OpenSkyThe International and

Government Affairs

Journal of Emirates

Issue 21 | May 2015

2 Subsidy Tosh

4 Emiratesrsquo single-carrier global network

6 78 years withhellipan Open Skies policy

7 The handy guide to select legacy carrier language

8 Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

9 The illusory level playing field ndash a few expert views

10 They said it best

11 A focus on the environment

12 Incremental growth in India

13 The cost of non-Europe - in aviation

14 Sector Insight ndash from a US consumer perspective

15 The economic value of cargo

16 lsquoA Greener Tomorrowrsquo initiative enters its second year

In this issue hellip

$29 billion is the estimated annual local economic impact of Emirates services to US airports and their surrounding regions

2 routeson which Emirates competes directly with Delta United and American airlines

US$849mEmiratesrsquo contribution to Indiarsquos GDP annually

518000tonnes of cargo was transported by Emirates to and from 17 EU Member States in 201314

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Chicago

Los AngelesSan Francisco

Seattle

HoustonOrlando

DallasFort Worth

BostonNew York

Airport ($m)

$132m$227m$257m$624m$200m$166m$445m$720m$100m

Total impact

$29bn

2

Roughly ten years have passed since the oft-repeated anti-Emirates smears really started to take off An easy deduction to make today is that we are exactly where we were then a time loop where some competitors repeat the same allegations again and again and Emirates proves the allegations false We have done that over the past ten years and will gladly do it again

Today it is the three biggest US airlines ndash Delta United and American ndash that are running a campaign aimed at limiting the growth of Emirates Etihad and Qatar in the US market

These US airlines have published a white paper in which they claim Emirates has received billions of dollars in subsidies It also says Emirates is competing unfairly under the terms of the open skies agreement between the US and the UAE For the record Emirates does not receive and never has received any form of subsidy from the UAE Government And considering that we have operated to the US since 2004 we fail to understand how we can possibly be competing unfairly in 2015 The real issue at hand is that the three biggest US carriers who together with their joint venture (JV) partners already control about two-thirds of international flights from the US want to further limit the international air transport choices available to American consumers airports local and regional economies US consumers must wonder why they deserve less competition in the marketplace when Delta American and United are amongst the most profitable airlines in the world but nowhere close to being ranked amongst the best airlines for service or product

Subsidy Tosh

3

Airports tourism boards chambers of commerce and businesses should in turn be asking regulators and legislators why valuable direct international air links - which are so important for businesses and critical for tourism - should be limited only to a few airport hubs served by the big three US carriers and their JV partners with whom they co-ordinate prices and capacity under anti-trust immunity

The US carriers allegedly took two years and goodness knows how much shareholder money to assemble a stack of allegations which included wrong assumptions and leaps of logic We are currently working on our point-by-point rebuttal but we can tackle the main accusations against Emirates immediately

Rather than harming US interests as the white paper claims Emiratesrsquo services have increased consumer choice filled a gap in the market by taking travellers to numerous destinations not served by others and helped contribute to the US economy trade and tourism Importantly Emirates also provides a much-needed competitive alternative to the three airline alliances with anti-trust immunity permitting them to keep fares artificially high Emirates has understood the tectonic shift in 21st century aviation and despite being a transparent efficient and commercially run carrier we recognise that our steady growth andsuccess has made us the scapegoat of choice among the few that prefer less competition ndash particularly when the competition comes from business models different to their own The unintended consequences of this could well be intra-industry polarisation that challenges the make-up of the traditional alliances and splits airline trade bodies The Association of European Airlines (AEA) has seen a number of carriers quit the group after fundamental disagreement on airline competition Within Airlines for America (A4A) member views also differ drastically on that topic The few will continue their gross misrepresentations about us to serve their narrow interests We have nothing to hide and we welcome appropriate discussion on our activities In the meantime our partners regulators and decision-makers in the aviation sphere need to consider whether artificially protecting three carriers on the basis of questionable allegations is worthwhile if it leads to higher prices limited choice poor service and unrealised economic activity Erecting barriers does not create value More competition more connectivity and more choice for consumers and businesses does

Myth vs FactAllegation Emirates benefited from $27b in subsidies from the governmentrsquos assumption of fuel hedging losses and the government also provided Emirates $16b in letters of credit

Emiratesrsquo response That is untrue All cash losses incurred by Emirates as a result of its fuel trades in place in 200809 were settled in full from the airlinersquos own cash reserves and not paid for by the Government of Dubai The letters of credit mentioned in the white paper were in fact provided by Emirates to our owners Investment Corporation of Dubai in support of the fuel trades novated not the other way round

Allegation Emirates benefited from $23b in subsidised airport infrastructure since 2004 which is a ldquomajor competitive advantagerdquo

Emiratesrsquo response Infrastructure investment is long term in its nature The Government of Dubai has made these investments like other progressive emerging market economies (eg China Singapore) with long term benefits in mind Comparably lower airport charges or charge exemptions for transfer passengers are neither a subsidy nor discriminatory as all airlines who use the infrastructure at Dubai International (DXB) benefit

Emirates pays the full published rates at DXB which are highly competitive commercially based and in fact higher than a number of other comparable major airports such as Kuala Lumpur (KUL)

Allegation Gulf carriers take passengers and revenues from US carriers and force US carriers to reduce terminate or forego services on international routes

Emiratesrsquo response Despite what some carriers may think air passengers are not proprietary to airlines What Emirates is doing is competing in the marketplace - we donrsquot ldquotakerdquo or ldquostealrdquo customers We offer a great product at a competitive price which appeals to the consumers who choose to fly with us The three US carriersrsquo obsession with market share makes all the more apparent what they are really after not competition not open markets or Open Skies but outright government-directed market allocation

4

Far too often many US carriers have been content to play it safe with long-established trans-Atlantic and trans-Pacific routes and either ignore new and growing markets such as India and Africa or simply hand over passengers to their European alliance partners

The leading US airlines have been busy consolidating through domestic mergers and practising ldquocapacity disciplinerdquo and in the process have ignored many opportunities in emerging markets

In contrast Emirates ndash which is independent of traditional alliance partners and not beholden to feed an alliance network that often inconveniences passengers with circuitous routings multiple connecting stops and longer travel times ndash has since 1985 built a network to capitalise on these emerging traffic flows and better serve the requirements of passengers

Emirates has created a hub in Dubai that allows passengers in any of the nine US cities it serves to fly one-stop to 15 different Middle Eastern destinations 23 African destinations and 35 Asian destinations ndash all with connections optimally timed for passenger convenience In contrast the three US network airlines only serve a combined four points in Africa and four in the Middle East (not including overlapping points)

Emiratesrsquo links from the US to emerging markets ndash for example 305 weekly flights to the five BRICS countries and 94 weekly flights to Pakistan and Bangladesh ndash will further drive American economic growth trade and US job creation However the three leading carriers along with their European partners offer only modest air services in several of these markets limiting consumer choice and sacrificing lucrative business

The table below demonstrates Emiratesrsquo strong commitment to these emerging markets with the number of points served directly compared with the three leading US carriers

Emiratesrsquo single-carrier global network

Middle East 15 2 4 0

Africa 23 4 1 0

Asia 35 13 13 5

Emiratesrsquo unique global connectivity to the USbull Emiratescommencednon-stop

passenger flights between Dubai and New York City in June 2004 and has since expanded to eight more destinations - Houston Los Angeles San Francisco Dallas Seattle Washington DC Boston and Chicago operating a total of 84 passenger flights per week Services to Orlando Emiratesrsquo 10th US destination will commence in September 2015

bull EmiratesfliestheBoeing777tofiveofitsUS destinations and operates the Airbus A380 powered by US-made GE GP7200 engines to Dallas Houston Los Angeles New York and San Francisco

bull Emiratesrsquoflightscarrytravellersfromthe US to 57 destinations in Africa (19 points) Asia Pacific (26 points) and the Middle East (12 points) that are not served by any American carrier and we do this with just one plane change in Dubai

bull Since2004113millionhigh-yieldtourists and business passengers have travelled on our US flights coming from and going to important developing markets in the Middle East Africa and Asia

bull Thehighaverageseatloadfactorsofover 80 in 2014 on our US flights demonstrate the customer demand for Emiratesrsquo services

bull EmiratesrsquoflightsbetweentheUSandDubai have carried over 518000 tonnes of high value goods since 2004

bull Therehasbeena442growthinUSexports to the UAE since Emirates started services to the US in 2004 and today the UAE is the 1 market for US exports in the Middle East

Chicago

Los AngelesSan Francisco

Seattle

HoustonOrlando

DallasFort Worth

BostonNew York

Airport ($m)

$132m$227m$257m$624m$200m$166m$445m$720m$100m

Total impact

$29bnSource Economic impact studies from respective airports or regionsData not available for Washington DC

Estimated annual local economic impact of Emirates operations

5

Glen Hauenstein - Delta Air Lines Inc - Chief Revenue Officer answering a question on competition between Delta and Middle Eastern carriers during an investor relations call December 2013

ldquoI think there are two components to your question One is the third and fourth freedoms which would be the traffic from the United States and from Europe into the Indian subcontinent and Asia Delta has never been a big player in that market Our partners Air France and KLM were probably not as heavily invested as Lufthansa or British Airways for that matter So they probably have a little less impact although itrsquos significant because those are traffic pools that they were relevant players in The thing about their location is they are about halfway around the world from us and thatrsquos kind of the good news and the bad news The good news is they are halfway around the world from us and we donrsquot really participate in a lot of the flows that they have the primary gateway for The second piece is if you look at their order books itrsquos hard for us to imagine that those aircraft could all be delivered in the same time frame to the same region without imploding all of themrdquo

Delta Air Lines Emirates

United Airlines Emirates

American Airlines Emirates Source OAG Analyser

Route network comparisonsThe maps below show that Emirates is providing vital routes to the US via its hub in Dubai that the three leading US carriers do not offer So despite their claims that Emirates is ldquostealing passengersrdquo these maps illustrate that in reality there are very few network similarities between Emirates and the big three US carriers United Delta and American Airlines

Many of Emiratesrsquo routes are to developing markets which are not currently served by American carriers These air links facilitate US foreign trade and open up new markets for US exporters helping to further drive American economic growth trade and job creation

6

Dubairsquos Open Skies policy is a key component of its economic and trade policy It calls for liberalised rules and regulations to foster a market forces-driven competitive environment for aviation to attract airlines and enable them to operate freely

How did it all start The ldquoDubai Commercial Air Agreementrdquo on July 22 1937 triggered the Open Skies policy of Dubai That agreement gave the British Government landing permission en route to India and elsewhere

It was quickly evident that it helped strengthen Dubairsquos position as an important trading outpost in the Gulf In the 1950s HH Sheikh Saeed bin Maktoum Al Maktoum the ruler of Dubai at the time decreed a policy of open seas open skies and open trade in part to help eliminate the dependence on oil resources

This was one of the first contributions to building the business-friendly Dubai of today which subsequently has been complemented with the creation of free zones and other business investment friendly incentives Today oil revenue constitutes a mere 18 of Dubairsquos GDP whereas aviation related activities and tourism make up approximately 30

Considering how protectionism within national airspaces has been a typical historical norm ndash and still is in places ndash Dubairsquos Open Skies policy has remained virtually unchanged for close to 80 years This has encouraged competition amongst airlines and as a result multiple foreign carriers have enjoyed the ability to pick up and drop off passengers in Dubai for onward flights

Currently more than 130 airlines operate to and from Dubai generating revenue for Dubairsquos economy and supporting its commercial activities whilst also putting constant competitive pressure on Emirates

78 years withhellip an Open Skies Policy

Many recognise the benefits of Dubairsquos forward thinking aviation policies

Nicholas E Calio President and CEO of A4A on the growth of non-US carriers specifically discussing the ldquointegrated aviation eco-systemrdquo in Dubai in his remarks before the International Aviation Club October 2014

ldquoIrsquom not being critical Irsquom being clinical This is brilliant This infrastructure enables the carriers growth lowers flight delays and costs and delivers newer and higher quality infrastructure The closely integrated Dubai aviation sector strives for maximum throughput since costs for one segment is revenue for another The bottom line is that Middle Eastern carriers benefit from smart forward-looking governmental strategies to stimulate passenger growth by setting low airport fees low corporate taxes and minimal passenger-related fees and taxes which drives significant economic benefit to the host countriesrdquo

HE Mohammed A Ahli Director GeneralDubai Civil Aviation Authority

ldquoDubai is one of the true pioneers of aviation liberalisation having adopted an open skies policy as one of the cornerstones of its economy ever since late Sheikh Saeed bin Maktoum Al Maktoum OBE signed the Dubai Commercial Air Agreement with His Majestyrsquos Government in July 1937 long before Emirates was established in 1985 Access to Dubai one of the worldrsquos largest and fastest-growing hubs allows carriers of the world to grow their services and also boost exports and trade to their own markets For Dubai it gives consumers more choice stimulates traffic growth and is good for business Considering that ICAO predicts there will be 6 billion people travelling by air in 2030 compared to 3 billion today Dubai is well-placed to capitalise on this growth I am confident that Dubairsquos steadfast commitment to Open Skies is a source of inspiration for other countriesrdquo

Open Sky usually features a lsquo60 seconds withhelliprsquo section to provide readers with a snapshot overview of the dynamics in a given market This issuersquos snapshot is dedicated to Dubairsquos longstanding Open

Skies policy which has been in place since 1937 We call it lsquo78 years withhelliprsquo

1985 2015

7

F a i r C o m p e t i t i o n bull [ fair ] [kom-pi-tish-uhn] 1 Competition rules defined by legacy carriers 2 A fair and equal opportunity to compete which ignores geography different market realities and government policies and supersedes the consumerrsquos right to choose

Unfair Advantage bull [uhn-fair] [ad-van-tij] 1 Situation in which a non-legacy carrier takes advantage of natural competitive advantages like geography progressive aviation policy low tax regimes or supportive airport conditions such as 24 hour flying or affordable parking and handling charges

Capacity Dumping bull [kuh-pas-i-tee] [duhmp-ing] 1 When a non-legacy carrier provides more seats between two countries than a legacy carrier to meet the demand at profitable and competitive rates 2 When third country airlines serve routes that have long been neglected and deemed unprofitable by legacy carriers 3 When an airline offers the consumer an alternative option by creating connections through non-traditional and non-legacy carrier hubs

Theft of passengers bull [theft] [ohv] [pas-uh n-jerz] 1 When passengers as a result of competitive prices connectivity

and superior service choose to travel with non-legacy carriers from the home of a legacy carrier 2 Also assumes prior ownership of said passengers by said legacy carriers

Level playing field bull [lev-uhl] [pley-ing] [feeld] 1 An aviation industry in which the rules are set by and acceptable to some EU legacy carriers 2 Competition that ignores market realities and the consumers right to choose

[uhn-[uhn- Situation in Situation in

which a non-legacy carrier takes which a non-legacy carrier takes advantage of natural competitive advantage of natural competitive advantages like geography advantages like geography progressive aviation policy low progressive aviation policy low tax regimes or supportive airport tax regimes or supportive airport conditions such as 24 hour conditions such as 24 hour flying or affordable parking and flying or affordable parking and

-- When a When a

non-legacy carrier provides more non-legacy carrier provides more seats between two countries seats between two countries than a legacy carrier to meet than a legacy carrier to meet the demand at profitable and the demand at profitable and

When third When third country airlines serve routes that country airlines serve routes that have long been neglected and have long been neglected and deemed unprofitable by legacy deemed unprofitable by legacy

When an airline offers When an airline offers the consumer an alternative the consumer an alternative option by creating connections option by creating connections through non-traditional and non-through non-traditional and non-

[theft] [theft] When When

passengers as a result of passengers as a result of competitive prices connectivity competitive prices connectivity

aviation industry in which the aviation industry in which the rules are set by and acceptable rules are set by and acceptable to some EU legacy carriers to some EU legacy carriers 2 2 Competition that ignores market Competition that ignores market realities and the consumers right realities and the consumers right to chooseto chooseThe handy guide to

SELECTLEGACYCARRIER

LANGUAGE

28

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

2

Roughly ten years have passed since the oft-repeated anti-Emirates smears really started to take off An easy deduction to make today is that we are exactly where we were then a time loop where some competitors repeat the same allegations again and again and Emirates proves the allegations false We have done that over the past ten years and will gladly do it again

Today it is the three biggest US airlines ndash Delta United and American ndash that are running a campaign aimed at limiting the growth of Emirates Etihad and Qatar in the US market

These US airlines have published a white paper in which they claim Emirates has received billions of dollars in subsidies It also says Emirates is competing unfairly under the terms of the open skies agreement between the US and the UAE For the record Emirates does not receive and never has received any form of subsidy from the UAE Government And considering that we have operated to the US since 2004 we fail to understand how we can possibly be competing unfairly in 2015 The real issue at hand is that the three biggest US carriers who together with their joint venture (JV) partners already control about two-thirds of international flights from the US want to further limit the international air transport choices available to American consumers airports local and regional economies US consumers must wonder why they deserve less competition in the marketplace when Delta American and United are amongst the most profitable airlines in the world but nowhere close to being ranked amongst the best airlines for service or product

Subsidy Tosh

3

Airports tourism boards chambers of commerce and businesses should in turn be asking regulators and legislators why valuable direct international air links - which are so important for businesses and critical for tourism - should be limited only to a few airport hubs served by the big three US carriers and their JV partners with whom they co-ordinate prices and capacity under anti-trust immunity

The US carriers allegedly took two years and goodness knows how much shareholder money to assemble a stack of allegations which included wrong assumptions and leaps of logic We are currently working on our point-by-point rebuttal but we can tackle the main accusations against Emirates immediately

Rather than harming US interests as the white paper claims Emiratesrsquo services have increased consumer choice filled a gap in the market by taking travellers to numerous destinations not served by others and helped contribute to the US economy trade and tourism Importantly Emirates also provides a much-needed competitive alternative to the three airline alliances with anti-trust immunity permitting them to keep fares artificially high Emirates has understood the tectonic shift in 21st century aviation and despite being a transparent efficient and commercially run carrier we recognise that our steady growth andsuccess has made us the scapegoat of choice among the few that prefer less competition ndash particularly when the competition comes from business models different to their own The unintended consequences of this could well be intra-industry polarisation that challenges the make-up of the traditional alliances and splits airline trade bodies The Association of European Airlines (AEA) has seen a number of carriers quit the group after fundamental disagreement on airline competition Within Airlines for America (A4A) member views also differ drastically on that topic The few will continue their gross misrepresentations about us to serve their narrow interests We have nothing to hide and we welcome appropriate discussion on our activities In the meantime our partners regulators and decision-makers in the aviation sphere need to consider whether artificially protecting three carriers on the basis of questionable allegations is worthwhile if it leads to higher prices limited choice poor service and unrealised economic activity Erecting barriers does not create value More competition more connectivity and more choice for consumers and businesses does

Myth vs FactAllegation Emirates benefited from $27b in subsidies from the governmentrsquos assumption of fuel hedging losses and the government also provided Emirates $16b in letters of credit

Emiratesrsquo response That is untrue All cash losses incurred by Emirates as a result of its fuel trades in place in 200809 were settled in full from the airlinersquos own cash reserves and not paid for by the Government of Dubai The letters of credit mentioned in the white paper were in fact provided by Emirates to our owners Investment Corporation of Dubai in support of the fuel trades novated not the other way round

Allegation Emirates benefited from $23b in subsidised airport infrastructure since 2004 which is a ldquomajor competitive advantagerdquo

Emiratesrsquo response Infrastructure investment is long term in its nature The Government of Dubai has made these investments like other progressive emerging market economies (eg China Singapore) with long term benefits in mind Comparably lower airport charges or charge exemptions for transfer passengers are neither a subsidy nor discriminatory as all airlines who use the infrastructure at Dubai International (DXB) benefit

Emirates pays the full published rates at DXB which are highly competitive commercially based and in fact higher than a number of other comparable major airports such as Kuala Lumpur (KUL)

Allegation Gulf carriers take passengers and revenues from US carriers and force US carriers to reduce terminate or forego services on international routes

Emiratesrsquo response Despite what some carriers may think air passengers are not proprietary to airlines What Emirates is doing is competing in the marketplace - we donrsquot ldquotakerdquo or ldquostealrdquo customers We offer a great product at a competitive price which appeals to the consumers who choose to fly with us The three US carriersrsquo obsession with market share makes all the more apparent what they are really after not competition not open markets or Open Skies but outright government-directed market allocation

4

Far too often many US carriers have been content to play it safe with long-established trans-Atlantic and trans-Pacific routes and either ignore new and growing markets such as India and Africa or simply hand over passengers to their European alliance partners

The leading US airlines have been busy consolidating through domestic mergers and practising ldquocapacity disciplinerdquo and in the process have ignored many opportunities in emerging markets

In contrast Emirates ndash which is independent of traditional alliance partners and not beholden to feed an alliance network that often inconveniences passengers with circuitous routings multiple connecting stops and longer travel times ndash has since 1985 built a network to capitalise on these emerging traffic flows and better serve the requirements of passengers

Emirates has created a hub in Dubai that allows passengers in any of the nine US cities it serves to fly one-stop to 15 different Middle Eastern destinations 23 African destinations and 35 Asian destinations ndash all with connections optimally timed for passenger convenience In contrast the three US network airlines only serve a combined four points in Africa and four in the Middle East (not including overlapping points)

Emiratesrsquo links from the US to emerging markets ndash for example 305 weekly flights to the five BRICS countries and 94 weekly flights to Pakistan and Bangladesh ndash will further drive American economic growth trade and US job creation However the three leading carriers along with their European partners offer only modest air services in several of these markets limiting consumer choice and sacrificing lucrative business

The table below demonstrates Emiratesrsquo strong commitment to these emerging markets with the number of points served directly compared with the three leading US carriers

Emiratesrsquo single-carrier global network

Middle East 15 2 4 0

Africa 23 4 1 0

Asia 35 13 13 5

Emiratesrsquo unique global connectivity to the USbull Emiratescommencednon-stop

passenger flights between Dubai and New York City in June 2004 and has since expanded to eight more destinations - Houston Los Angeles San Francisco Dallas Seattle Washington DC Boston and Chicago operating a total of 84 passenger flights per week Services to Orlando Emiratesrsquo 10th US destination will commence in September 2015

bull EmiratesfliestheBoeing777tofiveofitsUS destinations and operates the Airbus A380 powered by US-made GE GP7200 engines to Dallas Houston Los Angeles New York and San Francisco

bull Emiratesrsquoflightscarrytravellersfromthe US to 57 destinations in Africa (19 points) Asia Pacific (26 points) and the Middle East (12 points) that are not served by any American carrier and we do this with just one plane change in Dubai

bull Since2004113millionhigh-yieldtourists and business passengers have travelled on our US flights coming from and going to important developing markets in the Middle East Africa and Asia

bull Thehighaverageseatloadfactorsofover 80 in 2014 on our US flights demonstrate the customer demand for Emiratesrsquo services

bull EmiratesrsquoflightsbetweentheUSandDubai have carried over 518000 tonnes of high value goods since 2004

bull Therehasbeena442growthinUSexports to the UAE since Emirates started services to the US in 2004 and today the UAE is the 1 market for US exports in the Middle East

Chicago

Los AngelesSan Francisco

Seattle

HoustonOrlando

DallasFort Worth

BostonNew York

Airport ($m)

$132m$227m$257m$624m$200m$166m$445m$720m$100m

Total impact

$29bnSource Economic impact studies from respective airports or regionsData not available for Washington DC

Estimated annual local economic impact of Emirates operations

5

Glen Hauenstein - Delta Air Lines Inc - Chief Revenue Officer answering a question on competition between Delta and Middle Eastern carriers during an investor relations call December 2013

ldquoI think there are two components to your question One is the third and fourth freedoms which would be the traffic from the United States and from Europe into the Indian subcontinent and Asia Delta has never been a big player in that market Our partners Air France and KLM were probably not as heavily invested as Lufthansa or British Airways for that matter So they probably have a little less impact although itrsquos significant because those are traffic pools that they were relevant players in The thing about their location is they are about halfway around the world from us and thatrsquos kind of the good news and the bad news The good news is they are halfway around the world from us and we donrsquot really participate in a lot of the flows that they have the primary gateway for The second piece is if you look at their order books itrsquos hard for us to imagine that those aircraft could all be delivered in the same time frame to the same region without imploding all of themrdquo

Delta Air Lines Emirates

United Airlines Emirates

American Airlines Emirates Source OAG Analyser

Route network comparisonsThe maps below show that Emirates is providing vital routes to the US via its hub in Dubai that the three leading US carriers do not offer So despite their claims that Emirates is ldquostealing passengersrdquo these maps illustrate that in reality there are very few network similarities between Emirates and the big three US carriers United Delta and American Airlines

Many of Emiratesrsquo routes are to developing markets which are not currently served by American carriers These air links facilitate US foreign trade and open up new markets for US exporters helping to further drive American economic growth trade and job creation

6

Dubairsquos Open Skies policy is a key component of its economic and trade policy It calls for liberalised rules and regulations to foster a market forces-driven competitive environment for aviation to attract airlines and enable them to operate freely

How did it all start The ldquoDubai Commercial Air Agreementrdquo on July 22 1937 triggered the Open Skies policy of Dubai That agreement gave the British Government landing permission en route to India and elsewhere

It was quickly evident that it helped strengthen Dubairsquos position as an important trading outpost in the Gulf In the 1950s HH Sheikh Saeed bin Maktoum Al Maktoum the ruler of Dubai at the time decreed a policy of open seas open skies and open trade in part to help eliminate the dependence on oil resources

This was one of the first contributions to building the business-friendly Dubai of today which subsequently has been complemented with the creation of free zones and other business investment friendly incentives Today oil revenue constitutes a mere 18 of Dubairsquos GDP whereas aviation related activities and tourism make up approximately 30

Considering how protectionism within national airspaces has been a typical historical norm ndash and still is in places ndash Dubairsquos Open Skies policy has remained virtually unchanged for close to 80 years This has encouraged competition amongst airlines and as a result multiple foreign carriers have enjoyed the ability to pick up and drop off passengers in Dubai for onward flights

Currently more than 130 airlines operate to and from Dubai generating revenue for Dubairsquos economy and supporting its commercial activities whilst also putting constant competitive pressure on Emirates

78 years withhellip an Open Skies Policy

Many recognise the benefits of Dubairsquos forward thinking aviation policies

Nicholas E Calio President and CEO of A4A on the growth of non-US carriers specifically discussing the ldquointegrated aviation eco-systemrdquo in Dubai in his remarks before the International Aviation Club October 2014

ldquoIrsquom not being critical Irsquom being clinical This is brilliant This infrastructure enables the carriers growth lowers flight delays and costs and delivers newer and higher quality infrastructure The closely integrated Dubai aviation sector strives for maximum throughput since costs for one segment is revenue for another The bottom line is that Middle Eastern carriers benefit from smart forward-looking governmental strategies to stimulate passenger growth by setting low airport fees low corporate taxes and minimal passenger-related fees and taxes which drives significant economic benefit to the host countriesrdquo

HE Mohammed A Ahli Director GeneralDubai Civil Aviation Authority

ldquoDubai is one of the true pioneers of aviation liberalisation having adopted an open skies policy as one of the cornerstones of its economy ever since late Sheikh Saeed bin Maktoum Al Maktoum OBE signed the Dubai Commercial Air Agreement with His Majestyrsquos Government in July 1937 long before Emirates was established in 1985 Access to Dubai one of the worldrsquos largest and fastest-growing hubs allows carriers of the world to grow their services and also boost exports and trade to their own markets For Dubai it gives consumers more choice stimulates traffic growth and is good for business Considering that ICAO predicts there will be 6 billion people travelling by air in 2030 compared to 3 billion today Dubai is well-placed to capitalise on this growth I am confident that Dubairsquos steadfast commitment to Open Skies is a source of inspiration for other countriesrdquo

Open Sky usually features a lsquo60 seconds withhelliprsquo section to provide readers with a snapshot overview of the dynamics in a given market This issuersquos snapshot is dedicated to Dubairsquos longstanding Open

Skies policy which has been in place since 1937 We call it lsquo78 years withhelliprsquo

1985 2015

7

F a i r C o m p e t i t i o n bull [ fair ] [kom-pi-tish-uhn] 1 Competition rules defined by legacy carriers 2 A fair and equal opportunity to compete which ignores geography different market realities and government policies and supersedes the consumerrsquos right to choose

Unfair Advantage bull [uhn-fair] [ad-van-tij] 1 Situation in which a non-legacy carrier takes advantage of natural competitive advantages like geography progressive aviation policy low tax regimes or supportive airport conditions such as 24 hour flying or affordable parking and handling charges

Capacity Dumping bull [kuh-pas-i-tee] [duhmp-ing] 1 When a non-legacy carrier provides more seats between two countries than a legacy carrier to meet the demand at profitable and competitive rates 2 When third country airlines serve routes that have long been neglected and deemed unprofitable by legacy carriers 3 When an airline offers the consumer an alternative option by creating connections through non-traditional and non-legacy carrier hubs

Theft of passengers bull [theft] [ohv] [pas-uh n-jerz] 1 When passengers as a result of competitive prices connectivity

and superior service choose to travel with non-legacy carriers from the home of a legacy carrier 2 Also assumes prior ownership of said passengers by said legacy carriers

Level playing field bull [lev-uhl] [pley-ing] [feeld] 1 An aviation industry in which the rules are set by and acceptable to some EU legacy carriers 2 Competition that ignores market realities and the consumers right to choose

[uhn-[uhn- Situation in Situation in

which a non-legacy carrier takes which a non-legacy carrier takes advantage of natural competitive advantage of natural competitive advantages like geography advantages like geography progressive aviation policy low progressive aviation policy low tax regimes or supportive airport tax regimes or supportive airport conditions such as 24 hour conditions such as 24 hour flying or affordable parking and flying or affordable parking and

-- When a When a

non-legacy carrier provides more non-legacy carrier provides more seats between two countries seats between two countries than a legacy carrier to meet than a legacy carrier to meet the demand at profitable and the demand at profitable and

When third When third country airlines serve routes that country airlines serve routes that have long been neglected and have long been neglected and deemed unprofitable by legacy deemed unprofitable by legacy

When an airline offers When an airline offers the consumer an alternative the consumer an alternative option by creating connections option by creating connections through non-traditional and non-through non-traditional and non-

[theft] [theft] When When

passengers as a result of passengers as a result of competitive prices connectivity competitive prices connectivity

aviation industry in which the aviation industry in which the rules are set by and acceptable rules are set by and acceptable to some EU legacy carriers to some EU legacy carriers 2 2 Competition that ignores market Competition that ignores market realities and the consumers right realities and the consumers right to chooseto chooseThe handy guide to

SELECTLEGACYCARRIER

LANGUAGE

28

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

3

Airports tourism boards chambers of commerce and businesses should in turn be asking regulators and legislators why valuable direct international air links - which are so important for businesses and critical for tourism - should be limited only to a few airport hubs served by the big three US carriers and their JV partners with whom they co-ordinate prices and capacity under anti-trust immunity

The US carriers allegedly took two years and goodness knows how much shareholder money to assemble a stack of allegations which included wrong assumptions and leaps of logic We are currently working on our point-by-point rebuttal but we can tackle the main accusations against Emirates immediately

Rather than harming US interests as the white paper claims Emiratesrsquo services have increased consumer choice filled a gap in the market by taking travellers to numerous destinations not served by others and helped contribute to the US economy trade and tourism Importantly Emirates also provides a much-needed competitive alternative to the three airline alliances with anti-trust immunity permitting them to keep fares artificially high Emirates has understood the tectonic shift in 21st century aviation and despite being a transparent efficient and commercially run carrier we recognise that our steady growth andsuccess has made us the scapegoat of choice among the few that prefer less competition ndash particularly when the competition comes from business models different to their own The unintended consequences of this could well be intra-industry polarisation that challenges the make-up of the traditional alliances and splits airline trade bodies The Association of European Airlines (AEA) has seen a number of carriers quit the group after fundamental disagreement on airline competition Within Airlines for America (A4A) member views also differ drastically on that topic The few will continue their gross misrepresentations about us to serve their narrow interests We have nothing to hide and we welcome appropriate discussion on our activities In the meantime our partners regulators and decision-makers in the aviation sphere need to consider whether artificially protecting three carriers on the basis of questionable allegations is worthwhile if it leads to higher prices limited choice poor service and unrealised economic activity Erecting barriers does not create value More competition more connectivity and more choice for consumers and businesses does

Myth vs FactAllegation Emirates benefited from $27b in subsidies from the governmentrsquos assumption of fuel hedging losses and the government also provided Emirates $16b in letters of credit

Emiratesrsquo response That is untrue All cash losses incurred by Emirates as a result of its fuel trades in place in 200809 were settled in full from the airlinersquos own cash reserves and not paid for by the Government of Dubai The letters of credit mentioned in the white paper were in fact provided by Emirates to our owners Investment Corporation of Dubai in support of the fuel trades novated not the other way round

Allegation Emirates benefited from $23b in subsidised airport infrastructure since 2004 which is a ldquomajor competitive advantagerdquo

Emiratesrsquo response Infrastructure investment is long term in its nature The Government of Dubai has made these investments like other progressive emerging market economies (eg China Singapore) with long term benefits in mind Comparably lower airport charges or charge exemptions for transfer passengers are neither a subsidy nor discriminatory as all airlines who use the infrastructure at Dubai International (DXB) benefit

Emirates pays the full published rates at DXB which are highly competitive commercially based and in fact higher than a number of other comparable major airports such as Kuala Lumpur (KUL)

Allegation Gulf carriers take passengers and revenues from US carriers and force US carriers to reduce terminate or forego services on international routes

Emiratesrsquo response Despite what some carriers may think air passengers are not proprietary to airlines What Emirates is doing is competing in the marketplace - we donrsquot ldquotakerdquo or ldquostealrdquo customers We offer a great product at a competitive price which appeals to the consumers who choose to fly with us The three US carriersrsquo obsession with market share makes all the more apparent what they are really after not competition not open markets or Open Skies but outright government-directed market allocation

4

Far too often many US carriers have been content to play it safe with long-established trans-Atlantic and trans-Pacific routes and either ignore new and growing markets such as India and Africa or simply hand over passengers to their European alliance partners

The leading US airlines have been busy consolidating through domestic mergers and practising ldquocapacity disciplinerdquo and in the process have ignored many opportunities in emerging markets

In contrast Emirates ndash which is independent of traditional alliance partners and not beholden to feed an alliance network that often inconveniences passengers with circuitous routings multiple connecting stops and longer travel times ndash has since 1985 built a network to capitalise on these emerging traffic flows and better serve the requirements of passengers

Emirates has created a hub in Dubai that allows passengers in any of the nine US cities it serves to fly one-stop to 15 different Middle Eastern destinations 23 African destinations and 35 Asian destinations ndash all with connections optimally timed for passenger convenience In contrast the three US network airlines only serve a combined four points in Africa and four in the Middle East (not including overlapping points)

Emiratesrsquo links from the US to emerging markets ndash for example 305 weekly flights to the five BRICS countries and 94 weekly flights to Pakistan and Bangladesh ndash will further drive American economic growth trade and US job creation However the three leading carriers along with their European partners offer only modest air services in several of these markets limiting consumer choice and sacrificing lucrative business

The table below demonstrates Emiratesrsquo strong commitment to these emerging markets with the number of points served directly compared with the three leading US carriers

Emiratesrsquo single-carrier global network

Middle East 15 2 4 0

Africa 23 4 1 0

Asia 35 13 13 5

Emiratesrsquo unique global connectivity to the USbull Emiratescommencednon-stop

passenger flights between Dubai and New York City in June 2004 and has since expanded to eight more destinations - Houston Los Angeles San Francisco Dallas Seattle Washington DC Boston and Chicago operating a total of 84 passenger flights per week Services to Orlando Emiratesrsquo 10th US destination will commence in September 2015

bull EmiratesfliestheBoeing777tofiveofitsUS destinations and operates the Airbus A380 powered by US-made GE GP7200 engines to Dallas Houston Los Angeles New York and San Francisco

bull Emiratesrsquoflightscarrytravellersfromthe US to 57 destinations in Africa (19 points) Asia Pacific (26 points) and the Middle East (12 points) that are not served by any American carrier and we do this with just one plane change in Dubai

bull Since2004113millionhigh-yieldtourists and business passengers have travelled on our US flights coming from and going to important developing markets in the Middle East Africa and Asia

bull Thehighaverageseatloadfactorsofover 80 in 2014 on our US flights demonstrate the customer demand for Emiratesrsquo services

bull EmiratesrsquoflightsbetweentheUSandDubai have carried over 518000 tonnes of high value goods since 2004

bull Therehasbeena442growthinUSexports to the UAE since Emirates started services to the US in 2004 and today the UAE is the 1 market for US exports in the Middle East

Chicago

Los AngelesSan Francisco

Seattle

HoustonOrlando

DallasFort Worth

BostonNew York

Airport ($m)

$132m$227m$257m$624m$200m$166m$445m$720m$100m

Total impact

$29bnSource Economic impact studies from respective airports or regionsData not available for Washington DC

Estimated annual local economic impact of Emirates operations

5

Glen Hauenstein - Delta Air Lines Inc - Chief Revenue Officer answering a question on competition between Delta and Middle Eastern carriers during an investor relations call December 2013

ldquoI think there are two components to your question One is the third and fourth freedoms which would be the traffic from the United States and from Europe into the Indian subcontinent and Asia Delta has never been a big player in that market Our partners Air France and KLM were probably not as heavily invested as Lufthansa or British Airways for that matter So they probably have a little less impact although itrsquos significant because those are traffic pools that they were relevant players in The thing about their location is they are about halfway around the world from us and thatrsquos kind of the good news and the bad news The good news is they are halfway around the world from us and we donrsquot really participate in a lot of the flows that they have the primary gateway for The second piece is if you look at their order books itrsquos hard for us to imagine that those aircraft could all be delivered in the same time frame to the same region without imploding all of themrdquo

Delta Air Lines Emirates

United Airlines Emirates

American Airlines Emirates Source OAG Analyser

Route network comparisonsThe maps below show that Emirates is providing vital routes to the US via its hub in Dubai that the three leading US carriers do not offer So despite their claims that Emirates is ldquostealing passengersrdquo these maps illustrate that in reality there are very few network similarities between Emirates and the big three US carriers United Delta and American Airlines

Many of Emiratesrsquo routes are to developing markets which are not currently served by American carriers These air links facilitate US foreign trade and open up new markets for US exporters helping to further drive American economic growth trade and job creation

6

Dubairsquos Open Skies policy is a key component of its economic and trade policy It calls for liberalised rules and regulations to foster a market forces-driven competitive environment for aviation to attract airlines and enable them to operate freely

How did it all start The ldquoDubai Commercial Air Agreementrdquo on July 22 1937 triggered the Open Skies policy of Dubai That agreement gave the British Government landing permission en route to India and elsewhere

It was quickly evident that it helped strengthen Dubairsquos position as an important trading outpost in the Gulf In the 1950s HH Sheikh Saeed bin Maktoum Al Maktoum the ruler of Dubai at the time decreed a policy of open seas open skies and open trade in part to help eliminate the dependence on oil resources

This was one of the first contributions to building the business-friendly Dubai of today which subsequently has been complemented with the creation of free zones and other business investment friendly incentives Today oil revenue constitutes a mere 18 of Dubairsquos GDP whereas aviation related activities and tourism make up approximately 30

Considering how protectionism within national airspaces has been a typical historical norm ndash and still is in places ndash Dubairsquos Open Skies policy has remained virtually unchanged for close to 80 years This has encouraged competition amongst airlines and as a result multiple foreign carriers have enjoyed the ability to pick up and drop off passengers in Dubai for onward flights

Currently more than 130 airlines operate to and from Dubai generating revenue for Dubairsquos economy and supporting its commercial activities whilst also putting constant competitive pressure on Emirates

78 years withhellip an Open Skies Policy

Many recognise the benefits of Dubairsquos forward thinking aviation policies

Nicholas E Calio President and CEO of A4A on the growth of non-US carriers specifically discussing the ldquointegrated aviation eco-systemrdquo in Dubai in his remarks before the International Aviation Club October 2014

ldquoIrsquom not being critical Irsquom being clinical This is brilliant This infrastructure enables the carriers growth lowers flight delays and costs and delivers newer and higher quality infrastructure The closely integrated Dubai aviation sector strives for maximum throughput since costs for one segment is revenue for another The bottom line is that Middle Eastern carriers benefit from smart forward-looking governmental strategies to stimulate passenger growth by setting low airport fees low corporate taxes and minimal passenger-related fees and taxes which drives significant economic benefit to the host countriesrdquo

HE Mohammed A Ahli Director GeneralDubai Civil Aviation Authority

ldquoDubai is one of the true pioneers of aviation liberalisation having adopted an open skies policy as one of the cornerstones of its economy ever since late Sheikh Saeed bin Maktoum Al Maktoum OBE signed the Dubai Commercial Air Agreement with His Majestyrsquos Government in July 1937 long before Emirates was established in 1985 Access to Dubai one of the worldrsquos largest and fastest-growing hubs allows carriers of the world to grow their services and also boost exports and trade to their own markets For Dubai it gives consumers more choice stimulates traffic growth and is good for business Considering that ICAO predicts there will be 6 billion people travelling by air in 2030 compared to 3 billion today Dubai is well-placed to capitalise on this growth I am confident that Dubairsquos steadfast commitment to Open Skies is a source of inspiration for other countriesrdquo

Open Sky usually features a lsquo60 seconds withhelliprsquo section to provide readers with a snapshot overview of the dynamics in a given market This issuersquos snapshot is dedicated to Dubairsquos longstanding Open

Skies policy which has been in place since 1937 We call it lsquo78 years withhelliprsquo

1985 2015

7

F a i r C o m p e t i t i o n bull [ fair ] [kom-pi-tish-uhn] 1 Competition rules defined by legacy carriers 2 A fair and equal opportunity to compete which ignores geography different market realities and government policies and supersedes the consumerrsquos right to choose

Unfair Advantage bull [uhn-fair] [ad-van-tij] 1 Situation in which a non-legacy carrier takes advantage of natural competitive advantages like geography progressive aviation policy low tax regimes or supportive airport conditions such as 24 hour flying or affordable parking and handling charges

Capacity Dumping bull [kuh-pas-i-tee] [duhmp-ing] 1 When a non-legacy carrier provides more seats between two countries than a legacy carrier to meet the demand at profitable and competitive rates 2 When third country airlines serve routes that have long been neglected and deemed unprofitable by legacy carriers 3 When an airline offers the consumer an alternative option by creating connections through non-traditional and non-legacy carrier hubs

Theft of passengers bull [theft] [ohv] [pas-uh n-jerz] 1 When passengers as a result of competitive prices connectivity

and superior service choose to travel with non-legacy carriers from the home of a legacy carrier 2 Also assumes prior ownership of said passengers by said legacy carriers

Level playing field bull [lev-uhl] [pley-ing] [feeld] 1 An aviation industry in which the rules are set by and acceptable to some EU legacy carriers 2 Competition that ignores market realities and the consumers right to choose

[uhn-[uhn- Situation in Situation in

which a non-legacy carrier takes which a non-legacy carrier takes advantage of natural competitive advantage of natural competitive advantages like geography advantages like geography progressive aviation policy low progressive aviation policy low tax regimes or supportive airport tax regimes or supportive airport conditions such as 24 hour conditions such as 24 hour flying or affordable parking and flying or affordable parking and

-- When a When a

non-legacy carrier provides more non-legacy carrier provides more seats between two countries seats between two countries than a legacy carrier to meet than a legacy carrier to meet the demand at profitable and the demand at profitable and

When third When third country airlines serve routes that country airlines serve routes that have long been neglected and have long been neglected and deemed unprofitable by legacy deemed unprofitable by legacy

When an airline offers When an airline offers the consumer an alternative the consumer an alternative option by creating connections option by creating connections through non-traditional and non-through non-traditional and non-

[theft] [theft] When When

passengers as a result of passengers as a result of competitive prices connectivity competitive prices connectivity

aviation industry in which the aviation industry in which the rules are set by and acceptable rules are set by and acceptable to some EU legacy carriers to some EU legacy carriers 2 2 Competition that ignores market Competition that ignores market realities and the consumers right realities and the consumers right to chooseto chooseThe handy guide to

SELECTLEGACYCARRIER

LANGUAGE

28

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

4

Far too often many US carriers have been content to play it safe with long-established trans-Atlantic and trans-Pacific routes and either ignore new and growing markets such as India and Africa or simply hand over passengers to their European alliance partners

The leading US airlines have been busy consolidating through domestic mergers and practising ldquocapacity disciplinerdquo and in the process have ignored many opportunities in emerging markets

In contrast Emirates ndash which is independent of traditional alliance partners and not beholden to feed an alliance network that often inconveniences passengers with circuitous routings multiple connecting stops and longer travel times ndash has since 1985 built a network to capitalise on these emerging traffic flows and better serve the requirements of passengers

Emirates has created a hub in Dubai that allows passengers in any of the nine US cities it serves to fly one-stop to 15 different Middle Eastern destinations 23 African destinations and 35 Asian destinations ndash all with connections optimally timed for passenger convenience In contrast the three US network airlines only serve a combined four points in Africa and four in the Middle East (not including overlapping points)

Emiratesrsquo links from the US to emerging markets ndash for example 305 weekly flights to the five BRICS countries and 94 weekly flights to Pakistan and Bangladesh ndash will further drive American economic growth trade and US job creation However the three leading carriers along with their European partners offer only modest air services in several of these markets limiting consumer choice and sacrificing lucrative business

The table below demonstrates Emiratesrsquo strong commitment to these emerging markets with the number of points served directly compared with the three leading US carriers

Emiratesrsquo single-carrier global network

Middle East 15 2 4 0

Africa 23 4 1 0

Asia 35 13 13 5

Emiratesrsquo unique global connectivity to the USbull Emiratescommencednon-stop

passenger flights between Dubai and New York City in June 2004 and has since expanded to eight more destinations - Houston Los Angeles San Francisco Dallas Seattle Washington DC Boston and Chicago operating a total of 84 passenger flights per week Services to Orlando Emiratesrsquo 10th US destination will commence in September 2015

bull EmiratesfliestheBoeing777tofiveofitsUS destinations and operates the Airbus A380 powered by US-made GE GP7200 engines to Dallas Houston Los Angeles New York and San Francisco

bull Emiratesrsquoflightscarrytravellersfromthe US to 57 destinations in Africa (19 points) Asia Pacific (26 points) and the Middle East (12 points) that are not served by any American carrier and we do this with just one plane change in Dubai

bull Since2004113millionhigh-yieldtourists and business passengers have travelled on our US flights coming from and going to important developing markets in the Middle East Africa and Asia

bull Thehighaverageseatloadfactorsofover 80 in 2014 on our US flights demonstrate the customer demand for Emiratesrsquo services

bull EmiratesrsquoflightsbetweentheUSandDubai have carried over 518000 tonnes of high value goods since 2004

bull Therehasbeena442growthinUSexports to the UAE since Emirates started services to the US in 2004 and today the UAE is the 1 market for US exports in the Middle East

Chicago

Los AngelesSan Francisco

Seattle

HoustonOrlando

DallasFort Worth

BostonNew York

Airport ($m)

$132m$227m$257m$624m$200m$166m$445m$720m$100m

Total impact

$29bnSource Economic impact studies from respective airports or regionsData not available for Washington DC

Estimated annual local economic impact of Emirates operations

5

Glen Hauenstein - Delta Air Lines Inc - Chief Revenue Officer answering a question on competition between Delta and Middle Eastern carriers during an investor relations call December 2013

ldquoI think there are two components to your question One is the third and fourth freedoms which would be the traffic from the United States and from Europe into the Indian subcontinent and Asia Delta has never been a big player in that market Our partners Air France and KLM were probably not as heavily invested as Lufthansa or British Airways for that matter So they probably have a little less impact although itrsquos significant because those are traffic pools that they were relevant players in The thing about their location is they are about halfway around the world from us and thatrsquos kind of the good news and the bad news The good news is they are halfway around the world from us and we donrsquot really participate in a lot of the flows that they have the primary gateway for The second piece is if you look at their order books itrsquos hard for us to imagine that those aircraft could all be delivered in the same time frame to the same region without imploding all of themrdquo

Delta Air Lines Emirates

United Airlines Emirates

American Airlines Emirates Source OAG Analyser

Route network comparisonsThe maps below show that Emirates is providing vital routes to the US via its hub in Dubai that the three leading US carriers do not offer So despite their claims that Emirates is ldquostealing passengersrdquo these maps illustrate that in reality there are very few network similarities between Emirates and the big three US carriers United Delta and American Airlines

Many of Emiratesrsquo routes are to developing markets which are not currently served by American carriers These air links facilitate US foreign trade and open up new markets for US exporters helping to further drive American economic growth trade and job creation

6

Dubairsquos Open Skies policy is a key component of its economic and trade policy It calls for liberalised rules and regulations to foster a market forces-driven competitive environment for aviation to attract airlines and enable them to operate freely

How did it all start The ldquoDubai Commercial Air Agreementrdquo on July 22 1937 triggered the Open Skies policy of Dubai That agreement gave the British Government landing permission en route to India and elsewhere

It was quickly evident that it helped strengthen Dubairsquos position as an important trading outpost in the Gulf In the 1950s HH Sheikh Saeed bin Maktoum Al Maktoum the ruler of Dubai at the time decreed a policy of open seas open skies and open trade in part to help eliminate the dependence on oil resources

This was one of the first contributions to building the business-friendly Dubai of today which subsequently has been complemented with the creation of free zones and other business investment friendly incentives Today oil revenue constitutes a mere 18 of Dubairsquos GDP whereas aviation related activities and tourism make up approximately 30

Considering how protectionism within national airspaces has been a typical historical norm ndash and still is in places ndash Dubairsquos Open Skies policy has remained virtually unchanged for close to 80 years This has encouraged competition amongst airlines and as a result multiple foreign carriers have enjoyed the ability to pick up and drop off passengers in Dubai for onward flights

Currently more than 130 airlines operate to and from Dubai generating revenue for Dubairsquos economy and supporting its commercial activities whilst also putting constant competitive pressure on Emirates

78 years withhellip an Open Skies Policy

Many recognise the benefits of Dubairsquos forward thinking aviation policies

Nicholas E Calio President and CEO of A4A on the growth of non-US carriers specifically discussing the ldquointegrated aviation eco-systemrdquo in Dubai in his remarks before the International Aviation Club October 2014

ldquoIrsquom not being critical Irsquom being clinical This is brilliant This infrastructure enables the carriers growth lowers flight delays and costs and delivers newer and higher quality infrastructure The closely integrated Dubai aviation sector strives for maximum throughput since costs for one segment is revenue for another The bottom line is that Middle Eastern carriers benefit from smart forward-looking governmental strategies to stimulate passenger growth by setting low airport fees low corporate taxes and minimal passenger-related fees and taxes which drives significant economic benefit to the host countriesrdquo

HE Mohammed A Ahli Director GeneralDubai Civil Aviation Authority

ldquoDubai is one of the true pioneers of aviation liberalisation having adopted an open skies policy as one of the cornerstones of its economy ever since late Sheikh Saeed bin Maktoum Al Maktoum OBE signed the Dubai Commercial Air Agreement with His Majestyrsquos Government in July 1937 long before Emirates was established in 1985 Access to Dubai one of the worldrsquos largest and fastest-growing hubs allows carriers of the world to grow their services and also boost exports and trade to their own markets For Dubai it gives consumers more choice stimulates traffic growth and is good for business Considering that ICAO predicts there will be 6 billion people travelling by air in 2030 compared to 3 billion today Dubai is well-placed to capitalise on this growth I am confident that Dubairsquos steadfast commitment to Open Skies is a source of inspiration for other countriesrdquo

Open Sky usually features a lsquo60 seconds withhelliprsquo section to provide readers with a snapshot overview of the dynamics in a given market This issuersquos snapshot is dedicated to Dubairsquos longstanding Open

Skies policy which has been in place since 1937 We call it lsquo78 years withhelliprsquo

1985 2015

7

F a i r C o m p e t i t i o n bull [ fair ] [kom-pi-tish-uhn] 1 Competition rules defined by legacy carriers 2 A fair and equal opportunity to compete which ignores geography different market realities and government policies and supersedes the consumerrsquos right to choose

Unfair Advantage bull [uhn-fair] [ad-van-tij] 1 Situation in which a non-legacy carrier takes advantage of natural competitive advantages like geography progressive aviation policy low tax regimes or supportive airport conditions such as 24 hour flying or affordable parking and handling charges

Capacity Dumping bull [kuh-pas-i-tee] [duhmp-ing] 1 When a non-legacy carrier provides more seats between two countries than a legacy carrier to meet the demand at profitable and competitive rates 2 When third country airlines serve routes that have long been neglected and deemed unprofitable by legacy carriers 3 When an airline offers the consumer an alternative option by creating connections through non-traditional and non-legacy carrier hubs

Theft of passengers bull [theft] [ohv] [pas-uh n-jerz] 1 When passengers as a result of competitive prices connectivity

and superior service choose to travel with non-legacy carriers from the home of a legacy carrier 2 Also assumes prior ownership of said passengers by said legacy carriers

Level playing field bull [lev-uhl] [pley-ing] [feeld] 1 An aviation industry in which the rules are set by and acceptable to some EU legacy carriers 2 Competition that ignores market realities and the consumers right to choose

[uhn-[uhn- Situation in Situation in

which a non-legacy carrier takes which a non-legacy carrier takes advantage of natural competitive advantage of natural competitive advantages like geography advantages like geography progressive aviation policy low progressive aviation policy low tax regimes or supportive airport tax regimes or supportive airport conditions such as 24 hour conditions such as 24 hour flying or affordable parking and flying or affordable parking and

-- When a When a

non-legacy carrier provides more non-legacy carrier provides more seats between two countries seats between two countries than a legacy carrier to meet than a legacy carrier to meet the demand at profitable and the demand at profitable and

When third When third country airlines serve routes that country airlines serve routes that have long been neglected and have long been neglected and deemed unprofitable by legacy deemed unprofitable by legacy

When an airline offers When an airline offers the consumer an alternative the consumer an alternative option by creating connections option by creating connections through non-traditional and non-through non-traditional and non-

[theft] [theft] When When

passengers as a result of passengers as a result of competitive prices connectivity competitive prices connectivity

aviation industry in which the aviation industry in which the rules are set by and acceptable rules are set by and acceptable to some EU legacy carriers to some EU legacy carriers 2 2 Competition that ignores market Competition that ignores market realities and the consumers right realities and the consumers right to chooseto chooseThe handy guide to

SELECTLEGACYCARRIER

LANGUAGE

28

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

5

Glen Hauenstein - Delta Air Lines Inc - Chief Revenue Officer answering a question on competition between Delta and Middle Eastern carriers during an investor relations call December 2013

ldquoI think there are two components to your question One is the third and fourth freedoms which would be the traffic from the United States and from Europe into the Indian subcontinent and Asia Delta has never been a big player in that market Our partners Air France and KLM were probably not as heavily invested as Lufthansa or British Airways for that matter So they probably have a little less impact although itrsquos significant because those are traffic pools that they were relevant players in The thing about their location is they are about halfway around the world from us and thatrsquos kind of the good news and the bad news The good news is they are halfway around the world from us and we donrsquot really participate in a lot of the flows that they have the primary gateway for The second piece is if you look at their order books itrsquos hard for us to imagine that those aircraft could all be delivered in the same time frame to the same region without imploding all of themrdquo

Delta Air Lines Emirates

United Airlines Emirates

American Airlines Emirates Source OAG Analyser

Route network comparisonsThe maps below show that Emirates is providing vital routes to the US via its hub in Dubai that the three leading US carriers do not offer So despite their claims that Emirates is ldquostealing passengersrdquo these maps illustrate that in reality there are very few network similarities between Emirates and the big three US carriers United Delta and American Airlines

Many of Emiratesrsquo routes are to developing markets which are not currently served by American carriers These air links facilitate US foreign trade and open up new markets for US exporters helping to further drive American economic growth trade and job creation

6

Dubairsquos Open Skies policy is a key component of its economic and trade policy It calls for liberalised rules and regulations to foster a market forces-driven competitive environment for aviation to attract airlines and enable them to operate freely

How did it all start The ldquoDubai Commercial Air Agreementrdquo on July 22 1937 triggered the Open Skies policy of Dubai That agreement gave the British Government landing permission en route to India and elsewhere

It was quickly evident that it helped strengthen Dubairsquos position as an important trading outpost in the Gulf In the 1950s HH Sheikh Saeed bin Maktoum Al Maktoum the ruler of Dubai at the time decreed a policy of open seas open skies and open trade in part to help eliminate the dependence on oil resources

This was one of the first contributions to building the business-friendly Dubai of today which subsequently has been complemented with the creation of free zones and other business investment friendly incentives Today oil revenue constitutes a mere 18 of Dubairsquos GDP whereas aviation related activities and tourism make up approximately 30

Considering how protectionism within national airspaces has been a typical historical norm ndash and still is in places ndash Dubairsquos Open Skies policy has remained virtually unchanged for close to 80 years This has encouraged competition amongst airlines and as a result multiple foreign carriers have enjoyed the ability to pick up and drop off passengers in Dubai for onward flights

Currently more than 130 airlines operate to and from Dubai generating revenue for Dubairsquos economy and supporting its commercial activities whilst also putting constant competitive pressure on Emirates

78 years withhellip an Open Skies Policy

Many recognise the benefits of Dubairsquos forward thinking aviation policies

Nicholas E Calio President and CEO of A4A on the growth of non-US carriers specifically discussing the ldquointegrated aviation eco-systemrdquo in Dubai in his remarks before the International Aviation Club October 2014

ldquoIrsquom not being critical Irsquom being clinical This is brilliant This infrastructure enables the carriers growth lowers flight delays and costs and delivers newer and higher quality infrastructure The closely integrated Dubai aviation sector strives for maximum throughput since costs for one segment is revenue for another The bottom line is that Middle Eastern carriers benefit from smart forward-looking governmental strategies to stimulate passenger growth by setting low airport fees low corporate taxes and minimal passenger-related fees and taxes which drives significant economic benefit to the host countriesrdquo

HE Mohammed A Ahli Director GeneralDubai Civil Aviation Authority

ldquoDubai is one of the true pioneers of aviation liberalisation having adopted an open skies policy as one of the cornerstones of its economy ever since late Sheikh Saeed bin Maktoum Al Maktoum OBE signed the Dubai Commercial Air Agreement with His Majestyrsquos Government in July 1937 long before Emirates was established in 1985 Access to Dubai one of the worldrsquos largest and fastest-growing hubs allows carriers of the world to grow their services and also boost exports and trade to their own markets For Dubai it gives consumers more choice stimulates traffic growth and is good for business Considering that ICAO predicts there will be 6 billion people travelling by air in 2030 compared to 3 billion today Dubai is well-placed to capitalise on this growth I am confident that Dubairsquos steadfast commitment to Open Skies is a source of inspiration for other countriesrdquo

Open Sky usually features a lsquo60 seconds withhelliprsquo section to provide readers with a snapshot overview of the dynamics in a given market This issuersquos snapshot is dedicated to Dubairsquos longstanding Open

Skies policy which has been in place since 1937 We call it lsquo78 years withhelliprsquo

1985 2015

7

F a i r C o m p e t i t i o n bull [ fair ] [kom-pi-tish-uhn] 1 Competition rules defined by legacy carriers 2 A fair and equal opportunity to compete which ignores geography different market realities and government policies and supersedes the consumerrsquos right to choose

Unfair Advantage bull [uhn-fair] [ad-van-tij] 1 Situation in which a non-legacy carrier takes advantage of natural competitive advantages like geography progressive aviation policy low tax regimes or supportive airport conditions such as 24 hour flying or affordable parking and handling charges

Capacity Dumping bull [kuh-pas-i-tee] [duhmp-ing] 1 When a non-legacy carrier provides more seats between two countries than a legacy carrier to meet the demand at profitable and competitive rates 2 When third country airlines serve routes that have long been neglected and deemed unprofitable by legacy carriers 3 When an airline offers the consumer an alternative option by creating connections through non-traditional and non-legacy carrier hubs

Theft of passengers bull [theft] [ohv] [pas-uh n-jerz] 1 When passengers as a result of competitive prices connectivity

and superior service choose to travel with non-legacy carriers from the home of a legacy carrier 2 Also assumes prior ownership of said passengers by said legacy carriers

Level playing field bull [lev-uhl] [pley-ing] [feeld] 1 An aviation industry in which the rules are set by and acceptable to some EU legacy carriers 2 Competition that ignores market realities and the consumers right to choose

[uhn-[uhn- Situation in Situation in

which a non-legacy carrier takes which a non-legacy carrier takes advantage of natural competitive advantage of natural competitive advantages like geography advantages like geography progressive aviation policy low progressive aviation policy low tax regimes or supportive airport tax regimes or supportive airport conditions such as 24 hour conditions such as 24 hour flying or affordable parking and flying or affordable parking and

-- When a When a

non-legacy carrier provides more non-legacy carrier provides more seats between two countries seats between two countries than a legacy carrier to meet than a legacy carrier to meet the demand at profitable and the demand at profitable and

When third When third country airlines serve routes that country airlines serve routes that have long been neglected and have long been neglected and deemed unprofitable by legacy deemed unprofitable by legacy

When an airline offers When an airline offers the consumer an alternative the consumer an alternative option by creating connections option by creating connections through non-traditional and non-through non-traditional and non-

[theft] [theft] When When

passengers as a result of passengers as a result of competitive prices connectivity competitive prices connectivity

aviation industry in which the aviation industry in which the rules are set by and acceptable rules are set by and acceptable to some EU legacy carriers to some EU legacy carriers 2 2 Competition that ignores market Competition that ignores market realities and the consumers right realities and the consumers right to chooseto chooseThe handy guide to

SELECTLEGACYCARRIER

LANGUAGE

28

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

6

Dubairsquos Open Skies policy is a key component of its economic and trade policy It calls for liberalised rules and regulations to foster a market forces-driven competitive environment for aviation to attract airlines and enable them to operate freely

How did it all start The ldquoDubai Commercial Air Agreementrdquo on July 22 1937 triggered the Open Skies policy of Dubai That agreement gave the British Government landing permission en route to India and elsewhere

It was quickly evident that it helped strengthen Dubairsquos position as an important trading outpost in the Gulf In the 1950s HH Sheikh Saeed bin Maktoum Al Maktoum the ruler of Dubai at the time decreed a policy of open seas open skies and open trade in part to help eliminate the dependence on oil resources

This was one of the first contributions to building the business-friendly Dubai of today which subsequently has been complemented with the creation of free zones and other business investment friendly incentives Today oil revenue constitutes a mere 18 of Dubairsquos GDP whereas aviation related activities and tourism make up approximately 30

Considering how protectionism within national airspaces has been a typical historical norm ndash and still is in places ndash Dubairsquos Open Skies policy has remained virtually unchanged for close to 80 years This has encouraged competition amongst airlines and as a result multiple foreign carriers have enjoyed the ability to pick up and drop off passengers in Dubai for onward flights

Currently more than 130 airlines operate to and from Dubai generating revenue for Dubairsquos economy and supporting its commercial activities whilst also putting constant competitive pressure on Emirates

78 years withhellip an Open Skies Policy

Many recognise the benefits of Dubairsquos forward thinking aviation policies

Nicholas E Calio President and CEO of A4A on the growth of non-US carriers specifically discussing the ldquointegrated aviation eco-systemrdquo in Dubai in his remarks before the International Aviation Club October 2014

ldquoIrsquom not being critical Irsquom being clinical This is brilliant This infrastructure enables the carriers growth lowers flight delays and costs and delivers newer and higher quality infrastructure The closely integrated Dubai aviation sector strives for maximum throughput since costs for one segment is revenue for another The bottom line is that Middle Eastern carriers benefit from smart forward-looking governmental strategies to stimulate passenger growth by setting low airport fees low corporate taxes and minimal passenger-related fees and taxes which drives significant economic benefit to the host countriesrdquo

HE Mohammed A Ahli Director GeneralDubai Civil Aviation Authority

ldquoDubai is one of the true pioneers of aviation liberalisation having adopted an open skies policy as one of the cornerstones of its economy ever since late Sheikh Saeed bin Maktoum Al Maktoum OBE signed the Dubai Commercial Air Agreement with His Majestyrsquos Government in July 1937 long before Emirates was established in 1985 Access to Dubai one of the worldrsquos largest and fastest-growing hubs allows carriers of the world to grow their services and also boost exports and trade to their own markets For Dubai it gives consumers more choice stimulates traffic growth and is good for business Considering that ICAO predicts there will be 6 billion people travelling by air in 2030 compared to 3 billion today Dubai is well-placed to capitalise on this growth I am confident that Dubairsquos steadfast commitment to Open Skies is a source of inspiration for other countriesrdquo

Open Sky usually features a lsquo60 seconds withhelliprsquo section to provide readers with a snapshot overview of the dynamics in a given market This issuersquos snapshot is dedicated to Dubairsquos longstanding Open

Skies policy which has been in place since 1937 We call it lsquo78 years withhelliprsquo

1985 2015

7

F a i r C o m p e t i t i o n bull [ fair ] [kom-pi-tish-uhn] 1 Competition rules defined by legacy carriers 2 A fair and equal opportunity to compete which ignores geography different market realities and government policies and supersedes the consumerrsquos right to choose

Unfair Advantage bull [uhn-fair] [ad-van-tij] 1 Situation in which a non-legacy carrier takes advantage of natural competitive advantages like geography progressive aviation policy low tax regimes or supportive airport conditions such as 24 hour flying or affordable parking and handling charges

Capacity Dumping bull [kuh-pas-i-tee] [duhmp-ing] 1 When a non-legacy carrier provides more seats between two countries than a legacy carrier to meet the demand at profitable and competitive rates 2 When third country airlines serve routes that have long been neglected and deemed unprofitable by legacy carriers 3 When an airline offers the consumer an alternative option by creating connections through non-traditional and non-legacy carrier hubs

Theft of passengers bull [theft] [ohv] [pas-uh n-jerz] 1 When passengers as a result of competitive prices connectivity

and superior service choose to travel with non-legacy carriers from the home of a legacy carrier 2 Also assumes prior ownership of said passengers by said legacy carriers

Level playing field bull [lev-uhl] [pley-ing] [feeld] 1 An aviation industry in which the rules are set by and acceptable to some EU legacy carriers 2 Competition that ignores market realities and the consumers right to choose

[uhn-[uhn- Situation in Situation in

which a non-legacy carrier takes which a non-legacy carrier takes advantage of natural competitive advantage of natural competitive advantages like geography advantages like geography progressive aviation policy low progressive aviation policy low tax regimes or supportive airport tax regimes or supportive airport conditions such as 24 hour conditions such as 24 hour flying or affordable parking and flying or affordable parking and

-- When a When a

non-legacy carrier provides more non-legacy carrier provides more seats between two countries seats between two countries than a legacy carrier to meet than a legacy carrier to meet the demand at profitable and the demand at profitable and

When third When third country airlines serve routes that country airlines serve routes that have long been neglected and have long been neglected and deemed unprofitable by legacy deemed unprofitable by legacy

When an airline offers When an airline offers the consumer an alternative the consumer an alternative option by creating connections option by creating connections through non-traditional and non-through non-traditional and non-

[theft] [theft] When When

passengers as a result of passengers as a result of competitive prices connectivity competitive prices connectivity

aviation industry in which the aviation industry in which the rules are set by and acceptable rules are set by and acceptable to some EU legacy carriers to some EU legacy carriers 2 2 Competition that ignores market Competition that ignores market realities and the consumers right realities and the consumers right to chooseto chooseThe handy guide to

SELECTLEGACYCARRIER

LANGUAGE

28

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

7

F a i r C o m p e t i t i o n bull [ fair ] [kom-pi-tish-uhn] 1 Competition rules defined by legacy carriers 2 A fair and equal opportunity to compete which ignores geography different market realities and government policies and supersedes the consumerrsquos right to choose

Unfair Advantage bull [uhn-fair] [ad-van-tij] 1 Situation in which a non-legacy carrier takes advantage of natural competitive advantages like geography progressive aviation policy low tax regimes or supportive airport conditions such as 24 hour flying or affordable parking and handling charges

Capacity Dumping bull [kuh-pas-i-tee] [duhmp-ing] 1 When a non-legacy carrier provides more seats between two countries than a legacy carrier to meet the demand at profitable and competitive rates 2 When third country airlines serve routes that have long been neglected and deemed unprofitable by legacy carriers 3 When an airline offers the consumer an alternative option by creating connections through non-traditional and non-legacy carrier hubs

Theft of passengers bull [theft] [ohv] [pas-uh n-jerz] 1 When passengers as a result of competitive prices connectivity

and superior service choose to travel with non-legacy carriers from the home of a legacy carrier 2 Also assumes prior ownership of said passengers by said legacy carriers

Level playing field bull [lev-uhl] [pley-ing] [feeld] 1 An aviation industry in which the rules are set by and acceptable to some EU legacy carriers 2 Competition that ignores market realities and the consumers right to choose

[uhn-[uhn- Situation in Situation in

which a non-legacy carrier takes which a non-legacy carrier takes advantage of natural competitive advantage of natural competitive advantages like geography advantages like geography progressive aviation policy low progressive aviation policy low tax regimes or supportive airport tax regimes or supportive airport conditions such as 24 hour conditions such as 24 hour flying or affordable parking and flying or affordable parking and

-- When a When a

non-legacy carrier provides more non-legacy carrier provides more seats between two countries seats between two countries than a legacy carrier to meet than a legacy carrier to meet the demand at profitable and the demand at profitable and

When third When third country airlines serve routes that country airlines serve routes that have long been neglected and have long been neglected and deemed unprofitable by legacy deemed unprofitable by legacy

When an airline offers When an airline offers the consumer an alternative the consumer an alternative option by creating connections option by creating connections through non-traditional and non-through non-traditional and non-

[theft] [theft] When When

passengers as a result of passengers as a result of competitive prices connectivity competitive prices connectivity

aviation industry in which the aviation industry in which the rules are set by and acceptable rules are set by and acceptable to some EU legacy carriers to some EU legacy carriers 2 2 Competition that ignores market Competition that ignores market realities and the consumers right realities and the consumers right to chooseto chooseThe handy guide to

SELECTLEGACYCARRIER

LANGUAGE

28

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

8

With operations to Europe since 1987 and annual investments in products and services amounting to 43 billion in 201314 Emirates has long-standing relationships with a large number of European businesses and suppliers

Next to providing connectivity and direct employment this large-scale economic activity through purchases of goods and services has a multiplier effect which creates indirect and induced employment

The report lsquoEmiratesrsquo Impact in Europersquo by Frontier Economics quantifies Emiratesrsquo operational impact in Europe and provides detailed coverage of these impacts in all of the EU Member States that Emirates operates to

In Italy for example Emiratesrsquo direct indirect and induced impact from its operations amount to 10270 jobs and euro747 million in GDP contribution The indirect impact can be narrowed down further in Italyrsquos agricultural heart amongst Umbriarsquos rolling hills is a 500 hectare farm which is a recognised premium olive oil and wine producer Castello Monte Vibiano Vecchio is known for supplying Emirates with the small olive oil and balsamic vinegar bottles served at meal times in the premium cabins Emirates has procured olive oil from Castello Monte Vibiano Vecchio since 2003 and this business relationship is just one among many examples of how Emiratesrsquo direct expenditure and the consequential multiplier effect together contribute to economic activity and job growth in Italy For Emirates the on-board consumption of extra virgin olive oil with balsamic vinegar in

2013 was 3703000 bottles and in 2014 it grew to 3816000 bottles 307000 bottles of extra virgin olive oil were also consumed in 2013 a number which grew to 453000 bottles in 2014 This supply makes up 25 of Castello Monte Vibiano Vecchio production and contributes to sustaining a niche supplier of a quality product It has also had a measurable effect on employment ndash Castello Monte Vibiano Vecchio had 15 employees in 2003 and in 2014 the number of employees had grown to 70

Emirates and Monte Vibiano ndash an Italian perspective on growth and jobs

Emirates and Italy ndash fast facts

bullIn 2008 Emirates entered into a partnership with Bvlgari for the supply of products and

bags for First and Business class amenity kits In 201314 more than 2 million of

these kits were given to First and Business class passengers

bullIn2014morethan76000 bottles of Italian wine were consumed on Emirates flights

bullEmiratescurrentlyemploysmorethan800 Italian nationals

bullIn201314Emiratesprocuredmorethan200 million euros worth of goods from

Italian businesses

bullEmiratesprovidespassengersflyingtoandfromMilanRomeandVenicewith

8 unique one-stop connections that no other carrier or alliance can offer

euro

Lorenzo Fasola Bologna CEO of Monte Vibiano

ldquoOur long-standing partnership with Emirates now spans more than a decade and it has not only helped Monte Vibiano gain global recognition but also played a significant role in our ability to gradually expand our production and hire new staffrdquo

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

9

The illusory level playing field ndash a few expert views

Jaap de WitProfessor of Transport EconomicsUniversity of Amsterdam

If we apply the level playing field concept to international markets it not only means equal rules for international trade between states but also identical economic and institutional conditions within states

The existing diversity in national institutional and economic arrangements already underlines that the international playing field is not level Despite these inevitable differences substantial efforts have been undertaken in the context of ICAO to harmonise safety security and economic regulation in the global airline industry

However differences among states with regard to fiscal policy labour policy and bankruptcy conditions will have an on-going impact on competitive conditions in the international airline industry

Moreover in politics the role of the airline industry in society is perceived in different ways by individual states The political emphasis can range on one hand from fostering the national airline as an instrument that enables economic development through optimal international accessibility by air and on the other hand to an ordinary stand-alone economic activity subject to the full internalisation of its external costs and additional taxes

These different political perspectives among states can fundamentally affect the playing field in international air transport markets as illustrated by the EU the US China and the Gulf states However what makes the level playing field fundamentally unlevel in the international airline industry is not politics but geography The geographical location of a state on the globe determines its Ricardian comparative advantages in developing an international air transport network

For example the location of Emiratesrsquo hub in Dubai has been decisive in the development of a full-scale long-haul hub-and-spoke system Such a network provides optimal cost advantages derived from aircraft size economies and average distance flown Since hub location of European airlines dictates the need for costly short haul feeder systems the playing field with the Gulf carriers is inevitably unlevel

John BalfourConsultant Clyde amp Co London

ldquoFair and equal opportunityrdquo is a familiar concept in bilateral air services agreements but it has not been much tested under the traditional uncompetitive international air transport system However increasing liberalisation and competition requires that airlines should be able to compete under fair competitive conditions although this is easier said than done

Airlines start with differing advantages and disadvantages depending on the factual and historical matrix eg geographical location size and wealth of home market and potential connecting passenger market the historical legacy of traffic rights and established markets and differences in home state laws - in particular labour and tax laws

One topical issue is state aid - rightly given the competitive distortions it can cause but rules appropriate on an international basis are not easy to agree

In the EU during the 1990s airlines were allowed to receive over euro10 billion of state aid principally in order to help them restructure to meet the new competitive environment although a much stricter approach is now taken A strict approach may not be appropriate for airlines in other parts of the world at different stages of need or development For example the US was a stern critic of EU practice during the 1990s but took a different view to requests by its airlines for aid post 911 - and the EU then became the critic

The more liberalisation stimulates competition in international air transport the more important it is for airlines to have fair and equal opportunity to compete This is not easy but the effort must be made if competition is to be ultimately sustainable

Alan Khee-Jin TanProfessor of Aviation Law National University of Singapore

In the grand sport of aviation politics the playing field is seldom level to begin with Nor is it always possible to try levelling it States are simply not born equal Some have superior geography others have a big population base for their airlines to benefit from

Through the decades it is the successful well-run airline from the small strategically-located country that has maximized its advantages often in tandem with a government willing to provide airport hub infrastructure and other incentives KLM Singapore Airlines Korean Air Emirates Qatar Airways Ethiopian Airlines and Copa fit that bill to varying degrees

These sixth-freedom carriers are able to maximize (some say exploit) their advantages to collect and funnel passenger ldquofeedrdquo from other countries through their well-located and efficient hubs The success of this strategy depends largely on geography of course but also generous or unlimited third-and-fourth freedom rights exchanged with other countries Such rights are often withheld by larger countries seeking to protect their own carriersrsquo business and yes to level the aero-political playing field

But the airline from the small state is seeking to level the field too ndash by using its comparative advantages to make up for the lack of a domestic base So if all are trying to level the field to their own advantage there may be no level field in the end For whatrsquos really happening is that one side is working to deny the otherrsquos advantage

In the process we ignore the interests of those who count for more the passengers exporters and national economies as a whole ndash in terms of how these will benefit from more competitive fares and greater connectivity

The concept of a level playing field is not unique to aviation nor is the debate around the feasibility of it

Open Sky asks three industry experts their perspective is the level playing

field illusory

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

10

They said it best

Open Sky brings you the best quotes on liberalisation alliances aeropolitical protection free and fair trade economic policy and global business

If airlines want to ask for less regulation then why are they also asking for the government to intervene when they see competition from certain regions Itrsquos no wonder governments think theyrsquore getting mixed signals from airlinesrdquo - Brian Havel director of the International Aviation Law Institute at Chicagorsquos DePaul University

ldquoIt is also worrying to see protectionism rearing its head again notably in the US where some carriers complain the Open Skies arrangements are benefiting non-US airlines most particularly the Gulf carriersrdquo - Willie Walsh CEO of International Airlines Group

ldquoWhat India needs is a complete policy reversal in aviation We should go for unbridled open skies with global airlines free to operate any number of flights at any Indian airport This will help improve the local economy employment investment and tourism Sixty-seven years of protectionism has got Indian aviation nowhere It is time to test new ideasrdquo - Amber Dubey partner and India head of aerospace and defence at global consultancy KPMG

ldquoBritain has benefited from being home to the worldrsquos largest port or airport for the last 350 years connecting British business people and their exports to the worldrsquos markets but lack of capacity at Heathrow means we have lost our crown to Dubai It is hard to find a serious economic player that doesnrsquot aspire to having what London has taken for granted which is why Istanbul Dubai Chicago Hong Kong and Beijing are investing in their hub airports Itrsquos not too late We can have the vision and confidence to develop Heathrow into the worldrsquos best connected airport if we take decisions nowrdquo - John Holland-Kaye Heathrow CEO

ldquoDeltarsquos work groups have rejected nine proposals to unionize making us the only major airline outside the Middle East that is largely non-unionizedrdquo - Richard Anderson Delta Air Lines CEO

ldquohellip airlines do themselves no favors if they play the game of (rightly) rejecting regulation where it is not necessary but (wrongly) seeking it when it suits themhellipRequesting help to keep out competition sends mixed signals to Washington and opens a back door to the era of heavy-handed economic regulation Remember when CAB defined what could count as a ldquosandwichrdquo These same US carriers are turning to the Asia market and transpacific routes to get a bigger slice of that fast-growing market one made possible through Open Skies If US carriers seek regulatory help to fend off Gulf competition in North America then they have no recourse should Asian flagships do the same to themrdquo - Karen Walker Executive Editor Air Transport World

ldquoOur position on some important policy issues is not aligned with some other AEA legacy airlines In particular we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matterrdquo - International Airlines Group (IAG) in an emailed statement

ldquoLufthansa who would rather limit traffic rights of Gulf carriers through political lobbying is complaining about government aid even though Lufthansa has long benefited from it - most recently the Austrian state has paid the old debts of Austrian when Lufthansa took over Austrianrdquo - Sueddeutsche Zeitung one of Germanyrsquos leading daily newspapers

ldquoThe Gulf countries have recognised the value of aviation for an economy I would also like to see Europe to understand this value toordquo - Carsten Spohr Lufthansa CEO in an interview with the German newspaper Sueddeutsche Zeitung

Jim Compton United Airlines Vice Chairman

ldquoOur industry is ferociously competitivehellip Middle East carriers benefit from positive rather than detrimental national aviation policiesrdquo September 2014

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

11

Emirates recently released its 4th annual Environmental Report covering the financial year 2013-14 The report which is verified by PwC presents environmental data and case studies covering both air and ground based operations across the Emirates Group

FuelFuel efficiency is central to Emiratesrsquo business reducing unnecessary consumption not only reduces the environmental impact but also has a direct benefit on the bottom line As the network and fleet expand Emirates continues to develop efficiency and environmental initiatives which help to balance this growth During the reporting year capacity grew 146 in available seat kilometres and 144 in available tonne kilometres through the addition of 18 passenger aircraft and two freighters which increased overall fuel consumption Thanks in large part to the young and efficient fleet - 62 years average fleet age compared with the IATA wide-body fleet average of 117 years - Emiratesrsquo fuel efficiency improved 05 year-on-year to 03089 litres per tonne kilometre and remained 145 better than the IATA average Fuel efficiency for the freighter fleet improved a substantial 82 to 0190 litres per freight tonne kilometre

NoiseSince Emirates started reporting on environmental performance the fleet has become steadily quieter This year the noise footprint per tonne kilometre of payload improved 24 for take-off and 10 for landing All of Emiratesrsquo aircraft comply with the most stringent ICAO Chapter 4 noise standards

Ground operationsAt Dubai International Airport dnata cleaning crews collected more than 1700 tonnes of used newspapers and magazines for recycling from Emiratesrsquo aircraft dnatarsquos Aircraft Appearances team who are responsible for washing the exteriors of Emiratesrsquo aircraft initiated a water consumption measurement programme that helped save 333500 litres of water Details of all of these projects and the corresponding environmental data are in the Environmental Report 2013-14 available at httpwwwemiratescom IATA ndash WATS 58th Edition

Excludes two wet-leased Boeing 747-400 freighters

A focus on the environment

ENVIRONMENTAL REPORT 2013-14 | 1

ENVIRONMENTAL REPORT 2013-14THE EMIRATES GROUP

Case StudiesPartnerships in the air

Partnerships with air traffic management (ATM) providers enable aircraft to fly shorter routes and take advantage of favourable winds as well as making use of other operational enhancements Emirates expanded its participation in international ATM collaborations by joining the Asia and South Pacific Initiative to Reduce Emissions (ASPIRE) programme adding to the existing membership in the counterpart Indian Ocean regional programme INSPIRE The results of the INSPIRE programme indicate potential savings of 740 kg of fuel or 23 tonnes of CO2 per flight across the Indian Ocean

Reducing emissions

Flight crews use a variety of procedures to help save fuel and reduce emissions where it is safe and practicable to do so The use of idle reverse thrust saved 4129 tonnes of fuel equivalent to 13006 tonnes of CO2 Shutting one engine down while taxiing saved 1947 tonnes of fuel or 6133 tonnes of CO2

Conservation

Emiratesrsquo contribution to conservation projects has continued at the Dubai Desert Conservation Reserve and at Emirates OneampOnly Wolgan Valley in Australia

A total of 15000 indigenous ghaf trees were planted in the Dubai reserve irrigated by solar-powered pumps and 1000 endangered houbara bustards were released into the wild

Wolgan Valley renewed its carbon-neutral certification with carboNZero and deepened its wildlife research collaborations with university partners

62 years 145

82

Emiratesrsquo average fleet age compared with the IATA wide-body fleet average of 117 years

ahead of the IATA industry average in terms of fuel efficiency

improvement in fuel efficiency for our freighter fleet

12

Prime Minister Modi has set a target for Indiarsquos international aviation market to expand from its current position as 10th largest in the world to third largest with 85 million international passengers by 2020

Based on Airports Authority of India 201314 data international passenger capacity will need to grow by more than 80 over the next 5 years This is achievable but cannot be done by domestic carriers alone

In February 2014 the aeronautical authorities of India and Dubai negotiated the first expansion in market access since 2008 The implementation of Emiratesrsquo share of this capacity commenced in the summer 2014 schedule and will gradually increase until the summer 2015 schedule This capacity will be used to replace older aircraft with modern larger capacity aircraft including the deployment of a daily Airbus A380 service to Mumbai

The impact of this increase has been modelled by Indiarsquos National Council of Applied Economic Research (NCAER) Building on the results from their 2014 interim report they found that once the additional capacity is fully implemented in 2015 Emiratesrsquo operations will contribute US$8486 million to Indiarsquos GDP and support 86254 jobs on an annual basis

NCAER also predicts that Emirates will facilitate 673544 foreign tourist arrivals per year and generate US$175 billion in Foreign Exchange Earnings (FEE)

The following table shows Emiratesrsquo economic and employment impact figures from the 2012 NCAER report compared with the new modelling NCAER have completed incorporating the capacity increase The results clearly show that the capacity increases will stimulate investment and growth in India

Emirates currently connects 10 Indian cities via one stop to 15 cities in the Middle East 23 in Africa 37 in Europe and 13 in the Americas 80 of Emiratesrsquo destinations in these regions are not served by any Indian carrier

Incremental growth in India

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St Petersburg

CopenhagenGlasgow

ManchesterBirmingham

London

Geneva Munich

Milan

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata

Thiruvananthapuram

ChennaiBengaluruKozhikode

HyderabadMumbai

DelhiKarachi

Ahmedabad

Kochi

Mauritius

Seychelles

LusakaHarare

Satildeo PauloRio de Janeiro

Buenos Aires

New YorkWashington DC

Los Angeles

San Francisco

Seattle

Houston Orlando

DallasFort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Lyon

StockholmOslo

LisbonMalta

Barcelona

Algiers

Boston

ViennaBudapest

Chicago

Conakry

Dubai

Year Seats Direct economic

impact

Total economic

impact

Total jobs

supported

No of foreign tourists per year

Foreign exchange earnings

2012 54200 US$274 m US$596 m 72323 529928 US$115 b

2015 60200 US$371 m US$849 m 86254 673544 US$175 b

Zaragoza

LiegeBasel

Mexico

Lilongwe

Quito

Viracopos

HanoiChittagong

Eldoret

Djibouti

Atlanta

KanoOuagadougou

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St Petersburg

Copenhagen

SeoulBeijing

Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

JakartaBali

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata Hong KongDhaka

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluruKozhikode

LahoreIslamabad

SialkotPeshawar

HyderabadMumbai

DelhiKarachi

Ahmedabad

Maleacute

KochiColombo

Mauritius

Seychelles

LusakaHarare

Satildeo PauloRio de Janeiro

Buenos Aires

New YorkWashington DC

Los Angeles

San Francisco

Seattle

Houston Orlando

DallasFort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh City

Phuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Conakry

Dubai

Muscat

DammamBahrain

Riyadh DohaJeddah

Medina

BasraKuwait

Tehran

AmmanBeirut Baghdad

Erbil

Dubai

Middle East Network

----Orlando commences in September 2015

13

The European Parliament recently released lsquoThe Cost of Non-Europe in the Single Market (Cecchini Revisited)rsquo This report requested by Members of the European Parliament assesses the barriers gaps and market inefficiencies that plague the European tourism and transport sectors and quantifies the benefits of finalising the single market in the transport sector

After 20 years of action the common transport market remains incomplete making the sector vulnerable to external shocks and subject to unnecessary cost inefficiencies According to the report some of the main obstacles in finalising the single market come from difficulties and variable implementation of new legislation - as well as stakeholdersrsquo opposition and vested interests

The report advocates that a better control of state aid to EU carriers will be key in unlocking the potential for growth in the aviation sector and notes that the new 2014 guidelines on state aid rules for airports and airlines ldquowill still allow current market distortions and potential misuse of public resources for at least five more yearsrdquo

The findings recommend that the EU should also ensure optimal use of airport capacity by ensuring non-discriminatory slot allocation improve ground handling services harmonise airport charges and better invest in intermodal infrastructure

Rather than focusing on the effect of global competition on EU carriers the report foresees that the removal of internal barriers matched with the gradual opening of the market to non-European air carriers through Open Sky agreements would result in a more balanced distribution of intercontinental gateways in Europe

Based on these assumptions the report estimates that the average annual benefits from completing the single market in air transport would be between euro910 million and euro18 billion This would in turn benefit the tourism sector and ultimately support economic and employment growth

Emirates very much agrees that a more integrated and efficient European aviation environment would enhance the competitiveness cost-efficiency and environmental performance of all air carriers for the benefit of European businesses customers and tourists from all over the world

The cost of non-Europe ndash in aviation

Direct quantified gains

Complete Single Market Improved efficiency

Geographical balance

Market opening and harmonisation

Internalisation of environmental externalities

Improved infrastructure and cross-border links

Enhanced competition

Length efficiency

Lower operational coststravel time

and fuel consumption

Expectedannual savings between

euro09 and 18 bn

Reduced environmental impact

Source The Cost of Non-Europe in the Single Market (Cecchini Revisited)

14

Charles Leocha

Chairman of lsquoTravelers Unitedrsquo (formerly Consumer Travel Alliance)

Charles Leocha is Chairman of lsquoTravelers Unitedrsquo (formerly Consumer Travel Alliance) which advocates for travellers to US legislators regulators and industry associations The US Secretary of Transportation has appointed Mr Leocha to the Advisory Committee for Aviation Consumer Protections because of his in-depth knowledge of issues faced by travellers

How in your view has Open Skies benefited consumers Do you see downsides

From the point of view of American travellers Open Skies has been a boon for international travel and trade More US cities have non-stop flights to foreign destinations than ever before This connectivity has encouraged more international tourism travelling to the US and has made the rest of the world more accessible for Americans

Plus with Open Skies airline competition can flourish as airlines add routes to the US from new cities And that helps keep international airfares in check and improves the interaction between the US and other parts of the world both interpersonally and through business and trade

As an advocate for passengers are you concerned by calls by some airlines and unions for the US to reverse course on its Open Skies policy including reopening some existing Open Skies agreements and applying a different policy prospectively

Our organisation Travelers United has been steadfast in our belief that airline consumers need truth in advertising and a free market that will ultimately work to the passengersrsquo benefit The airline and labour unions calls for limitations on Open Skies agreements are pure protectionism

These efforts are attempts to roll back decades of negotiations between the US and foreign governments That is not in Americarsquos interest And it does not allow for the free market and free trade to operate and grow

As a result consumers would be harmed by less competitive choice and less passenger-friendly innovation which is spurred by greater competition More open skies agreements rather than protectionist regulatory limitations are clearly in the interest of American consumers as well as our travel and tourism industry

Emirates has been operating services to the US for 10 years In a global aviation market increasingly characterised by consolidation and three expanding alliances how important are non-aligned carriers to ensuring competitive choice for consumers

This competition is extremely important as I noted above However even more important is the streamlined access that airlines such as

Emirates provides to south Asia and Africa The countries in these parts of the world largely unserviced by US carriers are the areas with the greatest growth of the middle class and emerging businesses They will only become more important in the future It is increasingly in the US national interest and vital to US exports and export-related jobs to have efficient and competitive air service links with these dynamic markets

Do you worry that competitive choice for passengers is under threat

Travelers United has been clear about the threat to consumers by airline consolidation In the US we have just finished (hopefully) with consolidation of our major domestic carriers We now have four carriers that control more than 85 of the national market Internationally the three US network airlines have formed huge alliances many with anti-trust immunity that operate as one airline with coordinated routes schedules and airfares These three alliances control more than 80 of international airline traffic between the US and the rest of the world That kind of concentration is not healthy for consumers either in the US or elsewhere in the world

If the US had not pursued Open Skies how do you think the global air service landscape would look for passengers today

Without Open Skies agreements hub and spoke networks focused on a handful of major gateways would have become even more dominant There would not be as many non-stop connections between smaller countries and the US or foreign countries and US cities that are not network airline hubs Plus the focus would have remained on the already developed US-European routes with a system of feeder networks that would move US passengers to the rest of the world

Open Skies allowed the opening of new and more economical routes such as those flown by Emirates that are changing the economic shape of the world especially the developing nations in Asia and the southern hemisphere where economies are growing and natural resources are plentiful Open Skies-related competition also has fuelled consumer-friendly service innovation which without such competition would have been unlikely because airlines would have had significantly less commercial imperative to improve their products

Sector Insight

15

from a US consumer perspective An Open Skies environment government recognition that aviation spurs economic growth and a favourable geographical position support Emiratesrsquo ability to tap into the 21st century travel flows Is this unfair competition

The exponential growth of Emirates is not being fed by poaching air traffic from other established airlines but because of a major shift in demographics and economies

Emirates finds itself in a strategically important position as economic and middle-class growth has moved the travel trade and tourism centre of influence from an almost exclusively Euro-American-Japanese affair to a shared 21st century matrix where countries below the equator are developing and the economic focus of the world is shifting

Being able to take advantage of changing demographics and economics is a part of

competition A large portion of Emiratesrsquo success has come about because the major US and European airlines did not change their networks as the new economies developed

I expect to see the three major airline alliances make serious efforts to shift their networks and expand capacity to take advantage of the emerging developing world This is what competition is all about mdash and itrsquos not unfair

The Frontier Economics report lsquoEmiratesrsquo economic impact in Europersquo highlights the value of the unique connectivity provided by Emirates especially to secondary cities

This unique connectivity is beneficial not only to passengers ndash it helps facilitate the movement of cargo benefiting the overall EU economy Frontierrsquos analysis showed Emirates offers 21 unique direct connections and 199 unique one-stop connections which cannot be offered by any other airline or alliance partner Additionally Emirates offers 119 more frequent connections providing consumers with greater choice

In 201314 Emirates transported over 518000 tonnes of cargo to and from 17 EU Member States 58 of which was exports from the EU Nearly 77 of the total exports carried by Emirates came from Germany the UK Italy Spain and France

In 2014 Emirates was the third largest mover of UK origin cargo with a 972 share of the UK export market ndash behind British Airways and Virgin Atlantic Items exported included horses livestock luxury cars and vehicles foodstuff including salmon and shellfish specialised engineering products ships and aircraft spares aero-vehicle-marine engines and building materials These items were bound for Dubai and onward destinations such as Shanghai Singapore Hong Kong and Kuala Lumpur

Milan accounts for more than 50 of the exports that Emirates carries from Italy As one of the leading fashion capitals of the world the types of goods carried include made-in-Italy high fashion items such as garments bags and shoes and valuable cargo such as gold and jewellery Foodstuffs including cheese and vegetables machinery and spare parts furniture and chemicals find their way to destinations such as Melbourne and Johannesburg as well as Dubai

With ten freighters a week from Amsterdam the Netherlands ranks sixth in terms of volume of cargo exported by Emirates from the EU Items carried include plants and flowers ship spares and pharmaceuticals to Dubai and points beyond ndash Sydney Brisbane and Baghdad for example

The unique connectivity that Emirates provides allows the businesses shippers and freight forwarders alike to move items quickly and with ease getting goods to market in the shortest time possible

The economic value of cargo

PerthAdelaide

Sydney

Manila

Lahore

BrisbaneDurban

Dubai

New Silk Road

DusseldorfLyon

Madrid

ManchesterGlasgow

Hamburg

Barcelona

Automotive and autoship parts to Perth

Textile yarn footwearsilk etc to Adelaide

Aircraft spares andparts to Manila

Chemicals dyesresins etc to Durban

Pharma and biologicals to Lahore

Machinery equipmenttools etc to Brisbane

Perishables - Foodstuffbeverages to Sydney

16

Please visit our website for more information on Emiratesrsquo International Government and Environment Affairs department wwwemiratescom or write to us igeaemiratescom

Zaragoza

LiegeBasel

Mexico

Lilongwe

Quito

Viracopos

HanoiChittagong

Eldoret

Djibouti

Atlanta

KanoOuagadougou

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St Petersburg

Copenhagen

SeoulBeijing

Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

JakartaBali

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata Hong KongDhaka

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluruKozhikode

LahoreIslamabad

SialkotPeshawar

HyderabadMumbai

DelhiKarachi

Ahmedabad

Maleacute

KochiColombo

Mauritius

Seychelles

LusakaHarare

Satildeo PauloRio de Janeiro

Buenos Aires

New YorkWashington DC

Los Angeles

San Francisco

Seattle

Houston Orlando

DallasFort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh City

Phuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Conakry

Dubai

Route MapApril 2015

Muscat

DammamBahrain

Riyadh DohaJeddah

Medina

BasraKuwait

Tehran

AmmanBeirut Baghdad

Erbil

Dubai

Middle East Network

Passenger RoutesFreighter RoutesPassenger amp Freighter Routes

---- Upcoming Passenger RoutesUpcoming Passenger Routes

On the back of its successful debut project Emirates has announced the continuation of its lsquoA Greener Tomorrowrsquo initiative allocating US$ 150000 raised through Emiratesrsquo internal recycling programmes to support environmental or conservation-based not-for-profit organisations in safeguarding their local environment

When the project was first launched more than 400 organisations globally were nominated for the award by passengers Emiratesrsquo social media network universities environmental and conservation organisations and the general public Applications came from countries across the Emirates network and beyond and spanned environmental initiatives such as animal land and tree conservation biogas environmental research and green transportation

The recipients of last yearrsquos awards addressed a diverse range of issues from fuel-efficient cooking in Malawi eco-villages and sustainable farming practices in Pakistan and the conversion of Manilarsquos iconic lsquojeepneysrsquo into battery-operated versions that reduce emissions in the city

Organisations are now invited to submit project plans describing their project and the impact it will have on the local environment Application forms must be submitted by 7th May 2015

Individuals who wish to nominate an organisation for the award can send the organisationrsquos name email address and contact telephone number to greenertomorrowemiratescom

More information about the initiative and application criteria can be found at wwwemiratescomgreenertomorrow To read more about last yearrsquos projects please visit httpwwwemiratescomenglishenvironmentgreener-tomorrowa-greener-tomorrow-2013aspx

lsquoA Greener Tomorrowrsquo initiative enters its second year

Aircraft in fleet 233No of destinations 144Passengers 445 millionCargo 23 million tonnesPassenger Seat Factor 794Employees - Airline 52000Emirates flights daily 472

Financial Auditor PwCFinancials (Airline) Revenue $225bn profit $887mFuel Costs (Airline) $84bnFirst flight 25 October 1985New passenger routes in 2015 Bali and OrlandoA380 fleet 60 (on order 80)Boeing fleet 147 (on order 199)

Fast Facts

2013-14

13

The European Parliament recently released lsquoThe Cost of Non-Europe in the Single Market (Cecchini Revisited)rsquo This report requested by Members of the European Parliament assesses the barriers gaps and market inefficiencies that plague the European tourism and transport sectors and quantifies the benefits of finalising the single market in the transport sector

After 20 years of action the common transport market remains incomplete making the sector vulnerable to external shocks and subject to unnecessary cost inefficiencies According to the report some of the main obstacles in finalising the single market come from difficulties and variable implementation of new legislation - as well as stakeholdersrsquo opposition and vested interests

The report advocates that a better control of state aid to EU carriers will be key in unlocking the potential for growth in the aviation sector and notes that the new 2014 guidelines on state aid rules for airports and airlines ldquowill still allow current market distortions and potential misuse of public resources for at least five more yearsrdquo

The findings recommend that the EU should also ensure optimal use of airport capacity by ensuring non-discriminatory slot allocation improve ground handling services harmonise airport charges and better invest in intermodal infrastructure

Rather than focusing on the effect of global competition on EU carriers the report foresees that the removal of internal barriers matched with the gradual opening of the market to non-European air carriers through Open Sky agreements would result in a more balanced distribution of intercontinental gateways in Europe

Based on these assumptions the report estimates that the average annual benefits from completing the single market in air transport would be between euro910 million and euro18 billion This would in turn benefit the tourism sector and ultimately support economic and employment growth

Emirates very much agrees that a more integrated and efficient European aviation environment would enhance the competitiveness cost-efficiency and environmental performance of all air carriers for the benefit of European businesses customers and tourists from all over the world

The cost of non-Europe ndash in aviation

Direct quantified gains

Complete Single Market Improved efficiency

Geographical balance

Market opening and harmonisation

Internalisation of environmental externalities

Improved infrastructure and cross-border links

Enhanced competition

Length efficiency

Lower operational coststravel time

and fuel consumption

Expectedannual savings between

euro09 and 18 bn

Reduced environmental impact

Source The Cost of Non-Europe in the Single Market (Cecchini Revisited)

14

Charles Leocha

Chairman of lsquoTravelers Unitedrsquo (formerly Consumer Travel Alliance)

Charles Leocha is Chairman of lsquoTravelers Unitedrsquo (formerly Consumer Travel Alliance) which advocates for travellers to US legislators regulators and industry associations The US Secretary of Transportation has appointed Mr Leocha to the Advisory Committee for Aviation Consumer Protections because of his in-depth knowledge of issues faced by travellers

How in your view has Open Skies benefited consumers Do you see downsides

From the point of view of American travellers Open Skies has been a boon for international travel and trade More US cities have non-stop flights to foreign destinations than ever before This connectivity has encouraged more international tourism travelling to the US and has made the rest of the world more accessible for Americans

Plus with Open Skies airline competition can flourish as airlines add routes to the US from new cities And that helps keep international airfares in check and improves the interaction between the US and other parts of the world both interpersonally and through business and trade

As an advocate for passengers are you concerned by calls by some airlines and unions for the US to reverse course on its Open Skies policy including reopening some existing Open Skies agreements and applying a different policy prospectively

Our organisation Travelers United has been steadfast in our belief that airline consumers need truth in advertising and a free market that will ultimately work to the passengersrsquo benefit The airline and labour unions calls for limitations on Open Skies agreements are pure protectionism

These efforts are attempts to roll back decades of negotiations between the US and foreign governments That is not in Americarsquos interest And it does not allow for the free market and free trade to operate and grow

As a result consumers would be harmed by less competitive choice and less passenger-friendly innovation which is spurred by greater competition More open skies agreements rather than protectionist regulatory limitations are clearly in the interest of American consumers as well as our travel and tourism industry

Emirates has been operating services to the US for 10 years In a global aviation market increasingly characterised by consolidation and three expanding alliances how important are non-aligned carriers to ensuring competitive choice for consumers

This competition is extremely important as I noted above However even more important is the streamlined access that airlines such as

Emirates provides to south Asia and Africa The countries in these parts of the world largely unserviced by US carriers are the areas with the greatest growth of the middle class and emerging businesses They will only become more important in the future It is increasingly in the US national interest and vital to US exports and export-related jobs to have efficient and competitive air service links with these dynamic markets

Do you worry that competitive choice for passengers is under threat

Travelers United has been clear about the threat to consumers by airline consolidation In the US we have just finished (hopefully) with consolidation of our major domestic carriers We now have four carriers that control more than 85 of the national market Internationally the three US network airlines have formed huge alliances many with anti-trust immunity that operate as one airline with coordinated routes schedules and airfares These three alliances control more than 80 of international airline traffic between the US and the rest of the world That kind of concentration is not healthy for consumers either in the US or elsewhere in the world

If the US had not pursued Open Skies how do you think the global air service landscape would look for passengers today

Without Open Skies agreements hub and spoke networks focused on a handful of major gateways would have become even more dominant There would not be as many non-stop connections between smaller countries and the US or foreign countries and US cities that are not network airline hubs Plus the focus would have remained on the already developed US-European routes with a system of feeder networks that would move US passengers to the rest of the world

Open Skies allowed the opening of new and more economical routes such as those flown by Emirates that are changing the economic shape of the world especially the developing nations in Asia and the southern hemisphere where economies are growing and natural resources are plentiful Open Skies-related competition also has fuelled consumer-friendly service innovation which without such competition would have been unlikely because airlines would have had significantly less commercial imperative to improve their products

Sector Insight

15

from a US consumer perspective An Open Skies environment government recognition that aviation spurs economic growth and a favourable geographical position support Emiratesrsquo ability to tap into the 21st century travel flows Is this unfair competition

The exponential growth of Emirates is not being fed by poaching air traffic from other established airlines but because of a major shift in demographics and economies

Emirates finds itself in a strategically important position as economic and middle-class growth has moved the travel trade and tourism centre of influence from an almost exclusively Euro-American-Japanese affair to a shared 21st century matrix where countries below the equator are developing and the economic focus of the world is shifting

Being able to take advantage of changing demographics and economics is a part of

competition A large portion of Emiratesrsquo success has come about because the major US and European airlines did not change their networks as the new economies developed

I expect to see the three major airline alliances make serious efforts to shift their networks and expand capacity to take advantage of the emerging developing world This is what competition is all about mdash and itrsquos not unfair

The Frontier Economics report lsquoEmiratesrsquo economic impact in Europersquo highlights the value of the unique connectivity provided by Emirates especially to secondary cities

This unique connectivity is beneficial not only to passengers ndash it helps facilitate the movement of cargo benefiting the overall EU economy Frontierrsquos analysis showed Emirates offers 21 unique direct connections and 199 unique one-stop connections which cannot be offered by any other airline or alliance partner Additionally Emirates offers 119 more frequent connections providing consumers with greater choice

In 201314 Emirates transported over 518000 tonnes of cargo to and from 17 EU Member States 58 of which was exports from the EU Nearly 77 of the total exports carried by Emirates came from Germany the UK Italy Spain and France

In 2014 Emirates was the third largest mover of UK origin cargo with a 972 share of the UK export market ndash behind British Airways and Virgin Atlantic Items exported included horses livestock luxury cars and vehicles foodstuff including salmon and shellfish specialised engineering products ships and aircraft spares aero-vehicle-marine engines and building materials These items were bound for Dubai and onward destinations such as Shanghai Singapore Hong Kong and Kuala Lumpur

Milan accounts for more than 50 of the exports that Emirates carries from Italy As one of the leading fashion capitals of the world the types of goods carried include made-in-Italy high fashion items such as garments bags and shoes and valuable cargo such as gold and jewellery Foodstuffs including cheese and vegetables machinery and spare parts furniture and chemicals find their way to destinations such as Melbourne and Johannesburg as well as Dubai

With ten freighters a week from Amsterdam the Netherlands ranks sixth in terms of volume of cargo exported by Emirates from the EU Items carried include plants and flowers ship spares and pharmaceuticals to Dubai and points beyond ndash Sydney Brisbane and Baghdad for example

The unique connectivity that Emirates provides allows the businesses shippers and freight forwarders alike to move items quickly and with ease getting goods to market in the shortest time possible

The economic value of cargo

PerthAdelaide

Sydney

Manila

Lahore

BrisbaneDurban

Dubai

New Silk Road

DusseldorfLyon

Madrid

ManchesterGlasgow

Hamburg

Barcelona

Automotive and autoship parts to Perth

Textile yarn footwearsilk etc to Adelaide

Aircraft spares andparts to Manila

Chemicals dyesresins etc to Durban

Pharma and biologicals to Lahore

Machinery equipmenttools etc to Brisbane

Perishables - Foodstuffbeverages to Sydney

16

Please visit our website for more information on Emiratesrsquo International Government and Environment Affairs department wwwemiratescom or write to us igeaemiratescom

Zaragoza

LiegeBasel

Mexico

Lilongwe

Quito

Viracopos

HanoiChittagong

Eldoret

Djibouti

Atlanta

KanoOuagadougou

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St Petersburg

Copenhagen

SeoulBeijing

Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

JakartaBali

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata Hong KongDhaka

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluruKozhikode

LahoreIslamabad

SialkotPeshawar

HyderabadMumbai

DelhiKarachi

Ahmedabad

Maleacute

KochiColombo

Mauritius

Seychelles

LusakaHarare

Satildeo PauloRio de Janeiro

Buenos Aires

New YorkWashington DC

Los Angeles

San Francisco

Seattle

Houston Orlando

DallasFort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh City

Phuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Conakry

Dubai

Route MapApril 2015

Muscat

DammamBahrain

Riyadh DohaJeddah

Medina

BasraKuwait

Tehran

AmmanBeirut Baghdad

Erbil

Dubai

Middle East Network

Passenger RoutesFreighter RoutesPassenger amp Freighter Routes

---- Upcoming Passenger RoutesUpcoming Passenger Routes

On the back of its successful debut project Emirates has announced the continuation of its lsquoA Greener Tomorrowrsquo initiative allocating US$ 150000 raised through Emiratesrsquo internal recycling programmes to support environmental or conservation-based not-for-profit organisations in safeguarding their local environment

When the project was first launched more than 400 organisations globally were nominated for the award by passengers Emiratesrsquo social media network universities environmental and conservation organisations and the general public Applications came from countries across the Emirates network and beyond and spanned environmental initiatives such as animal land and tree conservation biogas environmental research and green transportation

The recipients of last yearrsquos awards addressed a diverse range of issues from fuel-efficient cooking in Malawi eco-villages and sustainable farming practices in Pakistan and the conversion of Manilarsquos iconic lsquojeepneysrsquo into battery-operated versions that reduce emissions in the city

Organisations are now invited to submit project plans describing their project and the impact it will have on the local environment Application forms must be submitted by 7th May 2015

Individuals who wish to nominate an organisation for the award can send the organisationrsquos name email address and contact telephone number to greenertomorrowemiratescom

More information about the initiative and application criteria can be found at wwwemiratescomgreenertomorrow To read more about last yearrsquos projects please visit httpwwwemiratescomenglishenvironmentgreener-tomorrowa-greener-tomorrow-2013aspx

lsquoA Greener Tomorrowrsquo initiative enters its second year

Aircraft in fleet 233No of destinations 144Passengers 445 millionCargo 23 million tonnesPassenger Seat Factor 794Employees - Airline 52000Emirates flights daily 472

Financial Auditor PwCFinancials (Airline) Revenue $225bn profit $887mFuel Costs (Airline) $84bnFirst flight 25 October 1985New passenger routes in 2015 Bali and OrlandoA380 fleet 60 (on order 80)Boeing fleet 147 (on order 199)

Fast Facts

2013-14

14

Charles Leocha

Chairman of lsquoTravelers Unitedrsquo (formerly Consumer Travel Alliance)

Charles Leocha is Chairman of lsquoTravelers Unitedrsquo (formerly Consumer Travel Alliance) which advocates for travellers to US legislators regulators and industry associations The US Secretary of Transportation has appointed Mr Leocha to the Advisory Committee for Aviation Consumer Protections because of his in-depth knowledge of issues faced by travellers

How in your view has Open Skies benefited consumers Do you see downsides

From the point of view of American travellers Open Skies has been a boon for international travel and trade More US cities have non-stop flights to foreign destinations than ever before This connectivity has encouraged more international tourism travelling to the US and has made the rest of the world more accessible for Americans

Plus with Open Skies airline competition can flourish as airlines add routes to the US from new cities And that helps keep international airfares in check and improves the interaction between the US and other parts of the world both interpersonally and through business and trade

As an advocate for passengers are you concerned by calls by some airlines and unions for the US to reverse course on its Open Skies policy including reopening some existing Open Skies agreements and applying a different policy prospectively

Our organisation Travelers United has been steadfast in our belief that airline consumers need truth in advertising and a free market that will ultimately work to the passengersrsquo benefit The airline and labour unions calls for limitations on Open Skies agreements are pure protectionism

These efforts are attempts to roll back decades of negotiations between the US and foreign governments That is not in Americarsquos interest And it does not allow for the free market and free trade to operate and grow

As a result consumers would be harmed by less competitive choice and less passenger-friendly innovation which is spurred by greater competition More open skies agreements rather than protectionist regulatory limitations are clearly in the interest of American consumers as well as our travel and tourism industry

Emirates has been operating services to the US for 10 years In a global aviation market increasingly characterised by consolidation and three expanding alliances how important are non-aligned carriers to ensuring competitive choice for consumers

This competition is extremely important as I noted above However even more important is the streamlined access that airlines such as

Emirates provides to south Asia and Africa The countries in these parts of the world largely unserviced by US carriers are the areas with the greatest growth of the middle class and emerging businesses They will only become more important in the future It is increasingly in the US national interest and vital to US exports and export-related jobs to have efficient and competitive air service links with these dynamic markets

Do you worry that competitive choice for passengers is under threat

Travelers United has been clear about the threat to consumers by airline consolidation In the US we have just finished (hopefully) with consolidation of our major domestic carriers We now have four carriers that control more than 85 of the national market Internationally the three US network airlines have formed huge alliances many with anti-trust immunity that operate as one airline with coordinated routes schedules and airfares These three alliances control more than 80 of international airline traffic between the US and the rest of the world That kind of concentration is not healthy for consumers either in the US or elsewhere in the world

If the US had not pursued Open Skies how do you think the global air service landscape would look for passengers today

Without Open Skies agreements hub and spoke networks focused on a handful of major gateways would have become even more dominant There would not be as many non-stop connections between smaller countries and the US or foreign countries and US cities that are not network airline hubs Plus the focus would have remained on the already developed US-European routes with a system of feeder networks that would move US passengers to the rest of the world

Open Skies allowed the opening of new and more economical routes such as those flown by Emirates that are changing the economic shape of the world especially the developing nations in Asia and the southern hemisphere where economies are growing and natural resources are plentiful Open Skies-related competition also has fuelled consumer-friendly service innovation which without such competition would have been unlikely because airlines would have had significantly less commercial imperative to improve their products

Sector Insight

15

from a US consumer perspective An Open Skies environment government recognition that aviation spurs economic growth and a favourable geographical position support Emiratesrsquo ability to tap into the 21st century travel flows Is this unfair competition

The exponential growth of Emirates is not being fed by poaching air traffic from other established airlines but because of a major shift in demographics and economies

Emirates finds itself in a strategically important position as economic and middle-class growth has moved the travel trade and tourism centre of influence from an almost exclusively Euro-American-Japanese affair to a shared 21st century matrix where countries below the equator are developing and the economic focus of the world is shifting

Being able to take advantage of changing demographics and economics is a part of

competition A large portion of Emiratesrsquo success has come about because the major US and European airlines did not change their networks as the new economies developed

I expect to see the three major airline alliances make serious efforts to shift their networks and expand capacity to take advantage of the emerging developing world This is what competition is all about mdash and itrsquos not unfair

The Frontier Economics report lsquoEmiratesrsquo economic impact in Europersquo highlights the value of the unique connectivity provided by Emirates especially to secondary cities

This unique connectivity is beneficial not only to passengers ndash it helps facilitate the movement of cargo benefiting the overall EU economy Frontierrsquos analysis showed Emirates offers 21 unique direct connections and 199 unique one-stop connections which cannot be offered by any other airline or alliance partner Additionally Emirates offers 119 more frequent connections providing consumers with greater choice

In 201314 Emirates transported over 518000 tonnes of cargo to and from 17 EU Member States 58 of which was exports from the EU Nearly 77 of the total exports carried by Emirates came from Germany the UK Italy Spain and France

In 2014 Emirates was the third largest mover of UK origin cargo with a 972 share of the UK export market ndash behind British Airways and Virgin Atlantic Items exported included horses livestock luxury cars and vehicles foodstuff including salmon and shellfish specialised engineering products ships and aircraft spares aero-vehicle-marine engines and building materials These items were bound for Dubai and onward destinations such as Shanghai Singapore Hong Kong and Kuala Lumpur

Milan accounts for more than 50 of the exports that Emirates carries from Italy As one of the leading fashion capitals of the world the types of goods carried include made-in-Italy high fashion items such as garments bags and shoes and valuable cargo such as gold and jewellery Foodstuffs including cheese and vegetables machinery and spare parts furniture and chemicals find their way to destinations such as Melbourne and Johannesburg as well as Dubai

With ten freighters a week from Amsterdam the Netherlands ranks sixth in terms of volume of cargo exported by Emirates from the EU Items carried include plants and flowers ship spares and pharmaceuticals to Dubai and points beyond ndash Sydney Brisbane and Baghdad for example

The unique connectivity that Emirates provides allows the businesses shippers and freight forwarders alike to move items quickly and with ease getting goods to market in the shortest time possible

The economic value of cargo

PerthAdelaide

Sydney

Manila

Lahore

BrisbaneDurban

Dubai

New Silk Road

DusseldorfLyon

Madrid

ManchesterGlasgow

Hamburg

Barcelona

Automotive and autoship parts to Perth

Textile yarn footwearsilk etc to Adelaide

Aircraft spares andparts to Manila

Chemicals dyesresins etc to Durban

Pharma and biologicals to Lahore

Machinery equipmenttools etc to Brisbane

Perishables - Foodstuffbeverages to Sydney

16

Please visit our website for more information on Emiratesrsquo International Government and Environment Affairs department wwwemiratescom or write to us igeaemiratescom

Zaragoza

LiegeBasel

Mexico

Lilongwe

Quito

Viracopos

HanoiChittagong

Eldoret

Djibouti

Atlanta

KanoOuagadougou

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St Petersburg

Copenhagen

SeoulBeijing

Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

JakartaBali

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata Hong KongDhaka

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluruKozhikode

LahoreIslamabad

SialkotPeshawar

HyderabadMumbai

DelhiKarachi

Ahmedabad

Maleacute

KochiColombo

Mauritius

Seychelles

LusakaHarare

Satildeo PauloRio de Janeiro

Buenos Aires

New YorkWashington DC

Los Angeles

San Francisco

Seattle

Houston Orlando

DallasFort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh City

Phuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Conakry

Dubai

Route MapApril 2015

Muscat

DammamBahrain

Riyadh DohaJeddah

Medina

BasraKuwait

Tehran

AmmanBeirut Baghdad

Erbil

Dubai

Middle East Network

Passenger RoutesFreighter RoutesPassenger amp Freighter Routes

---- Upcoming Passenger RoutesUpcoming Passenger Routes

On the back of its successful debut project Emirates has announced the continuation of its lsquoA Greener Tomorrowrsquo initiative allocating US$ 150000 raised through Emiratesrsquo internal recycling programmes to support environmental or conservation-based not-for-profit organisations in safeguarding their local environment

When the project was first launched more than 400 organisations globally were nominated for the award by passengers Emiratesrsquo social media network universities environmental and conservation organisations and the general public Applications came from countries across the Emirates network and beyond and spanned environmental initiatives such as animal land and tree conservation biogas environmental research and green transportation

The recipients of last yearrsquos awards addressed a diverse range of issues from fuel-efficient cooking in Malawi eco-villages and sustainable farming practices in Pakistan and the conversion of Manilarsquos iconic lsquojeepneysrsquo into battery-operated versions that reduce emissions in the city

Organisations are now invited to submit project plans describing their project and the impact it will have on the local environment Application forms must be submitted by 7th May 2015

Individuals who wish to nominate an organisation for the award can send the organisationrsquos name email address and contact telephone number to greenertomorrowemiratescom

More information about the initiative and application criteria can be found at wwwemiratescomgreenertomorrow To read more about last yearrsquos projects please visit httpwwwemiratescomenglishenvironmentgreener-tomorrowa-greener-tomorrow-2013aspx

lsquoA Greener Tomorrowrsquo initiative enters its second year

Aircraft in fleet 233No of destinations 144Passengers 445 millionCargo 23 million tonnesPassenger Seat Factor 794Employees - Airline 52000Emirates flights daily 472

Financial Auditor PwCFinancials (Airline) Revenue $225bn profit $887mFuel Costs (Airline) $84bnFirst flight 25 October 1985New passenger routes in 2015 Bali and OrlandoA380 fleet 60 (on order 80)Boeing fleet 147 (on order 199)

Fast Facts

2013-14

15

from a US consumer perspective An Open Skies environment government recognition that aviation spurs economic growth and a favourable geographical position support Emiratesrsquo ability to tap into the 21st century travel flows Is this unfair competition

The exponential growth of Emirates is not being fed by poaching air traffic from other established airlines but because of a major shift in demographics and economies

Emirates finds itself in a strategically important position as economic and middle-class growth has moved the travel trade and tourism centre of influence from an almost exclusively Euro-American-Japanese affair to a shared 21st century matrix where countries below the equator are developing and the economic focus of the world is shifting

Being able to take advantage of changing demographics and economics is a part of

competition A large portion of Emiratesrsquo success has come about because the major US and European airlines did not change their networks as the new economies developed

I expect to see the three major airline alliances make serious efforts to shift their networks and expand capacity to take advantage of the emerging developing world This is what competition is all about mdash and itrsquos not unfair

The Frontier Economics report lsquoEmiratesrsquo economic impact in Europersquo highlights the value of the unique connectivity provided by Emirates especially to secondary cities

This unique connectivity is beneficial not only to passengers ndash it helps facilitate the movement of cargo benefiting the overall EU economy Frontierrsquos analysis showed Emirates offers 21 unique direct connections and 199 unique one-stop connections which cannot be offered by any other airline or alliance partner Additionally Emirates offers 119 more frequent connections providing consumers with greater choice

In 201314 Emirates transported over 518000 tonnes of cargo to and from 17 EU Member States 58 of which was exports from the EU Nearly 77 of the total exports carried by Emirates came from Germany the UK Italy Spain and France

In 2014 Emirates was the third largest mover of UK origin cargo with a 972 share of the UK export market ndash behind British Airways and Virgin Atlantic Items exported included horses livestock luxury cars and vehicles foodstuff including salmon and shellfish specialised engineering products ships and aircraft spares aero-vehicle-marine engines and building materials These items were bound for Dubai and onward destinations such as Shanghai Singapore Hong Kong and Kuala Lumpur

Milan accounts for more than 50 of the exports that Emirates carries from Italy As one of the leading fashion capitals of the world the types of goods carried include made-in-Italy high fashion items such as garments bags and shoes and valuable cargo such as gold and jewellery Foodstuffs including cheese and vegetables machinery and spare parts furniture and chemicals find their way to destinations such as Melbourne and Johannesburg as well as Dubai

With ten freighters a week from Amsterdam the Netherlands ranks sixth in terms of volume of cargo exported by Emirates from the EU Items carried include plants and flowers ship spares and pharmaceuticals to Dubai and points beyond ndash Sydney Brisbane and Baghdad for example

The unique connectivity that Emirates provides allows the businesses shippers and freight forwarders alike to move items quickly and with ease getting goods to market in the shortest time possible

The economic value of cargo

PerthAdelaide

Sydney

Manila

Lahore

BrisbaneDurban

Dubai

New Silk Road

DusseldorfLyon

Madrid

ManchesterGlasgow

Hamburg

Barcelona

Automotive and autoship parts to Perth

Textile yarn footwearsilk etc to Adelaide

Aircraft spares andparts to Manila

Chemicals dyesresins etc to Durban

Pharma and biologicals to Lahore

Machinery equipmenttools etc to Brisbane

Perishables - Foodstuffbeverages to Sydney

16

Please visit our website for more information on Emiratesrsquo International Government and Environment Affairs department wwwemiratescom or write to us igeaemiratescom

Zaragoza

LiegeBasel

Mexico

Lilongwe

Quito

Viracopos

HanoiChittagong

Eldoret

Djibouti

Atlanta

KanoOuagadougou

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St Petersburg

Copenhagen

SeoulBeijing

Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

JakartaBali

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata Hong KongDhaka

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluruKozhikode

LahoreIslamabad

SialkotPeshawar

HyderabadMumbai

DelhiKarachi

Ahmedabad

Maleacute

KochiColombo

Mauritius

Seychelles

LusakaHarare

Satildeo PauloRio de Janeiro

Buenos Aires

New YorkWashington DC

Los Angeles

San Francisco

Seattle

Houston Orlando

DallasFort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh City

Phuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Conakry

Dubai

Route MapApril 2015

Muscat

DammamBahrain

Riyadh DohaJeddah

Medina

BasraKuwait

Tehran

AmmanBeirut Baghdad

Erbil

Dubai

Middle East Network

Passenger RoutesFreighter RoutesPassenger amp Freighter Routes

---- Upcoming Passenger RoutesUpcoming Passenger Routes

On the back of its successful debut project Emirates has announced the continuation of its lsquoA Greener Tomorrowrsquo initiative allocating US$ 150000 raised through Emiratesrsquo internal recycling programmes to support environmental or conservation-based not-for-profit organisations in safeguarding their local environment

When the project was first launched more than 400 organisations globally were nominated for the award by passengers Emiratesrsquo social media network universities environmental and conservation organisations and the general public Applications came from countries across the Emirates network and beyond and spanned environmental initiatives such as animal land and tree conservation biogas environmental research and green transportation

The recipients of last yearrsquos awards addressed a diverse range of issues from fuel-efficient cooking in Malawi eco-villages and sustainable farming practices in Pakistan and the conversion of Manilarsquos iconic lsquojeepneysrsquo into battery-operated versions that reduce emissions in the city

Organisations are now invited to submit project plans describing their project and the impact it will have on the local environment Application forms must be submitted by 7th May 2015

Individuals who wish to nominate an organisation for the award can send the organisationrsquos name email address and contact telephone number to greenertomorrowemiratescom

More information about the initiative and application criteria can be found at wwwemiratescomgreenertomorrow To read more about last yearrsquos projects please visit httpwwwemiratescomenglishenvironmentgreener-tomorrowa-greener-tomorrow-2013aspx

lsquoA Greener Tomorrowrsquo initiative enters its second year

Aircraft in fleet 233No of destinations 144Passengers 445 millionCargo 23 million tonnesPassenger Seat Factor 794Employees - Airline 52000Emirates flights daily 472

Financial Auditor PwCFinancials (Airline) Revenue $225bn profit $887mFuel Costs (Airline) $84bnFirst flight 25 October 1985New passenger routes in 2015 Bali and OrlandoA380 fleet 60 (on order 80)Boeing fleet 147 (on order 199)

Fast Facts

2013-14

16

Please visit our website for more information on Emiratesrsquo International Government and Environment Affairs department wwwemiratescom or write to us igeaemiratescom

Zaragoza

LiegeBasel

Mexico

Lilongwe

Quito

Viracopos

HanoiChittagong

Eldoret

Djibouti

Atlanta

KanoOuagadougou

Venice

Newcastle

Toronto

Casablanca

Paris

Nice

Athens

Rome

Moscow

St Petersburg

Copenhagen

SeoulBeijing

Osaka

Taipei

Tokyo

Glasgow

ManchesterBirmingham

London

Geneva Munich

Milan

LarnacaTunis

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

JakartaBali

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAbuja

AccraAbidjan

Dakar Khartoum

Cairo

Kolkata Hong KongDhaka

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluruKozhikode

LahoreIslamabad

SialkotPeshawar

HyderabadMumbai

DelhiKarachi

Ahmedabad

Maleacute

KochiColombo

Mauritius

Seychelles

LusakaHarare

Satildeo PauloRio de Janeiro

Buenos Aires

New YorkWashington DC

Los Angeles

San Francisco

Seattle

Houston Orlando

DallasFort Worth

Luanda

Durban

Madrid

Prague

Dublin

Brussels

Ho Chi Minh City

Phuket

Lyon

Guangzhou

StockholmOslo

LisbonMalta

Barcelona

AlgiersKabul

Boston

ViennaBudapest

Chicago

Conakry

Dubai

Route MapApril 2015

Muscat

DammamBahrain

Riyadh DohaJeddah

Medina

BasraKuwait

Tehran

AmmanBeirut Baghdad

Erbil

Dubai

Middle East Network

Passenger RoutesFreighter RoutesPassenger amp Freighter Routes

---- Upcoming Passenger RoutesUpcoming Passenger Routes

On the back of its successful debut project Emirates has announced the continuation of its lsquoA Greener Tomorrowrsquo initiative allocating US$ 150000 raised through Emiratesrsquo internal recycling programmes to support environmental or conservation-based not-for-profit organisations in safeguarding their local environment

When the project was first launched more than 400 organisations globally were nominated for the award by passengers Emiratesrsquo social media network universities environmental and conservation organisations and the general public Applications came from countries across the Emirates network and beyond and spanned environmental initiatives such as animal land and tree conservation biogas environmental research and green transportation

The recipients of last yearrsquos awards addressed a diverse range of issues from fuel-efficient cooking in Malawi eco-villages and sustainable farming practices in Pakistan and the conversion of Manilarsquos iconic lsquojeepneysrsquo into battery-operated versions that reduce emissions in the city

Organisations are now invited to submit project plans describing their project and the impact it will have on the local environment Application forms must be submitted by 7th May 2015

Individuals who wish to nominate an organisation for the award can send the organisationrsquos name email address and contact telephone number to greenertomorrowemiratescom

More information about the initiative and application criteria can be found at wwwemiratescomgreenertomorrow To read more about last yearrsquos projects please visit httpwwwemiratescomenglishenvironmentgreener-tomorrowa-greener-tomorrow-2013aspx

lsquoA Greener Tomorrowrsquo initiative enters its second year

Aircraft in fleet 233No of destinations 144Passengers 445 millionCargo 23 million tonnesPassenger Seat Factor 794Employees - Airline 52000Emirates flights daily 472

Financial Auditor PwCFinancials (Airline) Revenue $225bn profit $887mFuel Costs (Airline) $84bnFirst flight 25 October 1985New passenger routes in 2015 Bali and OrlandoA380 fleet 60 (on order 80)Boeing fleet 147 (on order 199)

Fast Facts

2013-14