US airlines have been making a fuss that Emirates, Etihad, and Qatar receive subsidies and it’s unfair they should have to compete against those carriers. (Subsidies for US airlines are, of course, ok.)
The airlines largely don’t compete with each other now, with a couple of flights to Dubai between them the US carriers and a couple of flights to India.
The big worry is an expansion of service like Emirates’ New York – Milan flight. Although ironically, of the 3 the weakest case they have is against Emirates.
While their eye is on the 3 big Gulf carriers (and not on Kuwaiti which flies New York – London, or Delta partner Saudi), the real competitive risk that they face comes from low cost carriers who will outcompete US airlines on price and where that competition can’t be explained away as subsidized.
RyanAir’s board approved a plan to operate across the Atlantic and could be flying to as many as 14 US cities within 5 years.
- RyanAir often makes bold pronouncements when they’re not in the news (like cabins with no seats and pay toilets)
- This plan rests on acquiring aircraft that they do not yet have orders for.
- 14 cities seems aggressive, especially without partner feed.
Nonetheless, it’s usually Singapore or Emirates that US airlines fear when the topic of foreign ownership of US carriers comes up. The thought it they’d have to compete with really great service and amenities on business routes. When the most likely scenario is they’d compete against RyanAir, you’d have growth in the sector currently dominated by Spirit and Allegiant.
That’s competition that the US airlines will have a hard time beating back, except with loyalty programs and corporate contracts — while US airlines have spent the last couple of years alienating frequent flyers and corporate buyers.
When competitors like Norwegian enter the picture the airlines’ game is to go political. But they won’t be able to fight that battle on every front.
“14 cities seems aggressive, especially without partner feed.”
They have feed on the European side of the Atlantic — themselves. It would just require them allowing for connections which would really only be a baggage issue. But I could easily see them operating something like BWI-DUB-Europe.
I hope government redeem their mistakes by letting competitors enter market to keep those airlines honestly. Of course they would use $ on lobbying and politicize this instead of innovation
Most posts in social media.. Open Skies become butt of the joke, they ask for it
No question that low cost transatlantic competition could be costlier for the major US airlines than the Middle East carriers. But that competition will be FAIR (business v business, instead of business v gov’t), which is a big difference from what’s going on with the ME3.
Ryanair’s business model is far less than a slam dunk across the Atlantic. I’m sure you remember Sir Freddie Laker. That didn’t end so well.
Flying Ryanair across the Atlantic would be like flying Spirit across the Atlantic. Would you look forward to that? Sure, Ryanair claims they know they need a premium cabin to compete. But isn’t that a bit like McDonalds saying they’re going to open an expensive steakhouse?
If they ever do launch, it will of course be a couple good years getting across the Pond for frugal consumers.
I’m a little more skeptical than you are, only because there’s a long history of LCCs failing at longhaul. It’s not even TATL by itself that’s the issue. AirAsia tried, and they got their asses handed to them. One of the local LCCs is trying long-haul with A330s to the Middle East. They’re getting their asses kicked.
It will be interesting if they can make it work, but there are legitimate reasons to suspect they won’t.
Spot on, Gary. I see some sense in the good, skeptical arguments made in the comments here. But still, as the mainline American carriers continue to slide downhill in terms of service, legroom/shoulder room and cultivating frequent flyer brand loyalty, and as more folks have their own entertainment options to keep them occupied in flight, I’d think that many people who settle for being squeezed into tight seats with minimal service domestically will do the same internationally. This could certainly be the case for the flights from the East Coast to Europe, which are not much longer than the transcontinental flights people accept the big squeeze for already.
First off seems to me , wall street traders have royally f’d these firms and consequently, the American flying public.
Notorious money losers and the bane of investors for years, they’ve been hoodwinked into “hedging” the oil market which I’m sure at this point with the ridiculous bottoming out they are locked in at a figure twice or more what they could get on the open market.
And the reason why OIL is so cheap is simple. Fewer people are driving using gas. People are slowly gravitating to solutions that don’t require paying some wanker who buys guns for people who kill us and threaten any hopes of stemming the tide.
If you could see the real numbers, I’d venture to guess the reason why our “supply” of oil is so high, highest it’s ever been is because nobody’s burning it, including the airlines themselves.
They should grow a pair and instead of complaining about the company that gets their oil cheap from their uncle, issue orders to cancel all those bull contracts that traders have them locked into and go fill up now. Yes it’ll involve litigation but you’re in the game for the long haul right?
@Marcus Aurealist – “And the reason why OIL is so cheap is simple. Fewer people are driving using gas. People are slowly gravitating to solutions that don’t require paying some wanker who buys guns for people who kill us and threaten any hopes of stemming the tide.” Actually, I think it has more to do with lower demand from China..
Not involved in this on the ground level, but my guess is the strokers over at ” XYZ – insert wall st firm ” do the game like this, they lock the airlines and other major open market participants into one side ( as far as I know the military keeps their own reserves ) , and then try to keep that fixed so they can then try and play the game with what’s left.
Well the airlines should say no more. We want to be in the game. My understanding is they have said well travelers won’t accept it so by hedging they are able to provide people with price stability but is that really what’s happened?
No actually they’ve inadvertently fixed the price of travel.
Nothing too serious because they didn’t do it intentionally but that’s the way it looks.
Wait, so we’re blaming oil prices on market manipulation now?
US airlines are just a pile of whiners. If they don’t want to lose sales to competitors they should be making their product more desirable. That’s the way free markets should operate. Supply and demand, it’s such a novel idea.