Wednesday, 28 March 2018

And hopefully Dubai Intl Airport will decline into insignificance like Gander Intl Airport did.


The first non-stop commercial flight between Australia and the UK has touched down in London. QF9 arrived at 5.02am local time on Sunday morning after a 17-hour long-haul from Perth.

A bit of aviation history:

Construction of the airport began in 1936 and it was opened in 1938, with its first landing on January 11 of that year, by Captain Douglas Fraser flying a Fox Moth of Imperial Airways. Within a few years it had four runways and was the largest airport in the world. Its official name until 1949 was Newfoundland Airport...

Gander is near the great circle route between cities of the U.S. East Coast and London. Starting in the 1940s it was a refueling stop for transatlantic flights to Scotland, Ireland and beyond, and continued in this role through the early 1960s and in some cases into the 1990s...

With the advent of jets with longer range in the 1960s, most flights no longer needed to refuel. Gander has decreased in importance, but it remains the home of Gander Control, one of the two air traffic controls (the other being Shanwick Oceanic Control in western Ireland) which direct the high-level airways of the North Atlantic.

Dubai is the modern equivalent of Gander. Flights have to stop there to refuel and most passengers never leave the airport.

What will happen to the rental value of land in Dubai? It declines - that rental value now accrues to airports at end destinations and their hinterlands as they will be more easily accessible.


Barman said...

I'm sitting in Dubai airport at the moment - about to catch a flight to Sydney.

I've been in Dubai four days and I have to say, Dubai is booming. I'd love to be the guy that rents out cranes!

I can't see direct flights to London changing the land values any time soon.

Mark Wadsworth said...

B, safe flight!

Lola said...

Dubai is booming on debt and credit expansion.

Andrew S. Mooney said...

Well, no, it's really not that impressive. It's London Heathrow to Perth. Which is further from Sydney and the east coast cities than London is to Moscow, and how many people does that serve as a market?

The entire population of Australia is less than London and the surrounding market that is 90 minutes travel from Heathrow.

London Heathrow to Los Angeles is a bigger market. I would even argue that LHR to Phoenix, Arizona, probably carries more people than the entire market for travel to Australia, and British Airways do that route every 48 hours with one 747, never mind any competition that they might have.

Dubai works because you can herd people onto an A380, sort them onto a second widebody and send them onwards. Gander never did this as it was simply an exercise in refuelling the plane. You were not changing planes to fly somewhere inside the United States.

It is instructive to note that Emirates is the A380's only meaningful customer.

Mark Wadsworth said...

L, and that.

ASM, it's not just UK to Straya, it's the whole of the far East to the whole of Europe. Mrs W flew to Malaysia and had to stop in Dubai.

Curtis said...

No she didn't. She (or you) just didn't want to pay for a direct flight. She could also have stopped in Amsterdam or Hong Kong or Singapore or somewhere in India, for less than a direct flight.

Qantas had 2 A380s going through Dubai, but that was only the case for 4 years. Prior to that one stopped in Hong Kong and one stopped in Singapore. But they also had an Australia-Germany and Australia-France flights, which were culled as they were losing money. And now one A380 again stops in Singapore while the 787 stops in Perth (it's really a London-Melbourne flight) - so they actually have fewer seats than when they went via Dubai.

Cathay Pacific runs 7 flights between the UK and Hong Kong daily and 9 between Hong Kong and Australia. Of course only a small proportion of the passengers are going all the way. But then there are Singapore Airlines, Thai, 2 Korean and 2 Japanese airlines, and numerous Chinese airlines as well as Air Canada and the US airlines you can use to fly to Australia, almost always cheaper than Qantas.

DXB is going nowhere. 75%+ of the passengers are local to the Middle East, or going to and from India/Pakistan/Bangladesh/Nepal anyway.

Mark Wadsworth said...

C, I do not know the details of why she booked that particular route. Presumably it was the cheapest.

But you've obviously looked into it in some depth and maybe it's not as extreme as I imagine. We'll see,

L fairfax said...

Why are direct flights often more expensive? Surely the extra costs should make indirect ones more expensive?

Mark Wadsworth said...

C, maybe the alternatives is changing in Amsterdam. So Amsterdam is in competition with Dubai, as they are charging pure rent, Dubai drops its charges accordingly.

The same as Suez and Panama canals being in competition for world trade so charge similar prices. Panama canal was hugely expensive to build and maintain, Suez is just a groove through the flat desert. Costs have little to do with it, it's rent.

C and LF, why are direct flights more expensive?

Because air travel is largely a monopoly situation, they charge for convenience, not cost + profit margin (as in a competitive situation).

So tickets for flights that take off or land in late morning - afternoon are cheaper then taking off in the very early morning or arriving late in the evening. I am sure the costs are pretty much the same.

And the cost of one-day parking at Stansted is as much as a return flight Stansted-Edinburgh, despite running a car park being about 0.01% as expensive and risky as running an airline.

It also depends on the desirability of the start and end points. The cost of a ticket UK to Frankfurt is far more than a ticket UK to Warsaw, despite Frankfurt being a shorter distance.

Bayard said...

"Because air travel is largely a monopoly situation, they charge for convenience, not cost + profit margin (as in a competitive situation)."

Even when you do have genuine competition, most businesses still charge the maximum they can get away with unless prices are completely elastic, which is very rare. The only place you find purely cost-plus pricing is in cases of competitive tender and that's because of the time limitation: as all the tenders have to be in before the contract is let, there is no time to discover what the market will bear.

Physiocrat said...

Dubai, Dubia. A place to stay a way from. A friend's brother was collared by officials at the place due to having been given wrong information about transfer visas by LGW.

It was not a nice experience.

JohnM said...

Dubai is not the only airport in that area that acts as a stoppover for long distance flights. Abu Dhabi and Qatar also serve that function. Having used all three I would guess that Dubai is trying to be more of a Hub than the other two.