Unit cost analysis of Emirates, IAG & Virgin; about learning from a new model, not unpicking it

Last year, 2013, saw significant shifts in the attitudes of the major European legacy carriers towards their competitors from the Gulf, as well as some changes in the strategic stance of the Gulf carriers towards global partnerships. Qatar Airways joined oneworld, Emirates entered into a joint venture agreement with Qantas, and Air France-KLM started to codeshare with Etihad, which continued to develop its equity alliance strategy with a growing number of European airlines (among others).

Nevertheless, old attitudes linger and there is still a feeling among some in Europe, including airlines and regulators, that the success of the Gulf carriers is based on unfair subsidies.

In this report we analyse Emirates' unit costs and compare them with IAG and Virgin Atlantic in order to understand the source of Emirates' cost advantage. How level is the playing field and what are the conclusions of this unit cost analysis for European legacy carriers and the policy implications for Europe's regulators and governments?