US airlines vs Gulf carriers: How competition empowers fliers
March 12 2015 10:55 PM
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An Emirates Airline Airbus A380 jet is met by a ground crew as it pulls up to a gate at JFK International Airport in New York (file). Thanks to the Gulf airlines, there’s more choice in reaching the major cities in the Arabian Gulf. This week, Emirates sweetened the deal with an offer of a $1,299 round trip to Dubai from any of nine US cities for two people on tickets purchased by March 12.


By Michael Sasso/Bloomberg Business



If you have to fly from New York to New Delhi on April 1, you can book through one of the three big US airlines for at least $1,100 round trip. Or you can take one of Emirates’ luxurious Airbus A380s for less than $900.
That choice is at the heart of the complaint raised by Delta, American, and United Continental with US regulators. They allege handouts from Gulf governments let the region’s major carriers offer “artificially low prices” and flood the market with wide-body aircraft that have far more seats than could be filled from their home markets alone.
Emirates president Tim Clark called the assertions “bluster and flimflam,” Etihad Airways said it’s reviewing the evidence, and Qatar Airways had no comment.
Clark travels to Washington this month to present his rebuttal.
All three Gulf airlines have long denied getting subsidies from their governments.
As the US reviews the complaints, here are some questions and answers for fliers.
Aren’t cheaper fares and more service good for consumers?
The three Gulf carriers offer an average of 25 daily round trips to the US, to cities that include New York, Washington, Los Angeles, and Miami. Collectively, the US airlines offer just two daily flights to Dubai.
So thanks to the Gulf airlines, there’s more choice in reaching the major cities in the Arabian Gulf. This week, Emirates sweetened the deal with an offer of a $1,299 round trip to Dubai from any of nine US cities for two people on tickets purchased by March 12.
Is there a downside for passengers?
The US airlines say their Middle Eastern rivals are just taking market share from other carriers, rather than responding to new demand. As Emirates, Etihad, and Qatar Airways undercut Delta, American, and United on some international routes, the US carriers will be forced to reduce service, they warn.
They contend that cheaper tickets to international destinations could wind up hurting passengers. If US airlines can’t compete with Gulf carriers on certain international routes, they’ll be left with fewer passengers on connecting domestic flights. That could make flights to small and midsize cities unprofitable, they say.
Have the Gulf airlines really changed travel behaviour in the US?
The Gulf carriers since 2008 have more than tripled the share, to 40%, that they and their European partners have of US-to-India bookings. The US carriers’ share has dropped in that time, bouncing in a range of 36% to 39% for several years before falling to 34%, the airlines’ report says.
Emirates ranked No 30 globally in international capacity in 1998 and today ranks No 1, according to the US carriers’ report. Qatar has shot up the rankings to No 10 from 90th in that time, while Etihad, which didn’t exist in 1998, today ranks No 13.
Another concern for US airlines is Gulf carriers flying between the US and Europe without stopping in the Middle East. Emirates already flies one such route between Milan and New York.
What do the US airlines want?
The three major US airlines met with the Obama administration in January to present their findings on what they say is $42bn in subsidies to the Gulf airlines and to request that the government open talks with Qatar and the UAE over air treaties. The State and Transportation departments have approved more than 100 such “Open Skies” agreements with countries over the past two decades, allowing flights between countries essentially free of government intervention. The US airlines also want the administration to ban the Gulf carriers from adding any new routes while it considers the issue.
The Big Three showed their investigative report to the European Union to help such partners as Air France-KLM and Deutsche Lufthansa. Those European airlines have their own complaints of “unfair competition” by the Gulf carriers.
But really, if the US airlines don’t fly much to the UAE and Qatar, who cares?
Travel to the Arabian Gulf itself isn’t the issue, according to the US airlines, which say most passengers to the region don’t actually begin or end their trips there. The Gulf carriers’ goal is to link the US and Europe with Asia and Africa, using their home cities of Dubai, Abu Dhabi, and Doha as points where passengers connect to their destinations. As Emirates flies more people from Mumbai or Singapore to Dubai and on to New York, it cuts the US and European carriers and their hubs out of the picture.
In the long run, the Big Three argue, that will come back to hurt US fliers.


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