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The Impact of Emirates Airline on the German Economy

Final Report May 2012

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Cover Picture: Emirates Airbus 380 visiting ILA Berlin Air Show 2010 Photographer: Wolfgang Grimme, DLR

Institute of Air Transport and Airport Research

2012-04-18Release: 1.00 Page 1

The Impact of Emirates Airline

on the German Economy

Final Report

Tim Alers, Dr. Peter Berster, Prof. Dr. Hansjochen Ehmer, Monika Teresa Fuhrmann, Dr. Marc Gelhausen,

Wolfgang Grimme, Stephan Horn, Hermann Keimel, Dr. Sven Maertens, Hendrik Niee

Release: 1.00Deutsches Zentrum fr Luft- und Raumfahrt e.V. in der Helmholtz-Gemeinschaft

German Aerospace Center

Institute of Air Transport and Airport Research Porz-Wahnheide Linder Hhe 51147 Kln Germany Head: Prof. Dr. Johannes Reichmuth

May 2012

Web: http://www.dlr.de/fw


The Economic Impact of Emirates Flights on Germany

Final Report

2012-04-18Release: 1.00 Page 2

Document Control Information Institute Director: Prof. Dr. Johannes Reichmuth Responsible author: Wolfgang Grimme Additional author(s): Tim Alers, Dr. Peter Berster, Prof. Dr. Hansjochen Ehmer,

Monika Teresa Fuhrmann, Dr. Marc Gelhausen, Stephan Horn, Hermann Keimel, Dr. Sven Maertens, Hendrik Niee

Project / research task: The Impact of Emirates Airline on the German Economy Filename: Emirates_Report_v1.00_180412.doc Release: 1.00 Save date: 2012-04-18 Total pages: 139 This study was conducted for Emirates Airline. 2012, DLR, Institute of Air Transport and Airport Research, Germany This document with all its parts is protected by copyright. Any use within or without the domain of the copyright act is illegal without a written consent of the DLR, Air Transport and Airport Research and will be prosecuted. This applies in particular to copying, translations, microfilm reproductions or converting, processing and storing this information on digital systems.



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Change Log

Release Date Changed Pages or Chapters Comments 1.00 18 April 2012 Final version



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Content List of figures ............................................................................................................................ 6List of tables ............................................................................................................................. 9Executive Summary ............................................................................................................... 101 Introduction ................................................................................................................... 182 Overview The Emirates business model and Emirates current activities in

Germany ....................................................................................................................... 203 Analysis of the effects of connectivity to the international aviation network

due to Emirates presence in Germany ......................................................................... 273.1 The importance of connectivity ................................................................................. 273.2 Connectivity for Germany ......................................................................................... 28

3.2.1 Non-stop connectivity ...................................................................................... 313.2.2 Connectivity for itineraries with one stop / transfer ......................................... 333.2.3 Connectivity to the 100 largest airports in the Eastern Hemisphere ............... 353.2.4 Comparison of the route networks of Emirates and Lufthansa ....................... 37

3.3 Connectivity for individual cities in Germany ............................................................ 413.3.1 Dsseldorf ....................................................................................................... 423.3.2 Hamburg ......................................................................................................... 443.3.3 Berlin ............................................................................................................... 463.3.4 Stuttgart ........................................................................................................... 49

3.4 Connectivity and Frequency ..................................................................................... 543.5 Connectivity index for German airports .................................................................... 573.6 Connectivity and capacity ......................................................................................... 603.7 Intermediate conclusions .......................................................................................... 65

4 Analysis of the effects of Emirates presence in Germany on passenger flows .............................................................................................................................. 67

4.1 Market development in Germany ............................................................................. 674.2 Market development at individual airports ................................................................ 714.3 Development of air fares .......................................................................................... 784.4 Intermediate conclusions .......................................................................................... 80

5 Analysis and quantification of economic effects for Germany ....................................... 825.1 Effects of existing passenger and cargo services .................................................... 83

5.1.1 Direct, indirect and induced employment ........................................................ 835.1.2 Catalytic effects ............................................................................................... 915.1.3 Incoming tourism ............................................................................................. 945.1.4 Outgoing tourism ........................................................................................... 1035.1.5 Air cargo ........................................................................................................ 103

5.2 Effects of new services ........................................................................................... 1105.2.1 Outlook for Germany for 2012 ....................................................................... 1105.2.2 New services to Berlin and Stuttgart ............................................................. 111

5.3 Effects of the purchase of aircraft, engines, spare parts and equipment ............... 1156 Discussion of the benefits of air transport market liberalisation for Germany ............. 119

6.1 Consequences of the liberalisation of air transport markets................................... 1196.2 Literature review of worldwide liberalisation ........................................................... 1216.3 Liberalisations impact on different stakeholders .................................................... 122

6.3.1 Secondary and hub airports .......................................................................... 1226.3.2 Airlines and alliances .................................................................................... 1236.3.3 Passengers ................................................................................................... 125



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7 Conclusions ................................................................................................................ 128Annex ................................................................................................................................... 131

Definition of regions used throughout this report ............................................................. 131Emirates Destinations ..................................................................................................... 133Stakeholder Interviews .................................................................................................... 135Literature.......................................................................................................................... 136



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List of figures Figure 2-1: Comparison of itinerary between two secondary airports with Emirates and

competing airlines / alliances ................................................................................. 21Figure 2-2: Specific fuel consumption in kg per aircraft-kilometre flown ................................ 22Figure 2-3: Comparison of operating costs for selected airlines ............................................ 23Figure 2-4: Development of Emirates frequencies from German airports 1996-2012 ........... 24Figure 2-5: Development of Emirates passengers on flights between Germany and

Dubai (and vice versa) 2000-2011 ......................................................................... 26Figure 3-1: Destination regions of origin-destination passengers on Emirates flights

from Germany ........................................................................................................ 28Figure 3-2: World regions to which Emirates provides connectivity for Germany .................. 29Figure 3-3: Non-stop destinations in the Eastern Hemisphere served by all airlines from

Germany in December 2011 .................................................................................. 31Figure 3-4: Overview of destinations in Africa, Asia, Middle East and South West

Pacific served non-stop from Germany in December 2011 ................................... 32Figure 3-5: Number of seats provided on non-stop flights and frequencies to

destinations in Africa, Asia, Middle East and South West Pacific served non-stop from Germany in December 2011 .................................................................. 33

Figure 3-6: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Germany with one stop/transfer in December 2011 ............... 35

Figure 3-7: Overview of non-stop services from Germany to the 100 largest airports in Africa, Asia, Middle East and South West Pacific in December 2011 .................... 36

Figure 3-8: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Germany with one stop/transfer in December 2011 ............... 37

Figure 3-9: List of complementary and overlapping destinations of Emirates and Lufthansa in the Eastern Hemisphere .................................................................... 38

Figure 3-10: Map of complementary and overlapping destinations of Emirates and Lufthansa in the Eastern Hemisphere .................................................................... 38

Figure 3-11: Seats offered on non-stop flights to Southern/East Africa, Asia and the Middle East from German airports in December 2011 ........................................... 41

Figure 3-12: Seats offered on non-stop flights to Southern/East Africa, Asia and the Middle East from Berlin and Stuttgart with possible future daily services by Emirates. ................................................................................................................ 42

Figure 3-13: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Dsseldorf non-stop or with one stop/transfer in December 2011 ...................................................................................................... 43

Figure 3-14: Map of destinations in Africa, Asia, Middle East and South West Pacific served from Dsseldorf non-stop or with one stop/transfer in December 2011 ..... 44

Figure 3-15: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Hamburg non-stop or with one stop/transfer in December 2011 ....................................................................................................................... 45

Figure 3-16: Map of destinations in Africa, Asia, Middle East and South West Pacific served from Hamburg non-stop or with one stop/transfer in December 2011 ....... 46

Figure 3-17: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Berlin non-stop or with one stop/transfer in December 2011 ....................................................................................................................... 47

Figure 3-18: Map of destinations in Africa, Asia, Middle East and South West Pacific served from Berlin non-stop or with one stop/transfer in December 2011 ............. 48

Figure 3-19: Perceived quality of connectivity from Stuttgart ................................................. 50



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Figure 3-20: Destinations with a need for improved non-stop or transfer connectivity, share of the number of mentioned destinations by region ..................................... 51

Figure 3-21: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Stuttgart non-stop or with one stop/transfer in December 2011 ....................................................................................................................... 52

Figure 3-22: Map of destinations in Africa, Asia, Middle East and South West Pacific served from Stuttgart non-stop or with one stop/transfer in December 2011 ......... 53

Figure 3-23: Number of weekly itineraries to the 100 largest airports in the Eastern Hemisphere from selected German airports by airline ........................................... 54

Figure 3-24: Number of weekly itineraries to the 100 largest airports in the Eastern Hemisphere from selected German airports by airline ........................................... 56

Figure 3-25: Calculation of the connectivity index .................................................................. 57Figure 3-26: Map of destinations in Africa, Asia, Middle East and South West Pacific for

which Emirates services reduce the number of stops / transfers from Hamburg ................................................................................................................ 59

Figure 3-27: Capacity contribution of Emirates on O&D relations from Hamburg to Southern and East Africa, Asia, the Middle East and South West Pacific (2011) ..................................................................................................................... 62

Figure 3-28: : Potential capacity contribution of Emirates on O&D relations from Stuttgart to Southern and East Africa, Asia, the Middle East and South West Pacific (2011) ......................................................................................................... 64

Figure 4-1: Origin-destination passengers from Germany to the Eastern Hemisphere and Emirates market share by region .................................................................... 67

Figure 4-2: Origin-destination passengers from Germany to Southern/East Africa, Asia, Middle East and South West Pacific, 2002-2010 ................................................... 68

Figure 4-3: Origin-destination passenger growth by individual carriers in the market between Germany and Southern/East Africa, Asia, Middle East and South West Pacific between 2005 and 2010 .................................................................... 69

Figure 4-4: Origin-destination passengers from Germany to Southern/East Africa, Asia, Middle East and South West Pacific between 2002 and 2010 in relative terms ...................................................................................................................... 70

Figure 4-5: Origin-destination passengers from Hamburg to Southern/East Africa, Asia, Middle East and South West Pacific, 2002-2010 ................................................... 71

Figure 4-6: Origin-destination passengers from Hamburg to Dubai, 2002-2010 .................... 72Figure 4-7: Origin-destination passengers from Hamburg to Dubai travelling on

Lufthansa, Air France, British Airways and Turkish Airlines, 2002-2010 ............... 73Figure 4-8: Origin-destination transfer passengers from Hamburg to Southern/East

Africa, Asia, Middle East and South West Pacific by first transfer point, 2002-2010 ....................................................................................................................... 74

Figure 4-9: Origin-destination passengers from Dsseldorf to Africa, Asia, Middle East and South West Pacific, 2002-2010 ....................................................................... 75

Figure 4-10: Origin-destination transfer passengers from Dsseldorf to Southern/East Africa, Asia, Middle East and South West Pacific by first transfer point, 2002-2010 ....................................................................................................................... 76

Figure 4-11: Seats offered on non-stop flights by Lufthansa from Germany to the Middle East and Germany to India ......................................................................... 77

Figure 4-12: Comparison of air fares in business class of Emirates and Lufthansa from Hamburg to selected Asian destinations. ............................................................... 78

Figure 4-13: Comparison of air fares in economy class of Emirates and Lufthansa from Hamburg to selected Asian destinations. ............................................................... 79



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Figure 4-14: Comparison of average air fares in economy class from Frankfurt for a set of five major Asian destinations and four combinations for minimum stay / advance booking .................................................................................................... 80

Figure 5-1: Differentiation of economic effects for Germany coming from Emirates activities ................................................................................................................. 82

Figure 5-2: Exemplary chain of inputs and definition of direct and indirect effects ................ 86Figure 5-3: Emirates expenditures in Germany and the resulting direct and indirect

employment effects for the fiscal year 2010/11 ...................................................... 87Figure 5-4: Location decision of companies depending on time- and real estate costs ......... 92Figure 5-5: Development of incoming tourism, measured in nights spent by travellers

from Asia, Middle East and South West Pacific 2001-2011 ................................... 95Figure 5-6: German National Tourist Board tourism growth forecast 2020 for incoming

tourism from Asia, Middle East and South West Pacific ........................................ 96Figure 5-7: Development of incoming tourism in Munich from selected countries,

measured in nights spent 2007-2011 ..................................................................... 97Figure 5-8: Correlation between the number of seats offered on non-stop flights from

the Middle East to Germany and the number of nights spent by tourists from the Middle East in Germany, 2001-2010 ................................................................ 99

Figure 5-9: Correlation between the number of origin-destination passengers between Germany and destinations in Asia and the number of nights spent by tourists from Asia and South West Pacific in Germany, 2002-2010 ................................. 100

Figure 5-10: Forecast on German exports for the manufacturing industry (constant prices, base year 2000) ........................................................................................ 104

Figure 5-11: Development of air freight exports from Germany to the UAE (in tons), 2000-2010 ............................................................................................................ 105

Figure 5-12: Development of the air freight volumes of major airlines originating from German airports ................................................................................................... 106

Figure 5-13: Market share of Emirates for outbound air freight originating in Germany in 2010 for different IATA regions ............................................................................ 107

Figure 5-14: Emirates passenger growth potential to/from Germany 2011/2012 ................. 110Figure 5-15: Emirates expenditures in Germany for the fiscal year 2011 and forecast

for fiscal year 2012 in million ............................................................................. 111Figure 5-16: Emirates fleet and order development 1985-2011 ........................................... 116Figure 5-17: Emirates aircraft on order as of 31st December 2011 (excluding options

and letters of intent) ............................................................................................. 116



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List of tables Table 2-1: Emirates operations in Germany as of December 2011 ....................................... 25Table 3-1: Comparison of frequencies and capacities to African, Asian and Pacific

destinations on direct flights* of Lufthansa from Germany with direct flights of Emirates from Dubai in December 2011 ................................................................ 39

Table 3-2: Connectivity index for German airports due to Emirates services to Dubai and onward destinations in December 2011 .......................................................... 58

Table 3-3: Total and Emirates (EK) used capacity on O&Ds from Hamburg to Asia, Southern and East Africa, South West Pacific and the Middle East region (2011) ..................................................................................................................... 61

Table 3-4: Estimated total and Emirates (EK) used capacity on O&Ds from Stuttgart to Asia, Southern and East Africa, South West Pacific and the Middle East region (2011) .......................................................................................................... 63

Table 5-1: A simplified symmetric input-output table (product by product) ............................ 83Table 5-2: Summary of direct and indirect employment estimations for Emirates air

services to and from Germany ............................................................................... 90Table 5-3: Expenditures by foreign tourists travelling on Emirates to Germany .................. 102Table 5-4: Traffic scenarios for Berlin and Stuttgart ............................................................. 112Table 5-5: Emirates expenditures for new services between Dubai and Stuttgart ............... 113Table 5-6: Emirates expenditures for new services between Dubai and Berlin ................... 113Table 5-7: Annual contribution of Emirates to the German aerospace industry ................... 118



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Executive Summary Since 1987, Emirates Airline has operated flights from Dubai to Germany. As of December 2011, the Dubai-based carrier serves four points in Germany (Frankfurt, Munich, Dsseldorf and Hamburg) with a total of nine daily passenger flights to and from Dubai. Additionally, Frankfurt and Dsseldorf are served regularly with freighters. The airline has contracted the Institute of Air Transport and Airport Research at the German Aerospace Center (DLR) to examine the economic effects coming from the provision and use of existing passenger and cargo flights and the additional benefits that could be gained from potential new services to Berlin and Stuttgart. Currently, the bilateral air services agreement between the United Arab Emirates and Germany allows Emirates to serve four points in Germany with passenger flights. Furthermore, the analysis includes the impacts on the German economy due to Emirates orders for aircraft, engines, spare parts and maintenance services. Scope of the Study / Methodology In this study, the effects for the German economy have been analysed in the following areas:

Connectivity impacts concerning airports that are currently being served by Emirates (pages 28ff.)

Connectivity impacts resulting from potential new Emirates services from Dubai to Berlin and Stuttgart (pages 46ff.)

Impacts of Emirates services on passenger flows, competing airlines and hubs (pages 67ff.)

Direct, indirect and induced employment effects due to Emirates economic activity in connection with the operation of existing and potential new services (pages 83ff.)

Direct, indirect and induced employment effects due to incoming tourists flying with

Emirates to Germany (pages 94ff.)

Effects for shippers of air cargo concerning freight capacities and the accessibility of destinations (pages 103ff.)

Direct, indirect and induced employment due to Emirates orders for new aircraft, engines, spare parts and maintenance services (pages 115ff.)

The analysis of connectivity is based on schedules data for December 2011. Concerning the assessment of the impacts of Emirates services on passenger flows and capacity supply, data provided by Sabre Airport Data Intelligence, based on Market Information Data Tapes (MIDT) was analysed. Furthermore, data provided by the Official Airline Guide (OAG) on seat capacities and aircraft were used. Employment effects of Emirates activities in Germany, coming from the provision of air transport services and from orders for aircraft, engines, spare parts and maintenance services were assessed by applying input-output analyses, which are based on input-output tables provided by the German Statistical Office and supplemented with data on expenditures provided by Emirates. The input-output methodology is well accepted for



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impact assessments of the contribution of individual industries or activities to the economy and delivers sound and reliable results. For a qualitative assessment in areas where quantitative data was not available, stakeholder interviews with managers of tourism authorities, chambers of commerce and freight forwarders were conducted. Results The following paragraphs summarise the main findings of our investigation:

Connectivity Impacts

Secondary airports like Dsseldorf and Hamburg, which attract significant passenger volumes, but do not have a hub function improve their connectivity to the world regions Southern/East Africa, Asia, the Middle East and Southwest Pacific through Emirates services. The number of destinations that can be reached with a maximum of one intermediate stop or transfer increases. The number of flight segments required is reduced accordingly (pages 42ff.). Overall, this improves passenger comfort.

The improvement, as measured by a specified connectivity indicator, can be as much as 12 % for Dsseldorf and Hamburg, when the 61 destinations served by Emirates in Southern/East Africa, Asia, the Middle East and Southwest Pacific are considered (pages 57ff.).

Both passengers and shippers of air cargo benefit from dedicated capacities to Southern/East Africa, Asia, the Middle East and Southwest Pacific with better availability of seat and cargo capacities and more choice in departure times, frequencies, prices and transfer points.

From the viewpoint of economic theory, Emirates displays a function as countervailing power against increased oligopolisation and monopolisation of markets through mergers and alliances. For Germany, this applies particularly to the fortress hubs in Frankfurt and Munich, where Star Alliance has a share of 62 % and 65 %, respectively, in the number of seats offered on flights to Southern/East Africa, Asia and the Middle East.

At the airports of Berlin and Stuttgart only very few intercontinental flights to Asia or the Middle East are offered, so passengers are required to transfer via a German or European hub for most trips, or to travel by car or train to nearby airports with a larger supply of long-haul flights. New Emirates services would broaden the choice in frequencies and enhance the accessibility of German regions.

In Stuttgart, with a daily flight to Dubai, the number of weekly flight nonstop and one-stop connections to the Eastern Hemisphere would increase by 14 %. In Berlin, a daily flight by Emirates would increase the number of connections to Southern/Eastern Africa, Asia, the Middle East and Southwest Pacific by almost 10 %.

With a daily flight from Stuttgart and Berlin to Dubai, Emirates can generate 210 one-stop connections per week in transfer window of up to 6 hours after arrival in Dubai.



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In comparison, Qatar Airways generates currently only 66 weekly transfer connections from Stuttgart and 148 connections from Berlin via Doha.

Impacts on Passenger Flows

The analysis of passenger development shows that Emirates stimulates the demand for trips between Germany and the Eastern Hemisphere. From this it can be concluded that passengers travelling on Emirates represent to a large extent additional demand, which has not been shifted away from other airlines or hubs.

The number of transfer passengers travelling from Dsseldorf / Hamburg via Frankfurt and Munich remains constant or even grows, despite new or increasing competition from Emirates and other new entrants (pages 71ff.).

The air transport market between Germany and destinations in the Eastern Hemisphere (Southern and East Africa, Asia, the Middle East and South West Pacific) has grown by 30 % between 2005 and 2010 (+1.3 million passengers in absolute terms). Emirates market share increased in this period from 7.5 to 10.2 %, the market share of German carriers increased from 23 to 24.5 %. In the particularly important market Germany-North Eastern Asia (1.4 million travellers in 2010; e.g. China, Japan and South Korea), Emirates market share is lowest with 3.5 %. Emirates market share is highest between Germany and the South West Pacific region with 20 %. In this market, no German airlines operate.

From a growing demand in air travel between Germany and the Eastern Hemisphere many airlines benefit. Emirates share in the overall growth between 2005 and 2010 is +250,000 passengers, while Lufthansas passenger numbers increased by +220,000, followed by Turkish Airlines and Air Berlin with +116,000 each (pages 69ff.).

Even in markets particularly exposed to competition with new entrants, like Middle East and India, market leader Lufthansa has continued to grow substantially in terms of seat capacities offered (from 134,000 to 217,000 per month between 2003 and 2011) and also destinations offered (from 15 to 21 between 2003 and 2011, pages 77ff.).

Based on the market analyses, we form the hypothesis that different market segments have evolved over the past years. On the one hand, time-sensitive travellers from Frankfurt and Munich continue to fly on non-stop services to Asia and passengers from secondary airports in Germany continue to use connections via Frankfurt and Munich, which often have the shortest travel times compared to competing transfer itineraries. On the other hand, price-sensitive passengers prefer the offers of new entrants, with slightly longer travel times, but a competitive offer concerning value for money.

As the route networks of Emirates and Qatar Airways are overlapping to a large extent and similar travel times on many origin-destination pairs are offered, it can be expected that competition will be much stronger between the two Gulf carriers than between Emirates and Lufthansa, once Emirates would start operations in Berlin and Stuttgart.

Moreover, Emirates daily non-stop services with wide-body jets from Berlin and Stuttgart to Dubai, would be more attractive from passengers point view compared to Qatar Airways three-weekly service from Stuttgart to Doha and daily service with



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narrow-body jets from Berlin to Doha. This limitation in the number of seats impedes the ability to stimulate traffic and hence for instance to stimulate incoming tourism.

Overall, the growth of airlines like Emirates has not led to a reduction of existing nonstop / direct services of German carriers. On the contrary, the accessibility of Germany has improved due to the new offers.

Impacts of Emirates economic activity in Germany

In fiscal year 2010/11, Emirates spent 203.3 million in Germany for salaries of its employees and the purchase of goods and services required to operate passenger and cargo flights (pages 87ff.).

In our definition, Emirates staff is defined as direct employment, while persons employed with suppliers delivering inputs to Emirates (e.g. ground handlers, crew hotels, fuel suppliers) are counted as indirect employees. This includes the full chain of inputs.

Input-output analyses show, that besides 169 employees directly employed with Emirates, 2,271 indirect jobs are created both through Emirates expenditures e.g. for ground handling, catering, crew accommodation and airport charges, as well as through the expenditures of Emirates passengers (e.g. at airport retailing, parking and restaurants) and through the provision of public services (customs, border control). Moreover, through consumption expenditures of persons directly and indirectly employed, 712 jobs are induced.

According to these results, the activities of Emirates for the provision of air transport services create in total approximately 3,200 direct, indirect and induced jobs across different industries and different skill levels.

We have also applied an alternative methodology as found in the literature on economic impacts of aviation, using the relation between employment at airports and passenger/cargo traffic. This methodology results in about 3,600 direct, indirect and induced jobs (pages 90ff.).

Impacts on Incoming Tourism

Interviews in the tourism industry have confirmed that the regional availability of direct

long-haul flights is a key factor to increase the attractiveness of a city or region for incoming tourists from Asia and the Middle East (pages 94ff.).

On average, every additional arriving passenger increases the number of overnight stays of foreign tourists in Germany by 0.8. Therefore, it is estimated that Emirates accounted for approximately 485,000 overnight stays by foreign tourists in 2010 (pages 95ff.).

Expenditures of foreign tourists coming on Emirates to Germany are approximately 76 million, creating almost 2,600 direct, indirect and induced jobs (pages 102ff.).

The German National Tourist Board expects that incoming travellers from the Middle East region will become the second largest group of non-European travellers (estimation of 2.3 million nights in 2020) after those from the US (estimation of 5.9 million nights in 2020), when measured by the number of nights spent in Germany.



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This can be regarded as an indication also for further growth potentials for air transport between Germany and the Middle East.

The growth of incoming tourism from the Middle East is even more remarkable, when taking into account the relatively small population size of 39.2 million inhabitants. Based on the expected number of nights to be spent in Germany per inhabitant, the propensity of Middle Easterners to travel to Germany (58.7 overnight stays per thousand inhabitants) is about 35 times the one of the Chinese (1.6 overnight stays per thousand inhabitants), 3.2 times the one of the Americans (18.6 overnight stays per thousand inhabitants) and 2.3 times the propensity to travel of the Australians (25.7 overnight stays per thousand inhabitants, pages 96ff.). In order to guarantee the long-term attractiveness of Germany for foreign tourists, availability of flights and low air fares are particularly important.

Impacts of potential new services to additional points in Germany

Each additional flight to Germany will create approximately 140,000 additional

passengers for the respective airport, where such a flight will be operated (pages 112ff.).

Each additional flight to Germany will create about 200 direct, indirect and induced jobs from aviation-related activities (pages 113ff.).

Each new Emirates flight will potentially increase incoming tourism by about 55,000 overnight stays. The expenditures related to this increase in incoming tourism amount to about 8.3 million annually, creating approximately 280 direct, indirect and induced jobs.

With two daily flights, for each destination the number of additional passengers increases to about 360,000, the number of jobs to 440 and the number of overnight stays to 144,000. This incoming tourism effect creates approximately 730 additional jobs.

Switching from any of the four points currently served to new points does not create

any additional benefits for the German economy.

With traffic rights for additional points to be served by Emirates, Germanys overall global competitiveness for business relations, exports and incoming tourism will be improved.

Impacts on the German aeronautical industry

Emirates is one of the main customers of the German aeronautical industry. Between

1985 and 2011 Emirates took delivery of 84 Airbus aircraft, of which 65 were in service at the end of December 2011 (including 20 Airbus A380 valued at more than US$7 billion at list prices). As of December 2011, the carrier has 140 firm orders for Airbus aircraft to be delivered over the next 10 years (2012-2022), with a contract value at list prices of US-$ 54.7 billion ( 41.4 billion; including spare parts and spare engines).

Without considering investments in engines, the share for Airbus Germany and German suppliers exceeds 10 billion. In total, this will protect and create more than



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9,400 jobs at Airbus, its suppliers and through the consumption expenditures of employees (page 118).

Emirates decision to equip its fleet of 90 Airbus A380 aircraft with Engine Alliance engines, in which German manufacturer MTU has a share of 22.5 % in development and production, has created almost 600 direct, indirect and induced jobs in Germany.

For the operation of its current fleet, Emirates spends annually almost 280 million with German suppliers of cabin interiors, ground support equipment, spare parts and repair services. These expenditures create more than 2,500 direct, indirect and induced jobs in Germany.

The total employment effect in the aeronautical industry, for its suppliers and through the spending of income of persons directly or indirectly employed in this industry exceeds 12,500 full time jobs.

Our analysis does not include effects coming from deliveries of the German industry to Boeing, where Emirates has 97 aircraft on firm order. Boeing did not provide any information on the German content of Boeing aircraft. However, based on the list prices of the aircraft ordered by Emirates, we estimate that every percentage point of German participation in Boeings aircraft programs creates 200 direct, indirect and induced jobs in Germany.

With total revenues in the order of 25 billion in the German aerospace industry Emirates would account for about 4 % of these revenues over the next 10 years.



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Conclusion The study finds that more than 18,000 jobs in Germany are dependent on the economic activities of Emirates. The total of direct expenditures by Emirates and indirect expenditures by incoming tourists travelling on Emirates exceed 1.6 billion per year. When two additional points in Germany (Berlin and Stuttgart) would be allowed to be served on a daily basis, we expect an additional contribution of close to 1000 jobs through the aviation-related activities and incoming tourism. If both destinations were served twice daily, more than 2000 new jobs would be created. The following tables summarise the findings concerning expenditures and related employment effects: Scenario 1 one daily flight to Berlin and Stuttgart

Employment Existing flights Existing flights +

one additional daily flight to BER and

STR each Change

Provision of air services 3,152 3,548 +12.6 %

Incoming tourism 2,583 3,147 + 21.8 %Industry 12,558 -/-Total 18,293 19,253 + 5.2 %

Expenditures Existing flights Existing flights +

one additional daily flight to BER and

STR each Change

Provision of air services 203.3 million 233.6 million +14.9 %

Incoming tourism 76 million 92.6 million + 21.8 %Industry 1,399.9 million -/-Total 1,679.2 million 1,726.1 million + 2.8 % Scenario 2 two daily flights to Berlin and Stuttgart

Employment Existing flights Existing flights +

two additional daily flights to BER and

STR each Change

Provision of air services 3,152 4,030 +27.9 %

Incoming tourism 2,583 4,043 + 56.5 %Industry 12,558 -/-Total 18,293 20,631 + 12.8 %



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Expenditures Existing flights Existing flights +

two additional daily flights to BER and

STR each Change

Provision of air services 203.3 million 269.1 million +32.4 %

Incoming tourism 76 million 119.2 million + 56.8 %Industry 1,399.9 million -/-Total 1,679.2 million 1,788.2 million + 6.5 % The example of Emirates shows that Germany benefits from air transport liberalisation twofold: On the one hand through the economic effects of additional flights and on the other hand through the employment effects in the aeronautical industry due to the large number of aircraft. From the analyses and the data shown in this report, a further liberalisation of aviation markets with third countries is likely to be beneficial for a wide range of stakeholders, such as for employees being hired to handle additional traffic, for Germanys airports, for the aeronautical industry, for shippers of air cargo and last but not least for passengers, who benefit from competitive prices, larger capacities and better connectivity. Overall, the analyses show that the German economy significantly benefits from the activities of Emirates in Germany. Moreover, it has been shown that the economic benefits can be further increased when flights to additional German airports will be offered.



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1 Introduction In recent years Emirates has grown considerably. Via the airlines hub in Dubai, Emirates provides connectivity to 103 destinations (as of December 2011) on all continents. Emirates growth trend is also reflected in the German market, despite limitations in traffic rights. From Germany, Emirates has become the second largest carrier after Lufthansa in the supply of seats on long-haul flights to destinations in Southern/East Africa, Asia and the Middle East. Passengers can reach a total of 61 destinations in Southern/East Africa, Asia, the Middle East and the South West Pacific with Emirates from any one of the four airports in Germany currently served. These destinations include Dubai as non-stop destination, 57 destinations to be reached with one transfer in Dubai and three destinations (Auckland, Christchurch and Entebbe/Kampala) with additional stops on the flight from Dubai. These numbers underline the importance of Emirates for the German air transport market, in terms of destinations served and seat capacity provided. Moreover, Emirates is an important customer to both Airbus and Boeing, as it operates a quickly growing fleet of long-haul wide-body aircraft. The German industry has significant shares in both Airbus and Boeing commercial aircraft projects and delivers spare parts, aviation equipment and services to Emirates. In this study, the DLR Institute of Air Transport and Airport Research undertakes research to quantify the effects generated for the German economy by passenger and cargo services operated by Emirates to and from Germany, as well as the effects for the German aerospace industry, resulting from orders for aircraft, engines, components, spare parts and equipment. The geographical scope of the analysis is on the one hand Germany in its entirety and, on the other hand, a particular focus is laid on the situation of Berlin and Stuttgart, where Emirates intends to offer new services. Emirates is currently constrained by the bilateral air services agreement between Germany and the United Arab Emirates, as no passenger services to these cities can be established without giving up services to existing destinations. With passenger services, Emirates is permitted to serve four airports in Germany and currently operates to Frankfurt, Munich, Dsseldorf and Hamburg. In this study, the effects for the German economy have been analysed in the following areas:

Effects for passengers due to increased choice in the number of destinations, seat capacity, services, frequencies and increased competition between airlines

Effects for shippers of air cargo due to an increase in freight capacities

Effects for the aeronautical industry (employment, revenues)

Effects on the tourism sector in Germany

The document is structured as follows: In the first part, a brief overview of Emirates in general and its activities in Germany will be given. In the second part, the connectivity of Germany in general, and Berlin and Stuttgart in particular, to the air transport system is analysed and the contribution of Emirates is shown. This analysis is based on flight schedules data for December 2011.



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In the third part, impacts of Emirates services on passenger flows between Germany and Africa, Asia and South West Pacific are analysed. This analysis is based on data provided by the German Statistical Office and Sabre Airport Data Intelligence. Sabres Airport Data Intelligence information is based on bookings collected by the computer reservation systems (commonly known as market information data tapes/MIDT), but is further processed to account for airline direct sales not processed via CRS. To account for these effects, additional data sources, e.g. data from statistical offices, is used. The fourth area of the study deals with the impacts of Emirates on the German economy. This analysis is structured in two parts: On the one hand the effects coming from air services with regard to tourism, business travellers and air cargo are individually assessed. This part of the analysis will be conducted for the German economy in total, supplemented by estimations of the regional economic effects coming from potential future services to Berlin and Stuttgart. On the other hand the economic impacts of Emirates orders for aircraft, engines, spare parts, services and equipment for the German aerospace industry are analysed. Both the effects from air services as well as the purchase of aircraft, equipment and services from the German industry are investigated from a macroeconomic perspective, showing the employment generated by Emirates in Germany, the contribution to the economy in terms of gross value added and the revenues of tax authorities and social security. The study concludes with a discussion on the benefits for Germany with the liberalisation of air services agreements in general and the benefits of Emirates services to passengers, summarising the findings of the previous chapters.



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2 Overview The Emirates business model and Emirates current activities in Germany The growth strategy of Emirates is embedded in an overall plan for the economic development of Dubai. Dubai has become a role model for an Aerotropolis, a city which is located at a global hub that facilitates the exchange of people, goods and ideas (Kasarda/Lindsay, 2011). The economic policy of the emirate is focussed on the improvement of infrastructure, attracting foreign investment and highly skilled labour, for which the place is attractive due to its global connectivity and open immigration rules. In recent years, other airlines like Qatar Airways and Etihad Airways, but also Star Alliance member Turkish Airlines, are following Emirates business model of developing networks with global connectivity and a particular focus on traffic flows between Europe, Asia and Africa. The economic benefits of the aviation hub in Dubai are estimated by the Oxford Economics study (June 2011). It is estimated that aviation-related jobs account for about 19 % of total employment in Dubai and for about 28 % of Dubais GDP. The total of 259,000 jobs related to aviation in Dubai splits into 58,000 persons directly employed in aviation-related businesses and 43,000 jobs created with companies delivering inputs to the aviation sector. A further 23,900 jobs are created as induced employment resulting from the spending of persons directly or indirectly employed in aviation. In addition to this, the tourism sector in Dubai benefits strongly from the improved connectivity provided by air services. The authors found that the employment effects in this area reach almost 134,000 jobs. Through the creation of a platform for global connectivity, benefits are not only created for the hub, but also for each spoke connected to each other point in the network. As of December 2011, 103 destinations were served with passenger flights. Including destinations only served by freighters, the number of points in the Emirates network increases to 116 on all continents. A multitude of aspects contributes to the success of Emirates, as shown by OConnell (2009). A key component in the success of the business model of Emirates is the geographic location of its hub in Dubai, roughly in the centre of the triangle London-Johannesburg-Tokyo, which allows serving a large number of intercontinental city pairs between Africa, Asia, Europe and the Middle East. In developing its network, Emirates follows the approach to connect primary and secondary airports in Europe via its hub in Dubai with primary and secondary airports in Africa, Asia and South West Pacific. This allows passengers from secondary airports in Europe to reach secondary airports in the Eastern Hemisphere with only one transfer, while itineraries with competing carriers often require at least two transfers (Brtzel, 2006). This network structure is called secondary-hub-secondary in the literature, compared to the secondary-hub-hub-secondary network structure of competing airlines and alliances. From the passengers perspective, the secondary-hub-secondary strategy offers benefits as one additional transfer can be avoided. The following figure shows the effect for the example of an itinerary from Hamburg to Perth in Australia. With Emirates, the itinerary has one transfer at the airlines hub in Dubai. Lufthansa offers for instance a routing via the hubs in Frankfurt and Singapore, oneworld via London-Heathrow and Singapore and SkyTeam via Amsterdam and Kuala Lumpur.



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From this strategy various airports can take advantage, which formerly had no or only very few intercontinental flights, for instance Glasgow and Newcastle in the United Kingdom, Perth and Brisbane in Australia or Hamburg and Dsseldorf in Germany.

Figure 2-1: Comparison of itinerary between two secondary airports with Emirates and competing airlines / alliances

Source: DLR.

In its business model, Emirates benefits from various cost advantages. Concerning flight operations cost savings can be achieved due to the following effects: In the operation of wide-body passenger jets, fuel consumption per aircraft-kilometre flown initially decreases with longer flying distance, as the energy-intensive take-off and climb phase spreads over larger flying distances. However, fuel consumption per kilometre flown increases again at some point with increasing distances, as fuel to be burnt at later stages of flight has to be carried over long distances. Modern passenger jets, such as the Boeing 777 or Airbus A330 have their minimum fuel consumption per kilometre flown at distances between 3,000 and 6,000 km (Egelhofer et al. 2008), which are typical for Emirates operations between Dubai and Europe or South East Asia (see Figure 2-2).



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Distance in km

Figure 2-2: Specific fuel consumption in kg per aircraft-kilometre flown

Source: Based on Egelhofer et al. (2008).

Therefore, a cost advantage is achieved over competitors, which operate non-stop (e.g. between Europe and South East Asia) with flight stages of 8,000 to 10,000 km. This relationship is shown in Figure 2-2. The unlimited operating hours of the airport in Dubai can be regarded as one element for the improvement of efficiency, too, as aircraft are not held artificially on the ground at the carriers main hub. Contributing to Emirates increasing success is a strong brand image. Emirates relies to a large extent on sponsorship of sports teams and events, as shown by OConnell (2009). In Germany, Emirates has increased its popularity through the support of the World Cup 2006 and as main sponsor of the Hamburger SV football team. The positive brand perception of passengers is also reflected in the results of Emirates inflight passenger survey for flights between Germany and Dubai, where the reputation of the carrier and the perceived value for money are among the four most often mentioned reasons for choosing Emirates. Due to its ambitious growth strategy, it has achieved considerable volume discounts in its aircraft orders. From the high number of orders, like for the Airbus A380 or Airbus A350, not only Emirates benefits, but positive spill-over effects extend to other airlines buying the same types. With more orders, Airbus can distribute the development costs over a higher number of aircraft, leading to smaller development costs per aircraft delivered. Moreover, with larger quantities produced, economies of scale in purchasing and production can be realised, which are partly passed through to the airlines. Additionally, Emirates fleet decisions have a signalling effect for other airlines, which potentially has a positive effect on the manufacturers sales success. Also the resale value of aircraft potentially increases with the number of aircraft produced, as types become more common. This should be applicable particularly for the Airbus A380 with Engine Allliance engines, of which Emirates has ordered 90 units, while other carriers have only ordered 35 of this variant.

Spe

cific

fuel

con

sum

ptio

n in

kg/

km

Frankfurt-Dubai

Dubai-Singapore

Frankfurt-Singapore



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Like other airlines in emerging economies, such as in Singapore or in Turkey, Emirates can benefit from relatively lower wage levels for less skilled workers (e.g. employees in ground handling at the hub in Dubai) compared to incumbents in Europe. Lower tax rates make the UAE attractive for highly skilled labour (e.g. cockpit crews, engineers and management), for which a global market has developed. However, while not being obliged to contribute to mandatory social security systems as in Europe, Emirates provides healthcare, housing and childrens education for management, pilots, engineers and other staff voluntarily to improve the attractiveness of Dubai. The costs incurred with these services exceed US-$ 500 million annually. The above mentioned factors concerning network structure, flight operations and location-specific advantages contribute to comparably lower production costs, but are mostly not specific to the UAE, as they can also be found in other emerging economies. The following figure provides an overview of production costs (costs per available seat kilometre) for a number of airlines operating in the Asia-Europe long-haul market.

Figure 2-3: Comparison of operating costs for selected airlines

Source: Oxford Economics (2011).

From an economists perspective, Emirates exploits a classical Ricardian comparative advantage in the services industry, pretty much the same way as consumer electronics are produced in China or textiles in Bangladesh, for the advantage of both the exporting and the importing country. The benefits from the international division of labour in the production and trading of goods are widely undisputed. Emirates has a long-standing relationship with Germany. It started services to Frankfurt on 31st July 1987 and will therefore celebrate its 25th anniversary in 2012. The second destination Munich was added on 1st November 1999, followed by Dsseldorf on 27th March 2001. Hamburg, the fourth destination, was added starting on 1st March 2006. Additionally, freighters are operated to and from the airports in Dsseldorf, Frankfurt and Hahn. The bilateral air services agreement between Germany and the UAE allows Emirates to operate cargo-only flights to more airports than the four available airports for passenger services. Figure 2-4 shows the development of Emirates frequencies from German airports. Both Frankfurt and Munich started with seven flights per week, which increased to 14 flights per week in 2003. In Dsseldorf frequencies were increased to double daily in 2006. In Hamburg, Emirates started with a daily flight from Dubai, which was extended in October 2006 to New



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York, but discontinued in 2008. In September 2011, Hamburg received a second and in December 2011 Frankfurt received a third daily frequency to Dubai. In Munich, one daily flight is operated by an Airbus A380.

Figure 2-4: Development of Emirates frequencies from German airports 1996-2012

Source: Own illustration based on data by OAG.

Over time, services to all German destinations were increased, both in the number of frequencies as well as aircraft sizes. This reflects the growing demand for air travel between Germany and the regions served by Emirates in Asia and the Middle East. The operational scheme from German airports as of December 2011 is shown in the following table.



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Table 2-1: Emirates operations in Germany as of December 2011

Airport MonthlyFrequency(Departures) AircraftTypeMonthlyseatcapacity(upondeparture)

Monthlycargocapacity(intupon

departure)

Dsseldorf44 AirbusA340300 11748 57218 Boeing777300 6552 3018 Boeing747400F** 0 936

FrankfurtHahn* 5 Boeing747400F** 0 585FrankfurtRheinMainInt`l

31 AirbusA330200 7347 52762 Boeing777300ER 21948 103529 Boeing747400F** 0 3393

Hamburg 31 Boeing777200ER 8246 52731 Boeing777300ER 10974 518

Munich 31 AirbusA340300 8277 40331 AirbusA380800 15159 248

Source: Own representation based on data by OAG and Emirates SkyCargo. *) Cargo traffic rights only **) Freighter operations The following figure shows the development of passengers flown on Emirates flights between Dubai and Germany (both directions) for the time frame 2000-2011. The steady growth underlines the resilience of Emirates business model, even during the difficult years after the terrorist attacks in September 2001 and the global financial crisis after 2008, which has had serious impacts on passenger demand with regard to other airlines. The year 2011 saw a small decline of the passenger numbers. For 2012, however, another increase can be expected as capacities on some routes have been increased in winter 2011/2012.



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Figure 2-5: Development of Emirates passengers on flights between Germany and Dubai (and vice versa) 2000-2011

Source: Own representation based on data by Emirates. In line with passenger growth, Emirates has achieved a positive recognition of its brand. The carriers inflight passenger survey reveals that more than 60 % of passengers on flights to and from Germany have flown on Emirates repeatedly. Primary reasons for customers to choose Emirates are the experiences made with the carrier before, the reputation and the value for money.



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3 Analysis of the effects of connectivity to the international aviation network due to Emirates presence in Germany

3.1 The importance of connectivity In developed economies the division of labour, and therefore a spatial separation in the value chain of nearly every good or service is a fact. This international system increasingly develops the need for international business contacts or the founding of international branches and subsidiaries and other aspects of trade. Economic development in a global economy is intertwined with growth of external trade making worldwide mobility a necessity. Moreover, there can be a substantial separation of working and living, if only at times, as well as living and leisure. Therefore, connectivity to the global aviation network is a key factor to the competitiveness of cities, regions and countries. Numerous studies (e.g. Button/Taylor, 2000; Santin, 2000; Harsche et al., 2008) have shown that accessibility by air transport has a wide range of regional economic effects, including an increase in foreign direct investment, job creation and an increase in incoming tourism. The existence of air services to a wide range of destinations and at affordable prices increases the attractiveness of locations for businesses and is an essential feature in the current economy that is based on global logistics chains, connections and speed. Therefore, an increase in air services with more destinations and frequencies is an effective measure to stimulate the economy and to participate in the globalisation process. On a regional level, in the catalogue of hard locational factors, the quality of the transport system is an additional criterion in the interregional competition of economic development (Santin, 2001). Thus, the economic development of a region is supported when the local industry appreciates and utilises the connection to a high quality transport network. Key elements for local businesses are time- and cost advantages creating improved possibilities to access international markets and strengthen business contacts (Santin, 2001). With increasingly global business ties, the network structure of the local air transport link is an important factor in this regard. Thus, a broad network and a high degree of accessibility of national, international and intercontinental destinations will increase the airports attractiveness for the local economy. In this regard it is noteworthy that a higher level of economic capacity in the destination regions would benefit the local economy better. The linking of places of production and the marketplace is especially important concerning cargo traffic. Other criteria concerning economic impact for the region refer to the frequency of flight connections and the overall number of available seats. A high number of connections are desirable for flexible planning and short notice decisions on the sides of industry as they reduce schedule delay and associated costs. Finally, the number of available seats is an important measure to rate the overall impact of additional flights from the passenger perspective. Higher capacities give more people the opportunity to benefit from air transport and contribute to decreasing fares, allowing also passengers with a lower willingness to pay to fly. The supply of transport services is of importance for the region and the airport itself. The airport can increase its attractiveness by holding a sufficient supply of transport services and this way it can generate higher revenues through fees and income from non-aviation sources. In this regard international and intercontinental connections are of special interest



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since larger aircraft generate higher fees and carry more passengers that spend more time and money at the airport (Doganis, 1992). Furthermore, an increased number of larger aircraft is especially important for capacity constrained airports like Dsseldorf, at which growth through an increase in the number of flights is hardly possible. Carriers with larger aircraft therefore contribute to a better use of a public infrastructure, which increases social welfare. Therefore, local economies can, to a large extent, benefit from the installation or expansion of intercontinental flight connections as Santin (2001) has illustrated. Thus the accessibility to the air transport network and an efficient international traffic structure is an important locational factor.

3.2 Connectivity for Germany The following chapter will analyse the connectivity of Germany to the international air transport system, with a special focus on the contribution of Emirates to the accessibility of destinations in Africa, Asia and South West Pacific. For the analysis of the integration of Germany into the global air transport network and the role of Emirates we have used the following approach: First, we have identified the relevant market regions to which Emirates provides connectivity from Germany. Based on data provided by Sabre ADI, in 2010, more than 50 % of origin-destination passengers travelling on Emirates flights from Germany were flying to destinations in Asia, followed by 32 % flying to the Middle East countries and 9 % flying to Southern or East Africa and South West Pacific respectively. All other world regions (West Africa, the Americas, Europe) account for only 0.3 % of all Emirates passengers on flights from Germany.

Figure 3-1: Destination regions of origin-destination passengers on Emirates flights from Germany

Source: Own representation based on Sabre ADI; Emirates online connections (defined below) only.



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Although it is theoretically possible to fly with Emirates from Germany via Dubai to South America, this itinerary is rarely chosen in reality, due to the increased travel time and detour factor involved compared to non-stop flights or transfer flights via hubs which are closer between Germany and the destination regions. Therefore, our analysis of connectivity is focussed on the following world regions and countries, which are considered as relevant in the course of this study:

Southern Africa (e.g. Angola and South Africa) East Africa (e.g. Ethiopia, Kenya, Tanzania, Mauritius and Seychelles) South Asia (e.g. Bangladesh, India, Pakistan and Sri Lanka) South East Asia (e.g. Indonesia, Malaysia, Singapore and Thailand) North East Asia (e.g. China, Japan and South Korea, excluding Russia) Middle East (e.g. Iran, Kuwait, Saudi Arabia and the UAE) South West Pacific (e.g. Australia and New Zealand)

For these markets, Emirates provides connectivity for travellers to and from Germany. Subsequently, when we mention in this study the terms Eastern Hemisphere or Africa, Asia and South West Pacific, we refer to the geographical regions defined above. The following figure provides an overview on the regions and countries involved.1

Figure 3-2: World regions to which Emirates provides connectivity for Germany

Source: Own representation based on data by Emirates and Sabre ADI. In a second step, we have used Official Airline Guide (OAG) schedules data for the month of December 2011 to analyse the number of destinations served from Germany non-stop, with one stop or with more than one stop. This analysis includes a discussion of the contribution

1 An overview of the countries assigned to each world region can be found in the annex of this report



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of Emirates services from Germany to the connectivity to the airports in the regions under consideration. In total, OAG reports 1,292 airports with scheduled passenger services in the geographical area defined above in December 2011. In our methodology, transfer itineraries will only be considered when both segments are operated by the same carrier (subsequently defined as online connection, or abbreviated O-O, showing that both flight segments in a one-stop itinerary are operated by the same carrier), or when both flight segments bear the flight number of one carrier, but one segment is operated by another carrier (codeshare connection, subsequently abbreviated as N-O or O-N, showing that an operated and non-operated flight segment are combined for an itinerary). An example for an online connection is, for instance, a flight with Emirates from Hamburg to Dubai, which connects to another Emirates flight from Dubai to Bangkok. An example for a codeshare connection is for instance a Lufthansa operated flight from Frankfurt to Singapore, with a connection to a flight from Singapore to Sydney operated by Singapore Airlines under the code of Lufthansa. Theoretically, under the IATA interlining system, it is possible to combine any IATA airlines for a transfer itinerary. However, this system has become less relevant for passengers due to codesharing and airline alliances. IATA interlining typically involves relatively high fares, therefore being less attractive for travellers than code-share connections, where airlines often offer through fares and optimised connections. Thus, our analysis includes only online and code-share connections.



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3.2.1 Non-stop connectivity In December 2011, a total of 54 destinations in the geographical region defined above were served from Germany with non-stop flights. Lufthansa serves 33 destinations non-stop from Germany, Air Berlin including its codeshare partners (Hainan Airlines and Royal Jordanian) 10.

Figure 3-3: Non-stop destinations in the Eastern Hemisphere served by all airlines from Germany in December 2011

Source: Own representation based on data by OAG.



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Figure 3-4: Overview of destinations in Africa, Asia, Middle East and South West Pacific served non-stop from Germany in December 2011

Source: Own representation based on data by OAG. While Emirates serves only a single destination (Dubai) among the 54 from Germany in total, the share in number of seats offered is substantially higher. Actually, Emirates has become the second largest carrier operating from Germany measured by the number of seats on long-haul flights to the Eastern Hemisphere.



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Figure 3-5: Number of seats provided on non-stop flights and frequencies to destinations in Africa, Asia, Middle East and South West Pacific served non-stop from Germany in December 2011

Source: Own representation based on data by OAG. This is due to Emirates strategy providing long-haul flights not only to the hubs Frankfurt and Munich, but unlike many other carriers, also to secondary airports in Dsseldorf and Hamburg, with currently two daily frequencies each. Generally, the supply of long-haul flights in Germany is strongly concentrated on the hubs Frankfurt and Munich, while the secondary airports struggle to attract long-haul flights. Even the larger metropolitan areas in Germany, such as Berlin, Dsseldorf or Hamburg have only a few intercontinental flights. The existing long-haul flights out of secondary airports in Germany are to a large extent bound for North America and the Caribbean, with only rare examples of flights to Asia or the Middle East. In this regard, Emirates is an important airline for secondary airports not only in Germany, but also in other European countries, providing at least daily long-haul flights to Dubai with subsequent onward connectivity.

3.2.2 Connectivity for itineraries with one stop / transfer When itineraries with one stop or transfer are considered, 429 destinations (out of the total of 1292 airports in the region) in the Eastern Hemisphere can be reached from Germany (see Figure 3-6). This number of destinations can be reached when all available online or codeshare connections of all carriers serving Germany are taken into account. Among the global alliances, Star Alliance provides the highest number of destinations from Germany, with 240 destinations that can be reached with one transfer, followed by SkyTeam with 147 and oneworld with 78 destinations. If only online connections by individual carriers are looked at, Emirates provides more destinations than Lufthansa (57 vs. 40). However, if Lufthansas



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destinations served with codeshare services are also considered, the number of destinations increases to 89. Air Berlin, as second largest German airline, serves 8 destinations in the Eastern Hemisphere, and 15, respectively, including code-sharing partners. As the analysis is based on schedules data for December 2011, Air Berlins new cooperation with Etihad Airways is not yet included. As a result of this cooperation, Air Berlin has started services from Berlin to Abu Dhabi in January with onward connections to 45 destinations in Southern/East Africa, Asia, the Middle East and South West Pacific currently served by Etihad. In consequence, the long-haul route network of Air Berlin has been restructured, with a discontinuation of non-stop-flights to a number of destinations (e.g. Dubai, Bangkok and Phuket). Three more destinations can be reached with Emirates from Germany with one transfer, however, with additional stops on the flights from Dubai to the final destination: Entebbe/Kampala in Uganda with a stop in Addis Ababa, Auckland with stops in Sydney, Brisbane or Melbourne and Christchurch with stops in Bangkok and Sydney. In the short-term, passengers from Germany can benefit from extensions in Emirates route network, as Entebbe/Kampala is now served non-stop from Dubai starting 25th March 2012. From June 2012, Emirates will open a new route from Dubai to Ho Chi Minh City in Vietnam, providing a further destination in an emerging economy in Asia. Additionally, Emirates has code-share agreements in place with Japan Airlines, which extend the route network with connections from Osaka to Sapporo and Tokyo-Haneda and Fukuoka, served from Tokyo-Narita. However, these services are only rarely used by travellers from Germany. Other codesharing partners of Emirates are Jet Airways and Oman Air, as well as Star Alliance member Thai Airways and SkyTeam member Korean Air. These services, however, are operated to destinations only, which are also served by Emirates own aircraft and therefore do not contribute additional destinations to the network. Emirates also has non-reciprocal code-share agreements in place on Emirates-operated flights, for instance with Air Malta, Air Mauritius, Philippine Airlines and Star Alliance member South African Airways.



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Figure 3-6: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Germany with one stop/transfer in December 2011

Source: Own representation based on data by OAG. O-O both segments operated by the respective airline N-O first segment codeshare flight, second segment operated by the respective airline O-N - first segment operated by the respective airline, second segment codeshare flight

3.2.3 Connectivity to the 100 largest airports in the Eastern Hemisphere While in the preceding chapter the connectivity to all airports in the Eastern Hemisphere has been analysed, this chapter shows the connectivity of Germany to the 100 largest airports in Southern/East Africa, Asia, Middle East and South West Pacific. The size of an airport, here, measured in the numbers of seats offered on departing flights in December 2011, can be seen as a proxy for the importance of the respective city or region as a business and tourist destination. Therefore, this analysis is more focussed on the actual centres of gravity in economic importance and passenger demand. As can be seen in Figure 3-7, among the 100 largest airports in the Eastern Hemisphere, 39 are connected with non-stop flights to Germany. 30 of the 100 largest airports can be reached with Star Alliance carriers, while the oneworld and SkyTeam alliances provide non-stop connectivity to only six destinations each. Lufthansa alone serves 29 of the 100 largest airports with non-stop flights.



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Figure 3-7: Overview of non-stop services from Germany to the 100 largest airports in Africa, Asia, Middle East and South West Pacific in December 2011

Source: Own representation based on data by OAG. From Germany, 96 of the 100 largest airports can be reached with one transfer when all online and code-share connections are taken into account (see Figure 3-8). Star Alliance alone provides connectivity to all 96 destinations, while oneworld and SkyTeam both serve 74 destinations. Lufthansa, without taking into account their codesharing partners, offers 35 destinations, while Emirates serves 40 of the 100 largest airports in Africa, Asia and the South West Pacific. Lufthansa increases the route network, when their code-sharing partners are also taken into account, to 58 of the 100 largest airports.



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Figure 3-8: Overview of destinations in Africa, Asia, Middle East and South West Pacific served from Germany with one stop/transfer in December 2011

Source: Own representation based on data by OAG. O-O both segments operated by the respective airline N-O first segment codeshare flight, second segment operated by the respective airline O-N - first segment operated by the respective airline, second segment codeshare flight

3.2.4 Comparison of the route networks of Emirates and Lufthansa When comparing the network of Emirates and Lufthansa, we can observe both overlaps and complementarities. Lufthansa serves 40 destinations in Southern/East Africa, Asia and the Middle East. Out of these 40 destinations, 9 are not served by Emirates. Out of the 61 destinations served by Emirates, 30 are not served by Lufthansa. 31 destinations are served both by Lufthansa and by Emirates. The following Figure 3-9 shows in detail the airports served by Emirates and Lufthansa. Figure 3-10 displays the geographic location of the destinations discussed in this paragraph.



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Figure 3-9: List of complementary and overlapping destinations of Emirates and Lufthansa in the Eastern Hemisphere

*) Ho Chi Minh City will be served by Emirates from 4th June 2012 Source: Own representation based on data by OAG.

Figure 3-10: Map of complementary and overlapping destinations of Emirates and Lufthansa in the Eastern Hemisphere

Source: Own representation based on data by OAG.



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The following table shows in detail the monthly frequencies and seat capacities of Lufthansa and Emirates in a direct comparison. Thirty destinations, which are not served by Lufthansa, can be reached from Germany via Dubai on direct flights offered by Emirates. Among the destinations in the focus of Emirates route network are cities in India (e.g. Ahmedabad, Kozhikode, Kochi, Hyderabad or Thiruvananthapuram), which are served at least once daily from Dubai, but have no direct services from Germany. Additionally, many destinations, which can be reached with Lufthansa between twice weekly and daily, can be reached with Emirates on a twice daily basis, thus providing more flight options to passengers. Among the destinations where Emirates provides more frequent services than Lufthansa are Kuala Lumpur (three times daily out of Dubai compared to 4 weekly flights by Lufthansa from Germany), Guangzhou (daily from Dubai compared to twice weekly from Frankfurt) and Jakarta (twice daily from Dubai compared to 6 weekly flights from Frankfurt). There are, however, also 9 destinations which can be reached from Germany on Lufthansa-operated flights, which are not served by Emirates.

Table 3-1: Comparison of frequencies and capacities to African, Asian and Pacific destinations on direct flights* of Lufthansa from Germany with direct flights of Emirates from Dubai in December 2011

Lufthansa Emirates

Airport Name IATA-Code

Monthly Frequencies

on direct flights from Germany

Monthly Seats on

direct flights from

Germany

Monthly Frequencies

on direct flights from

Dubai

Monthly Seats on

direct flights from

Dubai

Tel Aviv TLV 70 19514 0 0 Mumbai BOM 59 16418 155 46512 Delhi DEL 59 18774 124 35638 Dubai International DXB 57 19417 279** 90251** Tokyo Narita Apt NRT 56 23138 31 10974 Shanghai Pudong International Apt PVG 55 18570 62 23703 Singapore Changi Apt SIN 55 20695 117 41728 Hong Kong International Apt HKG 53 17895 84 33777 Seoul Incheon International Airport ICN 47 13983 31 15159 Beijing Capital Apt PEK 44 17349 62 23157 Riyadh RUH 40 11940 66 19053 Jeddah JED 38 8398 62 27057 Beirut BEY 35 4884 62 15786 Abu Dhabi International Apt AUH 31 6851 0 0 Bangkok Suvarnabhumi Apt BKK 31 10230 125 48975 Cape Town CPT 31 10230 62 17828 Osaka Kansai International Airport KIX 31 10230 31 10974 Muscat MCT 31 9951 62 15539 Kuwait KWI 30 6630 124 33047 Bengaluru BLR 29 9570 93 22821 Johannesburg O.r. Tambo International JNB 29 15254 93 37107 Chennai MAA 29 10005 93 26435 Nagoya Centrair International Apt NGO 29 7773 0 0 Tehran Imam Khomeini Apt IKA 28 9240 93 26991 Amman Queen Alia International Apt AMM 27 4148 48 13324 Jakarta Soekarno-Hatta Apt CGK 27 5967 62 21948 Bahrain BAH 26 5746 93 22215 Doha DOH 26 5746 155 40550 Addis Ababa ADD 22 4862 31 7998 Pusan PUS 18 3978 0 0 Kuala Lumpur International Airport KUL 17 5610 93 33174 Pune PNQ 15 2835 0 0



Final Report

2012-04-18Release: 1.00 Page 40

Lufthansa Emirates Airport Name IATA-

Code Monthly

Frequencies on direct

flights from Germany

Monthly Seats on

direct flights from

Germany

Monthly Frequencies

on direct flights from

Dubai

Monthly Seats on

direct flights from

Dubai

Asmara ASM 14 3094 0 0 Ho Chi Minh City SGN 14 4620 0*** 0*** Kolkata CCU 13 2873 54 12798 Dammam (SA) DMM 13 2457 30 7810 Erbil EBL 13 1612 0 0 Nanjing NKG 13 2873 0 0 Guangzhou CAN 9 1989 31 10974 Luanda LAD 7 1547 13 4602 Auckland International Apt AKL 0 0 93 37107 Ahmedabad AMD 0 0 44 10428 Baghdad BGW 0 0 18 4266 Brisbane BNE 0 0 62 21948 Basra BSR 0 0 17 4029 Kozhikode CCJ 0 0 49 12425 Christchurch CHC 0 0 31 10974 Colombo Bandaranaike Apt CMB 0 0 93 32268 Kochi (IN) COK 0 0 62 16460 Dhaka DAC 0 0 74 24352 Damascus DAM 0 0 31 8417 Dar Es Salaam DAR 0 0 31 7998 Durban King Shaka International Apt DUR 0 0 31 7347 Entebbe/Kam

reports on emirates airline germany

Documents

dlr institute of air

impact of emirates airline

emirates airbus

emirates presence

germany final report

airport research cover

emirates business model

emirates current activities