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Middle Eastern Airlines into KUL

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Even SQ is surrendering.

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Maybe this is due to the massive expansion of Middle East carriers in South East Asia. Plus connectivity to destination beyond the cancelled destination.

 

Also to add, the competition from emerging long haul LCCs between South East Asia and the Arabian Peninsular (read: D7, flynas, Cebu Pacific, Lion Air).

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Even the mighty SQ is losing battle.

 

Sidetrack a bit, in terms of Middle East and North Africa, Singapore Airlines used to fly to:

  1. Bahrain (terminated on 13th Dec 1977, was a tag-on Concorde flight LHR-BAH-SIN)*
  2. Abu Dhabi (terminated on 26th Oct 2012)
  3. Dhahran (terminated on August 1997)
  4. Kuwait (terminated on 30th September 2011, previously a tag-on flight from Abu Dhabi prior to suspension)
  5. Riyadh (will be terminating on 1st October 2014)
  6. Cairo (will be terminating on 1st October 2014)
  7. Tehran (started on 30th June 1977, termination date unknown)**

All that will remain now are Dubai and Jeddah.

 

*The Concorde service was withdrawn on 13 December 1977 after only 3 return flights, because of complaints from the Malaysian government about the supersonic boom over the Straits of Malacca, on the West coast of Malaysia. But in the summer of the same year, Malaysia Airlines plans of further capacity increase on the London route were denied in order to protect BA and Cathy Pacific, causing a clash between the Malaysian and British governments. In addition to these difficult relations, Singapore Airlines was a tough Malaysian competitor. Source: http://www.concordesst.com/history/events/sia.html

 

**Technical Stops:

Singapore-Colombo-Tehran-Amsterdam-Copenhagen 1 weekly 707

Singapore-Colombo-Tehran-Zurich-Amsterdam-Copenhagen 2 weekly 747
Singapore-Colombo-Tehran-Zurich-Copenhagen 1 weekly 707

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Maybe this is due to the massive expansion of Middle East carriers in South East Asia. Plus connectivity to destination beyond the cancelled destination.

 

Even SQ is surrendering.

 

 

Also to add, the competition from emerging long haul LCCs between South East Asia and the Arabian Peninsular (read: D7, flynas, Cebu Pacific, Lion Air).

 

Previously SQ was relying on pax from sandbox to Australia vv. With Middle East airlines flying directly to Oz land with more frequency and cheaper, hence SQ is taking a beating.

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Leaked report reveals Etihad’s long-denied royal funding

 

AFR - 22 May 2014 - Joe Aston

 

Etihad Airways received massive financial support from the royal family of Abu Dhabi contrary to long-standing denials, documents obtained by The Australian Financial Review show.

 

The state-owned airline had access to a secret, interest-free $US3 billion loan from the Abu Dhabi ruling family that required no repayments until 2027, according to documents prepared for prospective financiers.

 

Etihad chief executive James Hogan has repeatedly denied that the airline is subsidised.

 

“We are a government-owned ­carrier but we have been established and have to run as a commercial business. We get no state-funded handouts,” he said at Washington’s International Aviation Club in 2009.

 

Etihad’s denials that it is financially propped up by its owners have been questioned by rivals like Qantas Airways, which has accused the airline of predatory behaviour funded by large subsidies from the Gulf state.

 

Qantas is seeking the removal of foreign investment restrictions to free it to raise capital and compete with Etihad and other state-owned airlines.

 

A review prepared by management consultants Booz & Co in 2010, which was presented to Crown Prince Mohammed bin Zayed Al Nahyan, shows Etihad used special deductions to post its first profit, of $US14 million, in February 2012.

 

The review was shared among the Prince’s executive council of advisers.

 

Another document, from 2011, was presented to potential lenders during private meetings in New York, London and Sydney and has since circulated among the management ranks of Etihad’s competitors, such as Qantas and Emirates. Industry sources provided the documents to the Financial Review.

 

‘We pay for the sponsorships’

 

A PowerPoint slide entitled “Equity and Shareholder’s Loan” says: “The shareholder has provided significant loan facility for aircraft deposits and working capital – Subordinated, interest free and no repayments until 2027”.

 

Another slide presented to Abu Dhabi’s ruler deals with the airline’s “Public Service Obligations”, which include unprofitable routes, training and employing Emirati citizens and marketing sponsorships.

 

A footnote to the public service obligations [PSO] slide says that “Executive Council covers Man City” – an apparent reference to the Abu Dhabi government. Etihad is the major sponsor of English Premier League team Manchester City, owned by the Crown Prince’s brother Sheikh Mansour bin Zayed Al Nahyan, and paid a record £400 million deal for naming rights to the team shirt and stadium.

Etihad did not respond to a request for comment on Wednesday.

 

Asked about sponsorships last month, Mr Hogan said “everything is included. We pay for the sponsorships”.

 

“The results are the results.”

 

Mr Hogan has adamantly denied suggestions the airline does not have to cover the cost of unprofitable routes or the salaries of all its domestic workforce. More than 20 per cent of Etihad’s workforce is now made up of citizens from the United Arab Emirates, which is known as “Emiratisation”.

 

The report factored in an Emiratisation subsidy to reach a profit in 2011.

 

Mr Hogan has insisted that “everything we do with our headcount is on our payroll”. In 2012 he said that “we don’t have PSO routes, we have a commercial mandate. We do not fly any route that does not make a return or a network contribution”.

 

A PowerPoint slide entitled “Profitability 2011” bases Etihad’s projection of a $10 million profit on a “network PSO and Emiratisation offset”. The result also relied on excluding “assets and loan write-offs”.

 

Shopping list of subsidies

 

The 2011 break-even plan is reliant on an average 2011 price of brent oil of $US78 per barrel, with a $US10 per barrel price movement impacting the airline by $US40 million. Given the average price ended up being $US111 per barrel, the price sensitivity would represent an approximate hit of $US130 million against Etihad’s original estimated profit figure. Yet Etihad announced a $US14 million full-year profit for 2011, rising to $US42 million in 2012 and $US62 million in 2013. The figures were audited by KPMG.

 

Etihad’s accounts show the airline posted losses of $US2.1 billion in the three years from 2007, and projected a $US595 million loss in 2010. Mr Hogan, an Australian citizen, took over in 2006.

 

Another slide, entitled “What Etihad needs to win?” is a shopping list of subsidies being sought from its shareholder. They include “PSO destinations loss to be underwritten”, the granting of land for more Etihad buildings and “approval of acquisition of targets” in passenger air transport – which turned out to be equity stakes in Virgin Australia, Air Berlin and Jet Airways.

 

The revelations about Etihad come weeks after Qantas announced it would slash 5000 jobs, severely reduce its costs and possibly float assets, blaming “an uneven playing field” and “market distortions”, and will increase pressure on the federal government to act.

 

This week Etihad increased its stake in Qantas’s main competitor Virgin Australia to 21.24 per cent. Mr Hogan will join Virgin’s Board in July. Mr Hogan is scheduled to present to potential financiers in Sydney on Thursday.

 

Mr Hogan and Qantas chief executive Alan Joyce have become bitter rivals and Qantas has responded to Etihad’s injection of capital into Virgin by turning to Canberra for subsidies of its own.

Other state-owned carriers flying into Australia include Qatar, Singapore, Malaysian, South African, Emirates and Garuda. Air New Zealand is 53 per cent owned by its government. Many airlines have been bailed out of bankruptcy in recent years in the United States, Japan and the European Union.

 

Joe Aston is a former employee of Qantas and Etihad.

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Can I say that Middle Eastern carriers are generally doing better than other carriers as when it comes to bearing the cost of fuel, they get to pay lesser since they are the natural exporter of oil & gas?

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Fuel subsidies is possible, but interest free loans?

 

Which means they avoid riba' in business dealings (from my humble understanding though).

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They all claim they pay the same for fuel as with other airlines. But what is for sure is they have access to almost unlimited cash for expansion.

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But what's the problem? They are a rich nation, their citizen don't have to pay income tax and they seem to be contented with the ruling Sheikhs. There's not really a mismanagement of public fund to bail an airline in their case since there is no public fund from tax collection to begin with.

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They all claim they pay the same for fuel as with other airlines. But what is for sure is they have access to almost unlimited cash for expansion.

The second bit sounds very vaguely familiar to where MH is at, only it's like unlimited cash to stay alive instead :) (courtesy of you-know-who lah)

The first bit though is very dissimilar, with most of MH's P/L reports emphasizing how much fuel costs have soared

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In the week of 24JUN14′s OAG Schedules Analyser update, Iraqi Airways is adjusting planned operations on Kuala Lumpur – Baghdad 2 weekly service from late-July 2014. Revised operation sees the airline operates as 1-stop service, with flights via Basra and Erbil, once a week respectively.

 

eff 29JUL14 Baghdad – Basra – Kuala Lumpur

IAW455 BGW2100 – 2200BSR2300 – 1301+1KUL 330 1

IAW456 KUL1500 – 1830BSR1930 – 2030BGW 330 2

 

eff 02AUG14 Baghdad – Erbil – Kuala Lumpur

IAW455 BGW2000 – 2100EBL2200 – 1301+1KUL 330 5

IAW456 KUL1500 – 2000EBL2100 – 2200BGW 330 6

 

http://airlineroute.net/2014/06/26/iaw-kul-jul14/

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Things are not looking well for flynas. KUL is temporarily suspended. http://airlineroute.net/2014/07/30/xy-kul-sep14/

 

Flynas cancelled Manchester a few days ago.

 

Hopefully this is not a sign of going bust.

My aunty went to JED by Flynas and during the outbound flight from KUL, the pax load was only 30% . Their JED-KUL flight also delayed for 8 hours and only provided by sandwhich n mineral water. I guess they retimed the flight just because of light load to kul and vice versa

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Iraqi Airways in Winter 2014/15 season plans to expand capacity to Malaysia, as one weekly Baghdad – Kuala Lumpur service switches to Boeing 747, instead of 767. First Boeing 747 service is currently scheduled on 07NOV14, according to OAG Schedules Analyser.

IA455 BGW1945 – 0910+1KUL 747 5
IA456 KUL1040 – 1430BGW 747 7

http://airlineroute.net/2014/11/05/iaw-bgw-nov14/

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Curious to know how good the loads are on those flights...

 

Should be pretty good for them to upgrade to 747; given that KUL is a staging point for many ME nationals to enter AUS and EU.

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