OpenSkyThe International and

Government Affairs Journal of Emirates

Issue 25 | Oct 2016

Kolkata

Thiruvananthapuram

ChennaiBengaluru

HyderabadMumbai

Delhi

Ahmedabad

Kochi

Dubai

Lorem ipsum dolor sit amet, vestibulum massa viverra, est hendrerit vehicula leo commodo eu, pede lacus condimentum leo ligula amet elit amet, mauris in vestibulum amet vehicula suspendisse reprehenderit velit. Neque libero tortor etiam massa quis excepteur, sed non turpis libero, facilisis commodo.

NEW ADVENTURESSet sail for

in Yangon & Hanoi

DAILY FLIGHTS STARTING FROM 3RD AUGUST

Get ready to experience the sights, sounds and flavours of Myanmar and Vietnam with daily flights to Yangon and Hanoi from 3rd August. Don’t just visit, live it. Start your adventure at Emirates.com

Hello Tomorrow

Time for a review of alliances and Joint Ventures? 2

Emirates’ economic contribution to South Africa 2

The dizzying association merry-go-round 3

Women flying high at Emirates 4

India’s National Civil Aviation Policy 6

Tourism in India – a global opportunity 7

Growing competition in the China-Australia market 8

Yangon and Hanoi: Emirates supports non-hub growth in Southeast Asia 9

ACI EUROPE releases Airport Industry Connectivity Report 2016 9

Q&A with Phil Brown, Executive Director of Orlando International Airport 10

They said it best... 11

Shining results from aircraft dry washes 12

Fast Facts 12

In this issue:

5.43 million Emirates passengers carried to and from India in 2015

51% of Emirates employees are women

US$ 417million Emirates Group’s GDP contribution to South Africa

2

Time for a review of alliances and Joint Ventures?The market dominance of transatlantic airline Joint Ventures (JVs) protected by antitrust immunity (ATI) has caught the attention of the US Senate.

According to CAPA, 78% of available seat kilometres (ASKs) across the North Atlantic were operated by immunised JVs during the summer 2016 season. The three major global alliances account for 72% of this. The Open Skies environment in which these JVs operate was intended to stimulate transatlantic capacity growth and promote vigorous price competition. The reality, however, has been different. Increasing dominance by immunised JVs, whose members are permitted to coordinate on prices and schedules, has resulted in less consumer choice and higher fares. As Mark Schwab, the CEO of Star Alliance, conceded, “fare differentials are not that great” among the three major alliances.

The lucrativeness of these arrangements is underscored by the aggressive lobbying by the Big 3 US airlines (namely Delta Air Lines, United Airlines and American Airlines) along with their labour allies to block new competitive entries. They have vehemently opposed Norwegian Airlines’ applications to the US Department of Transportation (DOT) that seek authorisations for its Irish and UK subsidiaries. Moreover, they have attacked Emirates’ sole daily fifth freedom service between New York JFK and Milan Malpensa airports, which is fully permitted under the US-UAE Open Skies agreement and the UAE-Italy Air Services Agreement. This is no

different than the five Asia-Pacific cities Delta Air Lines serves on a fifth freedom basis via Tokyo Narita airport.

Robin Hayes, CEO of JetBlue, has led a growing chorus of concern in the US about the state of transatlantic competition. As Hayes notes, over half of the top 30 US-Europe routes have 100% of their seats operated by immunised JV carriers. JetBlue has called for DOT to begin conducting periodic reviews of ATI grants every three to five years to ensure consumer benefits outweigh harm to competition. Mark Dunkerley,

CEO of Hawaiian Airlines, has raised similar concerns arguing the adverse consequences of immunised JV market concentration in the Pacific will be even more profound.

Against this backdrop, the US Senate recently approved the Blumenthal Amendment to the Senate FAA Reauthorisation Bill directing the Government Accountability Office (GAO), Congress’s investigative arm, to prepare a comprehensive study of the competitive impact of alliances and ATI. The study would examine whether alliances have reduced competition and stifled new entrants, whether DOT monitoring is adequate, and whether there are alternatives to ATI that would benefit consumers without creating the same level of competitive risks. The amendment also directs GAO to recommend whether ATI grants should periodically expire.

This amendment is unlikely to be enacted this year as the US Congress deferred acting on a long-term comprehensive aviation bill. Instead, it passed a limited short-term bill extending the FAA’s current authority. This language, however, will carry over to next year when Congress again takes up a wide-ranging bill. In the interim it signals to the industry that market dominance via immunised alliances and JVs has caught the attention of the US Senate and may have reached a tipping point for corrective action..

Emirates’ economic contribution to South AfricaGenesis Analytics, the largest economic consultancy in Johannesburg, recently carried out an impact study quantifying the economic contribution of the Emirates Group to South Africa.

“Quantifying the Economic Contribution of Emirates to South Africa” analyses the impact of core airline operations; the benefits created through connectivity with the rest of the world; and the benefits of codeshare and interline partnerships.

The analysis revealed that the Emirates Group’s GDP contribution in 2014/15 amounted to US$417 million (ZAR 4.5 billion). The combined direct, indirect, and induced impact of employment for the same period was 12,989 jobs. Emirates’ operations in South Africa created 80 unique one-stop competitive travel routes to and from the country. This activity enabled an economic contribution of US$479 million (ZAR 5.2 billion) and supported 19,484 jobs in the tourism industry.

All JVs with ATI

78%

Others20%

Fifth Freedoms2%

Share of transatlantic ASKs, summer schedule 2016

The full report on Emirates’ economic impact in South Africa can be viewed here.

2,996seats/week

US$ 556 million toSA’s GDP

+22,193 jobs

370,941 inbound tourists annually

=

=

=

3,465seats/week

US$ 569 million toSA’s GDP

+23,133 jobs

386,658 inbound tourists annually

=

=

=

+ +

3 x upgauge of B777 to A380 (1 x CPT + 2 x JNB)

Second daily B777 service to DUR

The study also included two growth scenarios – the first of which is an upgauge of one B777 service to Cape Town (CPT) to an A380; and the upgauge of two B777 services to Johannesburg (JNB) to A380s. The second growth scenario is the introduction of a second daily B777 flight to Durban (DUR)..

Source: CAPA

3

The dizzying association merry-go-roundThe airline association space in Brussels – the EU’s capital – has become even more crowded recently, with Europeans for Fair Competition (E4FC) and Airlines for Europe (A4E) being established earlier this year. They add to the four existing associations who seek to represent the interests of the airline industry with the EU institutions.

While the latest additions seek to offer different representation, simply adding to what is an already overcrowded offering of airline associations seems to add more confusion than clarity. The frequently heard frustration among Brussels decision-makers is illustrated well by this comment from a Brussels decision-maker: “these four associations visit in sequence, one after the other, followed by representatives from each of the big airlines, all of them wanting to know what the last one said and calling for different things. Seriously, this is not the way to show a united front as a mature and economically significant industry.”*

For example, since its launch, E4FC’s purpose has been to address the alleged ‘unfair competition’ posed by Gulf carriers and lobbying for increased transparency. However, while they have been lobbying at both national and EU level, they are yet to make an appearance on the EU transparency register. It was also recently revealed by the Dutch newspaper ‘Financieele Dagblad’ that E4FC’s website was registered by the Dutch Pilots Association (VNV), despite VNV denying being behind E4FC, although they regularly write letters on behalf of E4FC. Despite

their airline membership having multiple crossovers with that of the Association of European Airlines (AEA), they have also been vocal in complaining about Gulf carriers investments in European airlines, but in doing so, actually contravene one of the key principles of the AEA, to eliminate ‘restrictive foreign ownership and control laws’. It is also noteworthy that the VNV has openly criticised KLM for “lacking the courage” to support E4FC despite the Dutch carrier willingly co-signing E4FC letters.**

So what of A4E, who set out on the mission of unifying the voices of all European airlines to provide clearer messaging? On the surface this should add some welcome clarity, but taking Air France-KLM as an example, the picture remains blurred - Air France-KLM is a member of five airline associations in Brussels*** – of which the views of one are often totally inconsistent with the other.

When speaking in an A4E context in February 2016, Norwegian Air CEO, Bjorn Kjos said, “Norwegian has always believed in healthy competition among airlines to create more choice and lower fares for passengers” which stands in stark contrast

to the letter sent by E4FC to Dutch State Secretary Sharon Dijksma in June which essentially called for the stifling of any competition, bar that of a few European legacy carriers. It was also not long ago that Air France-KLM petitioned the European Commission to stop supporting Norwegian Air International’s bid to operate transatlantic services due to cost benefits giving it an ‘unfair competitive advantage’.

It appears then, that despite trebling their number in the last two years in pursuit of greater influence, European airline associations’ messaging and the views of those carriers that are members of multiple associations, continues to be contrasting at best, and conflicting at worst. If the current situation makes anything clear, it is that the EU airlines may struggle to credibly convey common views to decision-makers in Brussels..*http://atwonline.com/blog/unlikely-marriage Jun 19, 2015**Commentary by Captain Steven Verhagen in Op de Bok, July/August edition***AEA, A4E, E4FC, IATA and IACA when including Transavia, part of the Air France-KLM Group

4

Women flying high at EmiratesDid you know that over half of Emirates’ workforce is female?

Emirates currently employs over 26,000 women, who comprise over 51% of the workforce. Women are employed in all age groups across at least 152 nationalities. Almost every department in Emirates has female staff, ranging from aircraft maintenance in engineering to flight deck crew. This is why their interests and needs are, and always have been, recognised.

Just over half of all women in the company are employed in mid-level positions and above, and 13% of our female workforce have worked for Emirates for 10 years or more, demonstrating Emirates’ credentials as an employer of choice globally. Still there are some common misconceptions around Emirates’ employment practices applicable to women and how female employees are

treated generally. To challenge those are some facts and figures and on page 5, six real life examples of strong, successful and empowered women currently working for Emirates..

76% of female cabin crew return to work after maternity leave

51% of Emirates employees are women

50 women currently on Emirates’ Executive Leadership Development Programme including 13 UAE Nationals

14% of all UAE National Emirates pilots are women

139 nationalities working as female cabin crew

13% of female employees have worked for Emirates for over 10 years

Myth Emirates terminates the employment of pregnant cabin crew.

Fact Emirates’ policy in relation to pregnancy amongst cabin crew is not dissimilar to many other global airlines. When a member of cabin crew becomes pregnant it is required by law that their flying license is suspended. Subsequently, however, Emirates provides different options. For example, if cabin crew wish to be considered for temporary ground-based roles during pregnancy, they can apply and Emirates will endeavour to accommodate this where possible. Not all pregnant cabin crew choose to pursue this option though. Unpaid leave can also be taken for the duration of a pregnancy and an additional 145 days after the birth of their child/ren. During this time, medical and maternity insurance coverage is provided by Emirates. On return to work, within 145 days from date of birth of the child/ren, cabin crew receive 45 days’ pay which is the equivalent to a maternity leave payment (non-cabin crew maternity leave entitlement is 45 days). Eligibility for cabin crew maternity leave is subject to the completion of three years’ service.

Also, all female employees who return to work in non-cabin crew roles after maternity leave are entitled to take one hour per day from their duties to attend to the child’s feeding and nursing

requirements – up until the child reaches the age of six months. Female cabin crew are not entitled to this benefit as they are able to take up to an extra 100 days of unpaid maternity leave.

Myth Emirates female cabin crew have an age restriction and are subject to curfews when off duty.

Fact Over 1,000 female cabin crew working for Emirates are over the age of 40.

Emirates’ female cabin crew can either live in company provided accommodation or privately rented accommodation in Dubai. There are no curfews imposed on female cabin crew living in company accommodation and in fact many prefer to opt for company accommodation because it means they will have a better support network, especially when they are living away from home in a different country.

MythEmirates employs most of their female cabin crew from poorer developing countries.

FactEmirates employs female cabin crew from 139 different countries. The top 20 nationalities among our female cabin crew cover every region in the world.

Dispellingthe myths

5

Karen Bell-Wright SVP Retail and Contact Centres

More than ten years ago Karen’s commitment to progressing her career brought her to Emirates. “At

the time, moving from a major multi-national company such as Hewlett-Packard to Emirates was a natural career progression. Emirates had become a recognisable global brand to work for and was synonymous with growth and opportunity in the region.” Karen quickly moved up the management ranks as her portfolio of responsibilities grew in size. Today, Karen manages over 3,000 employees across seven contact centres and 123 retail offices globally. She feels that Emirates’ multicultural working environment creates a certain dynamism and there is exceptional support for women within the company and in the UAE as a whole.

Annelies Beijer Captain, Boeing 777

“I have the best view from my office,” says Annelies. Captaining widebody aircraft was exactly the career she had envisioned since the age of eight. In fact, Annelies had a pilot’s

license before she had a driver’s license. She joined Emirates because of the opportunities it presented for career progression in terms of aircraft type and seniority. She was hired as a First Officer in 2011 with Boeing 737 experience and immediately Emirates supported her pilot training for a Boeing 777. Annelies recently became Captain, and she feels this happened faster compared to other airlines. Her next goal with Emirates is to become a training captain. Despite most airline pilots being male, Annelies says she has always been afforded equal opportunity and equal pay on the basis of individual experience and capability. Asked what she enjoys most about being a pilot, she replied, “Getting to the destination is as interesting as the destination itself. Every flight is different, and Emirates has a fantastic route network.”

Seema Jain Production Planning Engineer

Although Seema’s family believed that her abilities in maths and science would lead to a career in medicine, they gave their full support when she showed an interest in the field of

engineering. Seema went on to train as a mechanical engineer at an aviation college in India, joined Emirates earlier this year, and is now managing a team of 18 in the Production Planning division of Emirates Engineering. Seema believes that Emirates encourages the view that women can achieve whatever they set out to do, even in a male-dominated field of work such as engineering: “Emirates does not limit you. All of the engineering is done in-house so there is so much opportunity.”

Catherine Baird SVP Cabin Crew Training

Catherine started out her career as a teacher but, following the realisation that teaching was not her true vocation, took a risk and changed careers to become cabin

crew for British Airways. After broadening out her experience in a variety of roles in the aviation industry, Catherine joined Emirates 11 years ago as Manager of Cabin Crew Training, where she was quickly promoted to Vice President, and then ultimately to her current role where she oversees the training function for nearly 5,000 new cabin crew a year. Catherine believes that women bring unique skills and qualities to the table, and she attributes her success to being bold, taking risks and networking as much as possible.

Bakhita Saif Al Muhairy First Officer, Boeing 777

Bakhita has always been a high achiever and, after graduating from high school joined Emirates’ Cadet Pilot Programme in 2012. Emirates was a natural choice for Bakhita as Dubai is her home. She says that, although Emirates has been extremely supportive, she has not received any special treatment as a female pilot, and everyone she has worked with has been extremely respectful: “It helps that Emirates has a diverse culture and holds the view that women can

work in all fields.” Bakhita’s ultimate goal is to become a Captain for Emirates and she regards Captain Aysha Al Hamili, the Permanent Representative of the UAE at ICAO, as an inspiration and a strong female role model in this male-dominated profession.

Atikilt Abate Cabin Supervisor

Atikilt graduated from university with a computer science degree. At the time there were few opportunities in IT in her home country of Ethiopia, as the industry was still developing. Atikilt decided to explore her other passion of travelling and this sparked an interest in working for an airline. She had heard lots of positive comments about Emirates as a company so decided to apply online for a job as cabin crew. She was successful and five years on, Atikilt has recently

returned to work after having her first child. When becoming pregnant in July 2015 she was taken off flying duties and Emirates explored with her the option of taking up a ground-based role. A few weeks later, Atikilt joined the Group Safety Department and remained until going on maternity leave six months later. While on maternity leave, Emirates’ medical insurance plan covered all of her pre-natal and post-natal care. Atikilt has now returned to flying after completing a back-to-work training course, which included support sessions for new mothers. Atikilt enjoys her time at Emirates because she loves working with people from different cultures and backgrounds, and because Emirates has helped her to develop skills and confidence.

6

India’s National Civil Aviation PolicyIndia’s aviation industry witnessed two major policy announcements in June. India’s first ever comprehensive National Civil Aviation Policy (NCAP) was released on 15 June 2016, followed by the opening up of Foreign Direct Investment (FDI) in India’s aviation sector just five days later.

The overall aim of the NCAP is to “make flying affordable, safe and convenient and to promote balanced regional growth, tourism, infrastructure and ease of doing business,” according to the Civil Aviation Minister, Ashok Gajapathi Raju. It is hoped that the NCAP will assist the Government in achieving its objective of India becoming the world’s third largest aviation market by 2020.

India’s booming economy and growing middle class have helped to make it the world’s fastest-growing aviation market. In 2015-16, international traffic to India grew by 7.7% and domestic traffic grew by 27.4%. With the new NCAP in place, the aim is to create an aviation industry that can handle 500 million domestic passengers, 200 million international passengers, and cargo volumes of 10 million tonnes by 2027.

India is an extremely important market for Emirates and we view the NCAP as a significant development that includes positive initiatives that aim to address challenges, as well as explore various policy options. Emirates is a supporter of the NCAP’s stated core policy goals of making flying affordable and convenient, establishing an integrated aviation eco-system, enhancing regional connectivity and improving the ease of doing business in India. If implemented effectively, the policy has the potential to deliver growth in the aviation sector and help to promote tourism, employment and regional growth. It is also a clear signal that the Indian Government recognises the many economic and social benefits that increased connectivity provides.

India’s international air traffic has the potential to double in the next five years. In light of this, the momentum of the Government’s reform agenda will need to continue in order to ensure the policy leads to the structural shift required to deliver on its goals..

Foreign Direct Investment (FDI) policy:Following the announcement of the NCAP, the Government introduced significant policy changes to FDI in the aviation sector. India’s aim is to attract greater flows of foreign investment and boost job creation in the country. The changes allow 100% FDI in the aviation sector in Greenfield Projects and 74% FDI in Brownfield Projects. However, while the policy will allow overseas investors to fully own an Indian airline, foreign airlines will not be able to increase their ownership beyond 49%.

Key NCAP highlights:Open Skies – The Government plans to liberalise the regime that governs bilateral traffic rights by introducing Open Skies on a reciprocal basis with countries located further than 5,000 km from Delhi. For countries located within 5,000 km of Delhi, where Indian carriers have not fully utilised 80% of their capacity entitlements, but foreign carriers have fully utilised their capacity entitlements, a method will be recommended by the Cabinet Secretary for the distribution of additional capacity entitlements. When Indian carriers and foreign carriers have both fully utilised their capacity entitlements, the bilateral arrangements will be renegotiated in the usual manner.

Regional Connectivity Scheme – A key part of the Regional Connectivity Scheme is that the Government will set a limit on the airfare for a one-hour flight on certain regional routes to INR 2,500 (US$38). This will be implemented by reviving un-served or under-served airports and providing Viability Gap Funding to carriers in some cases.

5/20 rule – The previous 5/20 rule, which required Indian carriers to fly on domestic routes for five years and have a fleet of at least 20 aircraft to be allowed to commence international operations, has been modified. Under the now 0/20 rule, all Indian carriers can commence international operations provided they deploy 20 aircraft or 20% of total capacity for domestic operations, whichever is higher.

Industry reactions to the policies:

Tony Fernandes CEO of AirAsia Group

“It is not perfect. India is a complicated country. The fact that they have actually done it, which is more than any other government has done previously, is indeed a step forward… but I applaud that they have done something. At least, for the first time, we have clarity and we know what we need to do.”

Goh Choon Peng CEO of Singapore Airlines

“We have seen things liberalised… but from our perspective more can be done in terms of removing restraints.”

Amber Dubey Partner and Head, Aerospace and Defence, KPMG (India)

“The opening of FDI will help bring in much needed cash, aircraft fleet and best practices. We may see its positive impact over the next 6-12 months. Though equity holding of foreign airlines is still limited to 49%, a foreign airline can join hands with its sovereign fund or private investors and set up a 100% foreign owned airline in India.”

7

Tourism in India – a global opportunityThe impact of tourism on the economic and social development of a country can be enormous; opening it up for business, trade and capital investment, creating jobs and entrepreneurialism for the workforce, and protecting heritage and cultural values. For India, the current trajectory of strong tourism growth presents an unprecedented opportunity that should not be ignored.

India has witnessed steady growth of around 27% in Foreign Tourist Arrivals over the past five years. According to the World Travel and Tourism Council, the tourism sector in India is expected to grow at an average annual rate of 7.9% until 2023, making the country the world’s third fastest growing tourism destination over the next decade. Recognising the potential this presents, the Government has set a goal to increase India’s share in global foreign tourist arrivals from 0.68% to 1% by 2020, and to 2% by 2025.

In 2015, India ranked 40th globally in terms of Foreign Tourist Arrivals, according to the United Nations World Tourist Organisation (UNWTO). In a bid to make India even more attractive as a tourist destination, the Government introduced an electronic visa scheme in November 2014. India currently offers the electronic visa scheme to 150 different countries and is set to extend the programme to a further 36 countries. The reaction from foreign visitors has been positive, with 445,000 foreign tourists registering for the scheme in 2015.

Aviation and tourism are intrinsically linked and the adjustments we have seen to India’s aviation and tourism policy settings in the past two years, such as the NCAP, FDI and visa policies, will benefit both industries. In 2015, tourism’s direct contribution to India’s GDP was INR 2,668.3 billion (US$39.8 billion), and is forecast to rise by 7.1% this year. The sector also supported 23.4 million direct jobs, which is expected to grow by 3.2% in 2016. Further liberalisation of policy frameworks will see India’s aviation and tourism industries cement their position as strong economic drivers for India over the long term..

Kolkata

Thiruvananthapuram

ChennaiBengaluru

HyderabadMumbai

Delhi

Ahmedabad

Kochi

Dubai

Emirates’ India Network Launched:

1985 Mumbai Delhi

2000 Chennai

2001 Hyderabad

2002 Kochi

2006 Thiruvananthapuram Kolkata Bengaluru

2007 Ahmedabad

0

2

4

6

8

10

2011 2012 2013 2014 2015 To

uris

ts (m

illio

n)

0 1 2 3 4 5 6

2011 2012 2013 2014 201

6.30 6.58 6.97 7.68 8.03

4.64 4.94 4.86 5.21 5.43

5

Pas

seng

ers

(mill

ion)

0

2

4

6

8

10

2011 2012 2013 2014 2015

Tour

ists

(milli

on)

0 1 2 3 4 5 6

2011 2012 2013 2014 201

6.30 6.58 6.97 7.68 8.03

4.64 4.94 4.86 5.21 5.43

5

Pass

enge

rs (m

illion

)

Source: Ministry of Tourism, Government of India

Source: Emirates

Foreign tourist arrivals to India

Emirates passengers carried to/from India

8

Growing competition in the China-Australia marketAs competition heats up in the China-Australia market, new approaches to investment, partnership and passenger services, begin to make their mark.

In the first half of 2016, announcements by Hainan Airlines and the Nanshan Group laying out their intent to purchase a stake in Virgin Australia, set the stage for a new phase in China-Australia aviation development.

The China-Australia aviation market has become one of the most competitive in the world, with seat capacity growing by 43% in the first half of this year alone*. This followed 30.2% capacity growth between July 2014 and July 2016. In terms of passenger numbers, this translates to astounding growth – from 400,000 in 2010 to over one million in 2015 – making China the biggest growth story for Australian tourism in recent years.

China Southern currently holds over 40% of seat capacity in the China-Australia market, with China Eastern and Air China holding around 20% and 15% of the market respectively. This tight holding by China’s big three airlines is partly due to China’s “one route, one airline” policy which generally only allows one Chinese airline to operate on each international city pair. However, China’s smaller airlines have now entered the market to capture their slice of the pie and it is their operations from non-hub airports in China that have driven the rapid traffic growth between the two countries. Up until 2010, only three Chinese cities – Beijing,

Guangzhou and Shanghai – had services to Australia. This number increased to six in 2014, and has so far reached 14 in 2016, with the potential to grow to as many as 21 over the next few months.

In 2011, there were 11 city pairs between China and Australia, operated by five airlines, and this number has increased to 26 city pairs in 2016, operated by nine airlines. Most of the growth has occurred since late 2015 when Xiamen Airlines commenced routes from Fuzhou and Xiamen to Sydney. Last month Hainan Airlines began services from Xi’an and Changsha to Sydney, and is due to launch services from Xi’an to Melbourne in November 2016. Air China recently announced they would be commencing a service from Chengdu to Sydney in November 2016, and Virgin Australia plans to launch its first route to Beijing and Shanghai in June 2017. More recently, Qantas announced they will launch a service from Sydney to Beijing in January 2017.

The competition heating up on China-Australia routes has forced all participants to raise the bar in terms of their product and service offering. However, as new airlines enter the market, all players are looking beyond the product offering to explore new business models and deeper forms of cooperation. Qantas has formed

partnerships with both China Eastern and China Southern, exploring regional beyond markets as a way to provide seamless integration and customer experience. Virgin Australia is now owned by a consortium made up of Virgin, Etihad, Singapore Airlines, Air New Zealand, Hainan (as of May 2016) and Nashan Group (as of June 2016). We could be looking at far deeper partnerships that may have a lasting impact on the competitive landscape for passengers, and new models of cooperation for airlines.

The rapid growth of the China-Australia market in recent years demonstrates how aviation policies can help to create better connectivity and encourage more competition. Australia has liberalised its bilateral air services arrangements with China and is now in a position to be able to take advantage of the significant outbound flow of Chinese travellers. China is also encouraging its airlines to grow internationally and cement its position as an aviation nation, which will arguably serve its own carriers well.

The expansive growth between these two markets looks set to continue and it will be noteworthy to see what new routes and airlines emerge along the way..

Beijing

Qingdao

ShanghaiHangzhou

NanjingXi’an

ChongqingWuhan

Changsha

Chengdu

FuzhouXiamen

Shenzhen

MelbourneAdelaide Sydney

BrisbaneGold Coast

Perth

Cairns

Guangzhou

Air ChinaBeijing Capital Airlines*China Eastern AirlinesChina Southern AirlinesHainan AirlinesJetstar Airways*Qantas AirwaysSichuan Airlines*Xiamen Airlines*

*New entrant

Air ChinaChina Eastern AirlinesChina Southern AirlinesHainan AirlinesQantas Airways

Beijing

Shanghai

Shenzhen

Melbourne

Sydney

BrisbaneGold Coast

Perth

Cairns

Guangzhou

Airlines operating in 2016

Airlines operating in 2011

Source: OAG Analyser

*Source: CAPA

9

Yangon and Hanoi: Emirates supports non-hub growth in Southeast Asia On 3 August 2016, Emirates launched a daily service from Dubai to Yangon in Myanmar and Hanoi in Vietnam. This new service has expanded the airline’s network in Southeast Asia to 12 cities in seven countries.

Operating a Boeing 777-300ER aircraft in a three-class configuration, this new route strengthens Emirates’ network of destinations in Southeast Asia, offers a new flight option to passengers travelling between Hanoi and Yangon, and opens up new connections for Myanmese and Vietnamese travellers to access Emirates’ global network.

In terms of cargo, up to 20 tonnes of capacity is carried in the belly-hold on this service. This is in addition to the 260 tonnes of cargo capacity each way on our weekly all-cargo- service between Dubai and Hanoi.

Yangon is Myanmar’s commercial capital and largest city with a population of 7.2 million. Since the opening up of tourism in the country, Myanmar has continued to witness an increase in foreign tourist arrivals, in particular attracting those interested in eco-tourism or the country’s many historical temples. With its religious and ancient sites, natural trails and picturesque beaches, Yangon welcomed 1.1 million tourists in 2014, an increase of 25% compared to

the previous year. As the country’s main centre for trade, industry, real estate and entertainment, Yangon contributes approximately one fifth to the country’s GDP.

Hanoi, the Vietnamese capital, is located in the northern region of Vietnam, and as the second largest city in the country, has a population of seven million. Hanoi’s economy has grown from strength to strength since the 1990’s, and this is evident by the number of industrial parks and clusters across the city. Renowned for being a cultural centre, the city has a number of historic attractions, as well as UNESCO world heritage sites like Ha Long Bay. Hanoi is Emirates’ second passenger destination within Vietnam, complementing Emirates’ service to Ho Chi Minh City which was launched in 2012, as well as a dedicated cargo service to Hanoi in 2013.

With the daily service to Yangon and Hanoi, Emirates, in cooperation with its regional codeshare partners such as Bangkok Airways and Jetstar - now serves 31 non-hub destinations in Southeast Asia, providing vital, unique connectivity for tourists in these markets..Lorem ipsum dolor sit amet, vestibulum massa viverra, est hendrerit vehicula leo commodo eu, pede lacus condimentum leo ligula amet elit amet, mauris in vestibulum amet vehicula suspendisse reprehenderit

velit. Neque libero tortor etiam massa quis excepteur, sed non turpis libero, facilisis commodo.

NEW ADVENTURESSet sail for

in Yangon & Hanoi

DAILY FLIGHTS STARTING FROM 3RD AUGUST

Get ready to experience the sights, sounds and flavours of Myanmar and Vietnam with daily flights to Yangon and Hanoi from 3rd August. Don’t just visit, live it. Start your adventure at Emirates.com

Hello Tomorrow

ACI EUROPE releases Airport Industry Connectivity Report 2016Released in June 2016, the report highlighted the latest connectivity trends within Europe, as well as to and from other regions. In 2016, direct connectivity at European airports increased by 4.5% while indirect connectivity remained stable at 0.4%, driven primarily by the increased point-to-point services by low cost carriers (LCCs) at non-hub airports. This was coupled by a relative reduction of legacy carriers and hub-and-spoke services.

Part of the reason for stagnation in indirect connectivity is due to congestion at major hub airports, which represented more than 80% of Europe’s total hub connectivity. The scope for improving indirect connectivity at these airports is limited due to congestion during peak periods that offer the best connectivity options.

The report goes on to show that the growth in direct connectivity for European airports has been considerably less, compared to the growth in passenger traffic following the industry’s recovery from the financial crisis since 2010, indicating potential for capacity growth.

While the highest growth in direct connectivity for European airports was to the Middle East region at 8.8%, the region remains the lowest served along with Africa at just 5% share of total airport connectivity from Europe. At the same time, the major

hub airports in Europe have retained their status as industry leaders with the best and most diverse hub connectivity, led by Frankfurt Airport, Amsterdam Schiphol, Paris Charles de Gaulle, Istanbul Ataturk and London Heathrow. In comparison, Dubai

International ranks 11th in the global hub connectivity ranking. In fact, the cumulative hub connectivity of the top three European hubs is significantly higher than that of the top three in the Middle East.

The report also highlights that based on the current trends in the industry, if airports need to expand their services and increase connectivity, LCCs and non-European full-service carriers offer the most growth opportunities. This suggests there is plenty of potential for European airports to match the growth in passenger traffic with increased air services. This potential would be compromised if the market for growth in air services is limited to select carriers, for example through regulation. As such, restricting market access to foreign carriers would limit the growth of European airports and their economies, in contrast to the goals of ACI..

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Q&A with Phil Brown, Executive Director of Orlando International Airport

On 2 September 2015, Emirates flight EK219 touched down at Orlando International Airport, becoming the 10th Emirates destination in the United States. With Orlando being a leading business centre in Florida and a premier leisure and conference destination, it was a city perfectly suited for Emirates considering the ability to connect it to Dubai and cities

not served by any US carriers.

At the time Frank Kruppenbacher, Chairman of the Greater Orlando Aviation Authority, noted the expected measurable financial and cultural impacts: “The annual economic impact to Central Florida will be coupled with the potential to connect to diverse cultures of the world.” At the same time, the Emirates-JetBlue codeshare partnership enables passengers to seamlessly connect to other US, Caribbean and Latin American destinations.

When taking stock of this past year of Orlando operations, it is a win-win situation. Over 164,000 passengers and 4,400 tonnes of cargo have travelled on the route in the last year with over 5,000 passengers connecting onto JetBlue flights, while the annual economic benefit has exceeded US$100 million.

To mark the first anniversary of Emirates’ flights to Orlando, we interviewed Orlando International Airport’s Executive Director, Phil Brown.

Q: Take us back to 1981 when the current terminal was opened – was it expected then that more than 40 million passengers would use it some decades later?

A: In 1981, Orlando International was built in response to increasing tourist traffic and projections for continued growth. At the time, the airport consisted of a main terminal building (about 40% of today’s terminal) and two satellite terminals.

Today, it consists of a main terminal and four satellite terminals built to handle 24 million annual passengers. It is the result of an ongoing effort by the Greater Orlando Aviation Authority to expand based on demand in the region. With the dynamic growth of the region’s established tourism activity, and now an emerging centre for medical research and services, simulation and high tech activity, the need for capacity increased. Now, a US$3.1 billion capital program is in progress that will also provide multimodal transport by up to four rail systems. Orlando International is the fourth largest airport in the US in terms of land mass, so we have the ability to expand when necessary and well into the future.

Q: As a non-hub for the large three US airlines and in the post-consolidation era of US aviation, how significant is it for Orlando to have a global carrier like Emirates as a customer?

A: Because Orlando is a popular US destination, in fact the most visited destination in the country for the past three years with 66 million visitors annually, it is important to provide excellent customer service with convenient and efficient access to all major global destinations. With more non-stop domestic services than any other Florida market, and the reputable service offered by Emirates connecting our two iconic travel markets, Orlando is connected to many more world destinations. With the Orlando-Dubai service, Central Florida is one stop away from the rest of the world.

Q: A year on, are there concrete examples of how Emirates’ presence in Orlando supports economic growth and job creation?

A: The economic impact to Central Florida for the Emirates service was estimated at over US$100 million annually, with over

US$32 million in earnings and supporting over 1,400 jobs. With the recent up-gauging to the Boeing 777-300ER that impact increases to around US$140 million, and hopefully one day to US$188 million if Emirates chooses to operate the A380 to Orlando International.

Examples of that local impact include the multi-year contract that the Rosen College of Hospitality Management has signed to train the staff and management of Dubai Parks and Resorts, and the contracts which Emirates has entered into with several companies throughout the state of Florida for business travel on the Orlando-Dubai service, making it easier for local companies to do business in Dubai and beyond, through Emirates’ extensive route network into Africa, Asia and the Middle East.

Q: There has been some public debate about the US Open Skies policy recently – if the US had not pursued Open Skies, how would the air service landscape look for you as an airport today?

A: Orlando’s international route network would look drastically different today were it not for the US Open Skies policy. The US airlines providing the majority of international services operate hub and spoke networks, driving most of their international traffic over their hubs, and then connecting passengers onto their domestic route networks to reach their final destination. Because Orlando International is not a hub for any of those airlines, they provide very little international service to Orlando. We have therefore promoted to foreign carriers the advantages of providing non-stop international service to Orlando. In markets controlled by bilateral agreements, the US airlines traditionally seek frequencies from their hubs, and so airports like Orlando are rarely allocated frequencies. Because of the US Open Skies policy, Orlando has been able to grow non-stop international traffic to approximately 13% of total passenger traffic (about 5.5 million international annual passengers). In a study conducted in April 2015 (before Emirates launched its Orlando service) the economic impact to Central Florida generated by international service from countries with which the US has Open Skies agreements, since each agreement was signed, totalled almost US$19 billion to the region.

Q: To which extent do you see tourism and trade traffic between Central Florida and destinations in Asia, Middle East, and Africa increasing in the years to come?

A: The success of Emirates in Orlando demonstrates the global popularity of Central Florida and the potential benefits for both markets. We believe that others in Asia, Africa and the Middle East will follow Emirates’ lead and recognise the potential for growth into one of the world’s most popular and fastest growing destinations for tourism and business opportunities..

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They said it best... Open Sky brings you the best quotes from the aviation industry.

“Now that they [American, Delta and United] have grown larger than ever, they wish to change the rules to shut out smaller competitors, like JetBlue, from having the same opportunities. It’s a classic tactic from a segment of our industry that routinely shows they would rather complain than compete.” – spokesperson for JetBlue

“They [government] are very worried about Middle East [airlines], they are trying to protect Air India, and I think that comes at a cost, at the cost of tourism and jobs.” – Tony Fernandes, CEO of AirAsia Group

“If the US today thinks it can cherry pick, then who knows if one day the EU wants to do the same thing? Then we do not have a transatlantic agreement, just Swiss cheese.” – Henrik Hololei, Director General of DG Move, European Commission

“You know, the people making the complaints are Air France and Lufthansa, who are generally the most state-aided airlines in all of Europe, because they have control of the state funded airports.” – Michael O’Leary, CEO of Ryanair

“The bilateral agreement between the Netherlands and the UAE is very liberal and contains no restrictions on the number of airlines, flights or the type of aircraft or number of seats. We agreed on this, since this was in our interest. We have to keep that in mind. Based on this agreement, I cannot block additional frequencies.” – Sharon Dijksma, Dutch State Secretary, Ministry of Infrastructure and Environment

“To be honest I see protectionism around the world rising rather than more liberalisation.” – Carsten Spohr, CEO of Lufthansa Group

“Airports have become network developers and they need full freedom to attract airlines to serve their destination. Restricting market access should no longer be allowed to constrain connectivity – and the benefits of recent aviation liberalisation at EU level with the US, Canada or other countries like Morocco are plain for all to see.” – Olivier Jankovec, Director General of ACI EUROPE

“UAE’s Emirates Airline has become a world-class airline by providing a superior passenger experience… demonstrating an ability to both develop global brands and be relevant in local markets. Emirates has created a diverse and international workforce at all levels.” – 2016 Boston Consulting Group “Global Challengers” report (Global Leaders, Challengers, and Champions – the engines of emerging markets)

“The image of a community is in part determined by its airport and the airlines that serve that airport. And we are very proud of the fact that so many of our airlines use A380s because it provides exactly the kind of quality of service that I know their passengers want and that our customers and residents here want to fly on when they take a long flight overseas.” – Gary Toebben, President, Los Angeles Area Chamber of Commerce

“Opening the market there is more competition, consumers will have more choice. We can even see a reduction of tariffs in the long term.” – Alberto Ajzental, Professor of Economics in the Getulio Vargas Foundation, Brazil, on the project to authorise full ownership of Brazilian airlines by foreign capital.

Brigitte ZypriesParliamentary State Secretary, Germany’s Federal Ministry for Economic Affairs and Energy and Federal Government Coordinator of German Aerospace Policy

“The Gulf carriers have a geo-strategic advantage due to their location. One should think about other possibilities. I understand Lufthansa’s arguments, but it’s a difficult debate. The English have demonstrated how such cooperation could shape up, and it makes sense to consider that.”

Shane RossIreland’s Minister for Transport, Tourism and Sport

“I have always been pro-consumer and pro-competition. At a global level, I believe that an open and competitive aviation sector is the best mechanism to meet the challenges ahead. In the case of aviation policy, I am glad to say that Ireland is a convert to a pro-competition aviation policy. The positive results speak of this for themselves. There is now a diverse range of airlines based in Ireland; from legacy to low-cost and from long-haul to regional. Let me be clear that from my perspective the needs of the customer should always be at the heart of aviation policy making; whether it be their safety, security, service or economic needs.”

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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

LiegeBasel

Mexico

Lilongwe

Quito

Viracopos

Ciudad del Este

Eldoret

Djibouti

Atlanta

Columbus

KanoOuagadougou

Phnom Penh

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St. Petersburg

Copenhagen

SeoulBeijing

Yinchuan

Zhengzhou Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan Bologna

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DüsseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaClark

CebuBangkok

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

LahoreIslamabad

SialkotPeshawar

Multan

HyderabadMumbai

DelhiKarachi

Ahmedabad

Maldives

KochiColombo

Mauritius

Seychelles

LusakaHarare

São PauloRio de Janeiro

Buenos Aires

New YorkWashington, DC

Los Angeles

San Francisco

Seattle

Houston OrlandoFort Lauderdale

Dallas/Fort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh CityPhuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Hanoi

Yangon

Conakry

Dubai

Route MapOctober 2016

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 248Destinations 154Revenue (Airline)* US$23.2 billionProfit (Airline)* US$1.9 billionFuel Costs (Airline)* US$5.4 billionPassengers* 51.9 millionCargo* 2.5 million tonnesPassenger Seat Factor* 76.5%

Employees (Airline)* 61,205Financial Auditor PwCFirst flight 25 Oct 1985Average daily flights 520A380 fleet 84 (on order 58)Boeing fleet 161 (on order 179)Average fleet age* 74 monthsPassenger routes** Cebu-Clark, Yinchuan-Zhengzhou, Yangon, Hanoi, Fort Lauderdale

Fast Facts

*2015-16 **2016

Shining results from aircraft dry washesKeeping aircraft clean is an essential part of airline maintenance. A grimy exterior not only looks bad, it results in additional inflight fuel consumption, due to the additional wind resistance.

In the past, all of Emirates’ aircraft were washed in the traditional way, with large volumes of water applied at high pressure at an outdoor washing bay. This type of wash would use up to 7,000 litres of water, which is a precious resource in a desert environment where most water has to be desalinated.

After a careful assessment of the available options, Emirates Engineering introduced dry washing on 1 April this year.

Dry washing is similar to polishing: a team of trained cleaners applies a water-based cleaning solution and buffs the surface with special cloths. It not only uses a fraction of the water required for a standard wash, it uses much less chemical solution, and even the cloths can be washed and reused. The process applies a protective coating on the aircraft, which keeps the aircraft cleaner for longer and has a glossier appearance. The end result is a much higher quality finish.

The process also saves considerable downtime. Previously, Emirates Engineering had to schedule aircraft specially for washing in the dedicated outdoor bay. Now, the dry wash can be undertaken in the hangar when the aircraft are brought in for regular scheduled maintenance checks, reducing the number of hours the aircraft is out of service.

Dry washing is a good example of where we can reduce resource consumption, deliver a higher quality result, and manage our operations more efficiently at the same time: a win for both the business and our environment. .