The Impact Emirates Airlines has on the German Aviation market
Contents
Effects on Passengers due to Increase in Flights. 3
Benefits to Germany’s Aviation Industry. 5
References. 7
Impact of Emirates Flights on German Aviation Industry
Introduction
Emirates airlines have flights to Germany from Dubai since 1987. However, these flights increased in December 2011 following the increase of four point destinations for passengers. These are Frankfurt, Düsseldorf, Munich, and Hamburg, making nine daily scheduled passenger flights from Dubai. In addition, the airports of Düsseldorf and Frankfurt receive regular visits by Emirates freighters (Grimme, 2011). According to German Aerospace Center (2012), Emirates Airlines growth in Germany is due to its function as “countervailing power against increased oligopolisation and monopolisation of markets through mergers and alliances” (p.4). The increase in both passenger and cargo flights require an investigation of the possible effects on Germany, especially its aviation industry. The research will analyze the effects on passengers due to an increase in flights, effects on shippers due to freight services, and effects on employment and revenue of the aviation industry.
Effects on Passengers due to Increase in Flights
The research uses data from the “Official Airline Guide” (OAG). The OAG data comprises of flight schedules from December 2011 to analyze the destinations from Germany’s four points. These destinations are non-stop, one-stop or more than one-stop (Bieger, Müller & Wittmer, 2011). OAG’s report indicates that 1,292 airports have received scheduled passengers from the four points in Germany. This also includes any transfers that occur within the same flight segment served by emirates airlines. By December 2011, emirates airlines had 54 destinations from Germany served by non-stop flights. This is higher in comparison to Lufthansa, which serves 33 destinations with non-stop flights within the same geographical location. However, of the 54 destinations served from Germany, emirates only serves Dubai making its shares of seats higher (Grimme, 2011). This implies that by considering the number of seats in the eastern hemisphere, Emirates is the second largest carrier. The OAG report identifies that Emirates success is due to airline’s use of long-haul flights strategy for both the main hubs and secondary airports. The secondly hubs are Düsseldorf and Hamburg and have two daily frequency flights (InterVISTAS, 2009). The reason Emirates has a higher seat number for flights out of Germany are its ability to offer a broad choice of frequency to many destinations, with the large number of seats. According to the German Aerospace Center (2012) it is seen where, “Both passengers and shippers of air cargo benefit from dedicated capacities to Southern/East Africa, Asia, the Middle East and Southwest Pacific with better availability of seat and cargo capacities and more choice in departure times, frequencies, prices and transfer points” (p.3).
The increase in the number of flights between Berlin and Dubai increases the number of destinations from Berlin by four, with one transfer and not more than two stops (Grimme, 2011). These four additional destinations are Brisbane and Durban in South Africa, Sydney, and Perth in Australia. For passengers, the increase in flights and airlines serving the Germany and Asia market has a positive effect on the rates of airfares (InterVISTAS, 2009). The analysis uses studies of InterVISTAS indicate that the increase in the number of flights and the number of airlines have led to the liberalization. This is congruent to the report by OAG, which shows that the increase in the number of destinations and flights of Emirates airlines is causing the liberalization of the international aviation market especially between Germany and Asia (Bieger, Müller & Wittmer, 2011). This further is causing the reduction of the average of airfares in these international markets from between 7 to 30% (InterVISTAS, 2009). The reason is that the increase in the number of flights and destinations gives passengers a broader choice of departure times and seats. Overall, the origin and destination for passengers travelling from Germany to East and Southern African, Middle East, Asia and the South West Pacific by 2010 was at 5.6 million. Emirates airlines market share is 10.2% of this figure and depends on the geographical location of its destination (Bieger, Müller & Wittmer, 2011). Emirates airline has the highest market share of the traffic from Germany to South Asia and South West Pacific at 20%.
Benefits to Germany’s Aviation Industry
The increase in the number of flights increases the number of tourists visiting Germany thereby increasing revenues. For example, an increase in the number of flights to Berlin from the increase in connectivity increases the number of Australian tourists. From the OAG report, the number of nights Australian tourists spent in Berlin between 2007 and 2011 has increased from 104,000 to 188,000 (Grimme, 2011). This is an increase in revenue not only for the passenger carriers, but also to the domestic economy. The aviation industry is also seeing positive effects of Emirates increase in flights to Germany. This is in the increase in competitiveness in the passenger flight sector as competitors like Lufthansa and Qatar airlines compete with Emirates. Emirates airlines also are contributing to the number of lights in passenger, and freight services to secondly hubs like Düsseldorf and Frankfurt. Emirates airlines twice-daily flights to these hubs are creating a 17% and 18.2% in weekly itineraries of the eastern Hemisphere, as it offers 7.7% in Frankfurt and 11.1% in Düsseldorf (InterVISTAS, 2009). This creates the benefits of daily long hauls in these secondly hubs along with an increase in the number of onward connections on offer in Dubai as compared to other Gulf regions (Grimme, 2011). These also improve connectivity across the country and eastern hemisphere. This is because an increase in itineraries in secondly hubs reduces the number of transfers required for substantial destinations like Perth, Brisbane and Sydney (Bieger, Müller & Wittmer, 2011). The increase of emirates in the four points, in Germany is increase connectivity in terms of an increase in the number of seats. These seats are yielding better availability, higher levels of competition, and lower fares, and hence more choices for the consumer. Apart from passenger transport, the increase in emirates flights to the country is giving a relative large capacity in cargo transportation. This is because emirates only offer wide-body cargo aircraft. This is with those export-oriented cities like Stuggart where emirates cargo flights are increasing the time benefits. The increase in passenger and cargo flights is causing an increase in employment rates as locals get employment from the airlines, airports, secondly hubs, hotels, and local businesses serving visitors. In addition, the local economy is increasing due to an increase in the number of visitors, products, and services passing through Germany (Grimme, 2011). Airlines like emirates are causing secondly hubs to improve of services and infrastructure as they increase itineraries.
Conclusion
Emirates airline has established itself as the main carrier in air traffic between Germany and Australia and India with a market share of 20% of this market. This is due to the geographical location of the hub and a wide choice of destinations. The increase in points implies the increase in weekly itinerary to secondly hubs, increase in connectivity, increase in the number of seats, reduction in airfare, and the reduction of congestion connectivity in main hubs. The increase in flights is causing an increase in the number of local getting direct or indirect employment with the airlines, airports, or local businesses.
References
Bieger, T., Müller, R. and Wittmer, A. (2011). Aviation Systems: Management of the Integrated Aviation Value Chain. Springer Science and Business Media.
German Aerospace Center (2012, April 18). The Impact of Emirates Airline on the German Economy. Institute of Air Transport and Airport Research. Retrieved 30th October 2012 from http://www.emirates.com/ae/english/images/EN_tcm277-857586.pdf.
Grimme, W. (2011). The Growth of Arabian Airlines from a German Perspective- A Study of the Impacts of New Air Services to Asia. Journal of Air Transport Management, 17, 333-338.
InterVISTAS (2009a). The Impact of International Air Service Liberalization. Retrieved 30th October, 2012 from http://www.intervistas.com/4/reports/2006-06-07_EconomicImpactOfAirServiceLiberalisation_FinalReport.pdf.
