UAE Plays Hardball on Behalf of Emirates, Etihad

 - October 22, 2010, 7:02 AM
Emirates flies an Airbus A380 between Dubai and Toronto three days a week. Holding orders for 90 of the giant transports, the airline harbors plans to connect the world through Dubai, but limited access to landing rights could temper its aspirations. Copyright Airbus

Sometimes business mixes with politics in less than subtle ways, as a dispute over landing rights in Toronto for Emirates Airline and Etihad Airways clearly illustrates. What began as a purely commercial matter turned into a full-blown diplomatic row when the United Arab Emirates opted not to renew Canada’s lease on a key military supply base in Dubai, apparently because the government in Ottawa refused to reopen a 2001 bilateral air transport agreement to allow for more access to Canadian airports for Emirates Airline and Etihad Airways.

Emirates, which flies Monday, Wednesday and Friday between Dubai and Toronto Pearson International Airport, wants to increase its service between its Middle Eastern hub and Canada’s busiest airport to once every day and open new daily service into Calgary and Vancouver. Transport Canada has denied the application on the grounds that the current level of service from Emirates and Etihad satisfies all the demand for travel between Canada and the UAE.

Air Canada’s president and CEO, Calin Rovinescu, earlier this year accused Emirates of trying to flood the Canadian market with cheap capacity as part of its plan to build Dubai into the world’s largest air transport hub with the help of government subsidies. Of course, Emirates management has heard such charges before, most notably from airline executives in Europe and Australia who recognize the threat the Dubai-based carrier poses to their long-haul networks.

Now holding a firm order for 90 Airbus A380s, Emirates harbors plans to connect virtually every major commercial center in the world through its hub in Dubai. In fact, Emirates CEO Tim Clark has said the airline will need more of the airplanes to execute the airline’s ultimate designs. But unless countries such as Canada, France and Germany show a willingness to grant more access to their airports, Emirates’ plans for its A380s remain under threat.

Meanwhile, Canada’s refusal to play ball with the UAE might cost the Canadian taxpayers dearly, primarily for the sake of Air Canada. Although some estimates place the cost of closing the base in Dubai—used to supply troops deployed in Afghanistan—at a modest $50 million, an Emirates-commissioned study by InterVistas Consulting suggests that the Canadian economy stood to gain $480 million annually and 2,800 new jobs if Canada granted the Dubai-based airline further access to Toronto and rights to fly into Vancouver and Calgary.