Reports On Emirates Airline Germany

Institute of Air Transport and Airport Research
The Impact of
Emirates Airline on
the German Economy
Final Report
May 2012
Cover Picture: Emirates Airbus 380 visiting ILA Berlin Air Show 2010
Photographer: Wolfgang Grimme, DLR
Institute of
Air Transport and
Airport Research
The Impact of Emirates Airline

on the German Economy
Final Report
Tim Alers, Dr. Peter Berster, Prof. Dr. Hansjochen Ehmer,
Monika Teresa Fuhrmann, Dr. Marc Gelhausen,
Wolfgang Grimme, Stephan Horn, Hermann Keimel,
Dr. Sven Maertens, Hendrik Niee
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fr Luft- und Raumfahrt e.V.
German Aerospace Center
in der Helmholtz-Gemeinschaft
Institute of Air Transport and Airport Research

Porz-Wahnheide
Linder Hhe
51147 Kln
Germany
May 2012
Head: Prof. Dr. Johannes Reichmuth

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The Economic Impact of Emirates Flights on

Germany
Final Report
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Institute Director:
Prof. Dr. Johannes Reichmuth
Responsible author:
Wolfgang Grimme
Additional author(s):
Project / research task:
Tim Alers, Dr. Peter Berster, Prof. Dr. Hansjochen Ehmer,

Monika Teresa Fuhrmann, Dr. Marc Gelhausen, Stephan Horn,
Hermann Keimel, Dr. Sven Maertens, Hendrik Niee
The Impact of Emirates Airline on the German Economy
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This study was conducted for Emirates Airline.
2012, DLR, Institute of Air Transport and Airport Research, Germany

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Content
List of figures ............................................................................................................................ 6
List of tables ............................................................................................................................. 9
Executive Summary ............................................................................................................... 10
1
Introduction ................................................................................................................... 18
Overview The Emirates business model and Emirates current activities in

Germany ....................................................................................................................... 20
Analysis of the effects of connectivity to the international aviation network

due to Emirates presence in Germany ......................................................................... 27
3.1 The importance of connectivity ................................................................................. 27
3.2 Connectivity for Germany ......................................................................................... 28
3.2.1 Non-stop connectivity ...................................................................................... 31
3.2.2 Connectivity for itineraries with one stop / transfer ......................................... 33
3.2.3 Connectivity to the 100 largest airports in the Eastern Hemisphere ............... 35
3.2.4 Comparison of the route networks of Emirates and Lufthansa ....................... 37
3.3 Connectivity for individual cities in Germany ............................................................ 41
3.3.1 Dsseldorf ....................................................................................................... 42
3.3.2 Hamburg ......................................................................................................... 44
3.3.3 Berlin ............................................................................................................... 46
3.3.4 Stuttgart........................................................................................................... 49
3.4 Connectivity and Frequency ..................................................................................... 54
3.5 Connectivity index for German airports .................................................................... 57
3.6 Connectivity and capacity ......................................................................................... 60
3.7 Intermediate conclusions .......................................................................................... 65
Analysis of the effects of Emirates presence in Germany on passenger

flows .............................................................................................................................. 67
4.1 Market development in Germany ............................................................................. 67
4.2 Market development at individual airports ................................................................ 71
4.3 Development of air fares .......................................................................................... 78
4.4 Intermediate conclusions .......................................................................................... 80
Analysis and quantification of economic effects for Germany....................................... 82

5.1 Effects of existing passenger and cargo services .................................................... 83
5.1.1 Direct, indirect and induced employment ........................................................ 83
5.1.2 Catalytic effects ............................................................................................... 91
5.1.3 Incoming tourism ............................................................................................. 94
5.1.4 Outgoing tourism ........................................................................................... 103
5.1.5 Air cargo ........................................................................................................ 103
5.2 Effects of new services ........................................................................................... 110
5.2.1 Outlook for Germany for 2012....................................................................... 110
5.2.2 New services to Berlin and Stuttgart ............................................................. 111
5.3 Effects of the purchase of aircraft, engines, spare parts and equipment ............... 115
Discussion of the benefits of air transport market liberalisation for Germany ............. 119
6.1 Consequences of the liberalisation of air transport markets................................... 119
6.2 Literature review of worldwide liberalisation ........................................................... 121
6.3 Liberalisations impact on different stakeholders .................................................... 122
6.3.1 Secondary and hub airports .......................................................................... 122
6.3.2 Airlines and alliances .................................................................................... 123
6.3.3 Passengers ................................................................................................... 125
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Conclusions ................................................................................................................ 128
Annex ................................................................................................................................... 131

Definition of regions used throughout this report ............................................................. 131
Emirates Destinations ..................................................................................................... 133
Stakeholder Interviews .................................................................................................... 135
Literature.......................................................................................................................... 136
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List of figures
Figure 2-1: Comparison of itinerary between two secondary airports with Emirates and
competing airlines / alliances ................................................................................. 21
Figure 2-2: Specific fuel consumption in kg per aircraft-kilometre flown ................................ 22
Figure 2-3: Comparison of operating costs for selected airlines ............................................ 23
Figure 2-4: Development of Emirates frequencies from German airports 1996-2012 ........... 24
Figure 2-5: Development of Emirates passengers on flights between Germany and
Dubai (and vice versa) 2000-2011 ......................................................................... 26
Figure 3-1: Destination regions of origin-destination passengers on Emirates flights
from Germany ........................................................................................................ 28
Figure 3-2: World regions to which Emirates provides connectivity for Germany .................. 29
Figure 3-3: Non-stop destinations in the Eastern Hemisphere served by all airlines from
Germany in December 2011 .................................................................................. 31
Figure 3-4: Overview of destinations in Africa, Asia, Middle East and South West
Pacific served non-stop from Germany in December 2011 ................................... 32
Figure 3-5: Number of seats provided on non-stop flights and frequencies to
destinations in Africa, Asia, Middle East and South West Pacific served nonstop from Germany in December 2011 .................................................................. 33
Pacific served from Germany with one stop/transfer in December 2011 ............... 35
Figure 3-7: Overview of non-stop services from Germany to the 100 largest airports in
Africa, Asia, Middle East and South West Pacific in December 2011 .................... 36
Pacific served from Germany with one stop/transfer in December 2011 ............... 37
Figure 3-9: List of complementary and overlapping destinations of Emirates and
Lufthansa in the Eastern Hemisphere .................................................................... 38
Figure 3-10: Map of complementary and overlapping destinations of Emirates and
Lufthansa in the Eastern Hemisphere .................................................................... 38
Figure 3-11: Seats offered on non-stop flights to Southern/East Africa, Asia and the
Middle East from German airports in December 2011 ........................................... 41
Figure 3-12: Seats offered on non-stop flights to Southern/East Africa, Asia and the
Middle East from Berlin and Stuttgart with possible future daily services by
Emirates. ................................................................................................................ 42
Pacific served from Dsseldorf non-stop or with one stop/transfer in
December 2011...................................................................................................... 43
Figure 3-14: Map of destinations in Africa, Asia, Middle East and South West Pacific
served from Dsseldorf non-stop or with one stop/transfer in December 2011 ..... 44
Pacific served from Hamburg non-stop or with one stop/transfer in December
2011 ....................................................................................................................... 45
served from Hamburg non-stop or with one stop/transfer in December 2011 ....... 46
Pacific served from Berlin non-stop or with one stop/transfer in December
2011 ....................................................................................................................... 47
served from Berlin non-stop or with one stop/transfer in December 2011 ............. 48
Figure 3-19: Perceived quality of connectivity from Stuttgart ................................................. 50
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Figure 3-20: Destinations with a need for improved non-stop or transfer connectivity,
share of the number of mentioned destinations by region ..................................... 51
Pacific served from Stuttgart non-stop or with one stop/transfer in December
2011 ....................................................................................................................... 52
served from Stuttgart non-stop or with one stop/transfer in December 2011 ......... 53
Figure 3-23: Number of weekly itineraries to the 100 largest airports in the Eastern
Hemisphere from selected German airports by airline ........................................... 54
Hemisphere from selected German airports by airline ........................................... 56
Figure 3-25: Calculation of the connectivity index .................................................................. 57
Figure 3-26: Map of destinations in Africa, Asia, Middle East and South West Pacific for
which Emirates services reduce the number of stops / transfers from
Hamburg ................................................................................................................ 59
Figure 3-27: Capacity contribution of Emirates on O&D relations from Hamburg to
Southern and East Africa, Asia, the Middle East and South West Pacific
(2011) ..................................................................................................................... 62
Figure 3-28: : Potential capacity contribution of Emirates on O&D relations from
Stuttgart to Southern and East Africa, Asia, the Middle East and South West
Pacific (2011) ......................................................................................................... 64
Figure 4-1: Origin-destination passengers from Germany to the Eastern Hemisphere
and Emirates market share by region .................................................................... 67
Figure 4-2: Origin-destination passengers from Germany to Southern/East Africa, Asia,
Middle East and South West Pacific, 2002-2010 ................................................... 68
Figure 4-3: Origin-destination passenger growth by individual carriers in the market
between Germany and Southern/East Africa, Asia, Middle East and South
West Pacific between 2005 and 2010 .................................................................... 69
Middle East and South West Pacific between 2002 and 2010 in relative
terms ...................................................................................................................... 70
Figure 4-5: Origin-destination passengers from Hamburg to Southern/East Africa, Asia,
Middle East and South West Pacific, 2002-2010 ................................................... 71
Figure 4-6: Origin-destination passengers from Hamburg to Dubai, 2002-2010 .................... 72
Figure 4-7: Origin-destination passengers from Hamburg to Dubai travelling on
Lufthansa, Air France, British Airways and Turkish Airlines, 2002-2010 ............... 73
Figure 4-8: Origin-destination transfer passengers from Hamburg to Southern/East
Africa, Asia, Middle East and South West Pacific by first transfer point, 20022010 ....................................................................................................................... 74
Figure 4-9: Origin-destination passengers from Dsseldorf to Africa, Asia, Middle East
and South West Pacific, 2002-2010 ....................................................................... 75
Figure 4-10: Origin-destination transfer passengers from Dsseldorf to Southern/East
Africa, Asia, Middle East and South West Pacific by first transfer point, 20022010 ....................................................................................................................... 76
Figure 4-11: Seats offered on non-stop flights by Lufthansa from Germany to the
Middle East and Germany to India ......................................................................... 77
Figure 4-12: Comparison of air fares in business class of Emirates and Lufthansa from
Hamburg to selected Asian destinations. ............................................................... 78
Figure 4-13: Comparison of air fares in economy class of Emirates and Lufthansa from
Hamburg to selected Asian destinations. ............................................................... 79
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Figure 4-14: Comparison of average air fares in economy class from Frankfurt for a set
of five major Asian destinations and four combinations for minimum stay /
advance booking .................................................................................................... 80
Figure 5-1: Differentiation of economic effects for Germany coming from Emirates
activities ................................................................................................................. 82
Figure 5-2: Exemplary chain of inputs and definition of direct and indirect effects ................ 86
Figure 5-3: Emirates expenditures in Germany and the resulting direct and indirect
employment effects for the fiscal year 2010/11...................................................... 87
Figure 5-4: Location decision of companies depending on time- and real estate costs ......... 92
Figure 5-5: Development of incoming tourism, measured in nights spent by travellers
from Asia, Middle East and South West Pacific 2001-2011 ................................... 95
Figure 5-6: German National Tourist Board tourism growth forecast 2020 for incoming
tourism from Asia, Middle East and South West Pacific ........................................ 96
Figure 5-7: Development of incoming tourism in Munich from selected countries,
measured in nights spent 2007-2011 ..................................................................... 97
Figure 5-8: Correlation between the number of seats offered on non-stop flights from
the Middle East to Germany and the number of nights spent by tourists from
the Middle East in Germany, 2001-2010................................................................ 99
Figure 5-9: Correlation between the number of origin-destination passengers between
Germany and destinations in Asia and the number of nights spent by tourists
from Asia and South West Pacific in Germany, 2002-2010 ................................. 100
Figure 5-10: Forecast on German exports for the manufacturing industry (constant
prices, base year 2000)........................................................................................ 104
Figure 5-11: Development of air freight exports from Germany to the UAE (in tons),
2000-2010 ............................................................................................................ 105
Figure 5-12: Development of the air freight volumes of major airlines originating from
German airports ................................................................................................... 106
Figure 5-13: Market share of Emirates for outbound air freight originating in Germany in
2010 for different IATA regions ............................................................................ 107
Figure 5-14: Emirates passenger growth potential to/from Germany 2011/2012 ................. 110
Figure 5-15: Emirates expenditures in Germany for the fiscal year 2011 and forecast
for fiscal year 2012 in million ............................................................................. 111
Figure 5-16: Emirates fleet and order development 1985-2011 ........................................... 116
Figure 5-17: Emirates aircraft on order as of 31st December 2011 (excluding options
and letters of intent) ............................................................................................. 116
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List of tables
Table 2-1: Emirates operations in Germany as of December 2011 ....................................... 25
Table 3-1: Comparison of frequencies and capacities to African, Asian and Pacific
destinations on direct flights* of Lufthansa from Germany with direct flights of
Emirates from Dubai in December 2011 ................................................................ 39
Table 3-2: Connectivity index for German airports due to Emirates services to Dubai
and onward destinations in December 2011 .......................................................... 58
Table 3-3: Total and Emirates (EK) used capacity on O&Ds from Hamburg to Asia,
Southern and East Africa, South West Pacific and the Middle East region
(2011) ..................................................................................................................... 61
Table 3-4: Estimated total and Emirates (EK) used capacity on O&Ds from Stuttgart to
Asia, Southern and East Africa, South West Pacific and the Middle East
region (2011) .......................................................................................................... 63
Table 5-1: A simplified symmetric input-output table (product by product) ............................ 83
Table 5-2: Summary of direct and indirect employment estimations for Emirates air
services to and from Germany ............................................................................... 90
Table 5-3: Expenditures by foreign tourists travelling on Emirates to Germany .................. 102
Table 5-4: Traffic scenarios for Berlin and Stuttgart ............................................................. 112
Table 5-5: Emirates expenditures for new services between Dubai and Stuttgart ............... 113
Table 5-6: Emirates expenditures for new services between Dubai and Berlin ................... 113
Table 5-7: Annual contribution of Emirates to the German aerospace industry ................... 118
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Executive Summary
Since 1987, Emirates Airline has operated flights from Dubai to Germany. As of December
2011, the Dubai-based carrier serves four points in Germany (Frankfurt, Munich, Dsseldorf
and Hamburg) with a total of nine daily passenger flights to and from Dubai. Additionally,
Frankfurt and Dsseldorf are served regularly with freighters.
The airline has contracted the Institute of Air Transport and Airport Research at the German
Aerospace Center (DLR) to examine the economic effects coming from the provision and use
of existing passenger and cargo flights and the additional benefits that could be gained from
potential new services to Berlin and Stuttgart. Currently, the bilateral air services agreement
between the United Arab Emirates and Germany allows Emirates to serve four points in
Germany with passenger flights. Furthermore, the analysis includes the impacts on the
German economy due to Emirates orders for aircraft, engines, spare parts and maintenance
services.
Scope of the Study / Methodology

In this study, the effects for the German economy have been analysed in the following areas:
Connectivity impacts concerning airports that are currently being served by Emirates
(pages 28ff.)
Connectivity impacts resulting from potential new Emirates services from Dubai to
Berlin and Stuttgart (pages 46ff.)
Impacts of Emirates services on passenger flows, competing airlines and hubs

(pages 67ff.)
Direct, indirect and induced employment effects due to Emirates economic activity in
connection with the operation of existing and potential new services (pages 83ff.)
Direct, indirect and induced employment effects due to incoming tourists flying with
Emirates to Germany (pages 94ff.)
Effects for shippers of air cargo concerning freight capacities and the accessibility of
destinations (pages 103ff.)
Direct, indirect and induced employment due to Emirates orders for new aircraft,
engines, spare parts and maintenance services (pages 115ff.)
The analysis of connectivity is based on schedules data for December 2011. Concerning the
assessment of the impacts of Emirates services on passenger flows and capacity supply,
data provided by Sabre Airport Data Intelligence, based on Market Information Data Tapes
(MIDT) was analysed. Furthermore, data provided by the Official Airline Guide (OAG) on seat
capacities and aircraft were used.
Employment effects of Emirates activities in Germany, coming from the provision of air
transport services and from orders for aircraft, engines, spare parts and maintenance
services were assessed by applying input-output analyses, which are based on input-output
tables provided by the German Statistical Office and supplemented with data on
expenditures provided by Emirates. The input-output methodology is well accepted for
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impact assessments of the contribution of individual industries or activities to the economy

and delivers sound and reliable results.
For a qualitative assessment in areas where quantitative data was not available, stakeholder
interviews with managers of tourism authorities, chambers of commerce and freight
forwarders were conducted.
Results
The following paragraphs summarise the main findings of our investigation:
Connectivity Impacts
Secondary airports like Dsseldorf and Hamburg, which attract significant passenger
volumes, but do not have a hub function improve their connectivity to the world
regions Southern/East Africa, Asia, the Middle East and Southwest Pacific through
Emirates services. The number of destinations that can be reached with a maximum
of one intermediate stop or transfer increases. The number of flight segments
required is reduced accordingly (pages 42ff.). Overall, this improves passenger
comfort.
The improvement, as measured by a specified connectivity indicator, can be as much

as 12 % for Dsseldorf and Hamburg, when the 61 destinations served by Emirates
in Southern/East Africa, Asia, the Middle East and Southwest Pacific are considered
(pages 57ff.).
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.
From the viewpoint of economic theory, Emirates displays a function as

countervailing power against increased oligopolisation and monopolisation of
markets through mergers and alliances. For Germany, this applies particularly to the
fortress hubs in Frankfurt and Munich, where Star Alliance has a share of 62 % and
65 %, respectively, in the number of seats offered on flights to Southern/East Africa,
Asia and the Middle East.
At the airports of Berlin and Stuttgart only very few intercontinental flights to Asia or
the Middle East are offered, so passengers are required to transfer via a German or
European hub for most trips, or to travel by car or train to nearby airports with a larger
supply of long-haul flights. New Emirates services would broaden the choice in
frequencies and enhance the accessibility of German regions.
In Stuttgart, with a daily flight to Dubai, the number of weekly flight nonstop and onestop connections to the Eastern Hemisphere would increase by 14 %. In Berlin, a
daily flight by Emirates would increase the number of connections to
Southern/Eastern Africa, Asia, the Middle East and Southwest Pacific by almost
10 %.
With a daily flight from Stuttgart and Berlin to Dubai, Emirates can generate 210 onestop connections per week in transfer window of up to 6 hours after arrival in Dubai.
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In comparison, Qatar Airways generates currently only 66 weekly transfer

connections from Stuttgart and 148 connections from Berlin via Doha.
Impacts on Passenger Flows
The analysis of passenger development shows that Emirates stimulates the demand
for trips between Germany and the Eastern Hemisphere. From this it can be
concluded that passengers travelling on Emirates represent to a large extent
additional demand, which has not been shifted away from other airlines or hubs.
The number of transfer passengers travelling from Dsseldorf / Hamburg via

Frankfurt and Munich remains constant or even grows, despite new or increasing
competition from Emirates and other new entrants (pages 71ff.).
The air transport market between Germany and destinations in the Eastern
Hemisphere (Southern and East Africa, Asia, the Middle East and South West
Pacific) has grown by 30 % between 2005 and 2010 (+1.3 million passengers in
absolute terms). Emirates market share increased in this period from 7.5 to 10.2 %,
the market share of German carriers increased from 23 to 24.5 %. In the particularly
important market Germany-North Eastern Asia (1.4 million travellers in 2010; e.g.
China, Japan and South Korea), Emirates market share is lowest with 3.5 %.
Emirates market share is highest between Germany and the South West Pacific
region with 20 %. In this market, no German airlines operate.
From a growing demand in air travel between Germany and the Eastern Hemisphere
many airlines benefit. Emirates share in the overall growth between 2005 and 2010 is
+250,000 passengers, while Lufthansas passenger numbers increased by +220,000,
followed by Turkish Airlines and Air Berlin with +116,000 each (pages 69ff.).
Even in markets particularly exposed to competition with new entrants, like Middle
East and India, market leader Lufthansa has continued to grow substantially in terms
of seat capacities offered (from 134,000 to 217,000 per month between 2003 and
2011) and also destinations offered (from 15 to 21 between 2003 and 2011, pages
77ff.).
Based on the market analyses, we form the hypothesis that different market
segments have evolved over the past years. On the one hand, time-sensitive
travellers from Frankfurt and Munich continue to fly on non-stop services to Asia and
passengers from secondary airports in Germany continue to use connections via
Frankfurt and Munich, which often have the shortest travel times compared to
competing transfer itineraries. On the other hand, price-sensitive passengers prefer
the offers of new entrants, with slightly longer travel times, but a competitive offer
concerning value for money.
As the route networks of Emirates and Qatar Airways are overlapping to a large
extent and similar travel times on many origin-destination pairs are offered, it can be
expected that competition will be much stronger between the two Gulf carriers than
between Emirates and Lufthansa, once Emirates would start operations in Berlin and
Stuttgart.
Moreover, Emirates daily non-stop services with wide-body jets from Berlin and
Stuttgart to Dubai, would be more attractive from passengers point view compared to
Qatar Airways three-weekly service from Stuttgart to Doha and daily service with
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narrow-body jets from Berlin to Doha. This limitation in the number of seats impedes
the ability to stimulate traffic and hence for instance to stimulate incoming tourism.
Overall, the growth of airlines like Emirates has not led to a reduction of existing
nonstop / direct services of German carriers. On the contrary, the accessibility of
Germany has improved due to the new offers.
Impacts of Emirates economic activity in Germany
In fiscal year 2010/11, Emirates spent 203.3 million in Germany for salaries of its
employees and the purchase of goods and services required to operate passenger
and cargo flights (pages 87ff.).
In our definition, Emirates staff is defined as direct employment, while persons

employed with suppliers delivering inputs to Emirates (e.g. ground handlers, crew
hotels, fuel suppliers) are counted as indirect employees. This includes the full chain
of inputs.
Input-output analyses show, that besides 169 employees directly employed with
Emirates, 2,271 indirect jobs are created both through Emirates expenditures e.g. for
ground handling, catering, crew accommodation and airport charges, as well as
through the expenditures of Emirates passengers (e.g. at airport retailing, parking
and restaurants) and through the provision of public services (customs, border
control). Moreover, through consumption expenditures of persons directly and
indirectly employed, 712 jobs are induced.
According to these results, the activities of Emirates for the provision of air transport
services create in total approximately 3,200 direct, indirect and induced jobs across
different industries and different skill levels.
We have also applied an alternative methodology as found in the literature on

economic impacts of aviation, using the relation between employment at airports and
passenger/cargo traffic. This methodology results in about 3,600 direct, indirect and
induced jobs (pages 90ff.).
Impacts on Incoming Tourism
Interviews in the tourism industry have confirmed that the regional availability of direct
long-haul flights is a key factor to increase the attractiveness of a city or region for
incoming tourists from Asia and the Middle East (pages 94ff.).
On average, every additional arriving passenger increases the number of overnight

stays of foreign tourists in Germany by 0.8. Therefore, it is estimated that Emirates
accounted for approximately 485,000 overnight stays by foreign tourists in 2010
(pages 95ff.).
Expenditures of foreign tourists coming on Emirates to Germany are approximately

76 million, creating almost 2,600 direct, indirect and induced jobs (pages 102ff.).
The German National Tourist Board expects that incoming travellers from the Middle
East region will become the second largest group of non-European travellers
(estimation of 2.3 million nights in 2020) after those from the US (estimation of 5.9
million nights in 2020), when measured by the number of nights spent in Germany.
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This can be regarded as an indication also for further growth potentials for air
transport between Germany and the Middle East.
The growth of incoming tourism from the Middle East is even more remarkable, when
taking into account the relatively small population size of 39.2 million inhabitants.
Based on the expected number of nights to be spent in Germany per inhabitant, the
propensity of Middle Easterners to travel to Germany (58.7 overnight stays per
thousand inhabitants) is about 35 times the one of the Chinese (1.6 overnight stays
per thousand inhabitants), 3.2 times the one of the Americans (18.6 overnight stays
per thousand inhabitants) and 2.3 times the propensity to travel of the Australians
(25.7 overnight stays per thousand inhabitants, pages 96ff.). In order to guarantee the
long-term attractiveness of Germany for foreign tourists, availability of flights and low
air fares are particularly important.
Impacts of potential new services to additional points in Germany
Each additional flight to Germany will create approximately 140,000 additional

passengers for the respective airport, where such a flight will be operated (pages
112ff.).
Each additional flight to Germany will create about 200 direct, indirect and induced
jobs from aviation-related activities (pages 113ff.).
Each new Emirates flight will potentially increase incoming tourism by about 55,000
overnight stays. The expenditures related to this increase in incoming tourism amount
to about 8.3 million annually, creating approximately 280 direct, indirect and
induced jobs.
With two daily flights, for each destination the number of additional passengers
increases to about 360,000, the number of jobs to 440 and the number of overnight
stays to 144,000. This incoming tourism effect creates approximately 730 additional
jobs.
Switching from any of the four points currently served to new points does not create
any additional benefits for the German economy.
With traffic rights for additional points to be served by Emirates, Germanys overall
global competitiveness for business relations, exports and incoming tourism will be
improved.
Impacts on the German aeronautical industry
Emirates is one of the main customers of the German aeronautical industry. Between
1985 and 2011 Emirates took delivery of 84 Airbus aircraft, of which 65 were in
service at the end of December 2011 (including 20 Airbus A380 valued at more than
US$7 billion at list prices). As of December 2011, the carrier has 140 firm orders for
Airbus aircraft to be delivered over the next 10 years (2012-2022), with a contract
value at list prices of US-$ 54.7 billion ( 41.4 billion; including spare parts and spare
engines).
Without considering investments in engines, the share for Airbus Germany and
German suppliers exceeds 10 billion. In total, this will protect and create more than
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9,400 jobs at Airbus, its suppliers and through the consumption expenditures of
employees (page 118).
Emirates decision to equip its fleet of 90 Airbus A380 aircraft with Engine Alliance
engines, in which German manufacturer MTU has a share of 22.5 % in development
and production, has created almost 600 direct, indirect and induced jobs in Germany.
For the operation of its current fleet, Emirates spends annually almost 280 million
with German suppliers of cabin interiors, ground support equipment, spare parts and
repair services. These expenditures create more than 2,500 direct, indirect and
induced jobs in Germany.
The total employment effect in the aeronautical industry, for its suppliers and through
the spending of income of persons directly or indirectly employed in this industry
exceeds 12,500 full time jobs.
Our analysis does not include effects coming from deliveries of the German industry
to Boeing, where Emirates has 97 aircraft on firm order. Boeing did not provide any
information on the German content of Boeing aircraft. However, based on the list
prices of the aircraft ordered by Emirates, we estimate that every percentage point of
German participation in Boeings aircraft programs creates 200 direct, indirect and
induced jobs in Germany.
With total revenues in the order of 25 billion in the German aerospace industry
Emirates would account for about 4 % of these revenues over the next 10 years.
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Conclusion
The study finds that more than 18,000 jobs in Germany are dependent on the economic
activities of Emirates. The total of direct expenditures by Emirates and indirect expenditures
by incoming tourists travelling on Emirates exceed 1.6 billion per year.
When two additional points in Germany (Berlin and Stuttgart) would be allowed to be served
on a daily basis, we expect an additional contribution of close to 1000 jobs through the
aviation-related activities and incoming tourism. If both destinations were served twice daily,
more than 2000 new jobs would be created.
The following tables summarise the findings concerning expenditures and related
employment effects:
Scenario 1 one daily flight to Berlin and Stuttgart
Existing flights +
one additional daily
Employment
Existing flights
flight to BER and
STR each
Provision of air
3,152
3,548
services
2,583
3,147
Incoming tourism
12,558
Industry
18,293
19,253
Total
Expenditures
Provision of air
services
Incoming tourism
Industry
Total
Existing flights
Existing flights +
one additional daily
flight to BER and
STR each
203.3 million
233.6 million
76 million
92.6 million
1,399.9 million
1,679.2 million
1,726.1 million
Change
+12.6 %
+ 21.8 %
-/+ 5.2 %
Change
+14.9 %
+ 21.8 %
-/+ 2.8 %
Scenario 2 two daily flights to Berlin and Stuttgart
Employment
Provision of air
services
Incoming tourism
Industry
Total
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Existing flights
Existing flights +
two additional daily
flights to BER and
STR each
3,152
4,030
+27.9 %
2,583
4,043
+ 56.5 %
-/+ 12.8 %
12,558
18,293
20,631
Change
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Expenditures
Provision of air
services
Incoming tourism
Industry
Total

Germany
Final Report
Existing flights
Existing flights +
two additional daily
flights to BER and
STR each
203.3 million
269.1 million
76 million
119.2 million
1,399.9 million
1,679.2 million
1,788.2 million
Change
+32.4 %
+ 56.8 %
-/+ 6.5 %
The example of Emirates shows that Germany benefits from air transport liberalisation
twofold: On the one hand through the economic effects of additional flights and on the other
hand through the employment effects in the aeronautical industry due to the large number of
aircraft.
From the analyses and the data shown in this report, a further liberalisation of aviation
markets with third countries is likely to be beneficial for a wide range of stakeholders, such as
for employees being hired to handle additional traffic, for Germanys airports, for the
aeronautical industry, for shippers of air cargo and last but not least for passengers, who
benefit from competitive prices, larger capacities and better connectivity.
Overall, the analyses show that the German economy significantly benefits from the activities
of Emirates in Germany. Moreover, it has been shown that the economic benefits can be
further increased when flights to additional German airports will be offered.
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1 Introduction
In recent years Emirates has grown considerably. Via the airlines hub in Dubai, Emirates
provides connectivity to 103 destinations (as of December 2011) on all continents. Emirates
growth trend is also reflected in the German market, despite limitations in traffic rights. From
Germany, Emirates has become the second largest carrier after Lufthansa in the supply of
seats on long-haul flights to destinations in Southern/East Africa, Asia and the Middle East.
Passengers can reach a total of 61 destinations in Southern/East Africa, Asia, the Middle
East and the South West Pacific with Emirates from any one of the four airports in Germany
currently served. These destinations include Dubai as non-stop destination, 57 destinations
to be reached with one transfer in Dubai and three destinations (Auckland, Christchurch and
Entebbe/Kampala) with additional stops on the flight from Dubai.
These numbers underline the importance of Emirates for the German air transport market, in
terms of destinations served and seat capacity provided. Moreover, Emirates is an important
customer to both Airbus and Boeing, as it operates a quickly growing fleet of long-haul widebody aircraft. The German industry has significant shares in both Airbus and Boeing
commercial aircraft projects and delivers spare parts, aviation equipment and services to
Emirates.
In this study, the DLR Institute of Air Transport and Airport Research undertakes research to
quantify the effects generated for the German economy by passenger and cargo services
operated by Emirates to and from Germany, as well as the effects for the German aerospace
industry, resulting from orders for aircraft, engines, components, spare parts and equipment.
The geographical scope of the analysis is on the one hand Germany in its entirety and, on
the other hand, a particular focus is laid on the situation of Berlin and Stuttgart, where
Emirates intends to offer new services. Emirates is currently constrained by the bilateral air
services agreement between Germany and the United Arab Emirates, as no passenger
services to these cities can be established without giving up services to existing destinations.
With passenger services, Emirates is permitted to serve four airports in Germany and
currently operates to Frankfurt, Munich, Dsseldorf and Hamburg.
In this study, the effects for the German economy have been analysed in the following areas:
Effects for passengers due to increased choice in the number of destinations, seat
capacity, services, frequencies and increased competition between airlines
Effects for shippers of air cargo due to an increase in freight capacities
Effects for the aeronautical industry (employment, revenues)
Effects on the tourism sector in Germany
The document is structured as follows:

In the first part, a brief overview of Emirates in general and its activities in Germany will be
given.
In the second part, the connectivity of Germany in general, and Berlin and Stuttgart in
particular, to the air transport system is analysed and the contribution of Emirates is shown.
This analysis is based on flight schedules data for December 2011.
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In the third part, impacts of Emirates services on passenger flows between Germany and
Africa, Asia and South West Pacific are analysed. This analysis is based on data provided by
the German Statistical Office and Sabre Airport Data Intelligence. Sabres Airport Data
Intelligence information is based on bookings collected by the computer reservation systems
(commonly known as market information data tapes/MIDT), but is further processed to
account for airline direct sales not processed via CRS. To account for these effects,
additional data sources, e.g. data from statistical offices, is used.
The fourth area of the study deals with the impacts of Emirates on the German economy.
This analysis is structured in two parts: On the one hand the effects coming from air services
with regard to tourism, business travellers and air cargo are individually assessed. This part
of the analysis will be conducted for the German economy in total, supplemented by
estimations of the regional economic effects coming from potential future services to Berlin
and Stuttgart. On the other hand the economic impacts of Emirates orders for aircraft,
engines, spare parts, services and equipment for the German aerospace industry are
analysed. Both the effects from air services as well as the purchase of aircraft, equipment
and services from the German industry are investigated from a macroeconomic perspective,
showing the employment generated by Emirates in Germany, the contribution to the
economy in terms of gross value added and the revenues of tax authorities and social
security.
The study concludes with a discussion on the benefits for Germany with the liberalisation of
air services agreements in general and the benefits of Emirates services to passengers,
summarising the findings of the previous chapters.
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2 Overview The Emirates business model and Emirates

current activities in Germany
The growth strategy of Emirates is embedded in an overall plan for the economic
development of Dubai. Dubai has become a role model for an Aerotropolis, a city which is
located at a global hub that facilitates the exchange of people, goods and ideas
(Kasarda/Lindsay, 2011). The economic policy of the emirate is focussed on the
improvement of infrastructure, attracting foreign investment and highly skilled labour, for
which the place is attractive due to its global connectivity and open immigration rules.
In recent years, other airlines like Qatar Airways and Etihad Airways, but also Star Alliance
member Turkish Airlines, are following Emirates business model of developing networks with
global connectivity and a particular focus on traffic flows between Europe, Asia and Africa.
The economic benefits of the aviation hub in Dubai are estimated by the Oxford Economics
study (June 2011). It is estimated that aviation-related jobs account for about 19 % of total
employment in Dubai and for about 28 % of Dubais GDP. The total of 259,000 jobs related
to aviation in Dubai splits into 58,000 persons directly employed in aviation-related
businesses and 43,000 jobs created with companies delivering inputs to the aviation sector.
A further 23,900 jobs are created as induced employment resulting from the spending of
persons directly or indirectly employed in aviation. In addition to this, the tourism sector in
Dubai benefits strongly from the improved connectivity provided by air services. The authors
found that the employment effects in this area reach almost 134,000 jobs.
Through the creation of a platform for global connectivity, benefits are not only created for
the hub, but also for each spoke connected to each other point in the network. As of
December 2011, 103 destinations were served with passenger flights. Including destinations
only served by freighters, the number of points in the Emirates network increases to 116 on
all continents.
A multitude of aspects contributes to the success of Emirates, as shown by OConnell
(2009). A key component in the success of the business model of Emirates is the geographic
location of its hub in Dubai, roughly in the centre of the triangle London-JohannesburgTokyo, which allows serving a large number of intercontinental city pairs between Africa,
Asia, Europe and the Middle East.
In developing its network, Emirates follows the approach to connect primary and secondary
airports in Europe via its hub in Dubai with primary and secondary airports in Africa, Asia and
South West Pacific. This allows passengers from secondary airports in Europe to reach
secondary airports in the Eastern Hemisphere with only one transfer, while itineraries with
competing carriers often require at least two transfers (Brtzel, 2006). This network structure
is called secondary-hub-secondary in the literature, compared to the secondary-hub-hubsecondary network structure of competing airlines and alliances. From the passengers
perspective, the secondary-hub-secondary strategy offers benefits as one additional transfer
can be avoided.
The following figure shows the effect for the example of an itinerary from Hamburg to Perth in
Australia. With Emirates, the itinerary has one transfer at the airlines hub in Dubai.
Lufthansa offers for instance a routing via the hubs in Frankfurt and Singapore, oneworld via
London-Heathrow and Singapore and SkyTeam via Amsterdam and Kuala Lumpur.
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From this strategy various airports can take advantage, which formerly had no or only very
few intercontinental flights, for instance Glasgow and Newcastle in the United Kingdom,
Perth and Brisbane in Australia or Hamburg and Dsseldorf in Germany.
Figure 2-1: Comparison of itinerary between two secondary airports with Emirates and
competing airlines / alliances
Source: DLR.
In its business model, Emirates benefits from various cost advantages. Concerning flight
operations cost savings can be achieved due to the following effects: In the operation of
wide-body passenger jets, fuel consumption per aircraft-kilometre flown initially decreases
with longer flying distance, as the energy-intensive take-off and climb phase spreads over
larger flying distances. However, fuel consumption per kilometre flown increases again at
some point with increasing distances, as fuel to be burnt at later stages of flight has to be
carried over long distances. Modern passenger jets, such as the Boeing 777 or Airbus A330
have their minimum fuel consumption per kilometre flown at distances between 3,000 and
6,000 km (Egelhofer et al. 2008), which are typical for Emirates operations between Dubai
and Europe or South East Asia (see Figure 2-2).
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Specific fuel consumption in kg/km
Figure 2-2: Specific fuel consumption in kg per aircraft-kilometre flown
Frankfurt-Singapore
Frankfurt-Dubai
Dubai-Singapore
Distance in km
Source: Based on Egelhofer et al. (2008).

Therefore, a cost advantage is achieved over competitors, which operate non-stop (e.g.
between Europe and South East Asia) with flight stages of 8,000 to 10,000 km. This
relationship is shown in Figure 2-2.
The unlimited operating hours of the airport in Dubai can be regarded as one element for the
improvement of efficiency, too, as aircraft are not held artificially on the ground at the
carriers main hub.
Contributing to Emirates increasing success is a strong brand image. Emirates relies to a
large extent on sponsorship of sports teams and events, as shown by OConnell (2009). In
Germany, Emirates has increased its popularity through the support of the World Cup 2006
and as main sponsor of the Hamburger SV football team.
The positive brand perception of passengers is also reflected in the results of Emirates
inflight passenger survey for flights between Germany and Dubai, where the reputation of the
carrier and the perceived value for money are among the four most often mentioned reasons
for choosing Emirates.
Due to its ambitious growth strategy, it has achieved considerable volume discounts in its
aircraft orders. From the high number of orders, like for the Airbus A380 or Airbus A350, not
only Emirates benefits, but positive spill-over effects extend to other airlines buying the same
types. With more orders, Airbus can distribute the development costs over a higher number
of aircraft, leading to smaller development costs per aircraft delivered. Moreover, with larger
quantities produced, economies of scale in purchasing and production can be realised, which
are partly passed through to the airlines. Additionally, Emirates fleet decisions have a
signalling effect for other airlines, which potentially has a positive effect on the
manufacturers sales success. Also the resale value of aircraft potentially increases with the
number of aircraft produced, as types become more common. This should be applicable
particularly for the Airbus A380 with Engine Allliance engines, of which Emirates has ordered
90 units, while other carriers have only ordered 35 of this variant.
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Like other airlines in emerging economies, such as in Singapore or in Turkey, Emirates can
benefit from relatively lower wage levels for less skilled workers (e.g. employees in ground
handling at the hub in Dubai) compared to incumbents in Europe. Lower tax rates make the
UAE attractive for highly skilled labour (e.g. cockpit crews, engineers and management), for
which a global market has developed. However, while not being obliged to contribute to
mandatory social security systems as in Europe, Emirates provides healthcare, housing and
childrens education for management, pilots, engineers and other staff voluntarily to improve
the attractiveness of Dubai. The costs incurred with these services exceed US-$ 500 million
annually.
The above mentioned factors concerning network structure, flight operations and locationspecific advantages contribute to comparably lower production costs, but are mostly not
specific to the UAE, as they can also be found in other emerging economies. The following
figure provides an overview of production costs (costs per available seat kilometre) for a
number of airlines operating in the Asia-Europe long-haul market.
Figure 2-3: Comparison of operating costs for selected airlines
Source: Oxford Economics (2011).

From an economists perspective, Emirates exploits a classical Ricardian comparative
advantage in the services industry, pretty much the same way as consumer electronics are
produced in China or textiles in Bangladesh, for the advantage of both the exporting and the
importing country. The benefits from the international division of labour in the production and
trading of goods are widely undisputed.
Emirates has a long-standing relationship with Germany. It started services to Frankfurt on
31st July 1987 and will therefore celebrate its 25th anniversary in 2012. The second
destination Munich was added on 1st November 1999, followed by Dsseldorf on 27th March
2001. Hamburg, the fourth destination, was added starting on 1st March 2006. Additionally,
freighters are operated to and from the airports in Dsseldorf, Frankfurt and Hahn. The
bilateral air services agreement between Germany and the UAE allows Emirates to operate
cargo-only flights to more airports than the four available airports for passenger services.
Figure 2-4 shows the development of Emirates frequencies from German airports. Both
Frankfurt and Munich started with seven flights per week, which increased to 14 flights per
week in 2003. In Dsseldorf frequencies were increased to double daily in 2006. In Hamburg,
Emirates started with a daily flight from Dubai, which was extended in October 2006 to New
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York, but discontinued in 2008. In September 2011, Hamburg received a second and in
December 2011 Frankfurt received a third daily frequency to Dubai. In Munich, one daily
flight is operated by an Airbus A380.
Figure 2-4: Development of Emirates frequencies from German airports 1996-2012
Source: Own illustration based on data by OAG.

Over time, services to all German destinations were increased, both in the number of
frequencies as well as aircraft sizes. This reflects the growing demand for air travel between
Germany and the regions served by Emirates in Asia and the Middle East. The operational
scheme from German airports as of December 2011 is shown in the following table.
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Table 2-1: Emirates operations in Germany as of December 2011

Airport
Dsseldorf
FrankfurtHahn*
FrankfurtRhein
MainInt`l
Hamburg
Munich
MonthlyFrequency
(Departures)
44
18
8
5
31
62
29
31
31
31
31
AircraftType
AirbusA340300
Boeing777300
Boeing747400F**
Boeing747400F**
AirbusA330200
Boeing777300ER
Boeing747400F**
Boeing777200ER
Boeing777300ER
AirbusA340300
AirbusA380800
Monthlyseat
capacity(upon
departure)
11748
6552
0
0
7347
21948
0
8246
10974
8277
15159
Monthlycargo
capacity(intupon
departure)
572
301
936
585
527
1035
3393
527
518
403
248
Source: Own representation based on data by OAG and Emirates SkyCargo.

*) Cargo traffic rights only **) Freighter operations
The following figure shows the development of passengers flown on Emirates flights between
Dubai and Germany (both directions) for the time frame 2000-2011. The steady growth
underlines the resilience of Emirates business model, even during the difficult years after the
terrorist attacks in September 2001 and the global financial crisis after 2008, which has had
serious impacts on passenger demand with regard to other airlines.
The year 2011 saw a small decline of the passenger numbers. For 2012, however, another
increase can be expected as capacities on some routes have been increased in winter
2011/2012.
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Figure 2-5: Development of Emirates passengers on flights between Germany and Dubai
(and vice versa) 2000-2011
Source: Own representation based on data by Emirates.

In line with passenger growth, Emirates has achieved a positive recognition of its brand. The
carriers inflight passenger survey reveals that more than 60 % of passengers on flights to
and from Germany have flown on Emirates repeatedly. Primary reasons for customers to
choose Emirates are the experiences made with the carrier before, the reputation and the
value for money.
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3 Analysis of the effects of connectivity to the international

aviation network due to Emirates presence in Germany
3.1 The importance of connectivity
In developed economies the division of labour, and therefore a spatial separation in the value
chain of nearly every good or service is a fact. This international system increasingly
develops the need for international business contacts or the founding of international
branches and subsidiaries and other aspects of trade. Economic development in a global
economy is intertwined with growth of external trade making worldwide mobility a necessity.
Moreover, there can be a substantial separation of working and living, if only at times, as well
as living and leisure. Therefore, connectivity to the global aviation network is a key factor to
the competitiveness of cities, regions and countries.
Numerous studies (e.g. Button/Taylor, 2000; Santin, 2000; Harsche et al., 2008) have shown
that accessibility by air transport has a wide range of regional economic effects, including an
increase in foreign direct investment, job creation and an increase in incoming tourism.
The existence of air services to a wide range of destinations and at affordable prices
increases the attractiveness of locations for businesses and is an essential feature in the
current economy that is based on global logistics chains, connections and speed. Therefore,
an increase in air services with more destinations and frequencies is an effective measure to
stimulate the economy and to participate in the globalisation process.
On a regional level, in the catalogue of hard locational factors, the quality of the transport
system is an additional criterion in the interregional competition of economic development
(Santin, 2001). Thus, the economic development of a region is supported when the local
industry appreciates and utilises the connection to a high quality transport network. Key
elements for local businesses are time- and cost advantages creating improved possibilities
to access international markets and strengthen business contacts (Santin, 2001).
With increasingly global business ties, the network structure of the local air transport link is
an important factor in this regard. Thus, a broad network and a high degree of accessibility of
national, international and intercontinental destinations will increase the airports
attractiveness for the local economy. In this regard it is noteworthy that a higher level of
economic capacity in the destination regions would benefit the local economy better. The
linking of places of production and the marketplace is especially important concerning cargo
traffic.
Other criteria concerning economic impact for the region refer to the frequency of flight
connections and the overall number of available seats. A high number of connections are
desirable for flexible planning and short notice decisions on the sides of industry as they
reduce schedule delay and associated costs. Finally, the number of available seats is an
important measure to rate the overall impact of additional flights from the passenger
perspective. Higher capacities give more people the opportunity to benefit from air transport
and contribute to decreasing fares, allowing also passengers with a lower willingness to pay
to fly.
The supply of transport services is of importance for the region and the airport itself. The
airport can increase its attractiveness by holding a sufficient supply of transport services and
this way it can generate higher revenues through fees and income from non-aviation
sources. In this regard international and intercontinental connections are of special interest
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since larger aircraft generate higher fees and carry more passengers that spend more time
and money at the airport (Doganis, 1992).
Furthermore, an increased number of larger aircraft is especially important for capacity
constrained airports like Dsseldorf, at which growth through an increase in the number of
flights is hardly possible. Carriers with larger aircraft therefore contribute to a better use of a
public infrastructure, which increases social welfare.
Therefore, local economies can, to a large extent, benefit from the installation or expansion
of intercontinental flight connections as Santin (2001) has illustrated. Thus the accessibility to
the air transport network and an efficient international traffic structure is an important
locational factor.
3.2 Connectivity for Germany

The following chapter will analyse the connectivity of Germany to the international air
transport system, with a special focus on the contribution of Emirates to the accessibility of
destinations in Africa, Asia and South West Pacific.
For the analysis of the integration of Germany into the global air transport network and the
role of Emirates we have used the following approach:
First, we have identified the relevant market regions to which Emirates provides connectivity
from Germany. Based on data provided by Sabre ADI, in 2010, more than 50 % of origindestination passengers travelling on Emirates flights from Germany were flying to
destinations in Asia, followed by 32 % flying to the Middle East countries and 9 % flying to
Southern or East Africa and South West Pacific respectively. All other world regions (West
Africa, the Americas, Europe) account for only 0.3 % of all Emirates passengers on flights
from Germany.
Figure 3-1: Destination regions of origin-destination passengers on Emirates flights from
Germany
Source: Own representation based on Sabre ADI; Emirates online connections (defined
below) only.
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Although it is theoretically possible to fly with Emirates from Germany via Dubai to South
America, this itinerary is rarely chosen in reality, due to the increased travel time and detour
factor involved compared to non-stop flights or transfer flights via hubs which are closer
between Germany and the destination regions. Therefore, our analysis of connectivity is
focussed on the following world regions and countries, which are considered as relevant in
the course of this study:
Southern Africa (e.g. Angola and South Africa)

East Africa (e.g. Ethiopia, Kenya, Tanzania, Mauritius and Seychelles)
South Asia (e.g. Bangladesh, India, Pakistan and Sri Lanka)
South East Asia (e.g. Indonesia, Malaysia, Singapore and Thailand)
North East Asia (e.g. China, Japan and South Korea, excluding Russia)
Middle East (e.g. Iran, Kuwait, Saudi Arabia and the UAE)
South West Pacific (e.g. Australia and New Zealand)
For these markets, Emirates provides connectivity for travellers to and from Germany.
Subsequently, when we mention in this study the terms Eastern Hemisphere or Africa,
Asia and South West Pacific, we refer to the geographical regions defined above. The
following figure provides an overview on the regions and countries involved.1
Figure 3-2: World regions to which Emirates provides connectivity for Germany
Source: Own representation based on data by Emirates and Sabre ADI.

In a second step, we have used Official Airline Guide (OAG) schedules data for the month of
December 2011 to analyse the number of destinations served from Germany non-stop, with
one stop or with more than one stop. This analysis includes a discussion of the contribution
An overview of the countries assigned to each world region can be found in the annex of this report
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of Emirates services from Germany to the connectivity to the airports in the regions under
consideration.
In total, OAG reports 1,292 airports with scheduled passenger services in the geographical
area defined above in December 2011.
In our methodology, transfer itineraries will only be considered when both segments are
operated by the same carrier (subsequently defined as online connection, or abbreviated
O-O, showing that both flight segments in a one-stop itinerary are operated by the same
carrier), or when both flight segments bear the flight number of one carrier, but one segment
is operated by another carrier (codeshare connection, subsequently abbreviated as N-O
or O-N, showing that an operated and non-operated flight segment are combined for an
itinerary). An example for an online connection is, for instance, a flight with Emirates from
Hamburg to Dubai, which connects to another Emirates flight from Dubai to Bangkok. An
example for a codeshare connection is for instance a Lufthansa operated flight from
Frankfurt to Singapore, with a connection to a flight from Singapore to Sydney operated by
Singapore Airlines under the code of Lufthansa.
Theoretically, under the IATA interlining system, it is possible to combine any IATA airlines
for a transfer itinerary. However, this system has become less relevant for passengers due to
codesharing and airline alliances. IATA interlining typically involves relatively high fares,
therefore being less attractive for travellers than code-share connections, where airlines
often offer through fares and optimised connections. Thus, our analysis includes only online
and code-share connections.
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3.2.1 Non-stop connectivity

In December 2011, a total of 54 destinations in the geographical region defined above were
served from Germany with non-stop flights. Lufthansa serves 33 destinations non-stop from
Germany, Air Berlin including its codeshare partners (Hainan Airlines and Royal Jordanian)
10.
Figure 3-3: Non-stop destinations in the Eastern Hemisphere served by all airlines from
Germany in December 2011
Source: Own representation based on data by OAG.
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Figure 3-4: Overview of destinations in Africa, Asia, Middle East and South West Pacific
served non-stop from Germany in December 2011

While Emirates serves only a single destination (Dubai) among the 54 from Germany in total,
the share in number of seats offered is substantially higher. Actually, Emirates has become
the second largest carrier operating from Germany measured by the number of seats on
long-haul flights to the Eastern Hemisphere.
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Figure 3-5: Number of seats provided on non-stop flights and frequencies to destinations in
Africa, Asia, Middle East and South West Pacific served non-stop from Germany in
December 2011

This is due to Emirates strategy providing long-haul flights not only to the hubs Frankfurt and
Munich, but unlike many other carriers, also to secondary airports in Dsseldorf and
Hamburg, with currently two daily frequencies each.
Generally, the supply of long-haul flights in Germany is strongly concentrated on the hubs
Frankfurt and Munich, while the secondary airports struggle to attract long-haul flights. Even
the larger metropolitan areas in Germany, such as Berlin, Dsseldorf or Hamburg have only
a few intercontinental flights. The existing long-haul flights out of secondary airports in
Germany are to a large extent bound for North America and the Caribbean, with only rare
examples of flights to Asia or the Middle East. In this regard, Emirates is an important airline
for secondary airports not only in Germany, but also in other European countries, providing
at least daily long-haul flights to Dubai with subsequent onward connectivity.
3.2.2 Connectivity for itineraries with one stop / transfer

When itineraries with one stop or transfer are considered, 429 destinations (out of the total of
1292 airports in the region) in the Eastern Hemisphere can be reached from Germany (see
Figure 3-6). This number of destinations can be reached when all available online or
codeshare connections of all carriers serving Germany are taken into account. Among the
global alliances, Star Alliance provides the highest number of destinations from Germany,
with 240 destinations that can be reached with one transfer, followed by SkyTeam with 147
and oneworld with 78 destinations. If only online connections by individual carriers are looked
at, Emirates provides more destinations than Lufthansa (57 vs. 40). However, if Lufthansas
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destinations served with codeshare services are also considered, the number of destinations
increases to 89. Air Berlin, as second largest German airline, serves 8 destinations in the
Eastern Hemisphere, and 15, respectively, including code-sharing partners. As the analysis
is based on schedules data for December 2011, Air Berlins new cooperation with Etihad
Airways is not yet included. As a result of this cooperation, Air Berlin has started services
from Berlin to Abu Dhabi in January with onward connections to 45 destinations in
Southern/East Africa, Asia, the Middle East and South West Pacific currently served by
Etihad. In consequence, the long-haul route network of Air Berlin has been restructured, with
a discontinuation of non-stop-flights to a number of destinations (e.g. Dubai, Bangkok and
Phuket).
Three more destinations can be reached with Emirates from Germany with one transfer,
however, with additional stops on the flights from Dubai to the final destination:
Entebbe/Kampala in Uganda with a stop in Addis Ababa, Auckland with stops in Sydney,
Brisbane or Melbourne and Christchurch with stops in Bangkok and Sydney. In the shortterm, passengers from Germany can benefit from extensions in Emirates route network, as
Entebbe/Kampala is now served non-stop from Dubai starting 25th March 2012. From June
2012, Emirates will open a new route from Dubai to Ho Chi Minh City in Vietnam, providing a
further destination in an emerging economy in Asia. Additionally, Emirates has code-share
agreements in place with Japan Airlines, which extend the route network with connections
from Osaka to Sapporo and Tokyo-Haneda and Fukuoka, served from Tokyo-Narita.
However, these services are only rarely used by travellers from Germany. Other codesharing
partners of Emirates are Jet Airways and Oman Air, as well as Star Alliance member Thai
Airways and SkyTeam member Korean Air. These services, however, are operated to
destinations only, which are also served by Emirates own aircraft and therefore do not
contribute additional destinations to the network. Emirates also has non-reciprocal codeshare agreements in place on Emirates-operated flights, for instance with Air Malta, Air
Mauritius, Philippine Airlines and Star Alliance member South African Airways.
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served from Germany with one stop/transfer in December 2011

O-O both segments operated by the respective airline
N-O first segment codeshare flight, second segment operated by the respective airline
O-N - first segment operated by the respective airline, second segment codeshare flight
3.2.3 Connectivity to the 100 largest airports in the Eastern Hemisphere

While in the preceding chapter the connectivity to all airports in the Eastern Hemisphere has
been analysed, this chapter shows the connectivity of Germany to the 100 largest airports in
Southern/East Africa, Asia, Middle East and South West Pacific. The size of an airport, here,
measured in the numbers of seats offered on departing flights in December 2011, can be
seen as a proxy for the importance of the respective city or region as a business and tourist
destination. Therefore, this analysis is more focussed on the actual centres of gravity in
economic importance and passenger demand.
As can be seen in Figure 3-7, among the 100 largest airports in the Eastern Hemisphere, 39
are connected with non-stop flights to Germany. 30 of the 100 largest airports can be
reached with Star Alliance carriers, while the oneworld and SkyTeam alliances provide nonstop connectivity to only six destinations each. Lufthansa alone serves 29 of the 100 largest
airports with non-stop flights.
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Figure 3-7: Overview of non-stop services from Germany to the 100 largest airports in Africa,
Asia, Middle East and South West Pacific in December 2011

From Germany, 96 of the 100 largest airports can be reached with one transfer when all
online and code-share connections are taken into account (see Figure 3-8). Star Alliance
alone provides connectivity to all 96 destinations, while oneworld and SkyTeam both serve
74 destinations. Lufthansa, without taking into account their codesharing partners, offers 35
destinations, while Emirates serves 40 of the 100 largest airports in Africa, Asia and the
South West Pacific. Lufthansa increases the route network, when their code-sharing partners
are also taken into account, to 58 of the 100 largest airports.
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served from Germany with one stop/transfer in December 2011

O-O both segments operated by the respective airline
N-O first segment codeshare flight, second segment operated by the respective airline
O-N - first segment operated by the respective airline, second segment codeshare flight
3.2.4 Comparison of the route networks of Emirates and Lufthansa

When comparing the network of Emirates and Lufthansa, we can observe both overlaps and
complementarities. Lufthansa serves 40 destinations in Southern/East Africa, Asia and the
Middle East. Out of these 40 destinations, 9 are not served by Emirates. Out of the 61
destinations served by Emirates, 30 are not served by Lufthansa. 31 destinations are served
both by Lufthansa and by Emirates. The following Figure 3-9 shows in detail the airports
served by Emirates and Lufthansa. Figure 3-10 displays the geographic location of the
destinations discussed in this paragraph.
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Figure 3-9: List of complementary and overlapping destinations of Emirates and Lufthansa in
the Eastern Hemisphere
*) Ho Chi Minh City will be served by Emirates from 4th June 2012

Figure 3-10: Map of complementary and overlapping destinations of Emirates and Lufthansa
in the Eastern Hemisphere

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The following table shows in detail the monthly frequencies and seat capacities of Lufthansa
and Emirates in a direct comparison. Thirty destinations, which are not served by Lufthansa,
can be reached from Germany via Dubai on direct flights offered by Emirates. Among the
destinations in the focus of Emirates route network are cities in India (e.g. Ahmedabad,
Kozhikode, Kochi, Hyderabad or Thiruvananthapuram), which are served at least once daily
from Dubai, but have no direct services from Germany. Additionally, many destinations,
which can be reached with Lufthansa between twice weekly and daily, can be reached with
Emirates on a twice daily basis, thus providing more flight options to passengers. Among the
destinations where Emirates provides more frequent services than Lufthansa are Kuala
Lumpur (three times daily out of Dubai compared to 4 weekly flights by Lufthansa from
Germany), Guangzhou (daily from Dubai compared to twice weekly from Frankfurt) and
Jakarta (twice daily from Dubai compared to 6 weekly flights from Frankfurt). There are,
however, also 9 destinations which can be reached from Germany on Lufthansa-operated
flights, which are not served by Emirates.
Table 3-1: Comparison of frequencies and capacities to African, Asian and Pacific
destinations on direct flights* of Lufthansa from Germany with direct flights of Emirates from
Dubai in December 2011
Lufthansa
Airport Name
Tel Aviv
Mumbai
Delhi
Dubai International
Tokyo Narita Apt
Shanghai Pudong International Apt
Singapore Changi Apt
Hong Kong International Apt
Seoul Incheon International Airport
Beijing Capital Apt
Riyadh
Jeddah
Beirut
Abu Dhabi International Apt
Bangkok Suvarnabhumi Apt
Cape Town
Osaka Kansai International Airport
Muscat
Kuwait
Bengaluru
Johannesburg O.r. Tambo International
Chennai
Nagoya Centrair International Apt
Tehran Imam Khomeini Apt
Amman Queen Alia International Apt
Jakarta Soekarno-Hatta Apt
Bahrain
Doha
Addis Ababa
Pusan
Kuala Lumpur International Airport
Pune
Release: 1.00
IATACode
TLV
BOM
DEL
DXB
NRT
PVG
SIN
HKG
ICN
PEK
RUH
JED
BEY
AUH
BKK
CPT
KIX
MCT
KWI
BLR
JNB
MAA
NGO
IKA
AMM
CGK
BAH
DOH
ADD
PUS
KUL
PNQ
Emirates
Monthly
Frequencies
on direct
flights from
Germany
Monthly
Seats on
direct
flights
from
Germany
Monthly
Frequencies
on direct
flights from
Dubai
70
59
59
57
56
55
55
53
47
44
40
38
35
31
31
31
31
31
30
29
29
29
29
28
27
27
26
26
22
18
17
15
19514
16418
18774
19417
23138
18570
20695
17895
13983
17349
11940
8398
4884
6851
10230
10230
10230
9951
6630
9570
15254
10005
7773
9240
4148
5967
5746
5746
4862
3978
5610
2835
0
155
124
279**
31
62
117
84
31
62
66
62
62
0
125
62
31
62
124
93
93
93
0
93
48
62
93
155
31
0
93
0
Monthly
Seats on
direct
flights
from
Dubai
0
46512
35638
90251**
10974
23703
41728
33777
15159
23157
19053
27057
15786
0
48975
17828
10974
15539
33047
22821
37107
26435
0
26991
13324
21948
22215
40550
7998
0
33174
0
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Airport Name
Asmara
Ho Chi Minh City
Kolkata
Dammam (SA)
Erbil
Nanjing
Guangzhou
Luanda
Auckland International Apt
Ahmedabad
Baghdad
Brisbane
Basra
Kozhikode
Christchurch
Colombo Bandaranaike Apt
Kochi (IN)
Dhaka
Damascus
Dar Es Salaam
Durban King Shaka International Apt
Entebbe/Kampala****
Hyderabad Rajiv Gandhi Intl Arpt
Islamabad
Karachi
Lahore
Madinah
Melbourne Airport
Male
Manila Ninoy Aquino International Apt
Mauritius
Nairobi Jomo Kenyatta International
A
t
Perth
Peshawar
Sanaa
Mahe Island
Sydney Kingsford Smith Apt
Thiruvananthapuram
IATACode
ASM
SGN
CCU
DMM
EBL
NKG
CAN
LAD
AKL
AMD
BGW
BNE
BSR
CCJ
CHC
CMB
COK
DAC
DAM
DAR
DUR
EBB
HYD
ISB
KHI
LHE
MED
MEL
MLE
MNL
MRU
NBO
PER
PEW
SAH
SEZ
SYD
TRV
Lufthansa
Monthly
Monthly
Frequencies
Seats on
on direct
direct
flights from
flights
Germany
from
Germany
14
14
13
13
13
13
9
7
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3094
4620
2873
2457
1612
2873
1989
1547
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Emirates
Monthly
Monthly
Frequencies
Seats on
on direct
direct
flights from
flights
Dubai
from
Dubai
0
0***
54
30
0
0
31
13
93
44
18
62
17
49
31
93
62
74
31
31
31
31
93
31
124
31
31
93
62
62
50
58
63
14
18
49
93
54
0
0***
12798
7810
0
0
10974
4602
37107
10428
4266
21948
4029
12425
10974
32268
16460
24352
8417
7998
7347
7998
24162
9921
35383
9714
7347
32922
21084
21948
15747
14529
19970
3579
4266
12642
37107
12798
*) A direct flight is defined as operation under one flight number, either non-stop or with one or more stops en-route
**) Frequencies and seats on flights between Germany and Dubai
th
***) Emirates will start daily services to Ho Chi Minh City on 4 June 2012
****) Emirates commenced non-stop services from Dubai to Entebbe/Kampala in March 2012
Source: Own representation based on data by OAG for December 2011.

The main benefit Emirates provides in terms of connectivity for Germany can be found in the
area of a broader choice of frequencies to a wide range of destinations and the capacities
provided with a larger number of available seats (see chapter 3.6 for an assessment of the
capacity effects generated by Emirates). With this business model, Emirates has stimulated
traffic, which will be shown in detail in subsequent chapters.
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3.3 Connectivity for individual cities in Germany

While the preceding chapter has shown the connectivity to Southern/East Africa, Asia, the
Middle East and South West Pacific in a summarised view for Germany in general, the
following chapter shows Emirates contribution to the connectivity of individual cities in
Germany. This includes Dsseldorf and Hamburg, where Emirates has already operated for
several years, as well as the cities of Berlin and Stuttgart, where operations are likely to
commence once traffic rights are granted. In our analysis, we concentrate on Germanys
secondary airports, as Emirates services contribute relatively less to the connectivity of the
hubs in Frankfurt and Munich, which already have a large number of non-stop services to
destinations in the Eastern Hemisphere and to hubs providing onward connectivity to these
regions.
Although Germany is a poly-centric country with the economic strength and population being
distributed among several strong metropolitan areas, non-stop flights to destinations in Africa
and Asia are concentrated at the hubs Frankfurt and Munich, as shown in the following
figure.
Figure 3-11: Seats offered on non-stop flights to Southern/East Africa, Asia and the Middle
East from German airports in December 2011
*) Berlin includes the airports of Tegel and Schnefeld

In consequence, this centralised structure results in the majority of travellers needing to use
transfer itineraries for trips to Africa, Asia or the Middle East.
In case Emirates were to operate a daily service to Berlin and Stuttgart, the shares in the
number of seats would change as shown in the following figure. In Berlin, seats offered on
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non-stop flights to Southern/East Africa, Asia and the Middle East would rise from 28,000 to
35,000, an increase by about one quarter.
Figure 3-12: Seats offered on non-stop flights to Southern/East Africa, Asia and the Middle
East from Berlin and Stuttgart with possible future daily services by Emirates.
*) Berlin includes the airports of Tegel and Schnefeld

3.3.1 Dsseldorf
Dsseldorf lies in the middle of Germanys most attractive airport catchment area with a high
density region of around 10 million inhabitants. It is also part of the blue banana, the transEuropean megalopolis that forms a corridor of urbanisation and industry agglomeration. The
region displays a diverse economic structure of manufacturing and services and offers a
dense rail and road transportation network plus four international airports including
Dsseldorfs Rhein-Ruhr International Airport with 20.3 million passengers in 2011. The city
of Dsseldorf is the regional administrative capital of the Land North Rhine-Westphalia which
underlines a diverse economic structure and international relations. According to
EUROSTAT, the regional GDP per capita in Dsseldorf was 32 % above European average
in 2008.
Dsseldorf is Germanys number three airport when it comes to seat capacities on non-stop
flights to the Eastern Hemisphere. However, apart from Emirates twice daily service to
Dubai, the destination portfolio is largely oriented at leisure destinations such as Bangkok or
Mombasa, served by Air Berlin between once and four times weekly. Other destinations
include Beijing (Air China, three times weekly), Abu Dhabi (Etihad, twice weekly, from
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summer 14x weekly with 7x Etihad and 7x Air Berlin) and Tehran (Mahan Air, five times
weekly).
served from Dsseldorf non-stop or with one stop/transfer in December 2011

Dsseldorf has a relatively high level of integration into the air transport network, with 178
destinations served either non-stop or with one stop/transfer. Particularly Star Alliance, with
150 destinations, contributes to this level of connectivity. Within Star Alliance, particularly Air
China contributes with a large number of destinations in Asia, which could be reached with
one transfer in Beijing. In total, 106 destinations can be reached from Dsseldorf via Beijing.
However, the flight is operated only three times weekly. Emirates contributes with five
destinations (Ahmedabad, Brisbane, Durban, Perth and Sanaa), which could otherwise not
be reached from Dsseldorf with one stop/transfer.
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Figure 3-14: Map of destinations in Africa, Asia, Middle East and South West Pacific served
from Dsseldorf non-stop or with one stop/transfer in December 2011
3.3.2 Hamburg
The city of Hamburg and its surrounding boroughs encompass an urban area of 1.8 million
inhabitants. The citys historical role as a wealthy merchant city and part of the Hanse has
been supported by its port. Today, Hamburg is still among the leading port cities in Europe
and the recent increase in significance of the port is due to reclaimed hinterland after the end
of the Cold War. Hamburg constitutes a transport node in Northern Germany. The city is an
important centre of trade, manufacturing and service and its location as a port city has led to
the development of an industry agglomeration along the river Elbe displaying the industry
structure of a modern port. Hamburg is one of two main bases of Airbus as a major
manufacturer and employer for the region. The region has after London, Luxemburg and
Brussels the highest GDP per capita in Europe, which in 2008 was 88 % above the
European average.
Besides the twice daily Emirates service to Dubai, Hamburg is very limited in the number of
flights to the Eastern Hemisphere, as only Iran Air (twice weekly service to Tehran) and
China Eastern (twice weekly one-stop service to Shanghai via Frankfurt) operate from the
main airport in Northern Germany.
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served from Hamburg non-stop or with one stop/transfer in December 2011

94 destinations in the Eastern Hemisphere can be reached from Hamburg non-stop or with
one-stop, when all carriers are considered. Star Alliance provides the broadest network with
62 destinations, followed by SkyTeam, which offers 51 destinations and oneworld, with 32
destinations, which are almost exclusively provided via London-Heathrow. Lufthansa (on LH
operated flights) offers 33 destinations; including codeshare partners, the network increases
to 35 destinations. Among the non-aligned carriers, which offer in total 65 destinations,
Emirates provides the most extensive connectivity with 57 one-stop transfer destinations,
plus Dubai as the non-stop flight.
Without Emirates, the non-stop service to Dubai, currently used by more than 20,000 origindestination passengers between Hamburg and Dubai would not exist. Furthermore, 14 city
pairs out of the 94 can be reached exclusively with Emirates with one transfer instead of two
or more; therefore enhancing the integration of Hamburg into the air transport network
considerably. The 14 destinations served exclusively by Emirates with one stop are:
Ahmedabad (India)
Brisbane (Australia)
Dhaka (Bangladesh)
Durban (South Africa)
Jakarta (Indonesia)
Kochi (India)
Kozhikode (India)
Lahore (Pakistan)
Melbourne (Australia)
Perth (Australia)
Peshawar (Pakistan)
Sanaa (Yemen)
Sydney (Australia)
Thiruvananthapuram (India)
Moreover, other destinations, which can be reached with competing airlines less than daily
are connected on a daily basis with Emirates. This includes Addis Ababa, Guangzhou and
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Kuala Lumpur. On other routes, the increase in frequencies and seat capacities considerably
increases consumer choice.
from Hamburg non-stop or with one stop/transfer in December 2011
3.3.3 Berlin
The metropolitan Berlin-Brandenburg comprising of the city of Berlin and its surrounding area
is the largest urban agglomeration in Germany with more than 4 million inhabitants in a
radius of less than 100km around the city centre. Its significance derives from its historical
role as Germanys capital. Berlin represents a node of two traditional European transport axis
in East-West and North-South directions. The city has formerly been served by three airports
partly due to the citys divide during the Cold War. In future, Berlin will be served by one
international airport only, Berlin Brandenburg Airport, scheduled to open in June 2012 on the
site of Schnefeld airport. Economically, Berlin still is impacted by the consequences of the
German division. It has the lowest GDP per capita of all German cities with more than one
million inhabitants, at 99 % of the European average. Its economic focus lies on creative
industry and tourism and also biotech, medical engineering, pharmaceutics and energy. In
the tourism sector, Berlin has established itself as being among the top three city
destinations in Europe.
Probably due to the relative weak demand base from business travellers, Berlin has been
widely neglected by airlines when it comes to long-haul flights. In December 2011, eight
long-haul destinations in Asia and the Middle East were served from the Berlin airports Tegel
and Schnefeld: 14 flights to Amman operated by Royal Jordanian; 9 flights to Damascus by
Syrian Arab Airlines; 31 flights to Tel Aviv by El Al and Israir; 18 flights to Bangkok, 11 flights
to Phuket and 16 flights to Dubai operated by Air Berlin; 10 monthly flights operated by
Hainan Airlines to Beijing; and 31 flights by Qatar Airways to Doha. Although this results in
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little more than two daily long-haul flights on average, with these services, Berlin is in 4th
place in Germany in terms of the number of seats offered on flights to Asia and the Middle
East.
With one stop / transfer, 141 destinations in Southern/East Africa, Asia, the Middle East and
South West Pacific can be reached from Berlin. 66 destinations can be reached with Star
Alliance, 51 with SkyTeam and 47 with oneworld. Lufthansa provides services with one stop /
transfer to 33 destinations. There are no Lufthansa flights to other Star Alliance hubs than
Frankfurt and Munich. Travellers wishing to travel on Lufthansa flights therefore need to
accept two or more transfers to a relatively large number of destinations in the Eastern
Hemisphere.
It becomes apparent that a high number of destinations can be reached from Berlin with one
transfer only by non-aligned airlines. Contributing to this is the connectivity provided by
Hainan Airlines via Beijing as 42 destinations in Far East Asia can be reached via this city.
However, the number of frequencies is limited, as Berlin-Beijing is operated only twice
weekly. 56 destinations can be reached via Doha on the daily service by Qatar Airways. In
this case it has to be mentioned that the seat capacity on the flights to Doha is limited, as
Qatar Airways operates with A319/A320 narrow-body aircraft and an average seat capacity
of 143 seats per flight. This limitation in the number of seats impedes the ability to stimulate
traffic and hence for instance to stimulate incoming tourism.
served from Berlin non-stop or with one stop/transfer in December 2011

In December 2011, it was announced that Etihad Airways will become the largest
shareholder in Air Berlin. Associated with this investment is an integration of the networks of
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both carriers, which has started in January 2012. Air Berlin operates flights to Abu Dhabi with
onward connections to 45 destinations with Etihad Airways. At the same time, Air Berlin has
discontinued non-stop flights to Bangkok and has discontinued the service to Dubai in March
2012. In future, Phuket, which is currently served non-stop from Berlin, will be operated with
a stop in Abu Dhabi.
If Emirates would start operations between Berlin and Dubai, four additional destinations
could be reached from Berlin with only one transfer, which currently require two or more
stops. The four additional destinations are Durban in South Africa and Brisbane, Perth and
Sydney in Australia. From the perspective of benefits for the city of Berlin coming from the
increase in connectivity it is important to mention that Australian tourists play an important
role for the economy of Berlin. Between 2007 and 2011, the number of nights spent by
Australian tourists in Berlin has increased from 104,000 to 188,000. It can be expected that
this trend can be further supported with an improvement in the air transport connections
between Berlin and Australia.
from Berlin non-stop or with one stop/transfer in December 2011

A comparison between the routes of Emirates and Qatar Airways shows a considerable level
of overlap for the markets served by both carriers simultaneously. As shown in the figure
above and assuming Emirates service to Berlin, Emirates and Qatar Airways serve 57 and
56 destinations from Berlin with one transfer, respectively, plus Dubai and Doha as non-stop
destinations. Among these destinations are 47 served by both Emirates and Qatar Airways,
10 are exclusively served by Qatar Airways and 11 are served exclusively by Emirates.
Therefore it is likely that in the case of market entry by Emirates substantial competition with
Qatar Airways will develop for itineraries to and from Berlin. It is reasonable to assume that
the competition between Emirates and Qatar Airways will be more intense than the
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competition between Emirates and Lufthansa, as travel times between Emirates and Qatar
Airways are similar to a majority of onward destinations in the Far East, due to the
geographically similar location of the hubs in Dubai and Doha. Even with new flights to
Dubai, travel times will not be reduced significantly from the journey times realised today with
high-frequency services and short connection times offered by Star Alliance in Munich and
Frankfurt. Even though transfers from Berlin to the Far East via Frankfurt initially require
some degree of back-tracking, the level of circuity (defined as the relative distance of a
transfer itinerary to the direct great circle distance) is less for the majority of city pairs with a
transfer in west-central Europe than in the Gulf.
From the perspective of passengers, the impacts of more airlines serving the market
between Germany and Asia are expected to have particularly positive impacts on air fares. A
series of studies conducted by InterVISTAS came to the conclusion that market access
liberalisation will result in an average fare reduction in international markets of between 7
and 30 % (InterVISTAS, 2009a, 2009b and 2009c). Moreover, more flights in the market
bring broader choice to passengers in terms of departure times and the availability of seats.
3.3.4 Stuttgart
Stuttgart is the centre of the Stuttgart metropolitan area with 2.7 million inhabitants in the city
and the five adjacent counties. This area is rather large and multipolar and not as densely
populated as the other areas introduced here. Like Dsseldorf, Stuttgart is part of the blue
banana, the trans-European megalopolis that forms a corridor of urbanisation and industry
agglomeration. Stuttgart itself is a rail and road transport node in the South-West of
Germany. It is part of the wider east-west transport corridor Munich-Stuttgart-StrasbourgParis. The city of Stuttgart is the regional administrative capital of the Land BadenWrttemberg. Stuttgart displays a highly specified industry structure with a high proportion of
highly qualified employees. The automobile industry including suppliers is among the most
prominent. Stuttgart has the highest export rate of all German cities. Stuttgart reaches in
terms of regional GDP per capita a value that is 39 % higher than European average.
Stuttgart, despite being in an economically and demographically strong region of Germany,
has not had any direct services to Southern/East Africa, Asia or the Middle East before 2011.
The proximity to the hubs of Frankfurt and Munich, combined with high frequency, quick
railway access (1:15 hrs to Frankfurt airport) and traffic rights restrictions have led to the
decision of airlines not to connect Stuttgart with Asian destinations directly. Over the year
2011, the situation in Stuttgart has changed due to the opening of a new route to Doha,
operated by Qatar Airways. However, this service is operated as of December 2011 only
three times weekly, and only with an A319, offering only limited seat capacities with 110
seats per flight.
In the course of this study, in cooperation with the Chamber of Commerce and Industry of the
Stuttgart region a survey among companies based in and around Stuttgart about their
perception of the quality of connectivity and the needs for improved accessibility of
destinations was conducted. Main findings of the survey can be summarised as follows:
85 % of the business trips by air start from the airport in Stuttgart, which is an indication for
the preference of business passengers to use an airport that is located close to their home or
office. Only 12 % have used Frankfurt, with the remaining 3 % split among airports such as
Munich, Zurich or Karlsruhe. This is a relatively strong difference to passengers travelling for
leisure purposes, where airport choice is much more distributed over different airports, as
parking fees and air fares have a higher influence on airport choice than the convenience of
departing from an airport located in the immediate vicinity.
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Being asked why travellers chose a different airport than Stuttgart for their trips, 48 %
responded that the destination is not offered from Stuttgart and 19 % each that other airports
offered more frequencies or better departure times.
While destinations in Germany (18 %) and Europe (62 %) account for the majority of trips,
Asia has developed into the most important destination region outside Europe among the
companies participating in the survey, with 16 % of the total number of trips in the sample
going to Asia.
73 % of the companies answered that employees are not allowed to book a ticket
substantially more expensive to save time on intercontinental trips, which is an indication that
even in the business travel segment price sensitivities have increased.
Concerning the perceived connection quality, strong differences can be observed, when
different regions are analysed. Figure 3-19 shows an excerpt from the survey, comparing the
perceived connection quality to regions in Europe, the Middle East and Asia.
Figure 3-19: Perceived quality of connectivity from Stuttgart
Source: Own illustration based on data from Stuttgart region airport survey.
While the flight offers from Stuttgart to Europe are perceived as relatively good, with almost
three quarters of respondents giving a good, satisfactory or fair rating, connectivity to the
Middle East and Asia is rated as being insufficient. For flight offers to Asia, only roughly a
quarter of respondents gave a good, satisfactory or fair rating. Flight offers to the Middle
East were rated only by about 10 % of respondents as fair. Nevertheless, it has to be
mentioned that throughout the survey, the rate of respondents concerning the quality of
intercontinental connections was relatively low, with 36-46 % non-respondents. This is an
indication that a relatively large number of companies do not have any business trips to Asia
or the Middle East. Nevertheless, the survey updates and confirms earlier findings made by
the Chamber of Commerce and Industry of the Stuttgart region in 2007 (Reichardt / Gtz,
2007) that the accessibility of intercontinental destinations still lacks quality and choice from
the perspective of the companies located in the region, which use air services to the Middle
East and Asia.
Companies were also asked for their requirements regarding new destinations, being served
either non-stop or with improved transfer connections.
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Figure 3-20: Destinations with a need for improved non-stop or transfer connectivity, share
of the number of mentioned destinations by region
Source: Own illustration based on data from Stuttgart region airport survey.
The answers to this question are consistent with the results shown above. Asia and the
Middle East have gained in overall importance and as the connection quality is perceived as
being relatively weak, the demand for new destinations in Asia and the Middle East is
relatively high. Almost 60 % of the mentioned destinations companies would like to see
improvements in connectivity are in Asia or the Middle East.
The following figure shows the connectivity with non-stop / one-stop itineraries from Stuttgart.
Overall, 88 destinations in the Eastern hemisphere can currently be reached with one
transfer, Doha is the only destination that can be reached directly (the non-stop Qatar
Airways service has recently been replaced by a direct service with a stop in Zurich). Among
the three global alliances, Star Alliance provides the best connectivity with 60 destinations,
followed by SkyTeam with 40 destinations and oneworld with 32. Lufthansa provides
services to 33 destinations on flights operated by the German airline and 35 if also Lufthansa
codeshare flights operated by other airlines are taken into account. If Emirates was permitted
to operate to Stuttgart, it would serve 57 destinations in Africa, Asia, the Middle East and
South West Pacific with one transfer and Dubai as non-stop destination.
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served from Stuttgart non-stop or with one stop/transfer in December 2011
*) Qatar Airways operates three weekly services to Stuttgart.

In January 2012, Qatar Airways announced it will discontinue the three-weekly non-stop
service from Stuttgart to Doha and replace it with a service Stuttgart-Zurich-Doha from March
2012. For Stuttgart, the additional stop means that the one-stop connectivity Qatar Airways
currently provides on three days of the week has been lost entirely. This causes a reduction
in the number of destinations that can be reached with one stop or transfer from Stuttgart by
15 from 88 to 73 destinations. If Emirates were to start services between Dubai and Stuttgart,
10 destinations previously served by Qatar Airways could be reached with one stop again:
Ahmedabad (India)
Dhaka (Bangladesh)
Jakarta (Indonesia)
Kochi (India)
Kozhikode (India)
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Peshawar (Pakistan)
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from Stuttgart non-stop or with one stop/transfer in December 2011

While the Emirates route network overlaps with the network of Qatar Airways with 10
destinations, further effects of a daily Emirates service to Stuttgart can be identified. Firstly,
origin-destination passengers from Stuttgart to Dubai will benefit from time savings offered by
a non-stop flight. In 2010, almost 8,000 passengers have flown on transfer itineraries on their
way from Stuttgart to Dubai. It is likely, that additionally a large number of travellers from the
Stuttgart region have used other modes of transport to access airports offering non-stop
flights to Dubai (e.g. Frankfurt, Munich, Zurich), involving substantially increased travel times
associated with the indirect journeys.
Secondly, four additional destinations will be connected to Stuttgart with only one transfer:
Durban in South Africa and Brisbane, Perth and Sydney in Australia. This will create travel
time benefits for more than 1,000 passengers, which travelled to these destinations from
Stuttgart in 2010.
Thirdly, as shown below, the number of non-stop services offered between the Middle East
and Germany increases the attractiveness of Germany for incoming tourism. In case the
correlation between the number of seats and the number of nights spent by incoming tourists
holds in future, a daily Emirates service could result in additional 25,000 nights spent by
tourists from the Middle East in Germany and additional effects from tourists coming from
markets served by Emirates, such as India, China and Australia.
Therefore we conclude that the main effects of a potential new Emirates flight between
Stuttgart and Dubai can be found in an improvement in the accessibility for a total of 14
destinations, compared to the situation that will be the case after Qatar Airways schedule
change in March 2012. Passengers will be able to reach these destinations with a reduced
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number of transfers, resulting in reduced journey times. The additional seat capacity of a
potential new service between Stuttgart and Dubai is likely to cause similar traffic stimulation
effects as it was the case in Hamburg and Dsseldorf, analysed in this report in chapter 4.
3.4 Connectivity and Frequency

Up to this point, our analysis focused on the number of destinations that can be reached from
German airports non-stop or with one transfer. However, an important quality criterion in air
transport is the number of frequencies offered. With more frequencies available to
passengers and shippers of air cargo, schedule delay, i.e. the difference between published
and preferred departure time can be minimised. Moreover, choice for passengers concerning
service quality and fares increases, when several airlines offer connections between the
same city pairs
The following Figure 3-23 shows the weekly number of nonstop and one-stop itineraries from
Frankfurt, Munich, Dsseldorf, Hamburg, Berlin and Stuttgart to the 100 largest airports in
the Eastern Hemisphere, as measured by the number of seats offered upon departure (see
chapter 3.2.3). Figure 3-23displays the number of weekly connections offered by the 10
airlines, which in total offer the highest number of non-stop and one-stop connections from
the six German airports under consideration.
Hemisphere from selected German airports by airline
Source: Own illustration based on data provided by OAG.

For an itinerary to be considered, it must meet the following criteria: It must be a nonstop
flight or a one-stop online or codeshare connection offered in a transfer window between 45
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minutes and 6 hours after arrival. In case multiple feeder flights connect within the transfer
window to one onward flight, only the itinerary with the shortest overall journey time is
counted. Not considered are itineraries, which consist of one or two non-operated codeshare
flight segments. Therefore, an itinerary like Stuttgart-Frankfurt-Singapore where the two flight
segments are operated by Lufthansa, but also bear the marketing code of Singapore Airlines
is not considered for the marketing carrier, as this itinerary is already counted for the
operating carrier. Furthermore, connections are only accepted, when the total distance of a
two segment-itinerary does not exceed 1.5 times the shortest flight distance offered on the
respective city pair. With this step, commercially irrelevant connections, such as FrankfurtTokyo-Dubai are filtered.
The analysis shows that Lufthansa offers the highest number of weekly non-stop or one-stop
itineraries, with more 2,600 non-stop and connection services to the 100 largest airports in
the Eastern Hemisphere. Emirates is second, with more than 1,700 itineraries in December
2011. In case Emirates will be allowed to operate a daily flight from Stuttgart and Berlin, this
could increase to almost 2,200. For Stuttgart and Berlin, we have assumed hypothetical flight
schedules with daily departure times at 3:20pm and arrivals at 11:35pm in Dubai. For
Stuttgart and Berlin, respectively, a daily Emirates flight to Dubai could create 217 additional
weekly flight connections, i.e. seven non-stop flights to Dubai and 210 onward connections
from Dubai in Emirates network.
As Lufthansa has a broad domestic feeder network and basically every long-haul flight from
Frankfurt and Munich can be reached from any other German airport, Lufthansas number of
connections offered is very high for each German airport (368 from Stuttgart, 380 from Berlin,
399 from Dsseldorf and 403 from Hamburg). From Frankfurt, the German carrier offers 574
weekly connections. This includes Lufthansa-operated non-stop flights, one-stop connections
within the Lufthansa network (e.g. via Munich) and codeshare connections, where one flight
is operated by Lufthansa.
The highest number of weekly itineraries from one individual airline at one airport is 712,
offered by Air China from Frankfurt. The reason for this is that we find 32 airports in China
among the 100 largest airports in the Eastern Hemisphere.
The following figure shows the contribution of Emirates and Lufthansa to the total number of
weekly itineraries offered from the six German airports considered here.
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Hemisphere from selected German airports by airline
Source: Own illustration based on data provided by OAG.

The figure shows that the relative contribution of Emirates at Germanys secondary airports
is higher than at the hubs. The twice daily services from Dsseldorf and Hamburg create
17.0 % and 18.2 % of all weekly itineraries to the Eastern Hemisphere from these airports,
respectively. In Frankfurt, Emirates offers 7.7 % of all itineraries and in Munich 11.1 %.
With potential new flights to Berlin and Stuttgart, both airports will receive a considerable
improvement in the number of weekly itineraries. In Stuttgart, the number of weekly
connections would increase by more than 14 % from 1,547 to 1,764. In Berlin, flights will
increase by about 9.8 %, from 2,221 to 2,438.
The analysis of the number of weekly itineraries also shows the benefits of a daily long-haul
flight and the high number of onward connections offered at the hub in Dubai in comparison
to the offers of other Gulf carriers. While Qatar Airways currently offers 69 weekly itineraries
from Stuttgart and 154 from Berlin, Emirates would offer with one daily flight from the two
German airports 217 itineraries.
Also at other German airports, benefits of two (Dsseldorf, Hamburg, Munich) and three
(Frankfurt) daily services can be shown. For instance, Emirates offers 494 weekly itineraries
from Frankfurt, while Qatar Airways provides 305, Turkish Airlines 230 and Etihad 218.
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3.5 Connectivity index for German airports

A frequently used indicator for the quality of connectivity is the connectivity index (CI), which
is the average shortest path length (SPL) required for reaching all other airports in a
predefined airport network (Malighetti et al., 2008). SPL is defined as the number of flight
stages required to reach another airport in the network. The lower the CI, the better an
airport is connected to the air transport system, as passengers can reach their destinations
with fewer stops or transfers. In case all destinations in question can be reached with nonstop flights, the value of the indicator would be 1, in case all relevant destinations can be
reached with one transfer, the indicator value would be 2. A theoretical example of the
calculation of the connectivity index is shown in the following figure.
Figure 3-25: Calculation of the connectivity index
Source: Own representation based on Malighetti et al., 2008.

For our analysis, we calculate the CI for the German airports of Berlin, Dsseldorf, Frankfurt,
Hamburg, Munich and Stuttgart. The air transport network for which the CI will be calculated
includes all Emirates destinations in Southern and East Africa, Asia and South West Pacific.
From the view of the German point of origin this includes Dubai as non-stop destination and
57 one-stop destinations. Two destinations in Emirates route network can be reached from
Germany with two stops (Entebbe/Kampala, until 24th March 2012, when this destination will
be served non-stop from Dubai, and Auckland) and three stops (Christchurch), respectively.
The CI is then compared for each of the airports in the following three flight schedule
situations:
The complete flight schedule, including Emirates services to Dubai and onward
connections
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The complete flight schedule, excluding Emirates services to Dubai and onward
connections
Emirates flights services to Dubai and onward connections only
From a comparison of the values for the CI we can assess the contribution of Emirates to the
connectivity of each airport. Moreover, it is possible to compare how well each airport is
integrated into the aviation system. The results of the CI are shown in the following table. A
lower CI is better, as it is a measurement for the average number of flight stages required to
reach the 61 destinations analysed.
Table 3-2: Connectivity index for German airports due to Emirates services to Dubai and
onward destinations in December 2011
Airport
Connectivity Index = average shortest path length to the

61 Emirates destinations in Southern/East Africa, Asia
and South West Pacific
CI
CI
CI
Emirates flights
all airlines,
all airlines, with
only
without Emirates
Emirates
Connectivity
improvement
due to
Emirates
+0.07
+0.26
+0.00
+0.27
+0.00
+0.18
+0.24
Berlin
1.95*
2.02
2.08*
Dsseldorf
1.95
2.21
2.08
Frankfurt
1.39
1.39
2.08
Hamburg
2.00
2.27
2.08
Munich
1.72
1.72
2.08
Stuttgart
2.00*
2.18
2.08*
Stuttgart
(after
2.02
2.26
2.08*
Qatar
Airways
schedule change)
*) Theoretical value in case Emirates had operated flights to Dubai from Berlin and Stuttgart
Source: Own representation, based on data by OAG.
For the secondary airports in Germany, Emirates presence improves their connectivity to the
selected destinations, while in case of Frankfurt and Munich, no connectivity gains can be
found by the CI measurement. These airports are already so well integrated into the air
transport system, both due to non-stop long-haul flights as well as connections to other hubs,
that Emirates services do not reduce the number of flights stages to any of the 61 analysed
destinations.
A closer look at the secondary airports reveals the following aspects:
For Berlin, the CI would improve from 2.02 to 1.95 if Emirates was allowed to operate from
the German capital. The improvement in connectivity comes from the reduction of transfers
required to reach Brisbane, Perth and Sydney in Australia and Durban in South Africa from
two in the current situation to one in a situation where Emirates is permitted to operate from
Berlin to Dubai. It is worthwhile to mention that although Emirates own CI is worse than the
CI of all airlines currently operating, Emirates will contribute to an improvement in the CI with
the reduction in the number of transfers to the four aforementioned destinations. Emirates CI
is worse than the CI of all airlines currently operating, as some destinations are currently
served from Berlin non-stop (Amman, Bangkok, Doha and Beijing) or with one stop
(Entebbe) which improves the CI. To these destinations, new Emirates services do not
directly improve the connectivity, but only indirectly with more seat capacity and more
frequencies on transfer itineraries. However, even an airline with an overall worse CI
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improves the connectivity of an airport, in case when at least some destinations can be
reached with a lower number of flight segments are served better in a situation with than
without this airline.
The difference in the situation with and without Emirates for Berlin is also relatively small, as
the same destinations, which are currently in Emirates route network, can already be
reached with one transfer from Berlin due to services operated by Qatar Airways and Turkish
Airlines, for instance Basra, Baghdad, Dar-es-Salam, Medina or Melbourne.
Dsseldorf gains through Emirates services substantially in connectivity, as Qatar Airways
does not serve the capital of North-Rhine Westphalia. Therefore, a range of destinations
which would be served in parallel by Qatar Airways and Emirates from Berlin and Stuttgart
are served from Dsseldorf exclusively by Emirates.
Hamburg gains the highest connectivity benefit due to Emirates services. The airport has no
other services to Southern/East Africa, Asia and the Middle East apart from Iran Airs flights
to Tehran, which does not provide a high level of onward connectivity. Therefore, in a
situation without Emirates, passengers had to rely on hubs like Amsterdam, Frankfurt,
Istanbul, London-Heathrow and Paris-CDG. Without Emirates, connectivity to 15 destinations
out of 94, which can be reached today either non-stop or with one transfer would worsen.
The rather abstract improvement in the CI value can be visualised, as shown in the following
figure.
Figure 3-26: Map of destinations in Africa, Asia, Middle East and South West Pacific for
which Emirates services reduce the number of stops / transfers from Hamburg

Figure 3-26 shows the 15 destinations which can be reached with Emirates with one transfer
less than with other airlines. For most of these destinations the reduction in the number of
transfers also causes a reduction in travel times (denoted in the figure e.g. with -3:20 =
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Emirates offers a 3 hours, 20 minute faster connection than the fastest competitor). The
travel time gain is particularly striking with destinations in India, which are not yet included in
the (codeshare) destination portfolio of many other airlines operating from Hamburg. Benefits
in travel time reductions can also be found for Dubai as non-stop destination and for
destinations in Australia. For other destinations, the reduction in the number of transfers
does not bring travel time reductions (Durban, Sanaa and Jakarta), as the detour via Dubai
in combination with relatively long waiting times at the hub offset the travel time reduction of
one less transfer.
Finally, in Stuttgart, we see again a relatively large overlap with Qatar Airways, although the
overall connectivity gain with Emirates services would be substantially higher than in Berlin.
This is due to the currently non-existing non-stop flights to other Asian destinations from
Stuttgart, while in Berlin the non-stop flights to Amman, Bangkok, Beijing, Doha and Dubai
help to improve the CI. If frequencies were also considered in our model, the connectivity
gain for Stuttgart would be even higher, as Qatar Airways operates only three times weekly
into Stuttgart. The airline is not supposed to be allowed to increase this number of flights in
the foreseeable future, as the bilateral air service agreement between Germany and Qatar
allows for only a limited number of weekly services. Moreover, the non-stop flight to Doha
has been replaced by a service with an intermediate stop in Zurich, resulting in increased
travel times for itineraries to Doha and beyond.
If Emirates were allowed to operate to Stuttgart, the connectivity of the airport as measured
by the CI would improve to a level of Hamburg and would be only slightly lower than currently
in Dsseldorf or Berlin.
3.6 Connectivity and capacity

Above analyses concentrate on the connectivity gain, as measured by the number of
destinations that can be reached non-stop or with transfer connections and the average
number of flight segments required to reach destinations in Asia, South West Pacific or
Southern and East Africa.
However, the attractiveness of an airports flight schedule does not only depend on the
number of destinations and frequencies, but also on the actual capacity supplied, i.e. the
number of available seats.
In other words: Even in cases in which an airport is well connected to the most important
European hubs, the actual capacity available to certain final destinations might be rather
limited. Aircraft operating on intra-German or intra-European feeder services are usually
relatively small narrow-body aircraft typically with less than 200 seats and a significant share
of the segment capacity is used by local passengers that terminate their trips at the
respective hubs.
Hamburg, for example, is connected with Frankfurt, Munich, London, Paris, Copenhagen,
Stockholm, Vienna, Zurich and Prague, but all flights to these hubs are operated by narrowbody aircraft only.
Consequently, the actual daily supply of seats available for each indirect origin-destination
relation departure airport German/European Hub African/Asian destination can be quite
low. This observation is especially valid for lower-priced fare classes.
Then, if demand exceeds supply, different forms of crowding-out can occur, including those
in the following examples:
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First, an incoming tourist from Asia that wished to fly via Frankfurt to Hamburg could
be crowded out by a business traveller with a higher willingness to pay for a
particular flight between Germany and Asia. While for the individual airline, under a
profit-maximizing behaviour, it is logical to allocate seats to travellers with the highest
willingness to pay; this does not necessarily bring the best results for the German
economy.
Second, a local O&D passenger flying from Hamburg to Frankfurt on a business trip
could purchase a seat which would otherwise have been sold to a tourist flying from
Hamburg via Frankfurt to Asia or vice versa, if capacity on the intra-German flight is
limited.
Third, a passenger flying from the US via Frankfurt to Asia could crowd-out a
passenger wishing to fly from Hamburg via Frankfurt to Asia, if capacity on the flight
to Asia is scarce.
Consequently, given this limited capacities on indirect services, the inauguration of direct
long-haul services from secondary airports in Europe to hubs overseas can yield in a
significant increase in O&D capacity between the European departure airport and the
respective destination region.
In this chapter, we use a simple but sound methodology to roughly estimate the capacity
effects of the existing Emirates services to Hamburg and of a potential new service to
Stuttgart, for these two airports.
Sabre ADI data from 2011 is referred to in order to determine the actual number of
passengers from Hamburg and Stuttgart to destinations in Asia (without CIS states),
Southern and East Africa, Middle East (without Turkey) and South West Pacific, on the
carrier level.
For Hamburg, the total used capacity on O&D relations to the above regions in 2011 is
shown in the following table and figure.
Table 3-3: Total and Emirates (EK) used capacity on O&Ds from Hamburg to Asia, Southern
and East Africa, South West Pacific and the Middle East region (2011)
FROM
TO
Outbound Passengers
All carriers
HAM
HAM
Middle East
Southern & East
Africa
HAM
Asia (w/o CIS)
HAM
South West Pacific
Sum
all regions
Growth by EK
EK
Market
Share EK
96,115
30,888
47 %
32 %
32,803
7,051
27 %
21 %
157,027
46,740
42 %
30 %
17,169
8,590
100 %
50 %
303,114
93,269
44 %
31 %
Source: Own calculations based on Sabre/ADI data.
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Figure 3-27: Capacity contribution of Emirates on O&D relations from Hamburg to Southern
and East Africa, Asia, the Middle East and South West Pacific (2011)

It shows that the Emirates capacity share on these relations varies between 21 % (for O&D
traffic from Hamburg to Southern and East Africa) and 50 % (for O&D traffic to South West
Pacific). The capacity increase generated by Emirates calculated under the assumption
that the supply of Emirates has not resulted in any demand decreases with the other carriers
is in the range between 27 % for Africa and 100 % for the South West Pacific region.
On relations to Asia, the biggest of these O&D markets from Hamburg, Emirates had a
capacity share of 30 % in 2011, which stands for an increase in capacity by 42 %.
These figures and our connectivity analyses illustrate that the market entry of Emirates in
Hamburg has not primarily led to a higher level of connectivity in terms of flight length,
frequencies or the number of stops, but rather to a significantly increased supply in seats,
which per se yields in higher levels of competition, better availability, lower fares and hence
more choice for the consumer.
In the following paragraphs, we look in more detail at the potential capacity effect of a
possible inauguration of services by Emirates from Stuttgart to Dubai. Used capacity of
existing carriers serving the regions Asia (without CIS states), Southern and East Africa,
Middle East (without Turkey) and South West Pacific for the year 2011 has again been
derived from Sabre/ADI. We assume that passenger figures of the existing carriers would not
have declined if Emirates has already inaugurated services.
In order to look at the potential capacity and demand effects of a new Emirates service for
Stuttgart, we simulate that a daily flight with a 237-seater aircraft which equals the smallest
aircraft in Emirates fleet had already happened in 2011. Such a daily flight leads to an
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additional 12-months capacity of 86,505 departing seats, or an expected number of 69,204

additional passengers, if the average load factor of Emirates services into Germany is taken
as reference. In a final step, the simulated number of 69,204 passengers is allocated to the
four world regions on the assumption that the existing geographic distribution of Emirates
passengers out of Germany would also be valid for Stuttgart: Asia (without CIS states)
50.5 %, Southern and East Africa 8.6 %, Middle East (without Turkey) 31.9 % and South
West Pacific 8.6 % (see Figure 3-1 in chapter 3.2).
The resulting total estimated used capacity on O&D relations from Stuttgart to the above
regions in 2011 under the assumption that Emirates would already operate is shown in
the following table and figure.
Table 3-4: Estimated total and Emirates (EK) used capacity on O&Ds from Stuttgart to Asia,
Southern and East Africa, South West Pacific and the Middle East region (2011)
Outbound Passengers
FROM TOREGION
STR
MiddleEast
Southern&East
STR
Africa
STR
Asia(w/oCIS)
STR
SouthWestPacific
Sum
allregions
2011status Additional Totalincl. Growth

quo(no
passengers assumption inducedby Market
Emirates)
EK*
forEK*
EK
ShareEK
31,136
22,076
53,212
71%
41%
13,527
66,212
2,130
113,005
5,952
34,948
5,952
69,204
19,479
101,160
8,082
182,209
44%
53%
279%
61%
31%
35%
74%
38%
*) Assumption for Emirates passengers: 237 seats per day, 80 % load factor, same geographical distribution with regard to final
destination than Germany-wide in 2010 (Middle East 31.9 %, Southern/East Africa 8.6 %, Asia 50.5 %, South West Pacific 8.6
%)
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Figure 3-28: : Potential capacity contribution of Emirates on O&D relations from Stuttgart to
Southern and East Africa, Asia, the Middle East and South West Pacific (2011)

In Stuttgart, the overall capacity effect of a potential daily Emirates service would be even
larger than in Hamburg.
The corresponding graph shows that the potential Emirates capacity share on the relevant
relations would lie between 31 % (for O&D traffic from Stuttgart to Southern and East Africa)
and 74 % (for O&D traffic to South West Pacific). The capacity increase generated by
Emirates calculated under the plausible assumption that the supply of Emirates would not
result in any demand decreases with the other carriers is in the range between 44 % for
Africa and 279 % for the South West Pacific region.
On relations to Asia, the biggest of these O&D markets from Stuttgart, Emirates would gain a
capacity share of 35 %, which stands for an increase in capacity by 53 %.
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3.7 Intermediate conclusions

From the results shown in this chapter, we can draw the following intermediate conclusions:
Germany is already strongly integrated into the global aviation system with connectivity
provided by airlines and hubs based in Germany and Europe. However, particularly the
secondary airports like Hamburg and Stuttgart and the passengers travelling from these
points benefit from current or potential future services with Emirates, by new destinations,
additional frequencies and additional capacities for passengers and cargo.
Emirates offers more destinations in Africa, Asia and South West Pacific than Lufthansa with
their own (non-codeshare) flights. Emirates has already become the second largest carrier in
terms of seats offered on non-stop long-haul flights to the Eastern Hemisphere from
Germany. Thus, the services provided by Emirates give passengers a wider choice, on the
one hand by additional destinations, which could be reached without Emirates only with one
or two additional transfers en-route and on the other hand by additional frequencies. We
have shown in this context that Emirates has developed into the second largest provider of
seat capacities on long-haul flights to the Eastern Hemisphere from Germany.
From the perspective of German secondary airports, Emirates and other carriers from
emerging aviation markets provide opportunities for these airports to have long-haul flights,
which other carriers do not intend to offer. While airports like Berlin and Stuttgart already
enjoy a high level of integration into the global aviation network with connections to European
hubs, these flights are for various reasons not optimal for connections to Asia. The majority
of the hubs are in Western Europe (e.g. Amsterdam, London and Paris), which requires a
feeder flight in westerly direction against the overall direction of travel to the east. For this,
psychological barriers exist.
Moreover, from the perspective of cargo transport, Emirates provides relatively large
capacities, as only wide-body aircraft are operated. Particularly for a strongly export-oriented
region as Stuttgart, this could provide time benefits, when trucking to European hubs can be
reduced and cargo is loaded directly on intercontinental flights close to the point of origin.
The comparison of Berlin with Stuttgart shows that already a single added destination can
provide a substantially increased onward connectivity, as the case of Hainan Airlines to
Beijing shows. This service alone adds 46 destinations that can be reached from Berlin on an
itinerary with one transfer, which could otherwise only be reached with two or more transfers.
The benefits of Emirates services for passengers originating in the regions of secondary
airports in Germany can be found particularly for itineraries to secondary destinations in Asia
and for ultra-long-haul routes to Australia and on direct flights, although with additional
stops en-route to New Zealand. These destinations can be reached with Emirates with one
transfer, instead of two transfers, as offered by competing alliances.
When we take a look at the route networks and travel times of the different Gulf carriers and
compare them to incumbent carriers currently operating from Germany, we conclude that
particularly in the cases of Stuttgart and Berlin, Emirates would compete to a large extent
more with Qatar Airways than with Lufthansa, as the route networks of the two Gulf carriers
overlap at 47 destinations and similar journey time durations. Lufthansa remains on nearly all
city pairs between Germany and the Eastern Hemisphere the carrier with the fastest journey
times. This is due to a combination of the high number of frequencies from Germanys
secondary airports to the hubs in Frankfurt and Munich and the low detour factor. Based on
these findings, we form the hypothesis that Lufthansa and Emirates operate to a large extent
in two separate markets. Lufthansa is particularly strong in the area of high-yield business
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travel, where passengers have a high value of time. Emirates, in turn, stimulates the market
with added capacities and competes for less time-sensitive travellers against airlines, such
as Etihad Airways, Qatar Airways or Turkish Airlines.
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4 Analysis of the effects of Emirates presence in Germany

on passenger flows
4.1 Market development in Germany
According to data provided by Sabre ADI, 5.6 million origin-destination passengers travelled
from Germany to a destination in Southern and East Africa, Asia, the Middle East or the
South West Pacific in 2010. The data shows that Emirates had a market share of about
10.2 % in these markets. However, the market share of Emirates is very much dependent on
the geographical location of the destination, as shown in the following figure.
Figure 4-1: Origin-destination passengers from Germany to the Eastern Hemisphere and
Emirates market share by region
Source: Own representation based on data by Sabre ADI.

Among the geographical markets analysed, Emirates has the highest market share in origindestination traffic from Germany to both the South West Pacific and South Asia with slightly
more than 20 %. Particularly low market shares can be found for traffic from Germany to
North East Asia (3.5 %) and Southern Africa (6.2 %). The conclusions that can be drawn
from the data are the following: Emirates has established itself as a major carrier in the traffic
from Germany to India and Australia, due to the location of its hub, the beneficial schedule
(particularly to Australia with only one stop) and the wide choice of destinations offered in the
respective countries. Nevertheless, the analysis also shows that in the particularly high
volume market Germany-North East Asia with 1.4 million passengers in 2010, Emirates has
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remained on a low market share. Apparently, passengers are demanding more direct
routings between Germany and China, Japan and Korea.
Sabre ADI data on origin-destination passenger flows dates back to the year 2002.
Therefore, a time series on the development of Emirates in Germany and the effects of the
presence of Emirates on competitors can be shown. Figure 4-2 presents the total number of
origin-destination passengers from Germany to Africa, Asia, Middle East and South West
Pacific for 2002-2010 and the number of passengers that have flown either non-stop or on
the first two flight segments with Emirates or Lufthansa, which are the two largest carriers in
this market. In absolute terms, the number of travellers between Germany and the regions
analysed increased by 2.3 million, from 3.3 million passengers in 2002 to 5.6 million
passengers in 2010.
Both Lufthansa and Emirates have continuously increased the number of origin-destination
passengers from Germany to destinations in Africa, Asia, Middle East and South West
Pacific2. A bit surprisingly, given the strong competition on routes to the Middle East, the
market Germany-Middle East has more than doubled for Lufthansa from about 140,000
origin-destination passengers in 2002 to more than 300,000 in 2010. This is an indication for
the traffic stimulation effects as a result of increased competition, from which all carriers in
the market and the passengers benefit. In turn, from the data provided by Sabre ADI we
cannot observe a shift away from German airlines and German hubs towards new
competitors.
Middle East and South West Pacific, 2002-2010

2
Lufthansa does not serve any destinations in the South West Pacific region as operating carrier, but
passengers have used Lufthansa services for one or two flight segments to a hub in South East Asia,
continuing the itinerary on codesharing partner airlines. Such an itinerary is for instance BremenFrankfurt-Bangkok on Lufthansa and Bangkok-Sydney on Thai Airways.
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The following figure highlights which carriers have participated in the absolute growth of 1.3
million passengers in the market from Germany to Southern/East Africa, Asia, Middle East
and South West Pacific between 2005 and 2010. The analysis includes origin-destination
passengers which used a non-stop flight from Germany or an online connection (i.e.
transferring between two flights of the same carrier) on the first two flight segments of their
journeys. The totals shown in the figure accounts for an increase of about one million
passengers. The remaining net growth of 300,000 passengers can be attributed to non-stop
and online connections with other carriers and interlining.
Figure 4-3: Origin-destination passenger growth by individual carriers in the market between
Germany and Southern/East Africa, Asia, Middle East and South West Pacific between 2005
and 2010

Emirates has the highest growth in absolute passenger numbers, with about +250,000.
Second highest growth was achieved by Lufthansa with +220,000 passengers, followed by
Air Berlin and Turkish Airlines with a growth of +116,000 passengers each. This analysis
shows that Emirates has captured less than 20 % of the growth of the GermanyAfrica/Asia/Middle East/Pacific market between 2005 and 2010. The figure also shows the
airlines which have declining passenger numbers. In the first place, we see traditional
European network carriers, which have declined in the German market. Among these are
Austrian Airlines, Swiss, Air France-KLM and British Airways. It is reasonable to assume that
travellers bound for Asia from Germany prefer the offers from new entrants, which have
established themselves as carriers with a relatively high service quality and value for money.
Another factor contributing to the development shown is most probably the capacity
reduction on feeder flights of Air France and British Airways. The two carriers have reduced
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their seat capacities on flights from Germany to their hubs Paris and London between 2005
and 2011 by 1.2 % (Air France) and 4.3 % (British Airways).
The development of the aviation market between Germany and the Eastern Hemisphere can
also be shown in relative terms. Figure 4-4 represents the indexed development of
originating passengers between Germany and the Eastern Hemisphere between 2002 and
2010 (2002 = 100).
Middle East and South West Pacific between 2002 and 2010 in relative terms

The overall market has increased by about 70 % in eight years. For comparison, the indexed
development of Emirates (EK, red dashed line) and German airlines (primarily Lufthansa, Air
Berlin/LTU and Condor; dark blue dashed line) is displayed. Here the market development as
a whole (dark red solid line) serves as a benchmark. Average market growth was 6.6 % per
year (compounded annual growth rate, CAGR). In comparison, Emirates passenger
numbers have grown by 13.9 % (CAGR). But also the growth of German airlines was slightly
above market average with 6.8 % (CAGR).
German airlines have defended, respectively slightly increased their market share. Over the
total period, German airlines market share increased from 24.2 % in 2002 to 24.5 % in 2010,
whereas the market share in 2010 was 1.5 percentage points higher than in 2005. The
average market share of Emirates between 2002 and 2010 increased from 6.0 % to 10.2 %.
From the data shown we conclude that a wide range of airlines have benefited from the
growing market in Germany, with Emirates and Lufthansa as the two main beneficiaries of
this development.
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4.2 Market development at individual airports

The effects of Emirates market entry on passenger demand and on the competing airlines
can also be shown on the level of individual German airports. For such an analysis,
particularly the airports of Dsseldorf and Hamburg are suitable, as these cities have only a
limited supply in non-stop flights and passengers wishing to travel to long-haul destinations
have in most cases no alternative to connecting flights via a hub.
The development of origin-destination passengers from Hamburg are shown in the following
figure.
Figure 4-5: Origin-destination passengers from Hamburg to Southern/East Africa, Asia,
Middle East and South West Pacific, 2002-2010

Figure 4-5 shows the development of passengers departing from Hamburg airport and
travelling to the Middle East / Asia region between 2002 and 2010. The solid dark orange line
depicts the overall market development, where an increase in demand from 180,000 in 2002
to 320,000 in 2010 can be observed. Emirates offers non-stop flights from Hamburg airport to
Dubai since 2006. By offering non-stop flights, Hamburg airport instantly became a much
more attractive choice for travelling to the Eastern Hemisphere, especially to the non-stop
destination Dubai. Emirates strongly participated in the overall market growth with almost
100,000 origin-destination passengers in 2010, out of the total increase of about 140,000
passengers since 2002. Emirates market share in intercontinental traffic to destinations in
the Eastern Hemisphere from Hamburg reached 29 % in 2010. Lufthansa, in turn, has grown,
too, from 39,000 passengers in 2002 to more than 54,000 passengers in 2010. Lufthansas
market share was almost constant from 2002 to 2009 (slight decline from 22 % to 21 %, so
Lufthansas growth rate approached the market average. Only in 2010, Lufthansas market
share dropped according to Sabre ADI data to 17 %.
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In the following figure, we go further into detail and analyse the market Hamburg-Dubai.
Figure 4-6: Origin-destination passengers from Hamburg to Dubai, 2002-2010

The results are quite similar to those of Figure 4-5 from a qualitative point of view, however
intensified. This is primarily due to the fact that we now look at competition between non-stop
flights (Emirates) and connecting flights (Lufthansa). Not surprisingly, since the introduction
of the non-stop flights by Emirates, the market has developed much more dynamically
compared to Figure 4-5, and consequently, Emirates has gained a larger market share.
Lufthansas market share in Hamburg-Dubai traffic reached a peak in 2003 with 40 % and
began to decline already before Emirates market entry in 2005. With the introduction of the
non-stop flight, Emirates market share immediately increased to more than two thirds for the
first and subsequent years of operation. With the inauguration of the non-stop flight, the
demand for Dubai as a destination jumped immediately from about 12,000 origin-destination
travellers to more than 25,000 in the first year of operation.
Before Emirates entered the market in March 2006, about 3,500 origin-destination
passengers travelled on Lufthansa via Frankfurt and Munich to Dubai (2005). Immediately
after the market entry, transfer passenger numbers declined to about 2,000 for the year
2006. In the following years, however, transfer passenger numbers increased again and in
2009 and 2010 Lufthansa carried more passengers between Hamburg and Dubai than in the
years before Emirates non-stop flights. This phenomenon is particularly remarkable, as
Emirates offers a travel time advantage of more than two hours with its non-stop flight
compared to the transfer itinerary via Frankfurt or Munich with Lufthansa. Based on these
observations, we conclude that Lufthansa can benefit from increased demand for Dubai as a
destination after Emirates has stimulated the market and that obviously air fares in the
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Hamburg-Dubai market are attractive enough for Lufthansa to allocate seats on its flights
from Frankfurt and Munich to Dubai to a growing number of passengers from Hamburg and
not to passengers from any other origins.
However, a shift effect of transfer traffic due to new services can be observed for some
airlines and their hubs. When we again look at the example Hamburg-Dubai, we can see that
the demand on Air France and British Airways has declined from 2005 to 2010. This
resembles the findings shown in Figure 4-3 for the whole market in Germany. However, in
the same timeframe, Turkish Airlines has increased passengers from less than a hundred to
close to 2,000. So, even in a highly competitive market with non-stop services, carriers
offering transfer connections can increase passenger numbers.
Figure 4-7: Origin-destination passengers from Hamburg to Dubai travelling on Lufthansa, Air
France, British Airways and Turkish Airlines, 2002-2010

Taking a look at the choice of hubs for transfer itineraries from Hamburg to Southern/East
Africa, Asia, the Middle East and South West Pacific the following observations can be
made: The overall market between Hamburg and Asia/Middle East/South West Pacific has
grown from about 167,000 passengers in 2002 to about 280,000 passengers in 2010. About
92,000 passengers flew via the German hubs in Frankfurt and Munich in 2010, which is an
increase by about 16,000 passengers compared to 2002 and about the same level as in the
two years before Emirates operations began in Hamburg in 2006. It is worthwhile to mention
that transfer passengers from Hamburg in Frankfurt and Munich had actually grown to almost
125,000 in 2009 and only in 2010 the data shows a year of decline.
Emirates has now about 71,000 transfer passengers originating in Hamburg. The fourth most
important hub for traffic to the Eastern Hemisphere is Istanbul with about 31,000 passengers
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from Hamburg in 2010. In 2002, before Turkish Airlines embarked on a dedicated growth
strategy, less than 5,000 passengers from Hamburg used Istanbul as a hub on trips to
destinations in the Eastern Hemisphere. The West European hubs London-Heathrow,
Amsterdam-Schiphol and Paris-Charles de Gaulle remained more or less on the same level
in 2010 as in the years before. Among the other hubs, Helsinki is among the largest winners,
with a growth from less than 2,000 transfer passengers in 2002 to roughly 8,000 passengers
per year in 2010.
Figure 4-8: Origin-destination transfer passengers from Hamburg to Southern/East Africa,
Asia, Middle East and South West Pacific by first transfer point, 2002-2010

This analysis supports earlier findings (Grimme, 2011). According to these, the number of
passengers travelling via German hubs has not declined in absolute terms. In fact, a growing
market can be observed, in which most airlines and hubs can participate. Similar effects as
shown for Hamburg in the preceding paragraphs can also be observed in Dsseldorf. Here,
Emirates has been operating since 2001.
The overall market for intercontinental air trips to the Eastern Hemisphere from Dsseldorf
has grown from about 280,000 in 2002 to more than 450,000 in 2010. While the number of
passengers using Emirates has nearly tripled in this timeframe, the overall market grew
stronger in absolute terms (+170,000 travellers) than the additional passengers flown by
Emirates alone (+90,000 travellers). This is a further indication of the stimulation of traffic as
a result of increased supply and competition. The number of travellers that have flown on
Lufthansa has increased from 2002 to 2010 by 2,000.
Emirates has captured a market share of about 33 % in 2010 for trips from Dsseldorf to the
Eastern Hemisphere. Emirates market share has gradually increased, with a substantial
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boost between 2005 and 2006, when a second daily flight was introduced. Since 2005,
Lufthansas market share is almost constant between 10 % and 12 %.
Figure 4-9: Origin-destination passengers from Dsseldorf to Africa, Asia, Middle East and
South West Pacific, 2002-2010

While a substantial number of passengers use Emirates and Dubai as their point of transfer
for trips to the Eastern Hemisphere, incumbent hubs in Germany have increased the number
of transfer passengers from Dsseldorf to Southern/East Africa, Asia, the Middle East and
the South West Pacific, as shown in the following figure.
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Figure 4-10: Origin-destination transfer passengers from Dsseldorf to Southern/East Africa,

Asia, Middle East and South West Pacific by first transfer point, 2002-2010

Despite the new choices of direct services offered by Air Berlin and transfer itineraries of
Emirates via Dubai, the number of passengers travelling from Dsseldorf via a German hub
to the Eastern Hemisphere has increased from 71,000 to about 86,000 between 2002 and
2010.
From this analysis we conclude that the home carrier, despite new competition, can
successfully retain customers in its home market. Although we cannot disprove the claim that
transfer traffic of Lufthansa via the hubs in Frankfurt and Munich would have grown at a
higher rate without competition from new entrants, like Emirates and Turkish Airlines, it is
very likely that much of the growth that can be observed in traffic from Germany to the
Eastern Hemisphere exists only because of the presence of new competitors with their on
average lower air fares and additional capacities, also allowing for an increase in sales by
tour operators. In our view it is therefore incorrect to believe that all of the additional
travellers in the market would have flown on incumbent carriers, in case the new entrants
would not have entered the market.
In the case when incumbents react on new competition by lowering their own air fares, then
even passengers who continue travelling on incumbent carriers benefit from new
competition. Therefore, it is possible to say that new competitors affect the market with a
positive externality for all consumers, which benefit from lower fares, irrespective of the
carrier they ultimately choose.
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The overall strong position Lufthansa has in the market between Germany and Asia is also
reflected in the development of seat capacities and the number of destinations offered from
Germany. Lufthansa itself claims that the Lufthansa Group airlines have Europes largest
offer to Asia with 778 weekly flights as of July 2011, with a growth of 15 % compared to 2010
(Lufthansa, 2011). The same is true when taking a long-term look at the development of
seats offered on Lufthansa flights between Germany and the Middle East and Germany and
India, as shown in the following figure. Over the 8-year period from 2003 to 2011, seats
offered between Germany and India and between Germany and the Middle East have grown
by more than 50 %, despite that these markets are most probably strongly exposed to new
competition. This development allows concluding that not only Gulf carriers benefit from the
overall growth of the market, but also well managed incumbents. Already in 2006, it was
assumed that while in the markets for connecting traffic from European secondary airports
Emirates will shift away traffic from incumbent network airlines and hubs, the competitive
position of national carriers in non-stop markets, where the local brand image and the travel
time advantage matter, will continue to be strong (Brtzel, 2006). Half a decade later,
empirical evidence seems to support this view.
Figure 4-11: Seats offered on non-stop flights by Lufthansa from Germany to the Middle East
and Germany to India
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4.3 Development of air fares

Concerning the development of air fares, we can observe the following effects. Sabre ADI
data available from 2002 to 2011 provides a good overview for the effects of Emirates market
entry in Hamburg, which was in March 2006. So we have a time series with 4 years before
Emirates market entry (2002-2005) and five years (2007-2011) after.
The following figure shows an air fare comparison for business class passengers from
Hamburg to three major destinations in Asia (Hong Kong, Shanghai and Singapore) from
2002 to 2011. The air fare shown is for the one-way segments from Hamburg to the
respective destination, quoted in US-$. The analysis takes into account only two-segment
itineraries with Emirates and Lufthansa as operating carrier on both flight segments.
Figure 4-12: Comparison of air fares in business class of Emirates and Lufthansa from
Hamburg to selected Asian destinations.

We can see that the long-term trend of an increase in Lufthansas business class air fare was
not broken due to Emirates presence in the markets between Hamburg and Asia. The
downturn in fares in the year 2009 is most likely caused by the global recession, which led to
a decline in business travel demand. Overall, we find that Emirates business class fares are
about 30 % lower than the fares offered by Lufthansa. On the demand side, this probably
reflects the longer journey times with Emirates, as well as the lock-in effect achieved by
Lufthansas frequent flyer programme. On the supply side, the production cost advantages
discussed in chapter 2 might play a role, too.
In economy class, the differences between Lufthansa and Emirates are smaller. The data set
shows that in 2011, Emirates and Lufthansa have charged, on average, about the same fare
level for these destinations.
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Figure 4-13: Comparison of air fares in economy class of Emirates and Lufthansa from
Hamburg to selected Asian destinations.

As the air fares in business class do not seem to converge, we conclude that the flights
offered by Emirates and Lufthansa are not seen by the passengers as homogeneous,
substitutable services. It is reasonable to assume that two separate markets have developed.
In Figure 4-14, the average fares in economy class for a set of five Asian destinations (Hong
Kong, Singapore, Shanghai, Mumbai and Dubai) and four combinations for minimum stay
(including / excluding Saturday rule) and advance booking (7 days / 90 days) are shown. We
find that, on average, Lufthansa is most expensive among the airlines considered here. The
average lowest fare offered by a carrier from the EU is almost 30 % lower than Lufthansas.
As price leaders among the EU carriers, we relatively often find Finnair, but also airlines in
the Lufthansa Group, such as Austrian Airlines. In our sample, Emirates is substantially more
expensive than the price leaders among the non-EU-airlines. Lowest fares are typically
offered by Oman Air, Aeroflot and for destinations in North Eastern Asia the Chinese
carriers China Eastern and Air China.
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Figure 4-14: Comparison of average air fares in economy class from Frankfurt for a set of
five major Asian destinations and four combinations for minimum stay / advance booking
Source: Own representation based on data by Kayak.com.
4.4 Intermediate conclusions

From the analyses shown in this chapter, we draw the following conclusions:
Over the last decade, Lufthansa continued to grow in the market between Germany and
Asia/Middle East, both in terms of seat capacity as well as the number of destinations
offered. The reasons for this development can be seen in Lufthansas strong brand image in
its home market, the customer retention through frequent-flyer programmes and the highfrequency / low travel time itineraries to major destinations in Asia and the Middle East.
Therefore, our hypothesis is that to a certain extent a segmentation of markets has occurred
Lufthansa serves time-sensitive travellers and/or travellers which are locked in by frequent
flyer programme, while Emirates stimulates traffic for price sensitive demand, which would
not have flown otherwise, or, to other destinations. Moreover, with capacity expansion in
Frankfurt and, most likely, also in Munich, Lufthansa can further extend its intra-European
network with the opportunity to feed its long-haul flights.
Emirates has stimulated the demand for trips to Asia and the Middle East from Germany and
the growth observed at airports in Dsseldorf and Hamburg to these destinations would not
have happened without the new services. Here the special role of emerging carriers like
Emirates, Qatar Airways, Etihad Airways and Turkish Airlines for the travel industry should
be mentioned again. Tour operators, who had to purchase seats at relatively high fares on
charter / holiday carriers to destinations like the Maldives, Thailand and the Seychelles have
now the opportunity to purchase large quantities of seats on the new entrants, whose dense
schedules allow for a flexible combination of outbound and inbound flights for flexible trip
durations.
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However, the data also shows some declining transfer passenger figures for traffic between
Germany, foreign hubs and the Eastern Hemisphere. We observe in some markets declining
transfer passengers for Air France, British Airways and KLM, among others. Hubs like
London-Heathrow or Paris-Charles de Gaulle are not ideally located for transfer traffic from
Germany to Asia, as the westbound feeder flight is a psychological barrier and increases the
journey time. Moreover, transfers at the hubs in London or Paris are considered as relatively
inconvenient.
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5 Analysis and quantification of economic effects for

Germany
In this chapter we estimate the economic effects of Emirates services for the German
economy. We follow the approaches applied in previous studies, such as in the study
conducted by ECAD (Harsche et al., 2008) and INFRAS (2011) with a differentiation of
effects as shown in the following figure.
Figure 5-1: Differentiation of economic effects for Germany coming from Emirates activities
Source: Own illustration based on Harsche et al. (2008) and INFRAS (2011).
The analysis contains two main areas. We examine both the passenger and cargo services
provided by Emirates to Germany and the impacts of Emirates orders for aircraft, engines,
spare parts, equipment and services on the German aeronautical industry. In the focus of our
analysis is the impact on employment, due to the jobs created directly with Emirates and
through Emirates expenditures for goods and services. We also take into account jobs
created due to the spending of incoming tourists, which have been generated by additional
seat capacity on Emirates flights. The more diffuse effects, such as the improvement in
location quality through an improved accessibility with intercontinental air services, are
discussed on a qualitative level, supported with a literature review and stakeholder
interviews.
Finally, it has to be considered that air transport is an important sector to the economy, not
only because of the effects for the division of labour, international trade and globalisation, but
also due to the employment effects in the air transport sector itself. Being a service industry,
it is relatively labour intensive and provides jobs over the whole range of skills and education
levels. Moreover, due to aviation growth and only limited opportunities for the automation of
processes in the air transport value chain, the sector has been continuously creating new
jobs, both in the manufacturing industry and the provision of air transport services.
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5.1 Effects of existing passenger and cargo services

5.1.1 Direct, indirect and induced employment
For the assessment of direct, indirect and induced employment effects, we have modified the
classical input-output analysis to the particular situation of Emirates in Germany.
Input-output-tables are edited by the German Federal Statistical Office. Input-output tables
show the interdependencies between different branches of a national economy and between
branches of different economies. For the assessment of the indirect employment effects of
air transport, a classic input-output analysis is applied. This modelling approach, originally
formulated by Nobel Prize laureate Wassily Leontief, allows the estimation of the indirect
effects of the economic activity of a certain industry, such as the aviation branch, on
employment over the whole chain of inputs.
The inputs
Symmetric input-output tables provide the data used for the calculation of indirect effects. A
symmetric input-output table is a product by product or industry by industry matrix
describing the domestic production processes and transactions in products of the national
economy in great detail. So, in a symmetric input-output table either a product or an industry
classification is employed for both rows and columns (see Table 5-1 as example).
For each product, total supply (= the sum of demanded intermediate consumption, value
added and imports) matches total use (= the sum of supplied intermediate consumption,
exports, final consumption expenditure and gross capital formation).
Table 5-1: A simplified symmetric input-output table (product by product)
USE
SUPPLY
Products
Components
of
value
added
Rest of the
World
Total
Industries
(1)
Final
consumption
expenditure
(2)
Gross
capital
formation
(3)
Rest
Total
of the
World
(4)
(5)
(1)
Intermediate
consumption
Final
consumption
expenditure
Gross
capital
formation
Exports
Total
use by
product
(2)
Value added
(3)
Imports
(4)
Total
supply by
product
Total
supply
= Total
use
Source: Own representation based on Eurostat (1996).

Statistical information can be obtained for homogenous branches. It indicates what types of
products each sector has produced and sold, and what types of products have been bought
and used as inputs for production. Homogenous branches are defined as sectors in which
similar products are produced. For instance, it is differed between the nutrition industry, the
wholesale & trade sector, the healthcare and social assistance sector and so on.
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The model
In order to estimate the economic effects of a product or other economic activity throughout
the whole chain of its required inputs including those inputs (intermediate consumption)
that are necessary for other inputs we apply an open statistic Leontief model. The following
example illustrates how a chain of inputs is defined:
In order to produce and sell an aircraft, inputs from other sectors, such as iron & steel,
fabricated metal products, electrical machinery, energy, consulting, and many more, are
needed. In order to fabricate metal products, in turn, certain machinery & equipment is
required. For the fabrication of machinery & equipment, then, energy, among others, is
required, and so on.
Hence, the construction of aircraft generates jobs in all these upstream sectors. The degree
of these effects is quantified by a Leontief model. The Leontief model could be described as
the linkage between a series of input-output-tables relating to the economic activity driven by
a product, with the degree of impact of each input-output table quantified by the Leontief
model.
In the first stage of the model, we estimate the economic effects of interrelations between the
aerospace industry and its direct suppliers from different sectors. Next, we calculate the
direct supply interrelations of the first-stage supplying sectors (e.g. the fabricated metal
products sector).
In theory this process is run continuously, which would result in an infinite number of
calculations. A so-called Leontief inverse provides a mathematical approximation of the
output of the infinite process. The complete Leontief model used contains a combination of
the Leontief inverse and labour intensities. Labour intensity is defined as the relative
proportion of number of employees compared to value added or production output.
As an example, we show in the following paragraph the application of the Leontief model to
the estimation of the indirect effects of air transport services in Germany. According to
German input-output tables in 2007 in Germany, German and foreign carriers employed
56,000 direct employees, generating an industry output of 26.5 billion. In the generation and
production of air transport services, these airlines received products and services from
upstream sectors worth 20.8 billion. This was comprised of goods and services; 11.9
billion of which came from domestic suppliers and 8.9 billion came from third countries
(Source: Federal Statistical Office of Germany, German input-output tables 2007).
All supplying sectors, in turn, also require supply (intermediate consumption) from their
respective upstream sectors. We use sector-specific labour intensities to estimate all indirect
labour effects. Sector-specific labour intensities can be calculated from the number of
employees by industry and the value added or production output by industry. Both values
can be obtained from the statistical offices. In total, airlines contributed 56,000 direct and
130,000 indirect jobs in the German national economy in 2007.
Availability of data
The classification of economic activities which was the basis for the input-output tables is,
however, currently undergoing a global revision. This revision of the statistical data has been
driven by the emergence of new industries in recent years, whilst others have vanished. For
example, the economic activities of important sectors, such as the IT industry, is still not
shown separately but included in various branches. It is not yet known when the program of
revisions will be complete. Due to these on-going revisions to the data structure, input-output
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tables for the years 2008 and onwards are not available for use in this study. We therefore
have estimated data for the years 2008 onwards under the assumption that the structure of
intermediate consumption remains as it was in 2007.
The application of input-output analyses to the air transport sector

The air transport system, as categorised by national accounts, consists of the production
branch of air transport services, service activities incidental to air transportation (airports and
air traffic management), and aerospace industry.
Within the input-output tables, however, only air transport services are reported at the top
level. The manufacture of air- and spacecraft is contained within the manufacture of other
transport equipment production branch (i.e. including all transportation equipment, not
aircraft alone). Service activities incidental to air transportation are grouped similarly
broadly, as they are part of the warehousing and support activities for transportation
production branch. In order to estimate the economic effects of the latter two areas, the
original input-output tables are further differentiated in order to distinguish the production of
aircraft and the service activities as homogenous branches.
To generate these categories, data on the structural analysis of manufacturing, transport and
storage from the German Statistical Office have been used. These extended input-output
tables form the new basis for the Leontief model in our methodology.
Throughout this chapter, we use the following definitions for the analysis of employment
effects, generated by Emirates passenger and cargo services. The input-output analysis can
show the direct, indirect and induced employment and gross value added effects, but not the
benefits derived from an increase in connectivity.
Direct employment includes all employees on Emirates payroll in Germany. However,
Emirates contribution to the German economy goes far beyond the persons employed with
the carrier directly. Passenger and cargo traffic by Emirates creates jobs in a wide area of
services related to air transport, such as ground handling, warehousing, catering, aviation
security, customs and border control.
Indirect employment, as the term is used here in this study, includes all employees, which
are not on Emirates payroll, but whose jobs depend on the orders of goods and services
required by Emirates to operate passenger and cargo services from and to Germany. We
differentiate indirect employment in two levels. The first level describes the employment
effect at companies, which have a direct business relation with Emirates. This includes for
instance hotels for the crew accommodation, catering providers for inflight meals and drinks
or the airport operators as providers for infrastructure. A second level constitutes the chain of
inputs, required by the companies that deliver inputs.
Induced effects are defined as the economic activity generated by the consumption of
income generated from direct and indirect aviation activities. The induced effects can
therefore be considered as the multipliers of income of persons directly and indirectly
employed in the aviation sector.
Induced effects are estimated from the compensation of employees in the air transport sector
and their consumption, differentiated by products. However, we suggest being rather
cautious in the interpretation of the results for induced employment, for the following reason:
in case aviation would cease to exist, the consumption of employees formerly being directly
or indirectly employed in the aviation sector would be reduced but would not vanish
completely from the economy. Part of the employees formerly working in the aviation industry
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would find jobs in other sectors, albeit maybe at lower wages. Others would become
unemployed and reduce their consumption to the level that the income from social security
payments (or income from capital reserves) allows.
Therefore, the effect of aviation-induced employment on the economy is largely dependent
on the difference in consumer spending between the situation when a person is employed in
aviation and the alternatives (employment in other sectors, unemployment benefits).
The application of input-output analysis to the case of Emirates

Basis for the assessment of the induced effects of the economic activities of Emirates in
Germany are, as in the case of direct and indirect effects, empirical input-output tables,
which are used to conduct an input-output analysis with an open static Leontief model.
Our approach includes the following assumptions: In the first place, consumption depends on
disposable income, of which compensation of employees are only a part. Therefore, we
assume that the share of compensation of employees directly or indirectly employed in the
aviation sector is the same as in other sectors. Furthermore, we assume that the average
propensity to consume is the same for employees in the aviation sector as in other sectors.
Figure 5-2: Exemplary chain of inputs and definition of direct and indirect effects
Source: Own illustration.

The indirect employment effect for each sector can be estimated by calculating the
coefficients for employees per output unit (based on the figures of the overall economy) and
multiplying this coefficient by Emirates expenditures.
In our definition, we slightly deviate from past studies. Klophaus (2008), for instance, defined
direct employment as all employees which are directly employed on-site at the airport.
In order to capture the effects specific to the economic activities, we have supplemented the
macroeconomic analysis by a bottom-up approach as outlined by Santin (2001).
For this purpose, data provided by Emirates on the spending of the carrier in Germany has
been used. The elements of spending include for instance:
Salaries of Emirates employees in Germany
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Rents for offices and airport locations (counters, lounges)

Airport fees, catering, fuel, air navigation service charges
Payments for hotel accommodation for crews
Further goods and services obtained for the operation of Emirates, e.g. advertisement
The direct, indirect and induced effects can be calculated in more detailed and accurate
manner with this approach, than by solely relying on the input-output tables. For the
estimation of the effects, Emirates provided financial data for the fiscal year 2010/11.
Figure 5-3: Emirates expenditures in Germany and the resulting direct and indirect
employment effects for the fiscal year 2010/11
Source: Own representation.

In fiscal year 2010/11, the overall expenditures of Emirates in Germany related to the
operation of passenger and cargo services amounted to 203.3 million. 10.1 million are
spent directly as salaries and social security payments for the employees on Emirates
payroll. Emirates itself employs in Germany 169 persons, in the areas of passenger and
cargo sales, marketing, operations and administration.
The largest expenditure block consists of airport, handling and navigation charges, with
67.7 million. In the system of national accounts, this area is defined as Other supporting air
transport activities. Based on the employment coefficients of this sector, the employment
generated at airports, ground handlers and air traffic control can be estimated at 154 jobs. If
we also take into account the employment created by the inputs delivered to the airport
operators, ground handlers and air navigation service provider Deutsche Flugsicherung
(DFS), overall 292 jobs are generated in this area. Included in this category are the en-route
charges paid by Emirates to air navigation service provider DFS for overflights of German
territory by services operating to/from Western Europe (predominantly Netherlands and
United Kingdom) and North America (occasionally flights to/from New York cross German
airspace). This results in en-route charges of about 9.8 million annually.
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The second largest expenditure block of Emirates in Germany is the one for fuel bought in
Germany, with 62.8 million. In the system of national accounts, we find a relatively low level
of gross value added in the oil sector, as a large share of the value of the final product is
determined by the value of inputs, which is mainly crude oil. The labour intensity per revenue
unit is therefore relatively low and the employment effect is limited to 3 jobs. Taking into
account the chain of inputs required by the oil industry (transportation, energy, etc.), the
employment effect is 18 jobs.
Another major area of Emirates expenditures in Germany is services, such as the rental of
offices, IT services, advertising and sports sponsoring. This expenditure was in fiscal year
2010/11 43.6 million, generating 491 jobs over the full chain of inputs.
Emirates spent 18.2 million for crew accommodation and catering. This sector is
summarised in the system of national accounts as hotels and restaurants. The sector is
highly labour intensive, as a large share of the gross value added is created domestically or
even locally. The employment generated by Emirates expenditures is 504 jobs over the full
chain of inputs.
Finally, Emirates spends about 0.9 million on transit checks during the stops at Germany
airports. This creates an employment of 13 jobs.
Summarising the findings in our Emirates-specific input-output analysis, we estimate the
number of jobs dependent on Emirates economic activities in Germany at 1,797, which
includes 169 persons directly employed at Emirates and 1,628 persons employed either by
contractors in direct business relation with Emirates or being employed with companies
active in the downstream chain of inputs.
So far, our analysis included the employment effects directly linked with the economic
activities of Emirates. Further employment effects are originating from the passenger traffic
related to Emirates services, such as non-aviation activities at airports (retailing, parking) or
the employment at public authorities (e.g. border control or customs). These indirect
employment effects can be quantified in the order of 643 jobs.
Therefore, we estimate the sum of direct and indirect employment is at 2,440 jobs created by
Emirates air transport activities in Germany.
Further effects, due to the spending of foreign travellers, are analysed in chapter 5.1.3 on
incoming tourism. Besides the employment effects in hotels and restaurants, this also
includes the effects of retailing expenditures and the effects along the chain of inputs of the
tourism and retailing industries.
The induced employment effect, resulting from the spending of personal incomes generated
by Emirates direct and indirect activities, is estimated at 570 jobs. If we also take into
account that for instance employees working in airport retailing or public authorities are
dependent on Emirates activities, we estimate that the extended effect of induced
employment creates up to 712 jobs in Germany.
Summing up direct, indirect and induced effects for Emirates, its suppliers, the non-aviation
business at airports and public authorities, 3,152 jobs are created.
While the approach shown above is a solid, well-accepted methodology for comparison, we
also show the results in case other methodologies for the estimation of employment effects
of Emirates activities are applied. In the scientific literature we find several examples, where
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the correlation between the direct employment at airports and the volume of air cargo and
the passenger numbers handled at airports is analysed.
For instance, Klophaus (2007 and 2008), undertook a regression analysis showing the
dependency of direct employment at airports on the airports traffic. He considered both
passengers and cargo, which were translated in workload units (WLUs) representing the
airports traffic in a single measurement. In the workload unit calculation, each 100 kg of
cargo and each passenger equals 1 WLU. Running a simple regression, Klophaus found a
direct employment effect of 862 jobs per million WLUs.
In Klophaus definition, direct employment includes all jobs, independently of the economic
activity or sector, which are directly based at the airports. This includes airlines, the airport
operator, public authorities and services/retailing at the airport.
For the present study, the methodology used by Klophaus was adapted to the situation of
Emirates in Germany. As Emirates employs a large number of staff (flight deck and cabin
crew, maintenance, management) in Dubai, the application of an employment coefficient
which includes employment effects of airlines based in Germany would result in biased
results. Therefore, in the regression the number of employees based at the airport excluding
airline employees is used as dependent variable. Data published by the German airports
operator association (Arbeitsgemeinschaft Deutscher Verkehrsflughfen, 2005) shows
employment at German airports separately for airport operators, public authorities, airlines
and others. As independent variables, passengers handled and cargo volumes are used. It is
important to consider the effects of air cargo explicitly in the calculations, as in the area of
long-haul air services, air cargo plays an important role in traffic and revenue generation.
The coefficients calculated in the regressions show that each million passengers handled
created 494 direct jobs and each 100,000 t of cargo generated 222 direct jobs.
In fiscal year 2010/11, Emirates carried 1.43 million passengers and 145,000 t of cargo to
and from German airports. Based on the employment coefficients shown for passenger and
cargo traffic the direct employment effect of Emirates at Germany can be estimated at 1.198
jobs, including 169 employees on Emirates payroll (Methodology 2 in Table 5-2).
For the estimation of indirect (i.e. in this context jobs based outside the airport) and induced
jobs, Klophaus applies a multiplier. This approach is commonly applied also in other studies
on economic effects of aviation. The multiplier for the estimation of indirect and induced
employment in methodology 2, applied by Klophaus with a value of 2.0, is about the average
of multipliers that can be found in other airport-related economic studies. A collection of
multipliers for the employment effects at German airports is shown by ECAD (2008), where
the values range from 1.1 to 3.04. Therefore, if the multiplier of 2 is applied, 2,395 indirect
and induced jobs can be calculated, or 3,593 jobs including direct employment. The range of
total employment in case the multipliers found by ECAD would be applied vary between
2,515 and 4,839 jobs. A multiplier of 1.5 applied in methodology 2 would result in virtually the
same employment figures as with the application of the input-output analysis in methodology
1b. As particularly airlines due to their high share of inputs have a relatively high multiplier
and for Emirates, this effect rather occurs in Dubai than in Germany, the selection of a
multiplier smaller than 2 for the situation of Emirates in Germany seems to be suitable.
Therefore, the results seem to be consistent and plausible for the application of different
methodologies.
The following table summarises the approaches and findings of the two methodologies
applied here for the estimation of direct and indirect employment.
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Table 5-2: Summary of direct and indirect employment estimations for Emirates air services
to and from Germany
Methodology 1a
Methodology 1b
Input-output analysis,
supplemented with
bottom-up approach
on Emirates
expenditures in
Germany, including
employment effects of
non-aviation activities
(airport retailing and
public authorities)
Methodology 2
Multiple regression of
employees based at
German airports (without
airline jobs, dependent
variable) and cargo and
passenger WLUs as
independent variables
Short
description
Input-output analysis,
supplemented with
bottom-up approach
on Emirates
expenditures in
Germany
Definition of
direct
employment
Employees on
Emirates payroll
Employees on
Emirates payroll
Employees with
workplace based on the
airport
Employees at
companies delivering
inputs to Emirates,
including full chain of
inputs
Employees at
companies delivering
inputs to Emirates,
including full chain of
inputs and employees
benefitting from
Emirates activities
(e.g. airport retailing
and public authorities)
Employees with
workplace based outside
the airport
169
169
1,198
1,628
2,271
570
712
2,367
3,152
Definition of
indirect
employment
Direct
employment
Indirect
employment
Induced
employment
Sum of direct,
indirect and
induced
employment
Limitations
Does not account for

employees in nonaviation areas
(retailing, services by
public authorities
offered free of charge
to aviation, such as
customs or border
control)
2,395 (using a multiplier

of 2.0)
3,593
No
clear
distinction
between
direct
and
indirect employment in
the
systematic
of
national accounts, not
taking into account offairport employment (e.g.
city
ticket
office).
Multiplier
of
2.0
empirically questionable
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5.1.2 Catalytic effects

The economic impact of airports and the air transport industry can be divided into several
effects, as has been shown. The direct, indirect and induced effects, as explained in the
preceding chapter, are in the immediate relation with the production of air transport services.
However, in addition to the more obvious direct and indirect effects associated with the
production of air transport services, complex interdependent effects come from the use of air
transport services, from which regional, national and global economic development benefits.
Consequently it can be argued that (ATAG, 2005):
Air transport industrys most important economic contribution is through its
impact on the performance of other industries and as a facilitator of their
growth. It affects the performance of the world economy, improving the
efficiency of other industries across the whole spectrum of economic activity
referred to as catalytic or spin-off benefits.
In the literature, catalytic effects are defined as investment, production, income and
employment by economic activities through aviation-related activities for which air transport
links are a significant locational factor (Harsche et al., 2008 and Frey, 1979). Catalytic effects
can be distinguished in business- and passenger-related effects (INFRAS, 2011). Businessrelated effects are caused by aviation, when location decisions of companies are influenced
by air transport services. In this perspective, air transport can be seen as a production factor,
which is used to increase productivity and to improve the accessibility of resources and
markets. This influence is methodically difficult to quantify, although several studies (e.g.
Button/Taylor, 2000) have shown for the US, that metropolitan regions with intercontinental
air transport links have a higher employment in industries, which can be seen as relatively air
transport-intensive, such as high-tech and services. Button and Taylor conclude that
more international air transportation is likely to stimulate further growth in the
new economy.
Button and Taylor argue that both the number of destinations and the quality of service have
an impact on the location quality for businesses and that the marginal benefit of additional air
services declines. It is therefore reasonable to conclude that already few intercontinental
services to main economic centres and/or air transport hubs can generate positive impacts
for regions. This is particularly true for Germanys secondary airports, which currently have
no or only very few intercontinental air services, as shown in Figure 3-11.
Passenger-related catalytic effects are generated mainly by leisure and business travellers
using air transport and their subsequent expenditures (Harsche et al., 2008 and Frey, 1979).
In our study, we follow the approach of INFRAS (2011), to quantify the passenger-related
catalytic effects in the area of incoming tourism (see the following chapter 5.1.3), while
further effects related to the quality of locations are qualitatively discussed in this chapter.
Air transport and locational factors

Airports are the nodes of air traffic and contribute to increase the mobility of goods and
people (Harsche et al., 2008). In terms of economic development, air traffic allows
companies to uncover new distribution channels and open up markets and as a result
increases sales, increases productivity and reduces cost.
Locational factors are the reasons for site selection of companies. Firstly, there are general
location factors that apply to all businesses in a defined region and secondly specific factors
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that apply only to a limited number of companies or industries (Harsche et al., 2008). In this
context, companies with a certain affinity to or necessity for air transport shall lie in the focus.
By applying the fundamental approach of location theory, cost- and distance relations of
airports and businesses can be analysed. While this theory is usually applied for the
assessment of the distance between the site of production and a central market place, it can
also be used to present the relation between internationally active companies and the airport
as a supplier of transport services or gateway to international channels of supply and
distribution.
It is assumed that the costs of land decrease with increasing distance to the airport while the
time costs increase. From this model it becomes obvious that businesses with high time
costs prefer a location that is relatively close to an airport, which provides connections to the
relevant markets for this business. Typically, these industries can be found in the sector of
high-tech and services, as shown by Button and Taylor (2000).
Figure 5-4: Location decision of companies depending on time- and real estate costs

Strictly neoclassical theory referring mainly to transport costs is not sufficient to explain
regional economic development though. A complex interregional and international connected
economy is subject to several influences and aspects like industry- and regional specific
history and characteristics. An analysis of regional economic development demands the
examination of socio-economic structures from an evolutionary perspective. A combination of
locational factors might produce competitive advantages in a region and lead to business
concentration and clustering.
In its study, ECAD conducted a survey among 100 multinational corporations operating
within close proximity to an airport concerning the importance of air transport links. The
survey found that the quality of air transport links is among the most prominent location
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factors to support international investment within the region. This has the highest relevance
among companies operating in the fields of sales, distribution and marketing. Especially
contacts to parent- and sister companies and a strengthening of sales, distribution and
marketing necessitate direct personal contact. An expansion of business travel is anticipated
by companies interrogated in the study. Consulting the ECAD study, the analyses concerning
the relation of air transport and location- and investment behaviour of multinational
corporations suggests positive effects of aviation on long-term regional and macroeconomic
development in terms of productivity, investment, value added-, income- and employment
effects.
Assuming that air transport links lead to an increase of productivity and to a reduction of
costs for some of the regional companies then this leads ceteris paribus to an increase of
competitiveness of these enterprises in the region (Harsche et al., 2008) This would have a
positive long-term impact on a regional level of production or concerning the regional
economic structure and would result in a support of existing jobs in the region and actually
increase the total number of jobs.
However, not all companies are in the same way reliant on air transport. But especially highly
internationally orientated and integrated companies will only be able to a very limited degree
to substitute air transport links. The importance of air transport becomes obvious when taking
into account the economic structure of the major metropolitan areas in Germany, with a high
share of finance and consulting services in Frankfurt and high-tech engineering in and
around Stuttgart as examples.
In terms of regional economic development and according to theoretical and empirical
research, a high degree of international interaction promotes the exchange, the development
and the spatial diffusion of ideas, technological progress, process- and product innovations.
The accessibility of regions with intercontinental air services is, as previous studies have
shown, in times of globalization a decisive factor to maintain competitiveness and to
strengthen exports.
Access to air transport supports foreign direct investment into the region. Positive effects are
expected for regional but also national productivity. In general, the provision of international
air transport connections is a prerequisite for engagement of international purchasing power
and investment in the region and thus a requirement for long-term competitiveness of the
German economy. Aviation is one of the most prominent locational factors of international
enterprises in Germany. The global economy holds high demands on modern transportation
systems in terms of destinations, link frequencies and punctuality.
To summarise, ATAG states that:
Air transport boosts productivity across the global economy: improved transport
links expand the market in which companies operate. As a result, companies are
better able to exploit economies of scale thereby reducing costs, and to specialise
in areas of comparative advantage. By opening up markets, air services expose
companies to stiffer competition, encouraging them to become more efficient. Air
transport improves the efficiency of the supply chain, for example, many industries
use air transport to shorten delivery times as part of their just-in-time delivery
systems, enabling them to deliver products to clients quickly and reliably and to
reduce costs. Air transport is an enabler of investment both into and out of
countries and regions: viable air transport links are one of the key considerations
that influence where international companies choose to invest. (ATAG, 2005)
Similar to the positive business-related catalytic effects of aviation, the proximity of an airport
with intercontinental air transport links will have positive impacts on the private households
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mobility options. It is assumed that such benefit increases the shorter the distance to the
airport or the shorter the time needed to reach the airport.
These effects are particularly relevant for the attractiveness of a region for incoming tourism.
Obviously a region is much more easily accessible for international business or leisure and
thus more attractive if direct access to the air transport network is provided (Harsche et al.,
2008). A region will benefit from tourism since inbound tourists in the region will consume
local cultural and service offerings or the gastronomic service facilities. This said it is obvious
that the level of value-added contribution brought by tourists entering the country depends
largely on the prosperity of the origin of tourists as well as their length of stay. A
quantification of the effects coming from Emirates air service for Germany is conducted in
the following chapter.
5.1.3 Incoming tourism

Incoming tourism is an important sector for the German economy. In a study published by
the Federal Ministry for the Economy (BMWi, 2012), the share of tourism-related activities
was 4.4 % of the total gross value added in Germany (direct effect). When also the indirect
and induced effects are taken into account, the share in the gross value added of the
German economy increases to 9.7 %. The direct, indirect and induced employment effect of
tourism is estimated in the study at 4.9 million jobs (12 % of the total employment in
Germany). The authors of the study conclude that the tourism industry has a higher
importance for Germany than for instance the automobile industry or the financial services
sector.
Incoming travellers from Asia and Southern Africa have already achieved a significant share
in the number of arrivals and nights spent in Germany of foreign tourists. According to data
published by the German National Tourist Board (Deutsche Zentrale fr Tourismus),
travellers from Southern Africa, Asia and South West Pacific spent 4.8 million nights in
Germany in 2010, which is a share of 8 % of all nights spent by foreigners in Germany (DZT,
2011a).
Figure 5-5 shows the development of incoming tourism, measured by the number of nights
spent by travellers from the respective countries of origin in Germany for a selected range of
countries/regions which are connected to Germany via Emirates hub in Dubai.
The development shows a high growth dynamic. Particularly high growth rates in the number
of travellers to Germany can be found in markets served by Emirates, such as the Middle
East, India and China. Since 2001, average annual growth rates were exceeding 10 % for
the Middle East and China and about 9 % for Australia, New Zealand and South West
Pacific. Tourism from India, for which data is available since 2006, has grown even by almost
15 % per year. Annual growth rates between 2009 and 2010 for individual markets, such as
Middle East, China even have exceeded 25 %. The German National Tourist Board
estimates the further growth potentials at around 75 % for the next 10 years, which makes
Southern Africa/Asia/South West Pacific the region with the highest growth rate of all
incoming areas.
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Figure 5-5: Development of incoming tourism, measured in nights spent by travellers from
Asia, Middle East and South West Pacific 2001-2011
Source: Own representation based on data by the German Statistical Office.

The outlook for the year 2020, conducted by the German National Tourist Board and
presented in Figure 5-6, is similarly positive, as the development was in the past. It is
expected that the number of nights spent by foreign travellers from Asia, Middle East and the
South West Pacific will increase from 4.6 million in 2010 to 8.4 million in 2020 (+82 %). The
German National Tourist Board expects that incoming travellers from the Middle East region
will become the second largest group of non-European travellers (estimation of 2.3 million
nights in 2020) after those from the US (estimation of 5.9 million nights 2020), when
measured by the number of nights spent in Germany. This can be regarded as an indication
also for further growth potentials for air transport between Germany and the Middle East. The
growth of incoming tourism from the Middle East is even more remarkable, when taking into
account the relatively small population size of 39.2 million inhabitants3. Based on the
expected number of nights to be spent in Germany per inhabitant, the propensity of Middle
Easterners to travel to Germany (58.7 overnight stays per thousand inhabitants) is about 35
times the one of the Chinese (1.6 overnight stays per thousand inhabitants), 3.2 times the
one of the Americans (18.6 overnight stays per thousand inhabitants) and 2.3 times the
propensity to travel of the Australians (25.7 overnight stays per thousand inhabitants).
The German National Tourist Board applies a relative narrow definition of the Middle East countries
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Figure 5-6: German National Tourist Board tourism growth forecast 2020 for incoming
tourism from Asia, Middle East and South West Pacific
Source: Own representation based on data by the German National Tourist Board (DZT,
2011).
In order to attract foreign travellers, the availability of flights and low air fares are particularly
relevant. This view is supported by the tourism managers we have interviewed for this study
(Ostendorf, 2011). In a comparison between Berlin and Munich, the lack of non-stop flights
and capacities on transfer flights is considered as a competitive disadvantage in the tourism
development of Berlin. The strong positive effects on the growth rates of incoming travellers
of new long-haul flights can be seen in the case of Munich over the past decade.
In Munich, tourists from the Middle East have become the fourth largest tourist group overall
and the second largest group of intercontinental tourists after those from the USA. Among
the tourist originating countries with highest growth rates, we find also countries, for which
Emirates provides connecting services, e.g. from India and Australia.
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Figure 5-7: Development of incoming tourism in Munich from selected countries, measured in
nights spent 2007-2011
*) 2011: Estimated based on data from January to October

Source: Own representation based on data by the Munich Tourism Office.
In Berlin, growth from tourists from the Middle East was 7.8 % between 2007 and 2011, in
Munich 10.1 %. The data, however, also shows some regional specific preferences of foreign
travellers. Hamburg, for instance has not benefited from Emirates services
disproportionately in terms of tourists from the Middle East, which have grown only 1.3 % on
average per year between 2007 and 2011, while a substantial increase in the number of
tourists arriving from India can be observed with an average annual growth rate of 18.3 % in
the number of nights spent. A stakeholder interview with the Hamburg Chamber of
Commerce conducted in the course of this study delivered some explanations for this
development. While Hamburg does not promote tourism opportunities in the Gulf to a large
extent, the aeronautical industry in Hamburg employs a relatively large number of engineers
of Indian descent, which has intensified the relations between India and Hamburg also in
terms of tourism.
New long-haul flights generally increase the visibility of a city or region in the global tourism
market. A good example for this is the Hainan Airlines non-stop flight from Beijing to Berlin.
Since this flight has started, Chinese tour operators have started including Berlin in their
German and European tours. Before the operation of this long-haul route, other European
cities, which were better accessible by long-haul flights, such as Munich and Frankfurt, were
preferred as origin or destination points of package tours. The view that long-haul flights
strongly support incoming tourism is not only held by German tourism managers, but can
also be found in other studies. For instance, in the study A new airport for London authors
argue that the lack of flights between London and China is a major reason for the the UKs
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currently meagre record in attracting famously high-spending Chinese tourists to visit

(Greater London Authority, 2011).
Given the optimistic growth forecasts, we do not expect that with new long-haul services to
secondary airports in Germany tourism in Munich or Frankfurt will decline, as the overall
market grows at the rates shown above. On the contrary, new points for entry and exit can
increase the overall attractiveness of Germany as a travel destination, as it is possible to set
up tours more flexibly.
Although non-stop flights to the Far East are preferred as means of stimulating incoming
tourism from this region, transfer itineraries with added capacities are also seen as positive.
So far, the service from Berlin to Doha, operated by Qatar Airways, and its connectivity to
onward destinations, is seen by the tourism administration in Berlin as a positive first step;
resulting in additional interest in Berlin, but the stimulation effect is limited due to the
relatively small aircraft (A319/A320) operated on the route. In this regard, a daily service from
Berlin to Dubai operated by Emirates with wide-body aircraft is likely to create higher benefits
than the existing service by Qatar Airways.
Also the tourism authority in Stuttgart views new intercontinental air services as beneficial to
the development of incoming tourism. Currently, business travellers are the largest group of
visitors from abroad in the Stuttgart region. Main purposes for coming to the area are trade
shows, congresses and visits at German companies. While Stuttgart is well connected to
European hubs in Frankfurt, Munich and Zurich by a combination of air services and ground
access (e.g. high speed train to Frankfurt), new intercontinental air service can improve the
accessibility of the region, as business travellers are perceived preferring to arrive by air
directly at the final destination, without requiring an additional train ride after a long
intercontinental flight.
In the segment of leisure tourism, the Stuttgart tourism authority expects that growth
potentials in the area of individually booked tours can be exploited, particularly for travellers
from India. For this segment, the visibility of the city, e.g. in the timetable of airlines or in
internet flight search engines and travel websites is expected to improve the competitive
position compared to the blockbuster destinations like London or Paris. In comparison to
the most prominent European cities which are better known to Asian travellers, it is more
difficult for the majority of cities in Europe to attract incoming tourism from Asia. Stuttgart
sees itself in a favourable geographical location, enabling travellers to reach a number of
destinations particularly interesting for foreign travellers by a day-trip, such as Munich,
Heidelberg, Rothenburg ob der Tauber and even Paris with the recently opened high-speed
railway line. The managers of the Stuttgart Marketing GmbH have confirmed the observation
made by their colleagues from Berlin that with intercontinental air services, a destination is
more likely to become a gateway, i.e. in this context a location in which tours will start or end,
which leads to an increase in the average length of stay compared to a destination that is an
intermediate stop. In other words: if a city is not served by long-haul flights, for instance due
to restrictive traffic rights as it is the case with Emirates and Stuttgart, it may have a
competitive disadvantage compared to those cities with long-haul flights.
Finally, the Stuttgart region hopes to stimulate health / medical tourism, a segment that has
already developed strongly in the area around Munich. This segment is interesting as the
average length of stay is longer than for leisure trips. Moreover, the travellers in this segment
require a high level of convenience for their trip, strongly supported by direct air services.
Harsche et al. (2008) analysed the potential of medical tourism for the Stuttgart region.
Stakeholder interviews conducted by Harsche el al. (2008) indicate that while the medical
infrastructure in Baden-Wrttemberg is relatively good, further growth can be expected with a
new direct air service from the Middle East. Overall, German consulates in the Middle East
issued visas for 10,000 trips with medical treatments as the main purpose in 2007.
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Assessing the contribution of Emirates for incoming tourism in Germany

For assessing the contribution of Emirates to incoming tourism in Germany, we have
analysed the correlation between the origin-destination passenger volume and the seat
capacity offered and the nights spent by foreigners in Germany.
Our hypothesis is that with an increasing number of origin-destination passengers on a city
or country pair, the number of incoming travellers increases, as among the total number of
passengers on a route, we find both outgoing and incoming travellers.
Based on data provided by the German Statistical Office (tourism statistics, number of seats
offered on flights from Germany) and Sabre ADI (origin-destination passengers), we can
show a high correlation between both the seat capacity offered as well as the passenger
volumes between Germany and Asia/South West Pacific and the nights spent by incoming
travellers from these regions in Germany.
In the following figure, we correlate the number of seats offered on non-stop flights from the
Middle East to Germany with the number of nights spent in Germany by travellers from this
region. With a higher number of non-stop seat capacity, the attractiveness of Germany as a
destination for leisure and business trips, as the country can be reached quicker, more
conveniently and, in case of decreasing air fares due to increasing intensity of competition
with new offers also at a lower cost.
Figure 5-8: Correlation between the number of seats offered on non-stop flights from the
Middle East to Germany and the number of nights spent by tourists from the Middle East in
Germany, 2001-2010
Source: Own representation based on data by the German Statistical Office.
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The analysis shows that statistically for every four seats offered on a flight from the Middle
East to Germany, travellers from this region stay one night in Germany. Based on this finding
it can be argued that Emirates, which offered in 2010 about 860,000 seats to Germany,
generated about 215,000 overnight stays by tourists from the Middle East in Germany.
Particularly for Munich, we can observe a strong correlation between the increase in number
of air services from the Middle East and the number of incoming tourists. The number of
incoming tourists from the Middle East has increased by 10.1 % on average per year from
2007 to 2011, while the number of seats offered on direct flights between cities in the Middle
East and Munich has grown by about 12.5 % over the same timeframe.
As already explained above, tourists from the Middle East are important to the German
economy, as this region provides above-average growth prospects. Moreover, tourists from
this region coming to Germany are affluent and their length of stay is above average. While
the average Asian tourist stays 2.3 nights per arrival, travellers from the Middle East stay on
average 2.9 nights (German Statistical Office). The reason for this development can probably
be found in the trip purpose. A growing segment in the incoming business in Germany are
travellers from the Middle East coming to Germany for medical treatment, which, almost
automatically, requires a longer stay than a trip for sightseeing.
The correlation between origin-destination passenger volume between Germany and
destinations in Asia is equally strong as the correlation between the number of seats offered
and the number of overnights stays, as shown above.
Figure 5-9: Correlation between the number of origin-destination passengers between
Germany and destinations in Asia and the number of nights spent by tourists from Asia and
South West Pacific in Germany, 2002-2010
Source: Own representation based on data by the German Statistical Office and Sabre ADI.
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As shown in Figure 5-9, we find that on average for each additional passenger transported
on a country pair, the number of nights spent by foreigners in Germany increases by about
0.8. Emirates, with 608,000 passengers from Germany to Dubai, could therefore be
attributed about 485,000 nights spent by foreigners from Asia and South West Pacific in
Germany.
We estimate the economic impact for Germany from these travellers as follows: the German
National Tourist Board provides figures for the average daily spending of foreign travellers
from each country in Germany. We assume that the share of days spent by foreign travellers
equals the share of origin-destination passengers by country/region on Emirates flights from
Germany. The results are shown in the following table.
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Table 5-3: Expenditures by foreign tourists travelling on Emirates to Germany
Country/Region
MiddleEast
ChinaandHongKong
India
Australia,NewZealandandSouth
WestPacific
Korea
Japan
OthercountriesinSouthern/East
AfricaandAsia
Total
Total
spending
24.7million
11.7million
8.6million
5.0million
Expenditures
perday
160
348
153
120*
3.6million 176
1.4million 335
20.8million 120*
76.0million
Shareof
days
31.9%
6.9%
11.6%
8.6%
Total
no.of
days
154,646
33,597
56,467
41,946
4.2% 20,384
0.9%
4,292
35.8% 173,668
100.0% 485,000
*) Estimated
Source: Own calculations, based on data provided by the German National Tourist Board
and Sabre ADI.
In the first look, it may seem counterintuitive that affluent tourists from the Middle East spend
much less per day than tourists from China or Japan. However, this can be explained by the
fact that tourists from the Middle East stay on average with a total of 19 nights almost twice
as long in Germany as tourists from China (8.8 nights) or Japan (8 nights). Therefore,
expenditures on souvenirs or brand products Made in Germany distribute over a larger
number of days, leading to the smaller daily expenditure figure.
Overall, we estimate the expenditures of incoming tourists who travelled on Emirates to
Germany at about 76 million. Based on the input-output methodology described above, this
expenditure creates 2,583 direct, indirect and induced jobs.
However, we suggest being cautious with the causality implied by the calculation. We have
not studied the alternatives of incoming travellers to Germany flying on Emirates. Without
Emirates services, the travellers either could have switched their destination to another
country or could have flown to Germany on another airline. However, as discussed above, it
is unlikely that all the tourists would have visited Germany if Emirates flights had not been
available. The chapter on passenger flows has shown that Emirates has stimulated traffic
with new capacities at competitive fares.
Similar conclusions can be reached, when we analyse the correlations between the number
of seats on non-stop flights offered and the nights spent by tourists in Germany. With an
increasing number of non-stop flights, the attractiveness of Germany as a destination for
private and business trips increases, due to a higher level of convenience, time savings and
lower fares resulting from increased competition.
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5.1.4 Outgoing tourism

While Germany benefits strongly from incoming tourism, the net balance of payments in the
tourism sector is negative for the German economy. The income from tourism for Germany
was 26.2 billion in 2010, while the expenditure by German tourists abroad was
58.6 billion, resulting in a negative balance of payments of 32.4 billion (DZT, 2011b).
However, from the negative balance of payments it should not be concluded that aviation in
general or additional services is negative for Germanys welfare. For the individual traveller,
each additional offer can be regarded as positive, as the choice of travel options increases
and a stimulation of competition has positive effects on product quality and prices.
The same is true for tour operators. With the rise of the Gulf carriers and Turkish Airlines,
additional seat capacities became available for European tour operators, which have relied in
the past to a large extent on legacy network carriers and holiday / charter airlines. Flexibility
also in terms of the length of trip and the day of departure has increased, as flights are
operated daily in contrast to formerly offered weekly flights only.
For the impact of individual air routes and offers on outgoing tourism no empirical data is
available. It is reasonable to assume that new air services will most probably lead to a shift in
destination choice of tourists, but not to a complete change in behaviour and attitudes. Since
for instance Emirates offers services from Hamburg to Dubai, it is likely to assume that
tourists from the Hamburg area are now more likely to travel to Dubai for vacation. But it is
also very likely that these tourists would have travelled to Cuba, the Dominican Republic,
Egypt or Tunisia, if the air service to Dubai had not existed. At the same time, it is relatively
unlikely that tourists with a preference for the North Sea or Baltic from the Hamburg area
have switched their destination to the UAE. So the hypothesis is that new air services to a
large extent do not significantly increase the negative balance of net tourism spending for
Germany. However, this issue would require more fundamental research before final
conclusions can be drawn.
5.1.5 Air cargo

Air cargo has played for a long time an important role for the transportation of goods over
long distances. The main advantages are speed and safety, while the relatively high costs
compared to sea transport make air transport viable usually only for high-value goods. With
these characteristics, air cargo is a pillar for the success of the German economy in
international trade.
The German economy is characterised through a relatively high level of openness, i.e.
imports and exports have, in international comparison, an above average share in the
economic activity. In 2010, the share of exports in the German GDP was 47 %, with exports
valued at 1,160 billion, making Germany the number two behind China in international
trade (Statistisches Bundesamt, 2012). While the most important trade partners are located
within the European Union, the emerging markets in Asia have gained in importance over the
past years and so has air cargo, as a means to serve customers in these countries.
Most important trade partners in Asia and the Middle East are China, with exports valued at
53.8 billion in 2010, followed by Japan with 13.1 billion, South Korea with 10.3 billion and
India with 9.3 billion. Exports to the UAE were valued at 7.6 billion in 2010, making the
country Germanys fifth most important trade partner in Asia (Statistisches Bundesamt,
2011).
Long-term forecasts for Germanys manufacturing sector predict that the exports will grow
significantly. However, not all branches of manufacturing are equally air freight affine.
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Therefore, Figure 5-10 shows the long-term export outlook for various manufacturing
branches for which the use of air freight is very likely to a certain extent based on the
characteristics of the goods produced. The graph is based on data of Prognos Deutschland
Report 2030 issued in the year 2006 with the consequence that the economic crisis of the
years 2008/2009 is not incorporated in the forecast. However, having the long-term
perspective in mind, Figure 5-10 shall primarily illustrate the general market and export
development expected in the future. It is shown that branches, such as vehicle
manufacturing, mechanical engineering and the various sub-branches of manufacture of
electrical and optical equipment, are assumed to more than double their exports measured in
billion Euros from 2000 to 2030. Considering the fact that approximately 25 % of Germanys
external trade, based on the value of goods, is being exported by air and this is on a very
similar scale also true for the exports to the UAE and Asia for instance, one can hypothesize
that air freight volumes will prosper as well.
Figure 5-10: Forecast on German exports for the manufacturing industry (constant prices,
base year 2000)
Source: Own representation based on data by Prognos (2006).

Hence, taking into regard on the one hand the overall predicted growth of air cargo demand
between Europe and Middle East with an annual average growth rate of 6.0 % and Europe to
Asia with 6.5 % (eastbound)/6.7 % (westbound) between 2010 and 2029 based on the base
scenarios of Boeings World Cargo Forecast 2010-2011 (Boeing, 2010) and on the other
hand the industry-specific export forecast in Germany, it can be assumed that air freight
services and respective capacities on these routes have to develop accordingly to
accommodate the projected increase in demand.
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Figure 5-11: Development of air freight exports from Germany to the UAE (in tons), 20002010
Source: Own representation based on data by EUROSTAT.

The gain in importance of the UAE in trade relations with Germany is also reflected in the
volume of air cargo between the two countries. While imports from the UAE to Germany are
still relatively small, export of goods by air from Germany to the UAE has increased steadily
in the period from 2000 to 2010, except a decline in volumes in 2002 and 2003, as shown in
Figure 5-11. Surprisingly, the economic downturn of the years 2008 and 2009 did not seem
to have a negative impact on the German-UAE air freight market based on the analysis of
Eurostats foreign trade statistics (Eurostat, 2012). This picture is contrary to the
development of the global and especially European air freight market during that time, which
was hit by the crisis much harder resulting in a decrease of demand for air freight transport.
In 2010, Germany accounted for 25 % of the total air freight exports of the EU-27 member
states to the UAE. In consequence, based on a total volume of nearly 41,700 tons, Germany
forms the leading air freight exporting country to the UAE among the EU-27 countries. Taking
into consideration the overall foreign trade of Germany, the UAE have become the 5th most
important trading partner in Asia from an export perspective. These figures reflect the rising
importance of the UAE as export market for Germanys manufacturing industry and mirror
the positive economic development of the UAE as well.
The analysis of the composition and structure of the goods reveals that in particular
machinery and mechanical appliances, electrical machinery and equipment, metal products,
chemicals/plastics, automotive products and parts as well as optical and precision
instruments, e.g. medical, surgical and measuring equipment, can be identified as the major
air freight relevant goods being exported from Germany to the UAE. These industries form
the backbone of the German economy and contribute to a large extent to Germanys position
as one of the leading exporting countries worldwide. Hence, the provision of reliable, highperforming, efficient transport systems, including air freight transport, connecting Germany to
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emerging markets, such as the UAE and beyond to Asia, South America etc., is crucial for
Germanys industry in international trade and influences its competitive position.
Like in the market for passenger transport, also in the air cargo market Emirates has
developed into a major player in Germany. As Emirates operates wide-body aircraft with
relatively high belly cargo capacities, supplemented by several freighter services, it has
become the third largest carrier for air cargo in Germany, according to data provided by
IATAs Cargo Accounts Settlement Systems (CASS).
Figure 5-12: Development of the air freight volumes of major airlines originating from German
airports
Source: Own representation based on data by IATA Cargo Accounts Settlement Systems
(CASS).
Emirates air cargo market shares by region reported by the IATA Cargo Accounts Settlement
Systems (CASS) are comparable to the developments shown above for passenger traffic.
Relatively high market shares are reported for the South West Pacific and South Asia, most
probably due to the high number of destinations and frequencies to these regions. Relatively
small market shares can be observed for Japan and South Korea, which might be due to the
more indirect routing via Dubai, compared to competitors with direct flights. The overall
market share of Emirates of all cargo reported by IATA CASS from Germany was about 5 %
in 2010.
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Figure 5-13: Market share of Emirates for outbound air freight originating in Germany in 2010
for different IATA regions
Source: Own representation based on data by IATA Cargo Accounts Settlement Systems
(CASS).
In order to gain insights on the position of Emirates in the German air cargo market, the
project team has conducted a series of stakeholder interviews with the renowned freight
forwarders Schenker and Panalpina. The main effects coming from Emirates services in the
cargo business outlined by the interview partners can be summarized as follows:
Emirates is a preferred carrier for many major freight forwarders, as the service quality is
considered very high. Emirates has, according to the interview partners, a high reliability in
terms of the flown-to-booked-ratio, which is a key performance indicator in the air cargo
industry. The flown-to-booked ratio indicates the level of fulfillment, as it shows how much of
the cargo an airline actually has accepted for transportation has been flown as agreed. A
further benefit of Emirates services is the network, which includes destinations, which are
not served by other airlines on a daily basis. This includes, among others, destinations in
Pakistan or Africa. With several departures from German airports per day, express services
can be realized, which otherwise could not be offered in the same quality. This has led, at
least in one case, to the demand for medical products from Germany, which could otherwise
not be exported under a temperature-controlled environment to Africa. In this regard, the high
number of frequencies from Germanys central air cargo hub in Frankfurt with three daily
passenger flights with substantial capacity for belly cargo and a daily freighter service
positively supports the service quality offered.
For the Rhein-Main area around Frankfurt airport, the services of Emirates are also of value,
because with three passenger flights to Dubai distributed over the day (current departure
times 9:40am, 2:25pm and 8:15pm) express cargo services to Asia can be offered without
the need for night flights.
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The use of cargo services from other airports in Germany depends on the individual logistical
network of the forwarder. Some forwarders have argued that they only use services from
Munich or Hamburg for large single shipments, while smaller shipments are consolidated at
their hub in Frankfurt. Others have positively argued that with the provision of additional
cargo capacities at secondary airports in Germany, trucking to Frankfurt can be avoided up
to a certain extent. This reduces costs and decentral cargo capacities also provide
advantages concerning the service quality, as freight forwarders and shippers have more
options in case of high capacity utilization at the hubs.
The interview partners reported that Emirates (and other Gulf carriers) generally do not
significantly undercut the rates of incumbent carriers. One interview partner even noted that
Emirates often charges more than comparable carriers, including competitors from Germany
and other EU member states, taking its excellent service quality into account. It seems that
the price level in the cargo segment is pretty similar among the carriers operating in a
particular market and that the quality of services is besides the cargo rate a key driver for the
decision for or against a particular airline. It is reported that on main markets air cargo rates
have declined in line with the increase in capacity, but that in niche markets (such as
Pakistan or destinations in Africa), rates are still significantly higher. For these markets,
Emirates offers a new and reliable way of shipping air cargo.
The Chamber of Commerce in Hamburg reported that Emirates cargo services are used by
several companies in Hamburg for sea-air transport logistics chains, which combine the
speed of air transport with the cost-efficiency of sea transport. Shipping is used to transport
cargo from the Far East to Dubai and air cargo for the leg from Dubai to Hamburg. These
logistics chains are not only used for the import of goods, but also for export. For instance, a
company doing business in the area of spare parts for ships distributes its parts from Dubai
to different Asian destinations and parts are shipped daily by air from Hamburg to Dubai.
These delivery chains are largely owed to the provision of a direct air link between Hamburg
and Dubai. Similarly, it was reported that Airbus and Lufthansa Technik are using Emirates
air cargo capacities from Hamburg to Dubai and beyond to deliver time-critical spare parts to
aircraft operators in Asia.
In general, the growing capacity of Gulf carriers in the cargo market is seen from the
perspective of shippers and freight forwarders as positive. While in the short run, due to
business cycles and the difficult situation after the financial crisis sometimes overcapacities
exist, in the long run almost certainly additional capacities will be required to keep up with the
expected growth in exports. As freight forwarders (and with them the shippers of air cargo)
benefit from increased capacities and competition in the air cargo market, the stakeholders
we contacted were positively minded concerning further liberalisation of traffic rights.
When taking a look at the effects of potential new services from Berlin and Stuttgart, the
following can be concluded:
Both in Berlin and Stuttgart, up to now only very few wide-body aircraft operate from these
airports. The air cargo centre in Berlin scheduled to open with the new airport provides
modern facilities for air cargo handling, however, with only few airlines that operate with
wide-body aircraft to Germanys capital, the utilisation of this facility for air cargo remains to
be seen.
In Stuttgart, the existing cargo center at the airport is used to a large extent as a point for
commissioning cargo shipments, which will be trucked to other airports and flown from there.
From Stuttgart, currently no regular services with wide-body aircraft to Asia or the Middle
East operate from the airport. The situation for air cargo in Stuttgart can be expected - in the
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absence of Emirates services - not to improve, also because of the prevalence of low cost
carriers, which usually do not carry cargo aboard their flights.
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5.2 Effects of new services

5.2.1 Outlook for Germany for 2012
Starting at the end of 2011, Emirates has further extended the number of frequencies and
seat capacities between Dubai and the German airports it currently serves. Both Frankfurt
and Hamburg received an additional daily frequency, bringing the number of daily flights in
Frankfurt to three and in Hamburg to two. In Munich, Emirates replaced one daily service
with an A380 aircraft, therefore becoming the first foreign carrier bringing the A380 to a
German airport. The Emirates flight is the only regular A380 service to the Bavarian capital.
Services to Dsseldorf remain unchanged for the moment. If we assume that the average
seat load factor will remain constant, the additional services to Frankfurt and Hamburg and
the increase in aircraft size to Munich has the potential to generate 380,000 additional
passengers at the three airports.
Figure 5-14: Emirates passenger growth potential to/from Germany 2011/2012
Source: Own calculation.

Associated with the growth in passenger numbers is a further growth in expenditures as
shown in the following figure.
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Figure 5-15: Emirates expenditures in Germany for the fiscal year 2011 and forecast for
fiscal year 2012 in million
Source: Own calculation.

The total expenditures under the assumption that the flight schedule remains unchanged for
the year 2012, are expected to rise to almost 220 million, up from 184.8 million in the
previous year. The largest increase comes from the purchase of fuel, but also the increase in
airport, handling and air navigation charges will be substantial, as well as the expenditures
for crew accommodation and catering. A smaller contribution comes from additional staff
hired in the areas of administration, operations and passenger services and the additional
expenditures for maintenance services. We assume that the costs for IT, rents,
advertisement and other services remain constant. However, the picture could change, when
traffic rights will be granted and additional new services will be offered. The effects of
additional services to new destinations in Germany are discussed in the following paragraph.
5.2.2 New services to Berlin and Stuttgart

For the analysis of the macroeconomic impacts of additional Emirates flights to Germany, we
have set up traffic scenarios for Stuttgart and Berlin, which are evaluated with the same
methodology as described for Germany in total in chapter 5.1.
The traffic scenarios reflect Emirates strategy to operate on a newly opened route initially
with one daily service. This case is shown in scenario 1 for both Berlin and Stuttgart. As it
was the case for Dsseldorf, Frankfurt, Hamburg and Munich, Emirates usually increases
both frequencies and aircraft size, when a market has developed. In order to reflect this
development, in the second scenario it is assumed that Emirates operates a twice daily
service. The following table summarises the estimated traffic figures of the two scenarios for
Berlin and Stuttgart.
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Table 5-4: Traffic scenarios for Berlin and Stuttgart

Service scheme
Annual seat capacity
(arrival & departure)
Annual passengers
(80 % seat load
factor, arrival &
departure)
Annual air cargo (in
t, arrival & departure)
Annual transport
performance in
WLUs
Scenario 1
1 daily flight
Scenario 2
2 daily flights
173,010
450,410
138,408
360,328
5,475
17,374
193,158
534,068
Source: Own calculations.

A daily service to Dubai will generate approximately 140,000 passengers for each airport.
This figure was reached in the first and second full year after Emirates flights have started in
Dsseldorf and Hamburg. If the daily flight is complemented by a second daily frequency
and, at the same time aircraft size will be increased, the passenger numbers can be
expected to rise to 360,000 annually. Based on average cargo load factors from German
airports to Dubai and the aircraft types used, cargo traffic can be estimated at around 5,500 t
and 17,400 t, respectively.
Based on the passenger and cargo workload units and applying the methodology of
Klophaus (2007), the increase in on-site employment at the airports in Berlin and Stuttgart
can be estimated at 169 full-time equivalent jobs in traffic scenario 1 and 472 full-time
equivalent jobs in scenario 2.
The results of our own approach for the estimation of the economic effects with the inputoutput analysis, based on Emirates expenditures (Table 5-5 and Table 5-6) are shown in the
following table.
In Stuttgart, we estimate the annual expenditures to operate a daily flight at more than 15
million, which in turn creates 198 direct, indirect and induced full-time equivalent jobs. For the
second traffic scenario with two daily flights, we estimate the expenditures at around 34
million, creating 438 full-time equivalent jobs.
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Table 5-5: Emirates expenditures for new services between Dubai and Stuttgart
One-time start-up costs
Handling / catering
Airport charges (excluding passenger
security charge and passenger-related
charges
Airport charges (passenger-related)
Passenger-related security charges
Air navigation charges
Fuel uplift
Crew accommodation
Rent / IT / Personnel
Total
Scenario 1
0.2 million
2.8 million
Scenario 2
0.2 million
7.3 million
1.2 million
2.7 million
0.8 million
0.3 million
0.3 million
8.0 million
0.9 million
0.9 million
15.4 million
2.1 million
0.7 million
0.7 million
17.6 million
1.4 million
0.9 million
33.6 million

In Berlin, expenditures for the two traffic scenarios are slightly smaller, due to different
airport, passenger and security charges. However, the effects concerning the potential
generation of employment are similar.
Table 5-6: Emirates expenditures for new services between Dubai and Berlin
One-time start-up costs
Handling / catering
Airport charges (excluding passenger
security charge and passenger-related
charges
Airport charges (passenger-related)
Passenger-related security charges
Air navigation charges
Fuel uplift
Crew accommodation
Rent / IT / Personnel
Total
Scenario 1
0.2 million
2.8 million
Scenario 2
0.2 million
7.3 million
1.0 million
2.2 million
0.6 million
0.3 million
0.2 million
8.0 million
0.9 million
0.9 million
14.9 million
1.5 million
0.7 million
0.4 million
17.6 million
1.4 million
0.9 million
32.2 million

In both cases, a substantial share of the spending is flowing into the local and regional
economy, creating jobs in the airport region. This is particularly the case for handling fees,
catering expenditures, airport charges, security charges, crew accommodation and rent for
local offices. A smaller share of the expenditures remains in Germany outside of the Stuttgart
region, for instance air navigation service charges and fuel.
With the new passenger traffic, further effects can be shown. In the first place, airports will
benefit from more passengers, so not only aeronautical revenues will be generated, but also
the non-aviation business will increase. For instance, the airport operator in Stuttgart has
generated close to 10 in non-aeronautical revenues per passenger. It is likely that the
largest share of these revenues is made in parking and in revenue-sharing of airport retailing.
Given our assumptions for the passenger numbers associated with potential new Emirates
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flights, the non-aeronautical revenues for the airports of Stuttgart and Berlin can be expected
to increase by 1.4 to 3.6 million, respectively. As only a part of retailing revenues remain
with the airport, the actual expenditures by passengers in airport shops are probably several
times higher.
The effect for incoming tourism can be estimated using the relation between origindestination passengers and nights spent by foreign travellers in Germany shown in chapter
5.1.3. We estimate the marginal effect of new seat capacity on incoming tourism at 0.8 nights
spent by foreign travellers for each additional origin-destination passenger arriving in
Germany. In traffic scenario 1, we have 69,000 arriving passengers, therefore generating
about 55,200 additional nights of foreign tourists staying in Germany. In traffic scenario 2, we
estimate 180,000 arriving origin-destination passengers with a potential for 144,000 nights by
foreign tourists in Germany.
When a conservative average of 150 in expenditures per day (cf. Table 5-3) is assumed,
the economic effect of additional incoming tourism can be estimated at 8.3 million in traffic
scenario 1 and 21.6 million in scenario 2 for each additional destination in Germany.
While it is reasonable to assume that the main beneficiaries of the incoming tourism will be
the regions near the airports where new services are offered, it is likely that other areas in
Germany or even Europe will benefit from more incoming tourists, too. As the stakeholder
interviews with the tourism authorities in Berlin and Stuttgart have revealed, leisure travellers
from Asia often make round-trips with several intermediate overnight stops. Tour operators
usually select cities with long-haul connectivity as their gateways and these cities get a
longer average stay than intermediate points. With more potential gateway cities, tour
operators can offer more choice for travellers, therefore increasing the overall attractiveness
of Germany, probably also for repeat visitors.
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5.3 Effects of the purchase of aircraft, engines, spare parts and

equipment
The aerospace industry in Germany
In Germany, the aerospace industry is one of the key elements of the high-technology base
of the economy. According to the German Aerospace Industries Association (BDLI), in 2010
more than 95,000 people were employed in the industry, which had revenues of almost
25 billion. The German industry benefits from growth in aviation as an increasing number of
new aircraft, spare parts and engines are needed. Even rising oil prices do not necessarily
jeopardise this development, as technological innovations for more fuel efficient aircraft and
engines become commercially viable and airlines invest in newer technology aircraft to save
fuel and operating costs. For instance, the development of the Airbus A350 is a good
example for this trend.
Within the German aerospace industry, EADS and Airbus has a major role. The German
work share in Airbus aircraft is about 36 %. Besides the final assembly line for narrow-body
aircraft (A319/A321) in Hamburg, EADS branches in different parts of Germany supply major
components for Airbus wide-body aircraft, which are assembled in Toulouse. The systems
delivered from facilities in Germany include fuselage sections, vertical stabilizer and cabin
interior.
Among other German suppliers for systems of the Airbus A380 are Liebherr, with air systems
and flight control actuators, Diehl Aerospace (door and slide systems, cabin lighting and flight
actuators) and Sell (galleys). Also in the Airbus A350XWB project, German suppliers will take
a major role for systems and structures.
In the area of aircraft engines, Germany plays a major role, too. Besides activities of Rolls
Royce and the International Aero Engines (IAE) consortium for engines used in Airbus A320
family, MTU is part of the Engine Alliance consortium. Engine Alliance supplies one of two
engine options for the Airbus A380. GP7200 engines for the A380 were ordered e.g. by Air
France, Emirates, Etihad, Korean Air and Qatar Airways. MTU has a share of 22.5 % in the
development and production of this engine.
Emirates as customer of the aerospace industry

Emirates has become one of the largest customers for the aeronautical industry globally. Its
fleet has grown from two aircraft in 1985 to 168 as of the end of 2011.
Emirates is also one of the main customers of the German aeronautical industry. Between
1985 and 2011 Emirates took delivery of 84 Airbus aircraft, of which 65 were in service at the
end of December 2011 (including 20 Airbus A380 valued at more than US$7 billion at list
prices). These figures underline the long-term importance of the business ties between
Emirates and Airbus.
Emirates order backlog stood at 237 aircraft at the end of 2011. 140 firm orders are placed
with Airbus and 97 with Boeing. The list prices of Airbus aircraft on order at the end of 2011
was more than US-$ 54.7 billion (including spare parts and spare engines), the order value
for Boeing aircraft US-$ 28.5 billion. Furthermore, Emirates holds options or has signed
letters of intent for 80 aircraft.
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Figure 5-16: Emirates fleet and order development 1985-2011
Source: Own representation based on data by ASCEND Online Fleets.

Figure 5-17: Emirates aircraft on order as of 31st December 2011 (excluding options and
letters of intent)
Source: Own representation based on data by ASCEND Online Fleets.

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Employment effects for the German aerospace industry

By applying the same input-output analysis methodology as described in the chapter above
on air services, we have estimated the impacts of Emirates investment in new aircraft,
engines and spare parts for the German economy. Over the whole aerospace industry, the
input-output analysis shows that 9,091 direct, indirect and induced jobs are created for every
billion in revenues.
Based on Emirates firm orders with Airbus for 140 aircraft, the revenue share for Airbus
factories in Germany and German-based suppliers will exceed 1 billion per year over the
delivery schedule of the Airbus A380 and A350 aircraft. We estimate the direct, indirect and
induced employment effect for Germany in the order of 9,439 direct, indirect and induced
jobs created due to these aircraft orders.
In case Emirates would exercise its options / letters of intent for the 50 Airbus aircraft it
currently holds and these aircraft would be manufactured on top of the firm orders in the
same timeframe, the employment effect can be estimated at an additional 2,435 direct,
indirect and induced jobs in Germany.
Moreover, Emirates has ordered Engine Alliance GP7200 engines for its fleet of 90 Airbus
A380 aircraft and has concluded a 15-year fleet management contract for these engines,
which includes spare parts, maintenance and overhaul services. The German share of the
production of new engines and the fleet management contract amounts to 65.5 million
annually up to the year 2025. We estimate that 595 direct, indirect and induced jobs are
generated in Germany by Emirates decision for the Engine Alliance engine option for the
Airbus A380.
Unfortunately, Boeing did not provide any figures on the share of German suppliers in
Boeings aircraft programs. Based on the firm orders of Emirates for 87 Boeing 777-300ER
and 10 Boeing 777-200LRF, the contract volume for the German industry for each
percentage point in participation in these projects is about 174 million. As the intended
delivery schedule for these aircraft ranges from 2012 to 2019, we assume that the contract
volume will be evenly spread over this time frame. Based on these assumptions, we estimate
that about 200 direct, indirect and induced jobs in Germany are related to every percentage
point in work share in Boeing aircraft ordered by Emirates. However, as the actual share for
Germanys industry in Boeing aircraft programmes remains unclear, we have not included
these figures in the totals shown in the following paragraphs. In consequence, this means
that our estimations are rather conservative and underestimate the actual effects.
Besides the order of new aircraft, Emirates has spent 208.8 million in fiscal year 2010/11
for cabin interior components (e.g. carpets, seats, galleys), paints and ground handling
equipment at German suppliers. This also includes travel cost of Emirates staff travelling to
Airbus and other suppliers in Germany. Moreover, Emirates spent more than 68.8 million in
Germany for spare parts and the repair of components. With the same employment
coefficient as above, these on-going expenditures create another 2,500 direct, indirect and
induced jobs in Germanys aeronautical industry. This estimation can be considered as
conservative in the long-term, as the demand for spare parts will grow in future in line with a
growing fleet of aircraft. Moreover, the need for cabin interiors and parts will increase due to
the overhaul of Emirates fleet in future.
In summary, the following table shows the employment effects generated by Emirates
expenditures for the German aerospace industry. For new aircraft, engines and spare parts,
annual spending is close to 1.4 billion for the German economy, generating 12,558 direct,
indirect and induced jobs.
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If we also take into account the possibility that further aircraft will be firmly ordered, which are
currently on option with Airbus, the total employment effect increases to almost 15,000 fulltime equivalent jobs.
Table 5-7: Annual contribution of Emirates to the German aerospace industry
Area
Newaircraftorders(Airbusonly)
Production,spareparts,maintenanceand
overhaulforEngineAllianceGP7200engines
Cabininteriorsandgroundserviceequipment
Sparepartsandmaintenanceservicesforin
servicefleet
Annual
expenditures
Direct,
indirectand
induced
employment
1038.3million
9,439
65.5million
595
208.8million
68.8million
1,898
625
1381.4million
12,558
Total
Newaircraft(Airbusonly,option/letterof
intent)
267.8million
2,435
Totalincaseofconversionofoptionstofirm
orders
1,649.2million
14,993
Source: Own calculations, based on data provided by Emirates.
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6 Discussion of the benefits of air transport market

liberalisation for Germany
In this chapter, an overview on a more theoretical level about the impacts of liberalisation for
different stakeholders will be given. The analysis considers both the effects of liberalisation
for the decentral regions and for the hub regions to give a balanced view for the whole
country. In the beginning, a first general overview about the level of liberalisation and
possible changes will be given, followed by an overview about liberalisations related impact
change on airports, differentiating decentral and hub airports. Based on this, an analysis of
the consequences of liberalisation in the respective regions will be conducted. To get a
complete picture about the aviation industry, the impact for airlines and also for alliances will
be shown. Finally the passengers viewpoint will be taken into consideration as the
stakeholder who should benefit from the consequences of liberalisation. Whereas airports
and airlines represent more or less the supply side, passengers represent the demand side
of the industry. Before the focus is laid on the different stakeholders, there will be an
introduction about the impacts liberalisation is expected to cause. The approach will be on a
more theoretical level added by a literature review, showing what other authors identified as
impacts of liberalisation.
6.1 Consequences of the liberalisation of air transport markets

Liberalisation in the aviation industry is one of the best documented institutional changes the
theoretical economic literature can provide. Most of the existing literature concentrated on its
introduction and its first results. Here, the emphasis will be on the further progress of
liberalisation and its potential impacts. Liberalizing air services between countries means not
only positive outcomes for the demand side, such as the consumers in the form of new travel
options, job creation, better service quality, increased incoming tourism and improved
business relations, but also the supply side is affected. Airlines and airports may also benefit
from the liberalisation and the concerned countries may experience an overall positive
economic impact.
The path to liberalisation began in the United States with the Airline Deregulation Act of
1978. The purpose of this Act was to encourage, develop, and attain an air transportation
system which relies on competitive market forces to determine the quality, variety, and price
of air services, and of other purposes (Rhoades, 2003) The aim of deregulation was to
improve service for the public, to lower fares, to allow carriers to achieve higher profits, and
to create a more competitive airline industry through the entry of new carriers as well as a
more liberal regulatory environment for existing competitors (Kane, 1998). However, the fear
of negative consequences for incumbents, such as concerns on the competitiveness on the
market in relation to newcomers hindered liberalisation. Often national carriers and - by their
lobbying - also nations are not willing to liberalise markets. The results are restrictions still
existing in air service agreements.
Sometimes the antagonists of liberalisation mention the danger of an unlimited liberalisation
(Dempsey, 1990). The difference of understanding is already underlined by the different
wording: in the U.S., the term of deregulation is usual whereas in Europe the term of
liberalisation is more common. But even the relatively far reaching deregulation of the U.S.
did not remove all regulations being established in aviation over time. Especially regulations
dealing with safety and security were intensified over the years; regulations about social
norms still have their importance, and environmental regulations become more and more
relevant. This brief overview shows that the regulatory framework consists of quite more
regulations than the pure market regulations about market access, quantities and prices.
When referring to liberalisation throughout this study, we refer to market regulations only.
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Despite the doubtless positive impacts of deregulation of national (U.S.), regional (EU) and
international (open skies agreements between a growing number of countries) markets for
consumers, there is even a kind of re-regulation under discussion. This trend can be
observed particularly in the U.S., where legacy carriers have been struggling in adapting to
the market environment and developing a sustainable business model. The ideas in this area
go into the direction of a stricter market monitoring (Lowy, 2010).
The bilateral air service agreements negotiated between two countries lay out the regulatory
framework under which airlines can operate. The reciprocally agreed provisions were
typically based on airline designation, entry points per country, frequency, capacity and
pricing. Further ownership restrictions were incorporated to limit the number of potential
airlines. All restrictions were established in order to protect the own country and its airline
industry. As these stipulations were under discussion after the Second World War, with
commercial aviation in its infancy and a high significance of the national state, this may have
been justified at the time. Nonetheless, the overall framework and many individual
agreements did not completely change over time. While other industries, even in services,
have undergone a global liberalisation process, mainly driven through the World Trade
Organisation, the aviation industry remained a restricted one. However, with the increasing
globalisation and the ascent of emerging markets, aviation is changing and demands for
more freedom. In many bilateral relations a trend for further liberalisation can be observed,
albeit sometimes in a long and cumbersome way. At least in some of the largest aviation
markets, such as between the US and the EU, a full market access liberalisation was finally
reached. But even in these cases, ownership regulations were not touched.
In the agenda Statement of Policy Principles regarding the Implementation of Bilateral Air
Services Agreements released by IATA in 2009 (IATA 2009), seven nations including the
United Arab Emirates and the United States declared, although not binding, that they will
support the liberalisation of air service agreements. The agenda particularly emphasizes the
disadvantages the restrictions in bilateral air services agreements have on market access,
investment, tourism, job creation and economic growth. The declaration furthermore sets out
basic statements to be followed, such as the freedom to access capital markets, the freedom
to do business, the freedom to price services, fair competition, legal effect, and endorsement
by representatives of other countries.
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In the case study The Economic Impact of Air Service Liberalisation which was conducted
by InterVISTAS for IATA, several important consequences of further liberalisation of air
service agreements between countries have been identified. The report reveals a typical
traffic growth of 12 % to 35 % following market access liberalisation. It also states that
liberalizing only 320 bilateral agreements of the existing thousands would create 24.1 million
full-time jobs and generate an additional US-$ 490 billion in Gross Domestic Product.
(InterVISTAS, 2006) This corresponds to an economy almost the size of Brazil.The
statement of Giovanni Bisignani, then Director General & CEO of IATA, puts it all in a
nutshell (IATA, 2007):
Further liberalisation of international air transport is essential. Airlines facilitate
global travel but are among the last companies to benefit from globalisation.
Greater commercial freedom for airlines is vital for the long-term health of the
industry and for the global economy.
6.2 Literature review of worldwide liberalisation

Since 1978, a lot of literature was published about the impact of the liberalisation of the
aviation industry. Here we can give only a brief overview. It is a controversially discussed
topic, however, it seems that generally speaking liberalisation is evaluated having a positive
impact on the economy of the concerned countries. Rhoades (2003) argues that
liberalisation was meant to support the competitive market with the aim of improving the
overall economy. This intention is strengthen by InterVISTAS (2006), which gave some
figures as shown already in the previous paragraph.
IATA (2007) refers to other industries in order to emphasise on the positive outcomes
liberalisation had generated. In accordance with this, IATA (2009) released an agenda which
explicitly sets out a policy on liberalisation. Gillen et al. (2001) conducted a study,
commissioned by the city of Hamburg on the impacts of liberalisation of international aviation
on Hamburg airport.
In this study it is argued that market entry barriers for airlines from third countries do not
protect German airlines and hubs, as the intra-European market is liberalised. In case
capacity restrictions exist for long-haul flights, EU carriers will capture much of the market
growth, which then will be routed through their hubs. Moreover, market entry barriers lead to
higher ticket prices and cargo rates in Germany, which, from the viewpoint of the overall
economy is detrimental to Germanys competitive position in comparison to other EU
member states.
Gillen et al. (2001) have shown in their study that liberalisation is estimated to generate
149,000 new passengers and 17,000 who will use the airport as transfer point for other
international destinations, yield a 6 % increase of the overall airport revenue, increase local
output, investment and employment as well as create 11,000 new tourists and 22 new jobs in
the tourism industry. This study is of special interest since it has a focus especially on a
secondary airport and describes the positive impact for such an airport.
Fu et al. (2010) state that liberalisation has allowed airlines to optimize their network within
and across continental markets and that the growth of LCCs leads to increased competition
and stimulated traffic. Wang and Evans (2002) have stated that airline performance within
the liberalisation process shows that airlines, on average, achieve better results of operation
if the market is more liberal.
On the other hand, there are opponents of liberalisation. Particularly in the US, triggered
through the financially difficult state of legacy carriers, advocates can be found calling for
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restoring financial regulation and federal regulation of pricing in order to protect the wellestablished airlines as well as the customers. In the perception of supporters for reregulation, passengers do not benefit from liberalisation, as expressed by high-ranking US
politicians (Lowy, 2010). The objections to liberalisation are not new, as Dempsey argued
already in 1990 that deregulation has been a failure from a public policy standpoint. He
criticized that the positive claims of deregulations have been proven false and it resulted in
high levels of concentration, discriminatory pricing, service deterioration, narrower safety
margins, and higher prices.
6.3 Liberalisations impact on different stakeholders

6.3.1 Secondary and hub airports
Given that market access liberalisation allows airlines to operate long-haul services from a
large number of airports in a given country, it might be suggested that secondary airports can
take advantage from this process, while the incumbents hubs might lose.
Secondary airports are defined herein as airports not having a hub function by providing
airlines with infrastructure optimised for transfer itineraries. These systems were introduced
after liberalisation and optimized through alliances. One success of liberalisation was the
introduction of low cost carriers (LCC) offering point to point services in short- and mediumhaul markets. While the emergence of LCCs put pressure on the continental networks of
legacy carriers, it did not harm the big European hubs so far. Recently, a situation has
developed that liberalisation in Europe extends from the common internal market to the
relations with third countries. We observe that this has led to an increasing number of longhaul flights from secondary airports in Europe to the hubs of third country airlines in North
America, Asia and the Middle East.
The example of Hamburg shows that time-sensitive passengers can benefit from a direct
service e.g. to Dubai and avoid transfers when bound for this destination. Also passengers
for destinations beyond Dubai benefit from the reduction in the number of transfers, e.g. for
destinations in Australia or secondary destinations in India.
For secondary airports, the presence of third country carriers with long-haul flights into hubs
in North America or Asia results in an improvement in their global connectivity, as
frequencies and capacities to intercontinental destinations increase and new destinations
can be reached with only one intermediate stop instead of two or more.
In the German case, we find a number of intercontinental flights by third country carriers
connecting Germanys secondary airports with hubs on other continents. These are for
instance Continental Airlines with services from Berlin, Hamburg and Stuttgart to New York,
Delta Air Lines from Berlin to New York or Gulf carriers Etihad Airways from Dsseldorf to
Abu Dhabi and Qatar Airways from Berlin and Stuttgart to Doha. Emirates offers connections
from Dsseldorf and Hamburg to Dubai.
In a situation with static demand, these new services would result in a relocation of demand,
which would lead for incumbent airlines and the German hub airports Frankfurt and Munich
to a decrease of transfer passengers assuming that most of these passengers so far used
only these hubs.
However, the effects observed in reality are more complex than it seems in this simplistic
view. First, and of foremost importance, the demand for intercontinental air travel from and to
Germany is quickly growing at rates of more than 5 % p.a. over the last decade. A reason for
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part of the growth is the additional capacity brought into the market by new entrants and also
low prices, which generate additional demand. Already in the past it could be observed that
the price sensitive demand to a large extent has used foreign airlines, which typically offered
lower fares in the German market than the local incumbent. Typically, itineraries via
Amsterdam, London and Paris were available in the German market at low fares, while nonstop services and even transfer itineraries via Frankfurt and Munich were priced higher. This
phenomenon is described in the literature as home country premium (Frhlich, 2011). So the
relocation effect, which can be observed in the Germany-Asia market, goes at the expense
of European legacy carriers, such as Air France-KLM or British Airways, and mostly not at
the expense of Lufthansa.
But also the hub airports benefit from competition between incumbents and new entrants, as
is the case in Frankfurt and Munich, which are the preferred points for airlines starting
services to Germany. With competition and lower fares, demand is also stimulated at the
hubs. For instance, Emirates introduced a third daily service to Frankfurt and offers A380
services for one of its two daily services to Munich. On reason for the preference for the
German hubs is also the generation of transfer traffic with bi- and multilateral interlining
agreements.
Besides the above mentioned reason of an overall growing market in intercontinental air
travel, also the efficient transfer times at German hubs and the overall comparably shorter
journey times contribute to growing transfer passenger numbers at Frankfurt and Munich.
Relatively longer journey times and waiting times at the Gulf hubs in Abu Dhabi, Doha and
Dubai need to be compensated by lower prices in the market, from which price sensitive
travellers, mostly for leisure purposes, can take advantage of.
A further important point might be that business travellers are less price-sensitive; instead
they are in most cases member of frequent flyer programs (FFP). To collect further miles to
receive the benefits associated with such programs, this group of travellers remains loyal
with incumbent airlines and, hence, the hubs they use. This effect might be decreased the
more often business travellers are members in more than one FFP, but then it has to be
questioned if these additional FFPs will be of European airlines of other alliances or of nonEuropean airlines taking advantage of further liberalisation. As this aspect rather concerns
the passengers, this will be discussed further in the passenger part.
Finally, it can be concluded that the hypothesis of the beginning of this chapter has to be
corrected. Secondary airports benefit from the liberalisation process, but not at the expense
of German hub airports.
6.3.2 Airlines and alliances

Airlines are the main suppliers of the aviation industry towards the consumer. According to
the business model, airlines can be classified as network carriers, low cost carriers, holiday
carriers and regional carriers. Also a combination of different business models is possible
which is then recognized as a hybrid airline. Besides these airlines relying predominantly on
the passenger business, there are scheduled and charter freight carriers as well as
integrators.
In the beginning of the liberalisation process, the International Air Transport Association
(IATA) was sceptical towards liberalisation, as it was strongly involved in market access and
price regulation matters. IATA paved the way for regulating market access through the
system of slot allocation, which was adopted more or less along the lines of IATAs
recommendations in many parts of the world. More importantly, IATA acted as platform on
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which airlines coordinated prices in a global legally approved price cartel (Ehmer et al.,
2000). These structures exist until today; however, through the emergence of alliances,
internationally agreed IATA fares are less relevant now. Today, IATA is a strong proponent of
the liberalisation process. It might be the reason that IATA has recognized that the benefits
of liberalisation dominate for its members. Predominant benefits of liberalisation as outlined
by IATA include the lowering barriers to entry into the industry through removal of operational
restrictions, freedom for airlines to operate on a fully commercial basis, expand or rationalise
capacity and ownership in accordance with customer needs and to improve the return on
capital invested (IATA, 2007).
The current airline industry is characterised by the three major strategic alliances oneworld,
SkyTeam and Star Alliance, a large number of non-aligned network carriers, low cost carriers
and regional airlines. Alliances were one of the many consequences of partial liberalisation
and fierce competition. With full liberalisation, i.e. the removal of national ownership clauses,
it is probable that alliances will develop further into mergers. At least partly, with cross-border
mergers of British Airways and Iberia and the acquisition of Austrian Airlines, Brussels
Airlines and Swiss by Lufthansa this trend can already today be observed. However, as strict
regulations on foreign ownership still restrict these market consolidation trends, alliances
continue to be a remedy to solve this limitation.
Besides cost reductions through the joint use of resources, airlines try to achieve advantages
in marketing with a membership in a strategic alliance. An airline will be able to extend its
network through code sharing agreements and also reduce costs by sharing common
facilities getting easier access to new markets. By joining an alliance the particular airline will
be able to offer more frequencies, seamless travel, lounge access and the ability to bind
customers due to the mutual acceptance of frequent flyer programs of airlines being
members of the alliance. Star Alliance, oneworld and SkyTeam encompass over 50 onceseparate airlines, crossing national and regional boundaries and accounting for almost 70 %
of all international scheduled revenue passenger kilometres (RPKs) for 2010. (Emirates,
2011)
Independent airlines typically struggle to achieve the economies of scale, scope and density
without the benefits of alliances. For the emerging carriers in the Gulf region, the situation is
somewhat different. Economies of scale are realised through an extensive growth strategy in
a favourable environment with low labour costs, low taxes and adequate infrastructures on
the ground. However, network benefits, such as the exponential growth of city pairs that can
be served with every addition of a new destination as spoke in the network will be difficult to
realize without further liberalisation. With further liberalisation and the advantage of the 6th
freedom traffic rights, Emirates and other Gulf carriers are likely to continue to gain
significant passenger numbers.
Further implications of deregulation were the evolution of the hub and spoke systems. Via a
hub, airlines can be more productive by offering more city pairs and a higher number of
frequencies. Airlines could take advantage out of the increasing number of passengers per
leg, because several destinations were served by a single flight; the then used bigger aircraft
reduced the cost per seat. This results in benefits for consumers as well.
Since airlines offer a relatively homogenous product, a flight from A to B, they have a high
interest that their passengers are loyal. For this purpose, frequent flier programs were
introduced, which offer passengers benefits from frequently using the same airline or
alliance. The wider the network, the bigger is the benefit for consumers being members in a
frequent flyer program of a particular airline, as bonus and status points can be collected on
flights to a larger number of destinations. The formation of alliances contributed essentially to
the expansion of the networks of legacy carriers. Lufthansa is a good example for this
strategy, as the German carriers network grew substantially due to the large number of
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partners with in Star Alliance. Most Gulf carriers follow a different strategy with only limited
partnerships with other airlines and a high level of growth in the number of destinations
served with own aircraft.
Network airlines in Europe mainly operate so called hinterland hubs. As the name implies,
hinterland hubs stand for the bundling of passengers from smaller airports located more or
less concentrically around and relatively close to the hub. For intercontinental journeys, often
relatively short flights (e.g. Dsseldorf-Frankfurt) are combined with long flights (e.g.
Frankfurt-Guangzhou). This can be disadvantageous from a commercial point of view, as
short-haul flights are usually operated on relatively high costs per available seat kilometre in
comparison to long-haul flights. Moreover, when travelling on low-demand or ultra long-haul
city pairs, itineraries often involve two transfers, as typically less direct long-haul services to
smaller destinations are operated, but two hinterland hubs of an alliance are connected. An
example for such an itinerary is for instance Dsseldorf-Frankfurt-Singapore-Perth.
The strategy of Gulf carriers such as the Emirates lies in adding as many destinations as
possible and providing direct connections via their hub. This structure is defined in the
literature as hourglass hub. In such a system, individual spokes have about the same length.
Avoiding short-haul flights has overall cost advantages and passengers, even when travelling
between two secondary airports, can reach their destination with only one transfer. The
liberalisation process has allowed carriers to set up such a business model and exploit the
respective productive efficiencies, for the benefit of consumers and shippers of air cargo.
For the Gulf carriers, further liberalisation would allow for the expansion for their networks,
further increasing the economies of scale and density associated with the bundling of
passengers and their re-distribution over one central hub. Currently, many markets (e.g.
Germany and Canada) are restricted in the number of points that can be served. This
reduces the possibilities of more efficient 6th freedom services via the hubs in the Gulf.
Lufthansa on the other hand has always been making use of the 6th freedom rights, and
further liberalisation would also lift limitations Lufthansa currently faces, e.g. in China.4
The fear of losing traffic to competitors, which began thirty four years ago in the United
States, still has its traces until today. Individual stakeholders will always be differently
affected by liberalisation, but since overall traffic grows, even incumbents losing historic
privileges can prosper. Learning from the experiences of the US market, we can see that the
quote of the Survival of the Fittest is also valid in this industry and an essential requirement
for a competitive market. However, airlines which are well established have little to lose. This
is also a lesson that can be learnt from the past.
6.3.3 Passengers
In todays market, passengers have a wide choice of different airline business models for
their mobility needs, be it the low cost carriers on short-/medium-haul routes, legacy network
carriers offering domestic, European or intercontinental services and a growing number of
new entrants in long-haul markets, such as Emirates, Etihad, Qatar Airways or Oman Air.
Simultaneously, transfer passengers have the option between many different hub airports, In
Germany (with Frankfurt and Munich as the most prominent), Europe (Amsterdam, London
and Paris) or, for passengers with the final destination in the Eastern Hemisphere, hub
airports in the Gulf.
For passengers, further liberalisation means first of all more flexibility and choice.
Passengers can choose itineraries according to a wide range of individual preferences, such
4
http://www.aero.de/news-11051/Lufthansa-A380-Linie-nach-Peking-startet-mit-Problemen-.html
2012-04-18
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as the shortest journey time, the lowest price or other quality criteria, e.g. the highest level of
frequent flyer points. When considering the benefits for passengers, one has to distinguish
between frequent flyers and non-frequent flyers. The frequent flyer program is thought to
bind customers to one airline or alliance and promote customer loyalty. Through alliances,
airlines are aimed to provide the customer a more or less seamless travel with optimized
connection times.
Most frequent flyers are usually business travellers and high yield customers. These are
mostly time sensitive customers who are willing to pay more for a better connection and
service. Currently, there is a low likelihood that this customer segment would be attracted to
travel via Dubai since these connections incorporate a flight detour and a longer travel time.
Although this may hold true, it has to be noted that Emirates has a much higher number of
frequencies for example of the 31 common points, Lufthansa has more frequencies than
Emirates on only two points. Lufthansa for example is offering a broad network with fast
connections which is even more emphasized through the alliance partners. However, being
the national carrier of Germany, it also offers most of the time higher prices compared to
competing carriers on the same routes (Frhlich, 2011).
Even for the lowest available, non-refundable economy class ticket, the highest fare can be
up to twice the price of the lowest offer in the market, as shown exemplarily in Figure 4-14.
The same can be observed for business class travel, where price sensitivity of passengers is
particularly low due to frequent flyer programs, corporate loyalty schemes and a high value
attributed to travel time savings. Home carriers exploit this willingness to pay with a premium
in their national markets, as described by Frhlich (2011). Nevertheless, a growing demand
for lower-priced business class products exists, as in times of economic uncertainty
companies often slash their travel budgets to reduce costs. For these travellers, also
transfers or increase travel times are acceptable, often using European or to an increasing
extent also non-European hubs.
Time sensitive frequent travellers are very often members of the home carriers FFP and
companies they are employed at often hold a corporate contract and are therefore widely
locked-in by the national carrier. As the Gulf carriers often only allow limited collection of
bonus points on other carriers in their own FFPs, the attractiveness of these programs is
somewhat limited for passengers travelling on a range of different routes. In many cases,
therefore passengers with a gold status in one alliance, therefore prefer to have another
frequent flyer membership with an alternative alliance, providing more choice in the collection
of points.
Already today passengers on international routes have in most cases the choice between at
least two carriers, mostly being the two national carriers of the home and the destination
country. If these two carriers belong to the same alliance, they often have been granted
antitrust immunity, which allows coordinating schedules, capacities and, most importantly,
prices. While benefits for passengers are created through the extension of networks, such
arrangements basically eliminate price competition. For the more price-sensitive passengers,
carriers offering 6th freedom services in the same markets are an important alternative. The
market entry of Gulf carriers, among them most prominently through its wide network
Emirates, can be from the view of competition policy an important element of countervailing
power against the oligopolisation and monopolisation of markets.
So far the analysis concentrated mainly on customers having more choice. However, even in
markets with already a large number of competing carriers, it is positive to have more supply.
Every new carrier increases the competitive pressure in the market, driving down prices of all
carriers with the result of generation of new demand a further advantage for the
passengers. New customer groups get access to international services which increase at
least the social welfare and global connectivity.
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As far as new traffic is generated there will also be the probability of added frequencies. It
was shown already in previous parts of the study that this happened for Emirates opening
recently a third daily service in Frankfurt. This then leads to the advantage for the
passengers that the average waiting time for the transfers in the Middle East is shortened.
Also the average waiting time for travelling (schedule delay as the difference between the
preferred flight time of the individual passenger and the published time of a particular flight) is
reduced leading to an optimization of travel opportunities.
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7 Conclusions
From the findings in this report we draw the following conclusions:
Connectivity
Main benefits for passengers and shippers of cargo come from the supply of
dedicated capacity to the Eastern Hemisphere, which increases the availability of
seats and cargo capacity at all airports served by Emirates in Germany.
Secondary airports in Germany are relatively well connected to European hubs, but
rarely long-haul flights to destinations in Asia and the Middle East are offered.
Therefore, services to Emirates hub in Dubai improve the accessibility considerably.
The improvement can be found in an increase in the number of destinations that
can be reached with one transfer instead of two or more and in an increase in
frequencies, broadening choice for passengers.
Stakeholder interviews with the Chambers of Commerce in Hamburg and Stuttgart

and a survey among companies in the Stuttgart region have confirmed that the
accessibility of emerging markets in the Middle East and Asia is a crucial element
for the competitiveness of the German economy. In Stuttgart, the survey revealed
that participating companies are highly discontented with the connectivity to Asia and
the Middle East. More high-quality and high-capacity direct long-haul flights and the
subsequent onward connectivity are required, irrespectively of the airline providing
the service.
As other airlines show a limited interest in offering long-haul flights from Germanys
secondary airports to the Eastern Hemisphere, Emirates is a reliable supplier of new
flights, which can improve the accessibility of German regions in a global context.
With Germanys highly export-oriented economy, each improvement in connectivity
needs to be regarded as positive, both from the perspective of passenger and cargo
traffic, but also from the perspective of the airports and the regions.
Passenger Flows
Through the supply of additional capacities and attractive inflight services on flights to
Dubai and beyond, to our understanding, new demand has been generated at the
airports Emirates currently serves in Germany. Most likely, this demand development
would not have happened without the Gulf carriers market entry. It is therefore, in our
view and according to passenger flow data, not correct to assert that a high share of
demand currently served by Emirates has been detracted from other carriers.
From demand generation effects through a qualitatively attractive offer, the German
airports served by Emirates benefit from more passengers generating more
revenues in the aeronautical and non-aeronautical segments of business. Moreover,
Emirates generates additional transfer traffic at the hubs through interlining
passengers.
Although the overall market for air travel between Germany and the Eastern
Hemisphere grows, some airlines do not participate in this development. In some
cases, it can be observed that transfer traffic from Germany to Asia actually declines,
mainly affecting third-country carriers from Western Europe and the hubs in London-
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Heathrow, Amsterdam-Schiphol and Paris-Charles de Gaulle, which have a relatively

weak position in the German market since itineraries via these hubs are considered
relatively inconvenient by passengers.
The air transport market between Germany and the Eastern Hemisphere is not static,
but dynamically growing at rates of around 5 % p.a. in the recent past. The majority
of airlines can benefit from the growing demand, so that the aphorism that a rising
tide lifts all boats apparently seems to fit. This is particularly the case for Lufthansa,
as the strongest incumbent in the Germany-Asia air transport market. According to
data provided by Sabre Airport Data Intelligence, the German carrier, with very timeefficient non-stop or transfer itineraries and a high level of customer retention via its
frequent flyer program, has recorded the second highest growth after Emirates in the
number of origin-destination passengers between Germany and destinations in the
Eastern Hemisphere between 2005 and 2010.
With the findings presented in this study that transfer traffic is not shifted away
from German airports due to the offers of new entrants, previous hypotheses on the
impacts of new competition in long-haul markets (e.g. Brtzel, 2006) can widely be
confirmed. Incumbents can retain market shares in the high-yield market segment,
where passengers have a high value of time, a strong preference for non-stop flights
and are locked-in through frequent flyer programs.
We conclude that in case traffic rights would be granted allowing Emirates to

operate to additional points in Germany, the market situation at these points can be
expected to be very similar to the situations observed in Dsseldorf and Hamburg. It
is very likely that passenger demand for trips via Frankfurt and Munich will be stable
or slightly growing, while additional demand will be generated through the increase in
attractiveness by direct long-haul flights, with positive effects for secondary airports
and the regions surrounding them.
Economic Impacts
The German economy benefits from the provision of Emirates air transport services,
as well as the use of air transport links. We estimate that Emirates will spend about
200 million in 2012 for wages and the purchase of goods and services from
German suppliers.
The use of Emirates air services is beneficial for the shippers of cargo with highfrequency services also to destinations which would be less accessible if shippers
had to rely only on other airlines. The use of Emirates passenger services increases
the welfare for German passengers by creating a consumer surplus and stimulating
incoming tourism.
Germanys aeronautical industry and its suppliers are key beneficiaries of Emirates
orders for aircraft, engines, spare parts and maintenance services. These orders are
to an extent only possible due to market access liberalisation in many countries. As a
good example, the United Kingdom has fully liberalised market access for traffic
between the UK and the United Arab Emirates.
The assertion that Germany receives more economic benefits when air transport
demand growth will be handled with aircraft and crews that are based in Germany
(Lufthansa, 2010) instead of aircraft coming to Germany from third countries is only
partially correct. While it is right that more jobs are created when aircraft and crews
are based in Germany, also positive effects coming from competition need to be
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considered. Consumers benefit from competition, as it drives market participants

to produce with a higher efficiency.
Efficient production of services with lower unit costs is beneficial for consumers, as
can be seen in nearly all other industries from consumer electronics to textiles. With a
decrease in prices, demand will increase, having again a positive impact on
employment. This is also true for air transport services. The assessment of the
economic impacts of new air services needs to be conducted in a holistic way, taking
into account both the supply and demand side. In our view, the consumer perspective
must not be forgotten when making decisions on the liberalisation of air transport
markets.
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Annex
Definition of regions used throughout this report
SouthAsiaOAGRegionAS1
SouthernAfricaOAGRegionAF2
CountryName
ISOCode
CountryName
AO
Angola
AF
Afghanistan
BW
Botswana
BD
Bangladesh
LS
Lesotho
IN
India
MW
Malawi
LK
SriLanka
MZ
Mozambique
MV
Maldives
NA
Namibia
NP
Nepal
SZ
Swaziland
PK
Pakistan
ISOCode
ZA
SouthAfrica
ZM
Zambia
ZW
Zimbabwe
SouthEastAsiaOAGRegionAS3
EastAfricaOAGRegionAF4
ISOCode
CountryName
BN
BruneiDarussalam
CC
Cocos(Keeling)Islands
ISOCode
CountryName
ID
Indonesia
BI
Burundi
KH
Cambodia
DJ
Djibouti
ER
Eritrea
LA
LaoPeople'sDemocratic
Republic
ET
Ethiopia
MM
Myanmar
KE
Kenya
MY
Malaysia
KM
Comoros
PH
Philippines
MG
Madagascar
SG
Singapore
MU
Mauritius
TH
Thailand
RE
Reunion
TL
TimorLeste
RW
Rwanda
VN
Vietnam
SC
Seychelles
SO
Somalia
SS
SouthSudan
TZ
TanzaniaUnitedRepublicof
UG
Uganda
NorthEastAsiaOAGRegionAS4
ISOCode
CountryName
CN
China
HongKong(SAR)
China
HK
JP
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KP
Japan
KoreaDemocratic
People'sRepublic
KR
KoreaRepublicof
MN
Mongolia
MO
Macao(SAR)China
RU
RussianFederation
TW
ChineseTaipei
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MiddleEastOAGRegionME1
SouthWestPacificOAGRegionSW1
ISOCode
CountryName
ISOCode
CountryName
AE
UnitedArabEmirates
AS
AmericanSamoa
BH
Bahrain
AU
Australia
IL
Israel
CK
CookIslands
IQ
IR
Iraq
IranIslamicRepublicof
JO
Jordan
CX
ChristmasIsland,Indian
Ocean
KW
Kuwait
FJ
Fiji
LB
Lebanon
OM
Oman
FM
MicronesiaFederated
Statesof
QA
Qatar
GU
Guam
SA
SaudiArabia
KI
Kiribati
SY
SyrianArabRepublic
MH
MarshallIslands
YE
Yemen
MP
NorthernMariana
Islands(exceptGuam)
NC
NewCaledonia
NF
NorfolkIsland
NR
Nauru
NU
Niue
NZ
NewZealand
PF
FrenchPolynesia
PG
PapuaNewGuinea
PW
Palau
SB
SolomonIslands
TO
Tonga
TV
Tuvalu
VU
Vanuatu
WF
WallisandFutuna
Islands
WS
Samoa
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Emirates Destinations
The following table shows the destinations in Emirates global network served with passenger
flights, the number of departures, seat and cargo capacities in the month of December 2011,
according to OAG MAX schedule database. In column on the far right, we have marked all
airports, which are located in the OAG regions with significant passenger traffic from
Germany via Dubai.
AirportName
IATA
3
Letter
Code
Country
Monthly
Monthly
departures
seat
of
capacity
Emirates
Monthly
cargo
capacity
(t)
OAG
Region
Cairo
Casablanca
Khartoum
Tunis
CapeTown
Durban
Johannesburg
Luanda
CAI
CMN
KRT
TUN
CPT
DUR
JNB
LAD
Egypt
Morocco
Sudan
Tunisia
SouthAfrica
SouthAfrica
SouthAfrica
Angola
52
31
31
27
62
31
93
13
15184
8061
7347
6399
17828
7347
37107
4602
2463.6
1328.5
1289.6
1123.2
2927.3
1289.6
5465.3
737.1
Abidjan
ABJ
CoteD'Ivoire
62
16554
2498.6 AF3
Accra
ACC
Ghana
62
16554
2498.6 AF3
Dakar
DKR
Senegal
21
4977
873.6 AF3
Lagos
AddisAbaba
DarEsSalaam
Entebbe/Kampala
MaheIsland
Mauritius
Nairobi
Ahmedabad
Bengaluru
Chennai
Colombo
Delhi
Dhaka
Hyderabad
Islamabad
Karachi
Kochi(IN)
Kolkata
Kozhikode
Lahore
Male
Mumbai
Peshawar
Thiruvananthapuram
Bangkok
Jakarta
KualaLumpur
Manila
SingaporeChangiApt
BeijingCapitalApt
Guangzhou
HongKong
OsakaKansai
SeoulIncheon
ShanghaiPudong
TokyoNaritaApt
Amsterdam
LOS
ADD
DAR
EBB
SEZ
MRU
NBO
AMD
BLR
MAA
CMB
DEL
DAC
HYD
ISB
KHI
COK
CCU
CCJ
LHE
MLE
BOM
PEW
TRV
BKK
CGK
KUL
MNL
SIN
PEK
CAN
HKG
KIX
ICN
PVG
NRT
AMS
Nigeria
Ethiopia
Tanzania
Uganda
Seychelles
Mauritius
Kenya
India
India
India
SriLanka
India
Bangladesh
India
Pakistan
Pakistan
India
India
India
Pakistan
Maldives
India
Pakistan
India
Thailand
Indonesia
Malaysia
Philippines
Singapore
China
China
China
Japan
Korea
China
Japan
Netherlands
62
62
31
62
49
50
58
44
93
93
155
124
74
93
31
124
62
54
49
32
93
155
14
54
218
62
124
62
209
62
31
115
31
31
62
31
31
18972
15996
7998
15996
12642
15747
14529
10428
22821
26406
53552
35736
24352
24191
9921
35383
16460
12798
12425
9980
31094
46512
3579
12798
86082
21948
44138
21948
74586
23157
10974
48801
10974
15159
23616
10974
10974
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3109.3
2703.2
1351.6
2703.2
2136.4
2604.8
2442.5
1830.4
3835
4365.6
8628.2
4881.9
3944.6
3799.2
1621.8
5913.4
2708.1
2246.4
2069.2
1614
5005.7
7678.7
592.3
2246.4
12858.4
3515.4
7086.1
3515.4
11976.3
3301.5
1757.7
6678.1
1757.7
1949.9
3579.6
1757.7
1757.7
AF1
AF1
AF1
AF1
AF2
AF2
AF2
AF2
AF3
AF4
AF4
AF4
AF4
AF4
AF4
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS1
AS3
AS3
AS3
AS3
AS3
AS4
AS4
AS4
AS4
AS4
AS4
AS4
EU1
Airportwith
relevance
for
connectivity
to/from
Germany
OAGRegionName
Africa:NorthAfrica
Africa:NorthAfrica
Africa:NorthAfrica
Africa:NorthAfrica
Africa:SouthernAfrica
Africa:Central/Western
Africa
Africa
Africa
Africa
Africa:EastAfrica
Africa:EastAfrica
Africa:EastAfrica
Africa:EastAfrica
Africa:EastAfrica
Africa:EastAfrica
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthAsia
Asia:SouthEastAsia
Asia:SouthEastAsia
Asia:SouthEastAsia
Asia:SouthEastAsia
Asia:SouthEastAsia
Asia:NorthEastAsia
Asia:NorthEastAsia
Asia:NorthEastAsia
Asia:NorthEastAsia
Asia:NorthEastAsia
Asia:NorthEastAsia
Asia:NorthEastAsia
Europe:WesternEurope
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Athens(GR)
ATH
Birmingham
Copenhagen
Duesseldorf
Frankfurt
Geneva
BHX
CPH
DUS
FRA
GVA
Glasgow
Hamburg
IstanbulAtaturk
Larnaca
GLA
HAM
IST
LCA
LondonGatwick
LGW
LondonHeathrow
MadridBarajasApt
Malta
LHR
MAD
MLA
Manchester(GB)
MilanMalpensaApt
Munich
MAN
MXP
MUC
Newcastle
Nice
ParisCharlesdeGaulle
RomeFiumicino
Venice
Vienna
Zurich
NCL
NCE
CDG
FCO
VCE
VIE
ZRH
MoscowDomodedovo
DME
PragueRuzyne
Greece
United
Kingdom
Denmark
Germany
Germany
Switzerland
United
Kingdom
Germany
Turkey
Cyprus
United
Kingdom
United
Kingdom
Spain
Malta
United
Kingdom
Italy
Germany
United
Kingdom
France
France
Italy
Italy
Austria
Switzerland
31
7347
1289.6 EU1
62
31
62
93
31
21948
7347
18300
29295
9543
3515.4
1289.6
2831.6
4805
685.8
EU1
EU1
EU1
EU1
EU1
31
62
49
62
10974
19220
15762
14694
1757.7
3081.4
2526.3
2579.2
EU1
EU1
EU1
EU1
93
30194
4839.1 EU1
155
31
62
63450
10974
14694
9217 EU1
1757.7 EU1
2579.2 EU1
93
62
62
33480
22673
23436
4997.2 EU1
3645.5 EU1
3199.2 EU1
31
31
62
62
31
57
62
7347
8277
26433
26153
9538
17682
21948
1289.6
1249.3
3770.6
3711.8
1489.8
2891.3
3515.4
Europe:Eastern/Central
Europe
Europe
Europe
LatinAmerica:Lower
SouthAmerica
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
MiddleEast
NorthAmerica
NorthAmerica
NorthAmerica
NorthAmerica
NorthAmerica
SouthwestPacific
SouthwestPacific
SouthwestPacific
SouthwestPacific
SouthwestPacific
SouthwestPacific
EU1
EU1
EU1
EU1
EU1
EU1
EU1
62
19918
2524.1 EU2
PRG
Russia
Czech
Republic
31
7347
1289.6 EU2
StPetersburg
LED
Russia
31
8157
1254.5 EU2
SaoPauloIntlApt
Amman
Baghdad
Bahrain
Basrah
Beirut
Damascus
Dammam(SA)
Doha
DubaiInternational
Jeddah
Kuwait
Madinah
Muscat
Riyadh
Sanaa
TehranImamKhomeini
HoustonGeorgeBush
LosAngeles
NewYorkJFKennedy
SanFrancisco
TorontoIntlApt
Auckland
Brisbane
Christchurch
Melbourne
Perth
Sydney
GRU
AMM
BGW
BAH
BSR
BEY
DAM
DMM
DOH
DXB
JED
KWI
MED
MCT
RUH
SAH
IKA
IAH
LAX
JFK
SFO
YYZ
AKL
BNE
CHC
MEL
PER
SYD
Brazil
Jordan
Iraq
Bahrain
Iraq
Lebanon
Syria
SaudiArabia
Qatar
UAE
SaudiArabia
Kuwait
SaudiArabia
Oman
SaudiArabia
Yemen
Iran
USA
USA
USA
USA
Canada
NewZealand
Australia
NewZealand
Australia
Australia
Australia
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31
10974
48
13324
18
4266
93
22215
17
4029
62
15786
31
8417
30
7810
155
41135
5878 1868915
62
27057
124
33047
31
7347
62
15539
66
19053
18
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93
27247
62
18662
62
20305
62
26133
31
10974
13
6357
186
74214
124
43896
93
32922
186
65844
63
19970
186
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1757.7
2206.9
748.8
3875.4
707.2
2683.2
1392.1
1317.2
6927.2
289494.1
3593.7
5552.2
1289.6
2653.9
3166.3
748.8
3847.3
1054
2284.7
3707.6
1757.7
817.7
10930.6
7030.8
5273.1
10546.2
1825.3
10930.6
LA4
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
ME1
NA1
NA1
NA1
NA1
NA1
SW1
SW1
SW1
SW1
SW1
SW1
2012-04-18
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Final Report
Stakeholder Interviews
The authors of this report were supported with data, ideas and suggestions by the following
companies and organisations:
Berlin Tourismus & Kongress GmbH
Chamber of Industry and Commerce of the Stuttgart region
Hamburg Chamber of Commerce
International Air Transport Association, Geneva
Panalpina Deutschland
Stuttgart Marketing GmbH, Regio Stuttgart Marketing- und Tourismus GmbH
Schenker AG Global Air Freight
The authors would like to thank all interview partners for their valuable input for this study.
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Institute of Air Transport and Airport Research

The Impact of Emirates Airline

German Aerospace Center

Institute of Air Transport and Airport Research

Head: Prof. Dr. Johannes Reichmuth

The Economic Impact of Emirates Flights on

Document Control Information

Prof. Dr. Johannes Reichmuth

Project / research task:

Tim Alers, Dr. Peter Berster, Prof. Dr. Hansjochen Ehmer,

This study was conducted for Emirates Airline.

2012, DLR, Institute of Air Transport and Airport Research, Germany

The Economic Impact of Emirates Flights on

Changed Pages or Chapters

The Economic Impact of Emirates Flights on

Overview The Emirates business model and Emirates current activities in

Analysis of the effects of connectivity to the international aviation network

Analysis of the effects of Emirates presence in Germany on passenger

Analysis and quantification of economic effects for Germany....................................... 82

The Economic Impact of Emirates Flights on

Conclusions ................................................................................................................ 128

Annex ................................................................................................................................... 131

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

Scope of the Study / Methodology

Impacts of Emirates services on passenger flows, competing airlines and hubs

The Economic Impact of Emirates Flights on

impact assessments of the contribution of individual industries or activities to the economy

The improvement, as measured by a specified connectivity indicator, can be as much

From the viewpoint of economic theory, Emirates displays a function as

The Economic Impact of Emirates Flights on

In comparison, Qatar Airways generates currently only 66 weekly transfer

Impacts on Passenger Flows

The number of transfer passengers travelling from Dsseldorf / Hamburg via

The Economic Impact of Emirates Flights on

Impacts of Emirates economic activity in Germany

In our definition, Emirates staff is defined as direct employment, while persons

We have also applied an alternative methodology as found in the literature on

Impacts on Incoming Tourism

On average, every additional arriving passenger increases the number of overnight

Expenditures of foreign tourists coming on Emirates to Germany are approximately

The Economic Impact of Emirates Flights on

Impacts of potential new services to additional points in Germany

Each additional flight to Germany will create approximately 140,000 additional

Impacts on the German aeronautical industry

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

Scenario 2 two daily flights to Berlin and Stuttgart

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

Effects for shippers of air cargo due to an increase in freight capacities

Effects for the aeronautical industry (employment, revenues)

Effects on the tourism sector in Germany

The document is structured as follows:

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

2 Overview The Emirates business model and Emirates

The Economic Impact of Emirates Flights on

The Economic Impact of Emirates Flights on

Specific fuel consumption in kg/km