American Airlines lobbying to put an allegation on Gulf Airlines for getting illegal subsidies from the government and endangering open skies agreement.
OPEN SKIES, BOOM OR BUST?
ATTACK ON THE GULF AIRLINESMANAGERIAL ECONOMICS INSTRUCTOR: DR.
ABU ALIGROUP MEMBERS:MUHAMMAD SAQUIBNADER AL
SUNAIDAROUTLINEBACKGROUND STORYU.S AIRLINE INDUSTRYU.S BEING THE
LEADER OF THE MARKETGULF AIRLINE INDUSTRYENTRY OF GULF AIRLINES
INTO THE WORLD COMPETITIONTHE CONTROVERSYBARRIERS TO ENTRY IN THE
FREE MARKET PORTERS FIVE FORCESMARKET ECONOMIC ANALYSIS REASONS FOR
THE CONTROVERSY, THE ECONOMIC DOWNTURN OF US AIRLINES, PRICE
ELASTICITY OF DEMAND & GAME THEORY ADOPTEDCONCLUSION
BACKGROUND OF WORLD AIRLINE INDUSTRYHas played a vital role in
the worlds economy2000 airlines, 23,000, 3,700 airportsAnnual
growth of 5% since 2006Single departing passenger generating a
profit of $ 2.56 (Brian Pearce, Chief Economist of IATA)
US AIRLINE MARKETConsists over 100 airlines, 11 million
departures1/3 of the worlds total air traffic545,000 employees,
8,000 aircrafts, 31,000 flights per day8% of US GDP
GULF AIRLINE INDUSTRYWorld in recession, GCC Aviation in
expansion8% of the global air transport10% growth rateArab Air
Carriers Organization (AACO)400 million passengers by 2020Airport
expansions
GULF AIRLINE FACTORS WHICH AFFECT THE WORLD AIRLINE MARKET
DEMAND & SUPPLY REVENUE MANAGEMENT STRATEGY
THE CONTROVERSY
Let me tell you that some of the figures in there were factually
incorrect the conclusions that were drawn were incorrect and we
will put the record straight with regard to the fuel hedge, Sir
Trim Clark, CEO Emirates.PORTERS FIVE FORCESAnalysis (Impact on US
airlines)Gulf carriers aggregate seat capacity growth 1094%
Analysis (Impact on US airlines)
1 %Gulf carrier growth = 0.0917% decrease in US airline traffic
for international routesAggregate growth 104.8%9.62% decrease in
passengers traffic for US airline. Analysis (Example: Impact on US
airlines) Flight to New York to Rome Price: $1075 Price: $635
Flight to New York to Milan
Why, although is within the same country?
Emirates airline started a route- JFK-MILOn-price elasticity
North American to Europe = -1.740% decrease in Price = 68% increase
in demand
Factors and ConsiderationPrice Emirates AirlineUses Airbus A380
on JFK-DXBCalculated Fuel efficiency 21.052 liters/Km0.0407 liter
per passenger kilometerFlight LAX-DXB 13,412 KmRound trip saving
$162 per passenger American Airways Uses Boeing 747 on
JFK-DXBCalculated Fuel efficiency 17.862 liters/Km 0.0478 liter per
passenger kilometer Flight LAX-DXB 13,412 KmRound trip extra cost
$162 per passenger
Factors and ConsiderationServices and convenience William Evans
an Atlanta-based director for a major aviation industry company who
was interviewed by USA Today.I began to shift my business
especially to Emirates. The U.S. carriers are usually the most
expensive, and the service is lacking USAHerkea Jea, a
small-business owner from Fremont, Calif also interviewed by USA
TodayWhy? He rattles off a list of advantages for the Gulf
carriers, including new aircraft, high-quality food and friendly
staff.Stated by Airways News They are flying out of a region thats
a central hub that allows travelers to get to places around the
world easier. CONCLUSION
REFERENCES
1.http://www.airbus.com/presscentre/pressreleases/press-release-detail/detail/new-airbus-aircraft-list-prices-for-2015/2.http://www.boeing.com/assets/pdf/commercial/startup/pdf/business/prices.pdf3.http://www.nytimes.com/2012/05/26/business/start-up-airlines-face-big-obstacles.html?_r=04.http://www.wsj.com/articles/u-s-airlines-battling-gulf-carriers-can-cite-experience-of-others-14265439715.http://www.flightglobal.com/news/articles/analysis-how-have-gulf-carriers-impacted-us-airlines-407813/6.http://www.wsj.com/articles/emirates-etihad-and-qatar-make-their-move-on-the-u-s-14152265897.http://www.bizjournals.com/bizjournals/blog/seat2B/2015/03/us-airlines-challenge-persian-gulf-airlines.html?page=all8.https://www.iata.org/whatwedo/Documents/economics/air_travel_demand.pdf9.http://www.usatoday.com/story/travel/flights/2012/11/12/qatar-emirates-airlines/1700609/10http://airwaysnews.com/blog/2015/02/17/the-passenger-experience-on-u-s-airlines-versus-the-big-three-gulf-carriers-fair-fight/11http://www.vox.com/2015/3/27/8296495/gulf-airline-subsidies
