Comments

1. This is definitely something to watch. Etihad is slowly rebuilding rationally by building a viable but smaller franchise and relationships than the ME big 4 – including TK – but, in many ways, is a much higher quality operator.
   AF/KL clearly see value in cooperating w/ them even though AF/KL overlaps a number of destinations.
   Worth watching.

2. Somebody correct me if I’m wrong but… the Open Skies Agreement among the US and foreign air carriers required an equality in slots allotted, no government subsidies to the “state owned” carriers in competition with other non subsidized carriers. Etihad, Qatar and Emirates are the largest and most flagrant violators of this agreement. There’s no way that three small Middle East countries with a combined population of about 10 million can have the largest fleets of Boeing 777 and Airbus A380 and sell seats below what it costs to fly the aircraft. They can’t do this without a “full house” unless someone (government) is subsidizing them. And…no government enforces the agreement. Something wrong here.

3. Not surprising the skyteam is finally adding a middle east airlines, although the least of the east. United/Emirates and AA/Qatar are large and strong, this is more of a me too alliance. DL continues to play catch up IMO after years of leading/climbing/rising, they are now following and descending.

4. Win,
   ALL of the ME3 made charges – with sufficient documentation to show it – that the ME3 were being subsidized if for no other reason than via government ownership and below market pricing of a number of support systems for airlines in addition to the use of export financing for aircraft which has provided a substantial financial benefit to the ME3 which have been huge purchasers of Airbus and Boeing widebodies.

   let’s also remember that EK and all of the ME carriers got their start by shuttling south Asians to build the Middle East which provided jobs which those employees’ home countries were happy to support.
   EK particularly realized they could turn their unprecedented foreign carrier access to S. Asia into a global rather than just a regional asset and the Middle East carrier hub and spoke model on steroids was built.

   Covid provided a great reset and alot of countries and foreign airlines are still figuring out how to not allow the ME3 to regain the market share they once held.

   viking,
   beyond the subsidy charges, the biggest reason why the EU3 and US3 have not cooperated w/ the ME3 is because there is alot of route overlap and esp. to S. Asia which the EU3 all serve fairly well but not as well as the ME3.
   QR obviously bought its way into western aviation w/ its stake in BA while EY tried unsuccessfully to do it w/ a number of weak carriers.
   It is time for the world to figure out how to cooperate w/ the ME3 and the ME3 needs it.
   Let’s not forget that UA’s Indian route system has been reduced to a single route because of Russian airspace restrictions – so they needed access to a ME carrier to maintain their market share of the US-India market.
   AA still serves JFK-DEL and apparently is willing to continue to do so despite having very high costs due to their low density 777Ws.
   DL still has not restarted India but probably can using the latest versions of the A350-900; whether they will or not remains to be seen but DL has carried fairly high amounts of traffic from the US to India over VS, AF and KL.

   The issue for the US3 and EU3 is about finding sustainable and economically viable room for the ME3. The point of for profit companies is not to add routes and carriers but profits. AF/KL seem willing to believe they can do that with EY. Whether DL and VS follow and whether the partnership deepens and becomes a Skyteam effort of just one of AF/KL remains to be seen.

5. Oy the subsidy canard again.

   – Emirates was legitimately profitable, though absolutely true they’re intertwined with the state
   – U.S. airlines are massively subsidized, too
   – And comparing the ‘start’ of Mideast carriers should at least be compared to the start for U.S. airlines, right? Cf. the Airmail Scandal, that American’s first major aircraft order was subsidized by the Roosevelt administration (American’s CEO was best man in Roosevelt’s son’s wedding and later a Democratic administration cabinet secretary) to name just a couple of very small items.

   In any case what the US carriers want, led by Delta, was the literal abrogation of treaties the U.S. had signed in order to limit customer choice and raise fares, benefiting airline shareholders at the expense of consumers. Delta of course failed to show up in the Oval Office for the final meeting where Trump made the decision on their case.

   “QR obviously bought its way into western aviation w/ its stake in BA while EY tried unsuccessfully to do it w/ a number of weak carriers.”

   EY wasn’t trying to buy “its way into western aviation” it was trying to direct the traffic of struggling airlines through its Abu Dhabi hub. The costs of this folly were too great even for the Al Nahyan family – unwilling to consider to subsidize that much.

   “AA still serves JFK-DEL and apparently is willing to continue to do so despite having very high costs due to their low density 777Ws.”

   AA never got Russian overflight, even before Russia invaded Ukraine.

   “DL still has not restarted India but probably can using the latest versions of the A350-900; whether they will or not remains to be seen but DL has carried fairly high amounts of traffic from the US to India over VS, AF and KL.”

   They may do it but it’s generally low yield traffic. Delta had anticipated a partner on the ground in India in Jet Airways as Etihad backed away but that did not work out. The benefit of partnering with a Gulf carrier is one-stop service not just to a major Indian destination, but to minor ones, as well as to several destinations in Pakistan (like Lahore, Karachi, Islamabad) and even Bangladesh. American’s JFK-Doha flight was 80% NYC O/D on the U.S. side but virtually zero on the Doha side, it was all QR onward connections.

6. Gary
   nobody is reopening the “they are subsidized so bad” argument because US airlines did receive huge amounts of subsidies and are now far stronger than their global peers.
   The US3 – which included all 3 even if DL spoke the loudest – have far less economic impact than Boeing – which is why the case ultimately ended. The US3 gained cash later and DL specifically won a very significant win against Boeing with the Bombadier CSeries which put DL in a very privileged position that is as significant or more than the widebody saga. And DL has negotiated very lucrative contracts with Airbus and the engine suppliers.

   The growing partnerships with the ME3 by the US3 and EU3 are evidence that the past is indeed the past.

   EY’s financial downfall came because of its multiple failed investments which drained its cash.

   obviously AA and UA see value in serving India so it must not be THAT low esp. given the long distance esp. given that AA did not ever gain overfly rights.
   DL has long shown a preference for BOM over DEL and the amount of range it takes to get to BOM is higher given the Russia airspace issues. Given that UA says it can’t serve BOM w/ the 787 but SQ’s A350s from JFK/EWR to SIN overfly India by a couple hours – even at reduced passenger loads – shows the A350 can technically fly US to India; whether DL sees value in serving India again might be known in a couple weeks when DL is expected to announced its 2024 international schedule based on what is expected to be its largest addition of new widebodies in its history.

7. I’m pretty doubtful that EK’s “profit” isn’t supported by a lot of fuzzy book value accounting and generous depreciation assumptions as there is no real market for much of their fleet when they are done with it and I doubt they have marked anything to market. But with that said, I’ll gladly accept subsidies from the Emir and I don’t care at all how it effects American or Foreign carriers.

   This sounds good except that I doubt that Flying Blue will offer these seats for a reasonable price. You can fly US East Coast to as far as Kolkata/Madras on Etihad for only 70K miles in business. But the same seat is likely to be offered by Flying Blue for multiples of that if experience is a guide. Unless you are getting your Flying Blue miles at a steep discount, their prices are often absurd on the routes that Etihad could serve and post Covid SkyTeam is easily the lowest value alliance from an award price perspective, and has no Avianca or Air Canada to use as a value way to play (excluding a few accident awards offered by Garuda).