US airlines have been out swinging against the major Middle Eastern airlines Emirates, Qatar, and Etihad — arguing that they are state subsidized and competing unfairly against US carriers, and asking the US to terminate Open Skies agreements that permit unfettered access to US markets.
The end of open skies with the region wouldn’t much hurt US airlines, since they offer only limited service to the region. But it would hurt US travelers — precisely because US airlines offer only limited service to the region.
And US airlines also don’t serve the secondary and smaller cities India and Pakistan these carriers serve, or for that matter Indonesia, Malaysia and the Philippines.
It’s true that the Middle Eastern carriers have grown. And they’ve thrown capacity in several US markets which pushed down fares, and to my delight made award availability and upgrades quite easy.
US airlines are complaining about their loss in market share to the government and demanding action. (Note, and unmentioned in their complaints, that they have a smaller share of a larger market.)
U.S. airlines have lost at least five percentage points of their share of flight bookings from the United States to the Indian subcontinent and Southeast Asia since 2008, due to fierce competition from Gulf carriers, according to data seen by Reuters.
More recently, U.S. carriers have seen an erosion in their share of bookings to Milan, according to a report the U.S. airlines sent to the White House and the departments of State, Transportation and Commerce. The 55-page white paper is not yet public.
The report says the combined share of bookings between the United States and the Indian subcontinent for Delta Air Lines (DAL.N), United Airlines (UAL.N) and American Airlines (AAL.O) has fallen to 34 percent in 2014 from 39 percent in 2008. The drop includes bookings on the airlines’ joint-venture partners, such as British Airways (ICAG.L) and Air France (AIRF.PA).
It’s true that Middle Eastern carriers have enjoyed certain government advantages. For instance, Qatar is state-owned. As are many airlines around the world not drawing the ire of US airline lobbyists who fail to point out the subsidies these US carriers receive.
Cranky Flier calls out the US airlines and explains the benefits of Open Skies today. He’s far too generous with the US airlines, though, he finds their position so incomprehensible that he assumes they must know something that aren’t sharing that could square their position with logic.
One Mile at a Time points out some of the absurd rhetoric coming out of Delta on this issue.
“It’s a great irony to have the United Arab Emirates from the Arabian peninsula talk about that given the fact that our industry was really shocked by the terrorism of 9/11 which came from terrorists from the Arabian peninsula that caused us to go through a massive restructuring.”
Delta partner and Skyteam member Saudia – the flag carrier of Saudi Arabia – received gifted aircraft from the government. But Delta’s CEO is silent on Saudia.
This is especially strange since a portion of the 9-11 Commission’s report was redacted as embarassing to Saudi Arabia, pointing fingers apparently at certain figures in the Saudi government as supporting the attacks on US planes.
American isn’t clamoring for an end to Open Skies with Jordan, home of their oneworld partner Royal Jordanian. Or clamoring about state subsidies to oneworld’s Malaysia Airlines — which has recently been taken over by a government whose state religion is Islam. When I visited their national mosque, banners were everywhere proclaiming a “9/11 Truth” conference that would focus on US war crimes.
American of course is a partner of Etihad, and a oneworld partner of Qatar. And United used to partner with both Qatar and Emirates.
Heck, the US has Open Skies with Pakistan and the airlines aren’t complaining about state-owned PIA. Probably because they do stuff like this.
US airlines aren’t concerned with free markets and don’t hate subsidies, they hate competition. And their lobbyists are concerned only with their interests, and not those of travelers or consumers. They’ve gone to such cynical lengths as to invoke the memory of 9/11 to advance their own business interests while focusing only on 3 airlines. Shame on them.
Well said.
Gary–Im glad you pointed out the domestic carrier’s shameless business tactics of using 9/11 as a tool to further their own gains. If they want to increase sales, why don’t they improve services? #PaxEx
that’s new low for U.S. airlines… by invoking 9/11 as an excuse to suppress ME3’s expansion plans. I hope bozos in D.C. don’t listen deeply to those U.S. airlines’ executives’ B.S. excuses (record profits, points devaluations, and packed planes… what else they want more)
Not shocked. Hop over on Google flights and take a look on the price of flights on OW from the east coast to Milan as opposed to any other airports in the area (FCO, VCE, ZRH, ZAG, VIE or the German ones) and you’ll see prices quite a bit lower.
It’s like bullies on the playground. All US Carriers agreed not to make any waves or make any exceptional products and mutually offer 3 star airlines with moderate service. All of a sudden some new kids show up to the playground with Dom Perignon and LV amenity kits and all the sudden the tough guys want the teacher to stick up for them because they are being “bullied”.
I must have missed the part that all the US carriers got involved in this… I only heard about Richard Anderson talking out of his @ss today. He should have kept his mouth shut and not mentioned the 3 carries in the same breath as the “T” word.
The US legacies hate what the middle east carriers are doing more than anything, which is the opposite of what they are doing. IE increasing capacity. The A380 flying JFK-Milan is the best thing to happen for the American flying public in a while. Hopefully Emirates can add more routes soon. It puts pressure on the legacies other routes when price sensitive customers choose to connect onto this flight vs take the pricier direct route.
So let me get this straight. According to Gary, when we’re talking about airline mergers, three airlines is plenty of competition, so there’s no reason to worry about the mergers. But when we’re talking about airlines trying to block foreign competitors, three airlines is too little competition. How about a little intellectual consistency?
Gary is 100% right on the issue in this post. But that also means he’s wrong in his posts about the effects of airline mergers.
I agree. All Middle East carriers should be banned, except for Israel, and those as part of the US coalition. One World should drop Turkish Airlines AT ONCE!! Are you kidding me, with that maniac as Turkey’s leader?
And let’s not forget Obama Airlines = Delta Airlines. I have no plans to fly Delta until the Obama-ites are removed from Delta’s boardroom.
Thanks.
@ED Turkish Airlines is a Star Alliance member (they used to be an American Airlines partner years ago).
These comments have gone sideways. It’s an open market as it should be and US carriers are lazy. The end. Competition is good. Might get a salted chocolate chip cookie if the airlines decide to get fancy and enter the ring…
Gary,
Your comments are right on the mark. The U.S. airlines involved not only should be ashamed; they should be embarrassed!
I hope you’ll be sure to send your comments to the Secretary of Transportation, and copy the Chairmen and Ranking Minority Members of the Senate and House Committees and Subcommittees with purview over U.S. aviation, airlines, etc.:
Senate Committee on Commerce, Science, and Transportation, Sen. John Thune, Chmn, Sen. Bill Nelson, RMM
Senate Subcommittee on Aviation Operations, Safety, and Security, Sen. Kelly Ayotte, Chmn, Sen. Maria Cantwell, RMM
House Committee on Transportation and Infrastructure, Rep. Bill Shuster, Chmn, Rep. Peter DeFazio, RMM
House Subcommittee on Aviation, Rep. Frank Lobiondo, Chmn, and Rep. Rick Larsen, RMM.
So, now the three biggest liars in the airline industry have become the three biggest whiners! These guys are beyond pathetic and their arguments defy logic. The best thing that could happen is to see parker and schmuck off. Oh, did I misspell that last one?
Why would anyone fly a crappy US airline if they could go with a Gulf airline, or even a decent European one? Yes, there are a couple still out there.