chairman of GE

Robin Hayes President of JetBlue

“Emirates new and increased operations, like those of other foreign carriers operating to the United States, are precisely what will be needed in order to achieve President Obama’s goal to grow international visitors to the United States. In the year since JetBlue entered the former Delta monopoly route BOS-DTW, fares have fallen nearly 40% and daily passenger traffic has more than doubled. All of this activity increases job growth.”

Roger Dow US Travel Association President and CEO

“Consumers win when there are more competitors in the aviation marketplace, and the economy and job creation win when inbound visitation to US destinations is on the rise. Emirates Airlines’ new flight to Orlando accomplishes both. We hope we can look forward to more and more international flights to the many attractive but underserved markets all over the United States.”

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Goods transported annually by air are valued in excess of $6.8 trillion and constitute more than 30% of the total value of global international trade. High value and time sensitive goods are most frequently carried by air, enhancing the competitiveness of businesses and enabling economic development.

Emirates’ cargo operations out of the US are very small in comparison to US based cargo airlines, with less than 0.01% of the total share of US cargo in 2014/15. Emirates operates to 10 passenger destinations with a combination of B777s and A380s, all of which carry belly cargo, and has dedicated Boeing 777 freighter flights twice a week to Chicago, Houston, Los Angeles and Atlanta and once a week to Columbus.

Despite this small footprint, Emirates’ cargo operations allow US businesses to get goods to market quickly, while providing state of the art equipment such as refrigeration compartments for perishable goods and pharmaceutical products. Emirates’ unique route network supports businesses to create new opportunities by providing access to destinations previously unreachable, or to destinations that required lengthy connections potentially reducing the shelf life of products.

The UAE remains the largest US export destinations in the MENA region. US exports and foreign direct investment in the UAE rose from $3.6 billion in 2004 to $22.11 billion in 2014, a six-fold increase.

Emirates’ operations in Seattle illustrate the value of our network to US businesses. In September 2011, after 10 years of negotiation by the US Department of Agriculture with the Australian authorities, US cherries were approved for import into Western Australia. Emirates commenced services from Seattle in March 2012 and thanks to fast connection times offered a viable option for the transport of cherries from Washington State to Perth. In the first year of operations from Seattle, Emirates transported almost 600 tonnes of cherries to Australia, allowing US cherry growers to expand their business and reach new locations. With the commencement of the second daily service and the additional belly hold capacity, apple growers in the Pacific Northwest will also be able to expand their customer base.

As well as supporting US exports and businesses, Emirates’ cargo operations also create employment. SkyCargo, the cargo division of Emirates, directly employs 60 staff within the US, and a further 400+ staff are employed indirectly via contracted Ground Handling Agents that provide services to SkyCargo.

Emirates: facilitating US exportsFedEx and other US cargo airlines have been vocal in articulating how Open Skies agreements have allowed their businesses to flourish and the positive impact this has had on US GDP and employment.

David J. Bronczek President and CEO of FedEx Express

“FedEx and other US cargo carriers depend on Open Skies to provide our aircraft and their important cargo access to global marketplaces. Our ability to exploit the rights set forth in those agreements means that FedEx aircraft span the globe. Air cargo carriers, such as FedEx, move the high-value, time-sensitive products essential for the US to create more high-paying jobs. We also are leaders in carrying American products in the B2C markets of e-commerce, where there are new cross-border opportunities for US small and medium enterprises. We cannot operate internationally and provide efficient, cost-effective services without Open Skies.”

Atlanta

Washington, DC

Dubai

Houston

Seattle

San Francisco

Los AngelesDallas/Fortworth

BostonChicago

ColumbusNew York

Orlando

Emirates SkyCargo services between Dubai and US destinations

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10

David McMillan

Chairman of the Flight Safety Foundation and a Non-Executive Director of Gatwick Airport

David McMillan has been involved with transport issues at a national and international level for over twenty years. David is currently Chairman of the Flight Safety Foundation and a Non-Executive Director of Gatwick Airport. Prior to that, he was Director General of Civil Aviation for the Department for Transport in the United Kingdom and then Director General of EUROCONTROL. He has recently led an ICAO Task Force on risks to flights over conflict zones, in light of the MH17 tragedy.

Do you think that a meaningful outcome will be found on regional or global “fair competition” regulation that serves both travellers, industrial competitiveness, increasing demand and connectivity?

Aviation is the prime example of a global business, but it is also beset by an antiquated regulatory framework. Of course, each country has the right – and the duty – to regulate aviation, but it is vitally important to find a global approach to these issues. I see signs that policymakers are beginning to understand this as the world’s great regions become more equal in terms of economic weight, competitiveness as well as in terms of aviation maturity. But it is clearly a difficult issue. We all benefit from competition, but unfair or unwarranted subsidy does nobody any good in the long run.

In one way or another, we need to apply a more normal approach to setting up global rules for aviation. It grows harder year after year to justify aviation “exceptionalism”. Apart from the key issue of safety, why is aviation really so different from telecoms or other global businesses?

The EU has been a pioneer in terms of aviation market liberalisation. If regulators should seek to roll back liberalisation under the pretext of safeguarding EU aviation competitiveness, what do you - especially from a UK perspective - see as the main consequences?

My first reaction is to question why European regulators would be so short sighted. Liberalisation has delivered huge benefits to European consumers, offering a greater choice of flights, carriers and destinations than the old regulated approach ever did. And all this with much lower fares and very high levels of service. That said, there are certainly pressures on regulators to ensure that competition is conducted in a fair manner, so I recognise the danger that you allude to.

In a UK context, we have benefited from external liberalisation in a number of ways. In London, we have seen overseas airlines bringing choice, market innovation and very attractive fares to the market, which has in turn spurred UK airlines to become more efficient and to compete with these new entrants. The impact of this is very noticeable. If you compare fares across the Atlantic - where three alliances immunised

from anti-trust laws provide the great bulk of capacity - with fares to Australia – where there is extensive competition, not least provided by Emirates – you quickly see the benefits of competition. Business class fares to San Francisco are noticeably higher than to Sydney for a flight of about half the distance!

Another key advantage of liberalisation has been the growth in direct flights from non-London airports. The choice that a passenger from my home town of Edinburgh now has to fly to many destinations thanks to a liberal approach to air services first by the UK Government and then the EU is of huge benefit to Edinburgh and the Scottish economy. These are not benefits that we should give up lightly.

Is the Chicago Convention, signed in 1944, an adequate framework for aviation in 2015?

The Convention has many strengths and has helped foster the development of global aviation since the Second World War, but it is now outdated and needs modernisation, not least in its approach to key economic matters such as ownership and control rules. In my view, this is more likely to be done on an incremental basis than through some complete overhaul of the Convention which would consume huge levels of energy and would have to overcome the inherent conservatism of the system.

The number of air travellers is set to reach 6 billion by 2030 compared to 3 billion today – what are the most fundamental challenges the aviation industry needs to overcome to adequately accommodate such growth levels?

There is much that needs to be done, but one thing that strikes me as particularly urgent and particularly difficult is the reform of air traffic management. As a former Director General of Eurocontrol, I am convinced that the growth of global aviation requires a new approach to managing the flows of traffic between our continents and their major airports. We need regional flow centres that focus on managing these motorways of the skies – and their junctions - separately from national air traffic control, so as to ensure the highest levels of safety, capacity and efficiency in the arteries of world trade, tourism and business. Developing such a system will require major political and commercial decisions and so the work should start now.

Sector Insight

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... from a global perspectiveHow do you view ICAO’s development of a global market-based measure for international aviation emissions interacting with the EU ETS in the future?

I was deeply involved in this question at an earlier stage, as Europe’s spokesman on the environment at two ICAO Assemblies. The EU made the mistake then of trying to impose a solution without taking the trouble to convince colleagues from other regions of the benefits of the European approach. In part, that way of working was a result of frustration with the slowness and ineptitude of previous ICAO work. So I am encouraged that the Organisation now seems to recognise that urgent action is needed. I only hope that a workable solution can be found as it is vital that aviation plays a proper part in managing the risk of global warming, for the sake of all our futures.

Would you argue major airport hubs on different continents can co-exist side by side or is it a zero-sum game?

Aviation is a business that thrives in a competitive environment. Airports can and should compete with each other within and across continents, as well as more locally. For example, as a Director of London Gatwick airport, I see Gatwick as in direct competition with Heathrow and Stansted airports. It is my view that fostering that competition will lead to airlines delivering important passenger benefits - and that it will also lead to market stimulation and growth.

I take very much the same view on competition between airports and airlines from different continents. In part, they will be competing for the same traffic, but in part, they will be playing to their different geographical strengths and stimulating demand.

Is Europe’s constant debate about aviation infrastructure on the ground and in the air missing the point about what is possible with existing infrastructure?

It is certainly true that it is possible for Europe to extract more efficiency from its airport and ATM infrastructure. Gatwick is, for example, the world’s busiest single runway airport with 55 movements per hour in key peak hours. If all single runway airports could operate even close to this level of efficiency, the overall system would operate much more smoothly; and in ATM, there are major differences in the levels of productivity in the system across European countries. Nonetheless, the fact is that we are in danger of running out of capacity in our systems and of pushing the envelope too far. We need to continue to invest and to find ways to overcome our complex geographical and political boundaries to deliver benefits for all our citizens. Any region that fails to invest in its own future risks decline. Despite all our problems, I remain confident that the resourcefulness and determination of our people will ensure that we avoid that fate.

Australia’s iconic wombat may be known for its cute and cuddly looks, but it is also at risk from traumatic skin infections caused by a parasitic mite. Emirates is contributing to the survival and protection of these iconic marsupials by co-funding, together with Emirates One&Only Wolgan Valley, a new smartphone app and website developed by the University of Western Sydney.

Anyone can download the WomSAT app to their smartphone and use it to report wombat sightings and record the animal’s health. The information, tagged with the location from the smartphone’s GPS sensor, is uploaded to a national map, which will help the researchers identify wombats under threat. This makes the project a practical way for anyone with a smartphone to participate in science and help protect one of Australia’s most-loved native animals.

Emirates established the conservation-focused Wolgan Valley Resort and Spa in 2009 in a setting of 1,600 hectares of wilderness and retired farmland. In November 2014, Emirates announced a new partnership with One&Only Resorts, a subsidiary of Kerzner International Holdings Limited, to manage the property. Emirates will continue to retain full ownership, and the conservation and community principles that the resort began with will stay unchanged.

New technology and citizen science – protecting Australia’s wombats

12

Please visit our website for more information on Emirates’ International, Government and Environment Affairs department www.emirates.com or write to us igea@emirates.com

Zaragoza

Liege

Basel

Mexico

Lilongwe

Quito

Viracopos

Ciudad del Este

HanoiChittagong

Eldoret

Djibouti

Atlanta

Columbus

KanoOuagadougou

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St. Petersburg

Copenhagen

Seoul

Beijing

Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan Bologna

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

JakartaBali

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata Hong KongDhaka

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluru

Lahore

IslamabadSialkot

Peshawar

Multan

HyderabadMumbai

DelhiKarachi

Ahmedabad

Malé

KochiColombo

Mauritius

Seychelles

LusakaHarare

São PauloRio de Janeiro

Buenos Aires

New York

Washington, DC

Los Angeles

San Francisco

Seattle

HoustonOrlando

Panama City

Dallas/Fort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh City

Phuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Bamako

Dubai

Route MapSeptember 2015

Muscat

DammamBahrain

Riyadh Doha

Jeddah

Medina

BasraKuwait

Tehran Mashhad

AmmanBeirut Baghdad

Erbil

Dubai

Middle East Network

Passenger Routes Freighter Routes Passenger & Freighter Routes---- Upcoming Passenger Routes

Aircraft in fleet 239No. of destinations 147Passengers* 49.3 millionCargo* 2.4 million tonnesPassenger Seat Factor* 79.6%Employees - Airline* 56,725Emirates flights daily 486

Financial Auditor PwCFinancials (Airline)* Revenue US$24.2bn, profit US$1.2bnFuel Costs (Airline)* US$7.8bnFirst flight 25 October 1985A380 fleet 67 (on order 73)Boeing fleet 149 (on order 196)New passenger routes (2015-16) Bali, Bamako, Bologna, Mashhad, Multan,

Orlando and Panama City

Fast Facts

*2014-15

Emirates recently announced the launch of services to Panama City, beginning 1 February, 2016. The new service will be the longest non-stop flight in the world (17 hours 35 minutes in the westbound direction) and will be Emirates’ first gateway destination in Central America.

The service to Panama City, Panama’s capital and largest city by population, will commence with a daily flight operated by a Boeing 777-200LR aircraft. The aircraft can also carry up to 15 tonnes of cargo. Key imports to the country include pharmaceuticals, machinery products, iron/steel rods, and electronics. Service to Panama City will operate through Tocumen International Airport (PTY).

Panama City is also the economic and financial centre of the country with the major industries being international banking, commerce, and tourism. Ideally located between North and South America, as well as the Atlantic and Pacific Oceans, Panama City has developed an unrivalled transportation and communication network. It operates two of the busiest ports in Latin America, including the Colon Free Trade Zone - the world’s second largest free trade zone.

“It is gratifying to see how diplomatic efforts focused on generating development and

prosperity for Panama materialise,” said Isabel Saint Malo de Alvarado, Vice President of the Republic of Panama. “New doors to the country will open with a direct connection to the Middle East - a strong and thriving region with great synergies to both Panama and Latin America.”“This new direct flight between Dubai and Panama City will connect Latin America with the Middle East, Asia and Africa,” explained Eduardo Fonseca Ward, Consul General of the Republic of Panama, in Dubai. “This link will generate a broader global network with countless commercial and cultural opportunities for the two regions”.

Emirates to launch a new service to Panama City

Panama City

Dubai