Stop trying to ground the Gulf airlines

Syndicated articles from
In partnership with
© The Financial Times Limited 2015. All Rights Reserved. Not to be redistributed, copied or modified in any way.
Edition 2275 FT | 23 Mar 2015
ANALYSIS | BUSINESS
BLOOMBERG
AP PHOTO
Stop trying to ground
the Gulf airlines
A Finnair Oyj aircraft stands beside a passenger walkway as a Boeing 737-300
passenger aircraft operated by Emirates is seen beyond at Dusseldorf airport
By John Gapper
Nicole Kidman looks very
relaxed in Etihad Airways’
new advertisements, as she
floats gently down on to a bed
in its three-room Residence
first-class cabin - a mere
USD20,000 to fly Abu Dhabi
to London. The same cannot
be said of rivals to Etihad,
Emirates and Qatar, the Gulf
airlines that are roiling the
business of air travel.
The bosses of Emirates
and Etihad flew to Washington last week, presumably in
comfort, to rebut complaints
from US airlines that they
compete unfairly. American
Airlines, Delta and United did
better in the past, when global
competition was muted and
Americans flying abroad were
sufficiently loyal, or unworldly, to book business-class
seats that did not lie flat.
US airlines are not the only
ones feeling sore. The French
and German governments,
prodded by Lufthansa and
Air France-KLM, have complained to the EU. Lufthansa
is unhappy about what it calls
“unprecedented
cut-throat
competition in the international marketplace” - the sort of
thing that benefits consumers.
Ah yes, consumers. In their
55-page “white paper” attacking the Gulf airlines, the US
airlines only find space for
that word once, in the opening passage about the original
aims of the Open Skies deal
that allows Gulf airlines to fly
to cities such as New York,
San Francisco and Washington. After that, they discuss
passenger flow and traffic
quite a lot, but the C word is
absent.
What about workers? This
word recurs frequently because Gulf airlines are not
unionised, whereas US airlines are. The document includes in its $42bn of “unfair
subsidies” $3.1bn for lower
wages caused by the fact that
the Gulf states ban unions.
This is a peculiar notion, given that only 7 per cent of US
private-sector workers are
unionised.
This Washington lobbying
sounds distinctly like companies that used to provide mediocre services in ageing aircraft on international flights,
People enjoy watching a U.S. carrier Delta Air Lines’ plane landing at the Narita International Airport
and only responded to competition belatedly, complaining
about more energetic rivals.
Willie Walsh, chief executive
of IAG, owner of British Airways and Iberia, wrote recently of “protectionism rearing
its head again”.
Customers enjoy what the
Gulf airlines offer. Many
Americans now connect
through the Gulf on route to
the Indian subcontinent and
Southeast Asia, rather than
paying more to fly direct on a
US airline. The Gulf carriers
have sucked business from
European hubs - Dubai has
surpassed Heathrow as the
busiest international airport.
They have done so fast, Etihad was only founded in 2003,
by exploiting their natural advantages brilliantly. The first
is location. The Gulf sits at a
crossroads on the “new Silk
Road” between east and west,
and has emerged as a continental hub for sub-Saharan
This Washington
lobbying sounds
distinctly like companies
that used to provide
mediocre services
JOHN GAPPER
Africa. The only geographical
crossroads the US forms is
with itself.
The second advantage is
starting from scratch, without the legacy practices the
US airlines and European flag
carriers face. The Gulf carriers are the second wave of the
low-cost revolution started by
Southwest Airlines in 1971
after a failed legal campaign
to block it by US airlines including Continental (now part
of United), for skirting federal
regulation.
The Gulf airlines have taken the essentials of that model
- newer aircraft, flying from
airports with lower fees direct
to smaller cities rather than
through hubs, with better service - and applied it globally.
They are the most eager customers of Boeing and Airbus
for the latest, most fuel-efficient models of large widebody jets such as the Boeing
777 and the Airbus 380.
They have come out of
nowhere, now followed by
Turkish Airlines, to steal
a march on older airlines.
“There are always disrupters
who change the game and
make the incumbents squeal.
There might be aspects of
unfair competition at the margins but it misses the central
point that they came up with
a more efficient way of doing
The
bosses
of Emirates
and Etihad
flew to
Washington
to rebut
complaints
from US
airlines
that they
compete
unfairly
things,” says Jonathan Wober,
financial analyst at the Capa
Centre for Aviation.
Their third advantage is
being owned by determined,
autocratic governments that
want to turn their economies
into trading hubs rather than
simply living off oil and gas
wealth. Dubai, the poor cousin of Abu Dhabi, was the first
to try and gained hugely, with
aviation and related activity
such as tourism now forming
a quarter of its economy.
Has it done so unfairly?
The evidence is flimsy. Ignoring the alleged unfairness of
Emirates not having to negotiate with unions, the US airlines came up with about $5bn
of “subsidies” over a decade largely the Dubai government assuming lossmaking
fuel hedges in 2009 (a claim
dismissed as “tosh” by Tim
Clark, Emirates’ chief executive) and $2.3bn attributed to
low airport charges.
The latter is a head-scratcher. Yes, it costs nearly 10 times
as much to land a Boeing 777
at Heathrow as at Dubai, and
nearly six times as much at
Chicago O’Hare. But Dubai
has a lot of desert and can
build a gigantic airport when
it feels like it. This makes it
cheaper, but so what? Does
the rest of the world complain
that the US has plenty of arable land and shale gas?
Even taken at face value, the
figures are hardly game-changing. Over a decade, USD5bn
is $500m per year - about 2.3
per cent of Emirates’ operating costs in 2014. The truth is
that most of the Gulf success
stems not from illicit subsidies
but from innovation, exploiting their advantages fairly
and making a bet that paid off.
Good luck to them.
Copyright The Financial
Times Limited 2015
23.03.2015
Syndicated articles from
F2
© The Financial Times Limited 2015. All Rights Reserved. Not to be redistributed, copied or modified in any way.
AP PHOTO
Nobel Prize winner Kailash Satyarthi on battling child labor
Kailash Satyarthi
By Amy Kazmin
Kailash Satyarthi the Indian Nobel laureate who has
spent a lifetime battling
child labor, arrives for our
early afternoon meeting.
“You reached here before
me,” he says apologetically, stepping into the small,
austere living room of his
government-built flat in
Alaknanda, a middle-class
neighborhood in Delhi.
The 61-year-old founder of Bachpan Bachao Andolan, or Save Childhood
Movement, has been in
overdrive since October last
year, when he and Pakistani
schoolgirl Malala Yousafzai
were jointly awarded the
Nobel Peace Prize in recognition of their “struggle
against the suppression of
children and young people”.
Satyarthi is making the
most of his new global profile. He has recently met US
President Barack Obama,
the Prince of Wales, UN secretary-general Ban Ki-moon
and other global leaders,
urging them to push for the
elimination of child slavery
to be included in the UN’s
new sustainable development goals, now being negotiated. Doors are also
opening at home in India,
where Satyarthi has spoken
to powerful New Delhi political and business elites,
students and small town industrialists.
These are crucial audiences in a country where,
according to Unicef, about
28m children under the age
of 14 are working, around
two-thirds in agriculture, especially as New Delhi considers whether to push ahead
with a law to ban all employ-
nitely insist that you have
lunch with us”.
Sumedha Kailash has
been an active part of her
husband’s crusade but their
unlikely union faced stiff resistance. “It was a very revolutionary marriage,” recalls
the activist, who was born
Kailash Sharma, and adopted the surname Satyarthi, or
Satyarthi is making the
most of his new global
profile. He has recently
met Barack Obama, the
Prince of Wales, Ban Kimoon and other global
leaders
ment of such young children.
Satyarthi sinks into one of
two black vinyl sofas in the
modest sitting area. It is utilitarian, with a few paintings
on the white walls. It also
has little natural light, so we
move outside to bask in the
winter sun on a small outdoor terrace lined with potted plants. A bamboo fence
offers privacy from a home
just a few feet away, across
a narrow lane. Settling into
the cane chairs, Satyarthi
warns, “my wife will come
any time and she will defi-
“seeker of truth”, later.
He was the youngest son
of a police constable and
illiterate housewife in the
small town of Vidisha in
India’s Hindi heartland. His
future wife was the scion of
a prosperous Delhi publishing family.
Satyarthi was an engineering student when he started
contributing to one of the
magazines published by
Sumedha’s family; she was
his editor. He met her while
visiting Delhi in 1976. Both
families objected when they
announced their intention
to marry. His elder brothers
were already receiving proposals from families eager
to marry their daughters to
an engineer-to-be. Her family didn’t consider a smalltown boy from a humble
family as an appropriate
match, despite his being a
Brahmin - on the highest
rung of Hinduism’s hierarchical caste ladder. “It was
not caste - they were very
particular about the status,”
he says.
In October 1978, Satyarthi received a desperate call
from his sweetheart. Her father had abruptly delivered
an ultimatum: the couple
could marry in five days’
time - on a Sunday - or forget about each other. Five
days later, they married in a
simple temple ceremony in
Delhi, returning to Vidisha
that same night.
It was already clear that
Satyarthi would not pursue
an engineering career. He
had been disturbed by the
plight of poor children since
his school days, when boys
his own age stood on the
schoolhouse steps waiting
to polish the shoes of arriving students. Aged 11, he
displayed an early impulse
for social activism, organizing a campaign to collect
used textbooks for students
whose families couldn’t af-
ford them.
Not all his initiatives
worked, however. At 15, he
tried to hold a taboo-busting
dinner to honor Mahatma
Gandhi’s birth centenary,
with sweeper women - considered to be “untouchable” cooking for high-caste local
dignitaries. Yet the guests
failed to show, and Brahmin
community elders declared
Satyarthi an “outcaste”,
forcing his own family to
bar him from their kitchen or
risk being boycotted themselves. “I was given a separate room that opened on the
street, and I was not allowed
to enter into my kitchen,” he
recalls. “I did not care, but
it was so difficult for my
mother, who used to eat with
me every day. She could not
do it because she was frightened of the neighborhood.”
After getting married, Satyarthi lectured in engineering for 18 months to earn
some money. In 1980 he, his
wife and baby son moved to
Delhi, where their home was
a small storeroom that they
sublet from a civil servant.
Outside, “they built a kind
of shed - half of it was kitchen and half of it was bathroom,” he says.
Satyarthi began writing
about social issues for national newspapers, then started a
small magazine dedicated to
the cause of children, wom-
en, and India’s most marginalised people. But when
an impoverished brick-kiln
worker travelled from Punjab
to Delhi seeking help to save
his daughter from being sold
into prostitution, Satyarthi
leapt from journalism to fully
fledged activism. He became
known for his dramatic, and
often dangerous, rescues of
children working in industries such as carpet-making,
which put the issue of child
labor on the political agenda. In 1986, India passed its
first law against child labor,
banning children under the
age of 14 from hazardous industries such as mining and
chemicals.
Back in their “storeroom
house”, there were frequent
tensions. “Many poor people used to come to meet me
and my wife, and my wife
was cooking food for those
whose children were kidnapped or held in bondage,”
says Satyarthi. “My landlady
didn’t like it.” After a few
years, the family moved to
the slum area of Govindpuri,
in South Delhi, where they
had greater autonomy. Then
in 1996, the couple, who had
since had a daughter, bought
their current home, a 90 sq
metre, ground-floor flat built
by the Delhi Development
Authority, a state agency
charged with building affordable housing.
The family home is functional, with two small bedrooms and basic furniture,
such as a metal dining table
with six chairs. There are
lots of family photos and a
fine Madhubani painting the traditional art form of
India’s impoverished Bihar
state. The sunken sitting area
is cosy, with low banquettes,
a colourfully covered mattress on the floor, lots of soft
pillows with embroidered
cushion covers, and a large
flatscreen television. Built
as an add-on to the original
unit, Satyarthi says the inviting nook is now the family’s
favorite space.
The couple’s two children are both adults now
and live elsewhere, but the
house remains an open,
busy place, with a constant
flow of guests, including
work colleagues, visiting
activists and others seeking
Satyarthi’s help. “In my 35
years of married life, I cannot recall two consecutive
evenings when we ate alone.
There are always guests. We
live like that,” he says. Using the ancient Persian word
for a travellers’ inn, he adds,
“my house is like a big serai”.
Amy Kazmin is the FT’s
south Asia correspondent
Copyright The Financial
Times Limited 2015
mon 23.03.2015
By Juan Pablo Spinetto
and Yasmine Batista
F
OR investors with
dollars, the dream of a
condominium by Rio de
Janeiro’s most famous
beaches is suddenly within reach, just in time for the Olympic
Games.
A 467-square-meter four-bedroom apartment with views of
ocean swells rolling up on Ipanema Beach sells for 17 million
reais, or USD5.2 million. That’s
about half the price in dollars
from a year ago thanks to sliding property prices and a rout
in the local currency, according
to Judice & Araujo, a Rio-based
luxury home broker.
A 39 percent decline in the
real the past two years, the most
among 16 major currencies tracked by Bloomberg, is starting
to entice foreign investors, said
Frederico Judice Araujo, a partner in the company. Fueled by a
surge of expatriate oil and mining workers, Rio was the world’s 12th most-expensive city in
2011 - ahead of New York and
London. It has since fallen to
65th, according to cost of living
studies by consulting company
Mercer.
“Things for foreign buyers are
getting better and better,” Judice Araujo said by telephone.
“There are people that weren’t
active in the market a few months ago that are now considering some buying opportunities
at more attractive prices.”
The discovery of elephant oil
fields buried miles beneath a
layer of salt in the Atlantic seabed in 2007 boosted demand
for residential and office space
as the energy industry mobilized to extract the newfound
riches. Flagship oil company
Petroleo Brasileiro SA lured
oil equipment and service suppliers to start or expand operations in an effort to win work
in what was expected to be a
growing profit center for the offshore oil specialists.
Then the announcement in
2009 that Rio would host the
2016 Olympic Games sent the
city into a building frenzy, with
government officials rushing to
double hotel capacity, extend
subway lines and modernize
airports and renovate entire
neighborhoods.
“The massive investments in
pre-salt required by Petrobras
attracted a lot of companies in
the oil and gas segment,” Cristiane Spercel, a homebuilders
analyst at Moody’s Investors
Service, said in a telephone interview. “Now, with all the delays, the cutbacks in capital expenditures, the investigations
into large construction companies, we see a slowdown.”
Judice Araujo said prices for
luxury apartments in Rio’s
Zona Sul, the city’s most upscale district, fell 10 percent to 12
percent last year and have continued sliding at a more moderate pace since December.
FEATURE
F3
AP PHOTO
特刊
A worker stands on the balcony of an apartment inside the Rio 2016 Olympic Games athletes village in Rio de Janeiro, Brazil
Dream condo on Rio’s
Ipanema Beach 50 percent
cheaper as Real falls
Now, with all
the delays,
the cutbacks
in capital
expenditures,
the
investigations
into large
construction
companies,
we see a
slowdown
CRISTIANE SPERCEL
To be sure, day-to-day life in
Rio isn’t all sunshine and samba. The city of 6.3 million people has one of the continent’s
biggest slums, Rocinha, and
muggings jumped 31 percent
last year to 48,972, according to
data from Rio de Janeiro state.
Olympic- related construction
is disrupting traffic across the
city, including in the exclusive
neighborhoods of Ipanema and
Leblon. Efforts to halt sewa-
ge flowing into the Guanabara
Bay, which will host Olympic
sailing events, won’t be completed in time for the Games.
Rio’s dependence on locallybased commodity companies
like Petrobras and miner Vale
SA has also put the city’s economic outlook on precarious
ground.
Petrobras has banned more
than 20 companies which have
been cited in bribery investigations from bidding for new contracts at a time oil prices have
collapsed due to growing production and faltering demand.
A lack of consensus over graft
costs has delayed the release of
Petrobras’s earnings and temporally shut it out of international debt markets, threatening
the company’s spending plans.
Company officials are taking
longer to sign or renew contracts and release the results of
public tenders, said three people familiar with recent Petrobras procurement negotiations,
who asked not to be identified
because the deals aren’t public.
That’s freezing the oil and gas
supply chain and sending shock
waves in Rio, from the real estate to the executive recruitment
market.
“We have some cases of commercial tenants, who were Petrobras suppliers, who haven’t
been collecting and are behind
on rent,” said Leonardo Schneider, the vice president of Rio’s
branch of Secovi, an association
of real estate agencies. “These
executives, these professionals
that work at the companies
that are changing and shutting
down, also have their homes
and their expenses.”
A 39 percent
decline in the
real the past
two years is
starting to
entice foreign
investors
The slowdown in the energy
industry coincides with a surplus of new properties in Rio,
leading to a weaker real estate
market, said Pedro de Seixas
Correa, a professor at the Getulio Vargas Foundation specializing in the construction industry.
“The market is suffering this
negative economic outlook and
will continue doing so,” he said
in a phone interview. “When we
have a reduction in business ac-
tivity, revenue falls and the real
estate market is immediately
impacted.”
Selling prices in local currency for three-bedroom apartments in Rio rose 4.5 percent
in the year through February,
the slowest since at least 2008,
according to the FipeZap home
price index. That’s below the
city’s inflation rate and compares with annual increases of as
much as 45 percent in 2011.
Brazil’s economy unexpectedly contracted for the secondstraight month in January as
the government tightens both
fiscal and monetary policies to
tame inflation. Analysts surveyed by the central bank on
Monday cut their 2015 GDP
forecast for the 11th straight
week, to a contraction of 0.78
percent. That would be Brazil’s
worst performance since the
economy shrank 4.2 percent in
1990.
But bad news for Brazil’s economy may be a good lure for foreign buyers, said Darlan Carlos
Souza, a partner at Rio-based
real estate agent Wagner Diniz
Imoveis.
“We did some surprising sales
paid in cash, without the need
for financing,” he said in an interview. “Those who saved their
money are doing a great business buying now.” Bloomberg
NATURE
F4
23.03.2015 mon
自然
Iceberg forces detour in 5th leg
of Volvo Ocean Race
AP PHOTO
Meanwhile, one of the sailors, Swede Martin Stromberg of
Dongfeng Race Team, has told
how he narrowly avoided losing several fingers of his right
hand when he trapped it in a
winch block on Saturday.
“I could easily have lost a few
fingers,” he wrote in his regular
blog from the boat. “My hand
went into the block and was
stuck for a while by the rope
until I got help.
The massive
iceberg was
spotted on
the Race
HQ satellite
screens at the
end of last
week
V
OLVO Ocean Race crews
are speeding through the
Southern Ocean toward Cape
Horn in the fifth leg yesterday
after organizers guided them
clear of a 1-kilometre wide iceberg that was blocking their
path.
The massive iceberg was spotted on the Race HQ satellite
screens at the end of last week
and has led to a hasty change
in the positioning of ice gates
in the toughest of all nine stages in the nine-month offshore
marathon.
The ice limits will force the
boats to sail clear of the iceberg’s passage in the Southern
Ocean. Crews will be penalized
if they sail over these boundaries toward hazardous areas.
The iceberg itself is not the
major hazard. Growlers — or
chunks of ice that have broken
off it — are a more potent
threat as they can be unseen by
the crews until the last minute.
The fleet had already been
delayed three days in the previous port of Auckland, New
Zealand, to avoid the worst of
Cyclone Pam, which has claimed at least 16 lives in the
South Pacific archipelago of
Vanuatu.
The six boats nevertheless
made the most of high winds
on the tail of the cyclone after
setting off last Wednesday, and
made quicker progress through the South Pacific than anticipated.
Organizers to bring forward
the expected time of arrival in
leg five’s destination port of
Itajai, Brazil, to April 4 from
April 7.
“I thought I would lose some
fingers, but I was lucky with
some flesh wounds and blue
fingers. It will hurt for the rest
of the leg.”
Team Brunel of the Netherlands currently lead the leg
from Turkish-U.S. entry Team
Alvimedica, with overall race
leaders, Abu Dhabi Ocean Racing, Team SCA of Sweden,
Spain’s MAPFRE and the Dongfeng Race Team of China closely bunched behind them.
In all, the boats will cover
38,739 nautical miles (71,745
kilometers, 44,642 miles), visit
11 ports and every continent.
The nine-month event, held
every three years, concludes on
June 27 in Gothenburg, Sweden. AP
ASK THE VET
by Dr Ruan Du Toit Bester
4 Vaccines your puppy
should have
P
UPPY vaccines are crucial to your puppy’s good health. Newborn puppies
receive antibodies through their mother’s
milk; after your puppy is weaned and as its
immune system is strengthening, it needs
vaccinations to help its body form new antibodies against disease. Here are the four
core dog vaccinations your puppy needs
for good health. PARVOVIRUS VACCINE
Parvovirus is one the most common infectious dog disease in the world. Parvovirus is spread through contact with infected
feces; the virus can live on inanimate surfaces such as feeding dishes and clothing,
making it virtually impossible to stop its
spread. Parvovirus is deadly and treatment
is costly. Your puppy needs a parvo vaccine. CANINE DISTEMPER VACCINE
Canine distemper is another serious ill-
ness that can be deadly. The canine distemper virus attacks the central nervous
system, leading to seizures and death.
While dogs can recover from distemper
even in its late stages, the disease can leave
them with permanent brain damage. Like parvo, canine distemper is a viral
disease and therefore difficult to treat.
The most vets can do is to treat the symptoms of the disease to give your dog’s immune system a chance to fight back. Puppies do not have fully developed immune
systems, and so they are vulnerable to viral
diseases. A canine distemper vaccination
is among the four core vaccinations recommended by vets. RABIES VACCINE
In Macau, rabies vaccines are required
by law. Rabies in dogs causes aggressive
behavior, seizures and death. Rabies is a particularly dangerous disease
because it is both deadly and contagious to
humans. Rabies spreads through the saliva
of the infected animal, and rabid animals
are much more likely to attack because the
disease makes them aggressive. Dogs are
often vulnerable to rabies because they can
come in contact will small animals who
might be infected with the disease. CANINE HEPATITIS VACCINE
Canine hepatitis is another viral disease that can kill your puppy if it isn’t treated quickly. Canine hepatitis can kill puppies in a matter of hours, before symptoms even manifest. Even if your dog recovers from canine hepatitis infection, it will never be the
same. It will be more vulnerable to kidney
infections and may suffer serious permanent damage to its liver and eyesight. Your
dog can also continue to carry and spread
canine hepatitis for up to nine months
following its recovery, creating a high
risk of infection for other dogs with whom
it has contact.
Hope this helps Till next week
Dr Ruan
Ask the Vet:
Royal Veterinary Centre
Tel: +853 28501099, +853 28523678
Emergency: +853 62662268
Email: [email protected]