Ambitions of airline make persuasive case

Emirates' expansion has created an internecine struggle in Germany and Canada between federal governments and their provinces.

Air Canada views Emirates' ambitions, which entail flying daily to Toronto, Vancouver and Calgary, as an existential threat.

To read the headlines it would seem Emirates Airline has few friends in international aviation.

Threatened by its global success, a well-documented list of critics headed by the Star Alliance members Lufthansa and Air Canada, and the Association of European Airlines, argues that Emirates poses unfair competition.

So far conventional wisdom has been that their governments in Germany and Canada have responded in full support to these flag carriers. But that is only part of the picture.

The economic value of extra air links to a country, in particular to its provinces, is often lost in squabbles between one airline and another. In fact, there is a significant chorus of support from politicians, airports and consumer groups all lobbying for more services for the Dubai carrier to stimulate trade, tourism and investment.

Harald Wolf, the mayor of Berlin, is the latest to voice support.

"The Berlin government was, and is, in favour to open the airport to Emirates and give them the possibilities to have direct flights," Mr Wolf says.

But he adds his regional government is at odds with the federal government: "They are very restrictive. They have had a very strong lobbying from Lufthansa not to strengthen Emirates."

The growth of Emirates is pitting government agencies against each other in an unfolding, internecine struggle. Federal governments and transport ministries want to protect local airline jobs, while tourism and economic development agencies are more interested in introducing competition and developing provincial cities.

Politicians voice support for Emirates at some risk.

"It is not always easy for them, like Berlin's mayor," says Andrew Parker, the senior vice president of international affairs at Emirates. "Lufthansa is likely to call and say, 'remember, we employ thousands of people in your constituency'."

Air Canada views Emirates's ambitions, which entail flying daily to Toronto, Vancouver and Calgary, as an existential threat. So far it has succeeded in winning protection from Transport Canada, which controls aviation policy.

But Emirates's plans are championed by Industry Canada and its federal minister of state for small business and tourism, as well as the mayor of Mississauga, the Greater Toronto Airport Authority, the British Columbia transport minister, Ontario's chair of cabinet, and the Consumers Association of Canada.

Tim Clark, the president of Emirates, noted the diversity of the support in a 2009 speech in Ottawa entitled: "Dubai and Emirates Airline: Canada's premiers, ministers, mayors and business leaders can't all be wrong."

A root cause of the dispute between Emirates and Air Canada, and with Lufthansa, is India. Air Canada would prefer to be left alone to carry the estimated 2,000 travellers a day between Canada and India by dropping them off in Frankfurt, where partner Lufthansa would take them further.

The alternative would be to allow Emirates to carry them through Dubai and on to its much more developed network of Indian destinations. Long-haul, international traffic is key for airlines. It is where they really make money.

Lufthansa needs to protect this feeder traffic from Canada as well as all the travellers from the German hinterland headed for its centre in Frankfurt to fly long-haul.

If Emirates is allowed to fly to more German cities, travellers would be able to fly more directly to the Middle East and Asia without first having to go to Frankfurt.

What is good for Emirates seems to be good for consumers and the overall economy. An Emirates-funded study from Intervistas concluded that with more flights into Canada, 2,800 direct and spin-off jobs would be generated due to the additional 275,000 passengers a year.

Arguments in support of this stimulus have seemed to win out in Australia, which has steadily increased access for the Gulf carriers over the years. Today, Emirates and Etihad Airways operate almost 40,000 seats weekly into Australia. Other successes have followed in France, India and South Africa.

"What you tend to find is that with the success in Australia, it was the commitment of the regions that ultimately cracked Canberra," says Mr Parker. "Victoria and Queensland were the greatest advocates for tourism and exports."

Yet Qantas does not seem to have suffered. "Despite a 50 per cent increase in Gulf airline capacity since 2005, Qantas's international market share is almost identical to its level back then - just under 30 per cent," concludes the Centre for Asia Pacific Aviation.

Meanwhile, airline capacity to Australia's smaller airports "blossomed", it says.

Mr Parker says that although Emirates flies to secondary cities for commercial reasons, these services have become among its most powerful arms of advocacy, helping to persuade federal governments to grant the airline more access.

"Sometimes you know you are on a winning side of an argument," he says. "It just takes time."