Interesting article from the 'sandbox'.

[North Shore]

http://www.arabianbusiness.com/crew-sho ... 31918.html

The Gulf’s three largest airlines are facing a critical shortage of pilots and technical crew that threatens to stall the rapid growth of their fleets, aviation experts said.
Emirates, Etihad and Qatar Airways could be forced to go head-to-head in recruitment drives to attract staff in a bid to keep their ambitious expansion plans on track.
“All three of these carriers are going to be fighting each other to get the best pilots they can,” said Saj Ahmad, a London-based aviation analyst.
“The one thing that is missing [from their plans] is pilots and nobody seems to be generating an answer as to where they are going to come from. It will be a struggle for Gulf carriers because they are expanding at such a rate…a rate that in a sense defies belief in other regions.”

Gulf carriers are ramping up their expansion and investing heavily in new fleets as they look to build the region into a global tourism hub. Regional airlines placed orders of more than $30bn at this month’s Dubai Airshow.
Doha-based Qatar Airways announced a $6.5bn order with Airbus for 50 A320neo worth $4.6bn, plus options for another 30, and five A380s.
Dubai’s Emirates Airline, the largest international carrier, placed a record $26bn order with Boeing for 50 777s, including options to buy 20 more aircraft.
US plane maker Boeing said this month the Middle East will need 36,000 new pilots and 53,000 new maintenance personnel in order to keep up with its growing fleet. Boeing said it expects demand for 2,520 jetliners worth $450bn over the next 20 years, led by Emirates, Qatar Airways and Etihad.
A shortage of pilots coupled with the quality of crew training were two of the biggest concerns raised at the Gulf Aviation Training Event (GATE) conference at the Dubai Airshow. In a statement, the conference noted four points of concern including: “the quality of ‘outsourcing’; maintenance of high-quality training standards of both incoming pilot candidates as well as existing pilots; the use of ‘evidence-based’ training methods; and regular and careful industry reviews.”
Emirates this month announced it would invest $110m on a new training facility that would have the capacity to train up to 400 students at any time.
Disputes over pay and conditions for crew in Europe could hold the answer to the shortage in the long term. Strikes at British Airways over working conditions resulted in 22 days of strikes and cost the airline more than £150m. Australia’s Qantas has also clashed with staff over pay and other efforts to cut soaring costs.
“[Legacy carriers] have an attraction problem; there is nothing there for a pilot,” said Ahmad.
“So when it comes to the next generation of pilots coming through where are they going to pick, the growing Middle East or the antagonistic Europeans and American [airlines] - it’s a no brainer.”

Several comments..where are all the passengers going to come from? What's so great about Dubai that it's this huge tourism Mecca( )compared to Australia, say, or The Rockies? Why can't they attract pilots? Poor T&C's? poor basing, schedules? In a time that is somewhat fiscally constrained, where's all the cash coming from to buy these new planes?

What say y'all..

[Youngback]

It's not that there is anyone going to Dubai because it is a tourism destination. It's that they are trying to set themselves up as a major hub of transportation. The only problem is that there is a lot of other companies trying to do the same thing. Ethiopian, Turkish, Etihad, Qatar and Emirates are all fighting to be the next major hub. The cash to do this is coming from the oil fields and the royal families. Also Emirates and Etihad have much less operating costs than most other airlines due to the advantage they have in that half of all their flights are starting in a city with dirt cheap fuel costs. Emirates is not paying market rate when they fuel up in Dubai. As for why a lot of pilots aren't heading there, buying alcohol in the Emirates is like trying to buy a restricted firearm in Canada. After all the red tape and paperwork, you'll be wishing you could just head down to the local B&W store. The money in the middle east is good but its not everything.

[Expat]

What they are trying to do, is replace the old Europe, as a transit hub. And they are succeeding so far. From South and North America, passengers used to go through Spain, London, Frankfurt or Paris. Now, they will fly straight to the Emirates, thanks to those 777 ERs, and to anywhere from there. Cities in the Gulf aren't the greatest, but the airports and the airlines are just super. Amenities at Dubai airport are the best there are. Qatar and Abu Dhabi are competing to best them, so it will only get better.
They already have the best connections to Asia, which is also booming...
They also cover Africa very well, so the location for them is as important as the cheap fuel.

It seems that the advent of very long range airliners set them up to become the center of the world. They now have direct flights to Japan in the east, and the Americas to the west.

[Expat]

It's not that there is anyone going to Dubai because it is a tourism destination. It's that they are trying to set themselves up as a major hub of transportation. The only problem is that there is a lot of other companies trying to do the same thing. Ethiopian, Turkish, Etihad, Qatar and Emirates are all fighting to be the next major hub. The cash to do this is coming from the oil fields and the royal families. Also Emirates and Etihad have much less operating costs than most other airlines due to the advantage they have in that half of all their flights are starting in a city with dirt cheap fuel costs. Emirates is not paying market rate when they fuel up in Dubai. As for why a lot of pilots aren't heading there, buying alcohol in the Emirates is like trying to buy a restricted firearm in Canada. After all the red tape and paperwork, you'll be wishing you could just head down to the local B&W store. The money in the middle east is good but its not everything.

I flew last year with Turkish to Canada. It was a quick connect, but if you have to overnight in Istambul, the Emirates are much better. I heard so many horror stories about Istambul...

As far as alcohol, it is easy to get in Dubai, although Ramadan is a bad time.
But as you said, if the money is good, then why not? It sure beats Afghanistan!

[azimuthaviation]

Those three airlines are from Qatar and Dubai which has a local population of a few hundred thousand, not enough human resources to pool from to support the three fastest growing airlines in the world. When they have to import virtually all their manpower, mostly on a temporary basis I would expect major shortfalls.

[complexintentions]

Pretty much everything Youngback has said about Dubai is wrong. Emirates is not funded by oil money. It does have huge competitive advantages with it's location and cheap labour, weak regulatory oversight, the cozy relationship between the airport, the regulators, the government, and the company. But it is a commercial cash cow for the government, not the other way around. It does not get "cheap fuel", even if it could do so in the Middle East, where do you think it is purchasing its fuel when it flies worldwide? Certainly not defending the company, it makes a ton of money by leveraging its dubious advantages with absolutely ruthless disregard for anyone or anything in its path, including its employees. But sometimes I get tired of hearing nonsense spouted as truth.

Etihad, Qatar, those are different stories: "train sets" run as ego projects by their respective government that lose massive amounts of money annually.

Alcohol in Dubai is freely available. Yes you need a government license to purchase it at a government store locally (taxed at 30%, and as easily purchased as at any Western booze store) but most tech crew just bring back duty-free. The limit is 4 litres - compared to 1 litre in Canada. Plus there are other places where you can obtain cheaply...one infamous spot in particular. Linking the pilot shortage to alcohol seems a bit silly, I don't know a lot of colleagues who considered the availability of alcohol in their decision to join Emirates.

Expat is closer to the truth - no statistically meaningful number of people visit Dubai, per se, compared to total network traffic. They are positioning themselves as a global hub as mentioned. THAT's where the growth is coming from. Did anyone notice that the world population passed 7 billion this year? Most of it from this area of the world.

As far as the pilot shortage, it's been here for awhile. Pilots are getting worked, hard - an Emirates roster would make an Air Canada pilot shudder in horror. The company has responded by raising the threshold for productivity (overtime) from 78 hours/month roughly to 92 hours/month. They did this over two years ago, with the stroke of a pen - when promises were made that things were being done to alleviate fatigue, which was THEN already a real issue. To combat the 900 hour max hours/year, they only credit the hours at the controls on ULR flights. So on a LAX flight, even though you cross the pole and 12 timezones, you are only credited for 75% of the time. (Paid for 100%). Lots of tricks like this help to increase profit margins and keep the planes flying. There are a lot of exhausted crews trying to cope with huge rosters, month after month. Min rest is no joke with the most global, diverse network in the world.

And the shortage will continue. They are struggling to attract the type of pilots they want, and they have to compete with a lot of other asian carriers also looking for experienced, qualified wide body pilots. That demographic in the US, Canada, and Europe is retiring in droves, and not being replaced - who wants to be a pilot these days?! The internet has changed a lot of things as well, the word is getting out that living in the Middle East, away from most legal and human rights protections enjoyed in the West isn't always worth the money, which is always the least amount possible to attract candidates. Something will have to give: either growth will slow (unacceptable to the slave-masters), pay will rise (grudgingly, and they will find a way to take it back in other ways), or standards will be further stretched and relaxed, resulting in a few spectacular accidents (inevitable). Some combination of the above.

There is certainly nothing "great" about Dubai, no matter how many times they try to tell themselves there is.

[flyingcatfish]

This is how Boeing and the airlines are going to convince Joe Public there needs to only be one pilot in the cockpit

[Youngback]

Everything I know about Emirates was told to me by their employees. I've flown many times on each of the airlines I listed. As for how they compete, you are right. Some of the airlines (Ethiopian) are having money thrown at them by the government. If you read my previous post, when they fly to other destinations, they pay market fuel rates in those countries. Of course I can't prove anything I've said here but if I'm mistaken, it means the friends I have at the companies in question are mistaken as well.

[aerosexual]

Has there been any talk from any of these airlines to base crews elsewhere in the world as Cathay does (or used to do)? Surely they could attract a larger number of pilots this way, while decreasing costs.

[TeePeeCreeper]

Plus there are other places where you can obtain cheaply...one infamous spot

Ah yes, the 40 min booze run to the "other" emirate.... The only issue was having to drive back though the "dry" emirate... Walking into the store named after a silver fish always made my day... Bought bottles of French wine there that I could only imagine of finding in Canada.... God, the amount one could buy with 2000 dirams was mind boggling!

Back to NS post....

A friend of mine in EK HR told me that they had lost over 150 pilots last month mainly to Asian carriers.... It seemed that the money seemed "greener" in the other field? Either way, there are far worse places in this world to live in than DXB/AUH.

[Jastapilot]

This is how Boeing and the airlines are going to convince Joe Public there needs to only be one pilot in the cockpit

Yepper, I figure it's just a matter of time. There'll be a few cockpit enhancements first, I'll bet.

[watermeth]

Pilots are getting worked, hard - an Emirates roster would make an Air Canada pilot shudder in horror.

and I can't imagine the seniority list and a never ending "time to command".

[RB211]

and I can't imagine the seniority list and a never ending "time to command".

Do you mean at EK or AC? Guys are entering the upgrade process at 3.5 to 4 years at EK now.

[RB211]

?..Of course I can't prove anything I've said here but if I'm mistaken, it means the friends I have at the companies in question are mistaken as well.

With respect to EK/Dubai both you and your friends are mistaken on much of what you stated as fact.

Complexintentions has a more accurate assessment of the situation.

[Joe Blow Schmo]

Agree with most of what you said, however:

It does not get "cheap fuel", even if it could do so in the Middle East, where do you think it is purchasing its fuel when it flies worldwide?

Yes they do. Fuel in Dubai is cheap. Very cheap compared to the rest of the world. Probably about half the price. Emirates probably buys 50% or more of their fuel at that cheap price, other airlines buy little to none (they can only fill up when they fly into Dubai). When you consider that fuel costs make up 35-40%+ of an airlines operating costs, then buying 50% of your fuel at 50% of the price of what it would cost elsewhere immediately gives you a 10% cost advantage on your competition. That 10% advantage is before you take into account the other cost advantages they get from a cheap workforce, cozy relationships, weak regulation..etc..etc.

[RB211]

Agree with most of what you said, however:

It does not get "cheap fuel", even if it could do so in the Middle East, where do you think it is purchasing its fuel when it flies worldwide?

... When you consider that fuel costs make up 35-40%+ of an airlines operating costs, then buying 50% of your fuel at 50% of the price of what it would cost elsewhere immediately gives you a 10% cost advantage on your competition. That 10% advantage is before you take into account the other cost advantages they get from a cheap workforce, cozy relationships, weak regulation..etc..etc.

Well, from their 2010/11 financial results as audited by PWC, fuel accounted for 35.4% of costs. According to your figures, the same as other airlines.

Dubai does not refine fuel and gets most of it from Singapore. If it is cheaper it has to do with taxes. As I understand it, in Canada, the tax on fuel for international operations is substantially less than domestic. Do other countries discount in the same manner?

One of the other advantages EK has, which is rarely considered, is that the government sees air transport as an essential part of the economic machine and therefore is to be supported. It is not, as in much of the west, seen as a government cash cow simply because it is essential.

Quote from BA chief Willie Walsh:

Walsh admits that he is slightly envious of Middle East governments' push to develop global hubs in the region, and of the support their various airports enjoy.
"I am very envious of the fact that the government sees the value of having hub airports and the investment has been made in developing additional runway capacity," he says.
"I think the Middle East has fully understood the value of transfer traffic and it is a concept that some European governments are still struggling to understand."

[complexintentions]

Agree with most of what you said, however:

Yes they do. Fuel in Dubai is cheap. Very cheap compared to the rest of the world. Probably about half the price. Emirates probably buys 50% or more of their fuel at that cheap price, other airlines buy little to none (they can only fill up when they fly into Dubai). When you consider that fuel costs make up 35-40%+ of an airlines operating costs, then buying 50% of your fuel at 50% of the price of what it would cost elsewhere immediately gives you a 10% cost advantage on your competition. That 10% advantage is before you take into account the other cost advantages they get from a cheap workforce, cozy relationships, weak regulation..etc..etc.

Could you back up these statements with some facts please, or something more precise than "probably about half the price"? I mean, I am daily entrusted with one of their machines but even I am not privy to the figures paid for fuel. I do know that we routinely tanker fuel IN from certain outstations, so obviously fuel is not always cheapest in Dubai. All of your figures are based on assumptions that basically you pull out of thin air.

What I do know, is that RB211 is correct: Dubai buys its jet fuel from foreign refineries, and thus pays market prices. Of course, they probably get a good price due to volume and so on but the myth of the Arab states pumping it out of the ground and directly into their planes is just that, a myth. It's not dissimilar to Canada, where Canadian gas consumers get gouged because even though Canada has the second highest oil reserves in the world, they have to pay market rates to the refiners, most of them actually in the US.

This is not to say EK and their ilk do not have, and exercise, considerable (and arguably unfair) competitive advantages. Just that "cheap fuel" is not one of the major ones. Believe me, I used to think the same thing because it seems so intuitive and everyone wants an easy answer to how they're able to make so much money when Western carriers struggle. But it's simple - they make it on the backs of their employees, in just the same way fortunes are made on Chinese labour for manufactured goods. Only difference is the product is airline seats.

[homesick]

Dubai/Doha/Abu Dhabi are by no means prominent tourist destinations. The bulk of their traffic is picked up from India and shipped to the rest of the world. They are projecting themselves as major hubs to transfer pax between the east and the west.
The running joke in India is that the national carrier of India is Emirates.
These airlines do have inherent competitive advantages with respect to labour. No unions, CHEAP non skilled labour for support services and a tax free environment to operate. In an industry which survives on wafer thin margins, the middle east airlines do exploit these advantages to the fullest.

[bmc]

Dubai is the largest of the three, with substantial point to point traffic out of Europe. It is a tourist destination from other points in the Middle East, the sub continent and Brits.

Indian traffic is substantial, and it is also not bad yielding traffic. One feature about Indian traffic is that is year round traffic and not seasonal. Europe to Asia/Pacific has long been a key focus for Gulf carriers. To draw that traffic off of nonstop direct flights to/from Europe, you have to drop the price. From an airline perspective, you're stealing traffic off of one airplane going direct, and spreading reduced fares across two airplanes and longer flying time. If you have big enough capaciy with low seat cost, you can make it work.

[RB211]

Dubai/Doha/Abu Dhabi are by no means prominent tourist destinations. The bulk of their traffic is picked up from India and shipped to the rest of the world. They are projecting themselves as major hubs to transfer pax between the east and the west.
The running joke in India is that the national carrier of India is Emirates.
These airlines do have inherent competitive advantages with respect to labour. No unions, CHEAP non skilled labour for support services and a tax free environment to operate. In an industry which survives on wafer thin margins, the middle east airlines do exploit these advantages to the fullest.

Cheap labour is always cited as a major factor in the ability of EK to succeed. While I don't disagree that there is truth to the statement some of the wages are low by western standards, in terms of total cost to the airline the discrepancy is not as large as imagined.

When employee expenses as a percentage of total expenses are considered, EK is at 15.6% and AC18.1%. While not insignificant, certainly not the difference inferred by various posters on these forums.

The fact of the matter is global travel patterns are growing/changing, even with the financial difficulties many parts of the world are facing. By creating a global 'hub and spoke' at DXB, as has been pioneered by western carriers, EK is exploiting this change. With the evolution of long haul aircraft and their geographic location they are seizing the moment, as it were.

So you can come up with all sorts of reasons/excuses as to why their success is unfair or artificial but I would say EK is around for the foreseeable future.

[bmc]

EK will be victim of their ambitious growth plans due to their delayed move to the new airport. Its looking like they will cap their fleet at 260 airplanes due to capacity restrictions at the current airport.

[Youngback]

Fuel prices and whatever else I said that's apparently incorrect, Emirates and Qatar are easily the 2 best airlines I have ever flown on. The upgrades do happen relatively quickly there too. One guy I know is now a 777 Capt after he had been there 3 years. As for buying alcohol, never tried in Dubai. Doha was a different story.

[Expat]

Emirates have an ace up their sleeve. It is called Fly Dubai. That company operates narrow bodies, and bring all the passengers, from around, who can then fly outbound with Emirates. The business model is excellent!

[Joe Blow Schmo]

Agree with most of what you said, however:

Yes they do. Fuel in Dubai is cheap. Very cheap compared to the rest of the world. Probably about half the price. Emirates probably buys 50% or more of their fuel at that cheap price, other airlines buy little to none (they can only fill up when they fly into Dubai). When you consider that fuel costs make up 35-40%+ of an airlines operating costs, then buying 50% of your fuel at 50% of the price of what it would cost elsewhere immediately gives you a 10% cost advantage on your competition. That 10% advantage is before you take into account the other cost advantages they get from a cheap workforce, cozy relationships, weak regulation..etc..etc.

Could you back up these statements with some facts please, or something more precise than "probably about half the price"? I mean, I am daily entrusted with one of their machines but even I am not privy to the figures paid for fuel. I do know that we routinely tanker fuel IN from certain outstations, so obviously fuel is not always cheapest in Dubai. All of your figures are based on assumptions that basically you pull out of thin air.

What I do know, is that RB211 is correct: Dubai buys its jet fuel from foreign refineries, and thus pays market prices. Of course, they probably get a good price due to volume and so on but the myth of the Arab states pumping it out of the ground and directly into their planes is just that, a myth. It's not dissimilar to Canada, where Canadian gas consumers get gouged because even though Canada has the second highest oil reserves in the world, they have to pay market rates to the refiners, most of them actually in the US.

This is not to say EK and their ilk do not have, and exercise, considerable (and arguably unfair) competitive advantages. Just that "cheap fuel" is not one of the major ones. Believe me, I used to think the same thing because it seems so intuitive and everyone wants an easy answer to how they're able to make so much money when Western carriers struggle. But it's simple - they make it on the backs of their employees, in just the same way fortunes are made on Chinese labour for manufactured goods. Only difference is the product is airline seats.

It doesn't appear EK publishes there average fuel price in their annual reports, so no way to confirm it 100%. However, in the past, EK has been accused by many other airlines of getting a huge advantage from cheap fuel in Dubai. Their response has always been something to the affect of: "We pay the same price for fuel in Dubai as everyone else does". They don't deny they get cheap fuel, they just say that everybody else does too. Of course they don't point out that they buy most of their fuel in Dubai whereas other airlines buy almost none. That, in the PR world, is called spin. If the fuel in Dubai were the same or a similar price to other major ports, EK would happily publish a fuel price comparison to show that their competitors were full of crap.

[Eric Janson]

Has there been any talk from any of these airlines to base crews elsewhere in the world as Cathay does (or used to do)? Surely they could attract a larger number of pilots this way, while decreasing costs.

The Middle East is all about control. Workers are basically slaves with zero rights.

The last thing they want is to have employees based in a real country with labour laws and worker's rights. They don't want you taking them to court or forming a union.

Basings will never happen - they'll just lower the entry requirements.