US airlines stand to benefit from flight cutbacks by Dubai-based Emirates, which blamed President Donald Trump’s travel restrictions for hurting demand from Middle Eastern passengers.
Emirates will pare service to five US cities after the country banned on-board electronics on flights from some Middle Eastern airports and attempted to block travel from six predominantly Muslim nations. That trims competition from the biggest Gulf carrier.
With fewer flights, some Emirates passengers may switch to big European airlines and their US partners for travel from the Middle East and Asia. American Airlines Group, Delta Air Lines and United Continental Holdings have prodded US officials for two years to act on their allegations that $50bn in government support has enabled Emirates, Etihad Airways and Qatar Airways “to compete unfairly.”
“Any reduction in capacity from them is only a good thing for US airlines,” said Joe DeNardi, an analyst at Stifel Financial Corp.
Etihad said demand remained strong for flights to the US and pledged to upgrade New York service by using Airbus A380 super jumbo jets. Qatar Airways, which also serves airports affected by the laptop ban, didn’t immediately comment on its own capacity in the US.
“I understand the problem and I agree as a business traveller, that’s my most productive travel and now I’m looking to book through Europe,” said Michael Weiss, an Atlanta businessman who frequently travels to the Middle East and has preferred the customer service on Qatar Airways. “Fellow peers are doing the same thing because we need to be able to work.”
American declined to comment. United and Delta referred questions to the Partnership for Open & Fair Skies, which represents the carriers and several airline unions. In a statement on Wednesday, that group said the Gulf carriers were “propped up by billions of dollars in government cash.”
Emirates’ service to Seattle, Boston and Los Angeles will drop to one a day from two, while Fort Lauderdale and Orlando will get five flights a week, compared with daily services now. The changes will be phased in starting on May 1, the airline said in a statement on Wednesday.
“The recent actions taken by the US government relating to the issuance of entry visas, heightened security vetting and restrictions on electronic devices in aircraft cabins, have had a direct impact on consumer interest and demand for air travel into the US,” Emirates said. “Over the past three months, we have seen a significant deterioration in the booking profiles on all our US routes, across all travel segments.”
Emirates will redeploy some US capacity to serve routes across its global network. The carrier’s Dubai hub was one of the 10 airports affected by a ban on electronics in carry-on luggage on US-bound flights. Trump’s order restricting visitors from six countries – Iran, Libya, Somalia, Sudan, Syria and Yemen – has been blocked in court.
Emirates, which serves 12 US cities as part of its network of more than 150 destinations worldwide, will “closely monitor” the situation with the “view to reinstate and grow” its US operations as soon as viable, it said.
Emirates, Etihad and Qatar Airways have grabbed a substantial portion of the lucrative market for travel from the Americas and Europe to the Middle East, Asia, Africa and Australia by developing their home bases into huge transfer hubs. If travellers look to European carriers to get to the Middle East or India, US carriers could benefit through revenue-sharing agreements with partner airlines.
“If Emirates slashes their presence to Seattle in half, that’s a few hundred seats a week,” said Peter van der Lende, a former Delta executive who worked on global alliances. “That traffic would have gone to Dubai and beyond. Some of that traffic needs to find other solutions. The one that’s on top of the list to receive that traffic is Delta,” which has a Seattle hub.
Some of the flights Emirates is cutting may not have been very profitable, van der Lende said. Florida cities often attract more leisure travellers than lucrative business fliers. Boston doesn’t work as well as other Emirates destinations such as Dallas for flight connections to other US cities.
“I think they were hurt by both bans, but most likely those routes were marginally profitable, if at all,” said van der Lende, who’s now a business development consultant in Atlanta with Expand360.
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