It looks like American, Delta, and United are getting a little nervous about those fast-growing carriers in the Middle East. It’s bad enough that the three have now banded together to push on the US government to renegotiate open skies treaties with those countries. From what’s known publicly, this seems like a bad idea. So either they’re dumb, or they know more than we do.
The US has been the world’s biggest advocate of open skies treaties for two decades. It has signed more than 100 of them since 1992. What does that mean? An open skies agreement means that airlines of one country have the right to fly to the other country without restriction* and vice versa. I put an asterisk there because there are always non-governmental restrictions that get in the way, like slot scarcity at JFK or something like that.
But the point is that you lift the shackles of government regulation off the air traffic between two countries and let airlines compete on an equal footing. EQUAL is the word that American, Delta, and United are currently fighting about.
Open skies agreements have been very successful in growing traffic. Think about the silly restrictions that only allowed a limited number of flights on two US carriers and two British carriers between Heathrow and the US before the current open skies agreement with the European Union was signed.
Or, more importantly for this post, think about how traffic has exploded between the US and both Qatar and the United Arab Emirates. Of course, most of that growth has come from carriers based in those countries and not from the US. But it has certainly added a ton of capacity and travelers have benefited greatly.
It’s that huge, one-sided growth that has the US carriers crying foul. Were this any other airline in any other country with even more questionable underlying finances, the US carriers wouldn’t care because there wouldn’t be a credible threat. But this? This is going to get a ton of attention because of what’s at stake.
The argument from the US carriers presumably centers entirely on the issue of a FAIR and EQUAL competitive playing field. They say that these Middle East carriers (Emirates, Etihad, and Qatar) are highly subsidized and have huge advantages. With those structural advantages, it’s just not fair competition.
On the surface, this argument seems rather weak. While Etihad has certainly had gobs of subsidies, Emirates is really just benefiting from coming from a country that strongly supports aviation. There is a huge tax advantage to being based in the UAE, and labor is cheaper. (While flight crews tend to make good money over there, the people on the ground don’t.) It’s hard to argue that different environments make something inherently unfair. Besides, those exist everywhere.
Look at the list of open skies agreements and you can pick out plenty. There’s Jordan, Singapore, Taiwan, El Salvador, Guatemala, Malaysia, Uzbekistan, Pakistan, Burkina Faso, oh hell, you get the point. Companies in one country will always have structural differences than those in another country. Sometimes it’s an advantage, and sometimes it’s a disadvantage. But the US carriers have never complained about these other ones for the obvious reasons I mentioned. There isn’t a threat.
But, especially in the case of Emirates, it’s hard to see how this is a strong argument. And that’s why I assume there’s something that the US carriers know that we don’t. Maybe they’ve uncovered a smoking gun. If not, then they’re wasting our time.
From a customer perspective, the gulf carriers are great. Someone in Seattle today now has a whole world of new single-stop options that didn’t exist before Emirates arrived. You can really say the same for even big cities in the US. The number of places you can fly via Dubai, Abu Dhabi, and Doha is astounding. And the fares are often very good. So travelers love it.
The opposite end of the spectrum is that garbage we see in Canada. Canada is downright draconian when it comes to allowing access to gulf carriers. Etihad, Emirates, and Qatar have 3 flights a week to the entire country. (Etihad and Emirates serve their hubs from Toronto while Qatar serves its hub from Montreal.) They want more access but the Canadian government refuses. That doesn’t seem good.
The US carriers knows that the federal government cares about how the general public will feel about any move. So if the airlines are really making a full court press here, then they really must know something we don’t. The timing is probably also not a coincidence.
Sure, gulf carriers can take a lot of traffic for people going from the US to Africa, Central Asia, India, and Southeast Asia. But to Europe, Asia, and anywhere within the Americas, they aren’t a threat. Or are they?
Emirates started a Dubai-Milan-New York flight that the US and European carriers have been fighting. But Emirates recently won its appeal and the route will continue. Remember, Etihad has been pouring money into failing carriers as well. That means airlines like Alitalia and Air Berlin now have Etihad propping them up. Meanwhile, Qatar bought a sizable stake in British Airways’ parent company IAG. This is just the tip of the iceberg, and it’s why US carriers are so scared. (European carriers have been scared for years.)
What exactly the US carriers are hoping to achieve with this isn’t entirely clear, but we’re going to see a lot of friction in the coming years. The battle has just begun. Let’s see if the US carriers actually have uncovered anything to help their cause.
[Original shark photo and original buoy photo via Shutterstock]
68 comments on “US Airlines Ramp Up Effort to Stifle Middle East Carriers – What Do They Know?”
I’m not sure there needs to be a smoking gun. Couldn’t it be as simple as there are now airlines with the funding AND product to take a bite out of the US carriers revenue and profits?
Of the countries you list in the beginning, really only Singapore and Taiwan have carries with excellent products. And due to distance and cost, they don’t fly a ton to the US – just a few cities. The Mideast three are being far more aggressive, and because they can connect virtually any two cities with a single connection, the US carriers are scared.
So rather than try to compete – better routes, serious hard products, etc – they want to legislate their troubles away.
N – The government is not going to protect them if the answer is just “competition with other countries is hard.” The airlines know that, so that’s why there has to be something more. (Or at least, they think there is.)
Cranky, I think you’re underestimating the power of public opinion. Most people don’t understand aviation the same way your readers do. The Middle East is a scary-sounding place to most Americans, and “unfair competition” is enough to get them to support trade barriers.
Our door’s need to remain locked when it comes to the ME3 and to a degree, Turkish Airlines…..with bottomless pockets they can afford to buy the huge amounts of NEW planes. and it seems, the bigger, the better…..they are already eating other Flag carriers business….the Middle East to London route boggles my mind with how many flights combined, they have and with the A380….Open Skies wasn’t meant for 3 maybe 4 carriers from the Middle East to fly the world’s air travel’s and send other airlines spiraling downward….the LCC’s are doing a good job of that….the US doesn’t need little mini me’s flying from ATL to DAB named Emirates US, Turkish Delight, Etihad Express and Qatar America…..Competition to some airlines doesn’t exist, they want it all and will make their planes all nice and pretty and do whatever it takes to get more people to switch to them and they will continue to do so with bigger and bigger planes……either Flag carries unite with the big 3 maybe 4 and survive or risk it going alone and see what happens…..PLEASE keep out doors closed until everyone can play fair…..
I can kind of understand as a business why the US airlines want to keep competition away. The three middle eastern carriers have taken Europe by storm and made legacy airlines that were suffering from LCC competition fall even further into losses. The US airlines are right in the fact that the three carriers have serious advantages due to their economic systems and environment. And I don’t mean policies that “support” aviation, the government in the three countries have ample oil and oil revenue, no human or employee rights and don’t tax anyone because they have oil income. I find it hard to see these airlines survive once the oil is gone and the government can’t keep them afloat anymore.
To play devil’s advocate for a moment, Dubai has minimal oil revenue anymore, and while it is true that Bahrain and Qatar certainly do, the likelihood is they will continue on with their sovereign wealth funds and with their location as an alternative financial and offshore location for the more duplicitous individuals and companies amongst us. But I agree that overall, it is hard to see such unrestrained capacity hitting the market and being sustained without significant subsidies; the likelihood is that one of the three Gulf carriers will have to either merge with the other or be scaled back significantly. Then again
Again, its notable that you don’t have the US airline industry complaining about Icelandair or Wiz, both of which essentially have the same setup at the Gulf carriers, but also are not domiciled in low tax dictatorships. And lets be real; they are “pro aviation” because they ARE a dictatorship. They don’t have to do environmental assessments, or negotiate with neighborhood groups, or deal with pesky things such as labor or human rights. They can just slap together a bunch of migrant laborers and force them to throw up whatever gaudy, unsustainable nonsense they can put together.
Oh ya, I agree that Dubai as an emirate is definetly trying to invest in other sectors to move away from oil dependency and oil revenue is playing a less and less role in their income nowadays. Yet they still have massive funds to draw money from.
And I never considered a merger as a way to soothe overcapacity, thanks for that new take on the future Sean. I can see a possible Etihad-Emirates merger to create a “UAE” national airline. I still have no idea where they plan to put these A380’s on not to mention 100 B777X. Only time can tell us……..and possibly government intervention
No chance of a Etihad-Emirates merger. The UAE is made up of individual emirates (or like a US states) and Abu Dhabi and Dubai compete against each other. More chance of the Yankees and the Red Sox getting together than Emirates-Etihad.
About all those wide-bodies, remember the idea of Emirates is to drive Dubai as the connecting city, so I assume it’s either more cities or more frequency between Dubai and the other destination.
But there have also been other advantages for US carriers like JetBlue. They have a great partner to provide connections. Maybe once Southwest gets it’s computer system together we will see arrangements like this too.
Our government has also helped these ME carriers. The ME carriers that have ample amounts of cash are purchasing their planes from Boeing using the Import/Export Bank of the United States. This gives loan guarantees and favorable interest rates to these carriers while US based carriers pay market rates to finance their airplanes.
The Import/Export Bank serves a great purpose in helping sell American good overseas, but I don’t think the ME carriers are struggling to find financing. They could probably pay cash for very 777 or 787 they order.
That gives them at somewhat of a unfair advantage.
Who signed this Open Skies agreement? We are letting the ME carriers fly wherever they want in the US in exchange for us being able to fly anywhere US carriers want in the Middle East. There are only three cities in the ME that could support regular scheduled service (Dubai, Abu Dahbi and Doha) anyway while the US has many cities that would support regular service. (JFK, IAD, MIA, DFW, IAH, LAX, SFO, SEA, ORD etc. etc. ) Seems like we should have done what Germany did.
Germany permits the ME carriers fly to a total of 5 cities in their country. They can pick which 5. If they want to add one, they have to pull out of one.
AFAIK, the rates at the import/export bank are more expensive than what the US airlines are getting.
That wouldn’t negate that the ME3 are being subsidized by Ex-Im, if they are using it. All these subsidies and agreements are a tangled race to the bottom. I guess if the Wright Brothers did not have government financing, Ohio state manufacturing subsidies, and a Kitty Hawk open skies agreement, this industry would have failed to launch.
Perhaps. But then you could say Boeing is being subsidized… Oh and Delta is too, because they’ve had engine overhaul contracts setup through the ExIm Bank.
Ex-Im rates are typically lower rates than what airlines will find in their own countries.
True, but its not lower than what US carriers find in the US.
I’m not sure what Cranky is suggesting that US airlines know? There’s nothing stopping Delta or United from improving their product, flying nonstop to anywhere in the world that EK/QR/EY do (Baghdad, Tehran, Kabul and Algiers, anyone?), investing in underperforming European airlines, hiring a harder-working workforce domiciled in low tax jurisdictions, or asking the federal govt for support to buy US-built planes. Heck, it wasn’t that long ago that they all had hubs in Tokyo and Frankfurt and fly fifth freedom all over the world – including all over the Middle East
So, why the big fuss right now? Sounds like sour grapes at the whiff of any competition. And, like in Canada (which also prevented Singapore Airlines from expanding – funny, they didn’t have any issue with any other airlines until Emirates came along), the only losers will be the flying public and the economy.
By comparison, witness the economic benefits brought by direct EK/QR flights to UK regions – like Newcastle, Glasgow, Edinburgh and Birmingham, which would never have sustained long haul flights by themselves, and which BA was (rightly) never interested in serving, except from its hub in London
Your choice, America…
kt74 – I’m suggesting that the US carriers better know something or the argument is weak. What would that be? Massive hidden subsidies above and beyond what we already see. I really have no clue. I just assume there has to be more.
There are things preventing hiring low wage workers in other countries and getting subsidies for aircraft purchases. It’s not as easy as you make it sound. There are structural differences when you’re based in the US versus in the UAE.
Oopsie. This is why your out-of-office response should be set to people in your network only.
I’m not sure why this got through the filters. I’ll take a look right now. Sorry about that.
I assume you meant 3 daily to Canada, not weekly.
Slightly off topic, but I know the ME carriers have better premium service than US and Euro carriers which probably accounts for most of their profits, but I’m kind of tired of hearing about how great the carriers are to fly and much better than the others. I haven’t flown any of them yet, but I am not sure how sitting 10 abreast in a 777 on Emirates is going to be better service and quality than 9 across on United. I’m not saying United is such a great airline, but it seems like all the experts and public comments raving about hard and soft product ignore the way that majority of passengers fly. I fly international quite a bit for work in coach and always consider personal space the most important hard product in coach, switching carrier or even flight time to get on an airplane best configured for my comfort.
What am I missing? Are the ME carriers really better for coach passengers?
More on topic, another structural advantage the ME carriers have is the volume / demand they have to carry large numbers of low skill labor (some would say slave labor) from South Asia to the Middle East. A cynic could say that they have an advantage in that the human trafficking market in the Americas is relatively minuscule in comparison (unfortunately it does exist here but not but legally like in ME) and Delta, AA, United would not do well to lobby legislative change on that side of the issue.
Nope. He means 3x weekly. The Canadians are *that* protectionist
The advantage to Y passengers is the ability to fly daily, one-stop from Miami to Chongqing, Seattle to Basra, or Dallas to Jaipur. And many other combinations.
The Y product is nothing special – good enough. But at least the wifi, unlimited IFE and alcohol is free… 10 abreast Y – that’s what AA is retrofitting, isn’t it? And you can always fly QR 777s with 9 abreast
It is so good that someone has finally tried to put the discussing public from the top of their enthusiasm about ME premium cabins (which most of this public cannot afford to fly for their own money) to the bottom of the most common form of travelling – coach. Coach is the biggest cabin with any airline for the sole reason that most people cannot or are not willing to afford to pay for all those fancy suites everybody is so amazed about. And I would say that coach tickets on ME3 are hardly way too better than on any other carrier.
Plus as Brett rightly mentioned, US airlines make most money on either transatlantic routes (JFK-LHR) or a few other routes, not including those to the Middle East. So, I can barely see either of the ME3 airlines stealing away traffic on lines between the USA and Latin America, USA and China/Japan (at least not with the West Coast), the USA and Western Union.
What I don’t understand is why those US carriers do not oppose government spending on Abu Dhabi immigration facility that helps Etihad lure regional passengers to flying to the US via its hub rather than directly with some other airlines.
The airlines did oppose the pre-clearance center in Abu Dhabi. I don’t recall the airlines themselves doing much of the talking, but Airlines for America (the trade organization representing the US airline industry) was very vocal. Pilot unions were also very vocal, and certain members of Congress very publicly were against it.
http://crankyflier.com/2014/01/30/what-is-preclearance-and-why-are-airlines-so-mad-about-abu-dhabi-having-it/
Opinion article: http://aviationweek.com/commercial-aviation/viewpoint-us-plan-aid-etihad-outrageous
I heard, but they were all probably still too quiet at that time not forseeing the scale at which ME3 would grow in the USA.
Shan – The Emirates strategy for coach seems to be to pack them in and lull them into submission with awesome inflight entertainment. You think about all the people coming in from India or other low cost labor pools. These people may not have a TV. So you give them a seat with a thousand movies at their fingertips, they don’t care if it’s a narrow seat. It’s going to be a great experience.
Brett, you do have a point, but… People from India with no TV are poor workers who stop in Dubai to perform low-paid labour duties and do not go further to the US. I don’t think the US carriers have plans to shuttle cheap labour force between ME and India. ))
Andrey – Oh sure, those people aren’t coming to the US, but that still seems to be the Emirates strategy in coach. It seems to work well regardless of your background, I suppose.
Shan – The Emirates strategy for coach seems to be to pack them in and lull them into submission with awesome inflight entertainment.”
He’s not wrong. I’ve done the 15 hour EK SFO-DXB hell flight in a coach middle seat (albeit lucky enough to get exit rows both directions without a surcharge).
Having that broad IFE makes a big difference when you don’t have any arm rests to yourself and you barely get a few hours sleep during that trip. The food wasn’t shabby either.
That flight was the best international flight I had done…until I scored Royal Laurel Class Saver Tickets on EVA.
If the US carriers offered up that kind of IFE instead of looking for ways to continue nickel and diming us to death with IFE that can’t compete even if it was free, we wouldn’t be here talking about this.
US carriers have been slow to invest in their fleets. UA upgraded its 747s to a product level that’s still substandard compared to the best ingternational carriers. They want the US government to protect them so they can continue to drag their feet on their competitiveness.
I’ll add another point that seems to be getting overlooked here. The US carriers, particularly the last few years, have been doing everything possible to gut their loyalty programs. Award restrictions, award devaluations, partner award devaluations, going to revenue based systems which aren’t equal to the systems they are abandoning in terms of the ability to max earn, or playing hide and seek/don’t ask don’t tell with their award levels (Hellooooooooo Widget!). They have done major damage to their programs in the belief that people have nowhere else to turn to. But that’s true only as long as other carriers are kept out of the US market.
Emirates and the other two may or may not be a threat because of their “favorable operating conditions”. But they are definiteloy a threat because they offer a superior product and because the US carriers are giving their passengers no good reason to be loyal any more.
I’m not sure I really have an opinion about open skies. What I do believe is that the ME carriers are building something that is not sustainable for the long run. While they may have the economics worked out for the time being it will not last forever. Never mind that they are all based in a part of the world that is a powder get waiting to explode. Sure, the UAE may be the Switzerland of the ME but one arab spring in the wrong place could have all these airlines grounded overnight.
A – I actually agree with you. I think Etihad is building a house of cards with all these investments. It’s great for revenue growth but at some point, the money dries up. Geopolitical changes always shift the wealth over time. Look at what’s happening now with oil prices. (Not as big of an issue for the UAE, but still having a huge impact on places like Russia.) I tend to think Emirates is sustainable, though maybe not with as many A380s as they have. But the faster these guys all grow, the more some will have to teeter over time.
I find it hard to believe that they will find enough airports (and passengers) to fill all those widebodies they have on order.
Until the US revokes some labor laws and allow for the removal of the senior “wide-bodies” that work the international sectors US carriers will never be competitive.
Not a very politically correct opinion, but a valid one.
The inflight experience on Emirates, Etihad or Qatar is so far beyond anything the US3 can offer that it’s not even funny. The service, even in coach, is polished, professional and attentive. Crew greet you by name, are groomed to the nines, and seem genuinely happy to be there.
Contrast that with American, United, and (to a lesser but still noticeable extent) Delta, where most of the longhaul crews can’t be bothered with pesky things like service standards or grooming. Even in F and J, the attitude is that they’ll get to you when they get to you, and that’s that. It’s their aircraft, not yours, and you can sit down until they’re ready to deal with you. There is absolutely no comparison, and the US3 know it. The seniority system has their hands tied – the crabbiest, least motivated worst-of-the-worst old dragons are flying the most prestigious routes and delivering a consistently subpar experience, and there’s nothing they can do about it.
Bingo. This really nails it.
But you have to add the corporate arrogance/indifference of the US carriers, who have lousy customer service (see: “UA breaks guitars) and nasty and growing nickel-and-dime fees which irritate people.
I’m not sure what’s more hilarious about this post; the casual sexism, ageism, or the entitlement. I fly international semi-regularly, and I’ve generally had positive experiences on Delta, who I use, though certainly I cannot speak about others. Admittedly I don’t fly business class either, and maybe my expectations aren’t on part with the Diamond Medallion flier but in my experience most flight attendance service is from average to quite good. I’m not getting a 40 minute dinner presentation, but I don’t really care about that either.
The simple fact is that DL, for whatever reason, cannot complete with the ME3, so they’ve resorted to whining for the government for protection. Cranky feels that DL knows more than we do. I disagree; if they had something they would release it to bolster their case. I suspect that they’re bluffing.
Ah, yes, the old entitlement chestnut. It’s a testament to the lousiness of the US3 that someone who has paid thousands of dollars for a seat in a premium cabin, and who expects professionally-delivered service from friendly, well-groomed crew, is immediately dismissed as “entitled.”
I, too, fly international semi-regularly. The things you see US3 cabin crews do on those flights would get crews written up or fired on just about any other respectable carrier. Snapping at passengers, ignoring call buttons, rolling eyes, smacking gum, carrying on conversations with each other across the aisles. I once watched an AA crew member tell a passenger in J to move seats so her non-rev friend could have an aisle seat. I’ll admit that Delta longhaul crews generally outshine those on United and American, but they don’t measure up to any kind of international standard, either.
Moreover, anyone who travels internationally with any frequency has probably had the embarrassing experience of watching a US3 crew go through customs at the same time as a crew from Lufthansa, JAL, Emirates, TAM, etc. Even airlines like SAS or Qantas, where longhaul crews tend to be equally as tenured as AA/UA/DL, manage to enforce some kind of uniform standard. It’s not about wanting to look at sexy young women in hot pants. It’s about the airline projecting a brand image that its employees don’t bother measuring up to.
There’s nothing sexist, ageist or entitled about pointing out how horrifically bad the international service levels can be on our three main carriers, and that that’s largely due to sour-faced, burned-out crews who believe they’re untouchable. The ME3 crews perform circles around them without even trying.
CAPA did an excellent analysis on the Middle East ‘subsidies’, and it turns out that, well, um, Emirates is just a really well run airline. CAPA also points out that, um, US airlines have been subsidised and many of their alliance partners receive assistance.
http://centreforaviation.com/analysis/us-airline-attacks-on-gulf-carriers-more-rhetoric-than-consistency—but-it-makes-for-good-politics-192138
But what about the no taxes and no labour rights. Emirates may not be “subsidised” as such but I’m sure cheap oil and government favouritism plays a part in their success. Emirates is known to have a cost base second to none. No airline is THAT well run, I mean global network, excellent service AND profit. An airline that good, is too good to be true. If Emirates are that good, why isn’t every other airline in the world. How come China’s, Australia’s and Europe’s airlines can’t pull an “Emirates” off if there is clearly a market there?
The ME3 are hurting the European big 3 airlines much more than the big 3 American airlines. AFKL, LH and to a lesser extent BA are heavily reliant to transfer traffic, EU-ME/Asia and NA-ME/Asia. EU-ME/Asia is no issue for UA, DL and AA.
The NA-ME/Asia transfer traffic that was previously flying on UA-LH or DL-AFKL JVs on the Atlantic is being siphoned off via the DXB/AUH/DOH. Assume someone used to play $1000 to fly SEA-CDG-BOM on DL-AFKL; also assume the trans-Atlantic part is worth $500. DL used to get 50% of that ($250) via the JV, that’s gone now via DXB. That’s where the pain point is for DL. UA is similarly affected.
AA is not so badly affected because it’s JV with BA is relatively new and the NA-LHR flights are mostly BA and not AA. Also, BA is less reliant on NA-ME/Asia transfer traffic and prefers the higher yielding LHR O/D pax.
“AA is not so badly affected because it’s JV with BA is relatively new and the NA-LHR flights are mostly BA and not AA”
I’d say it’s probably more because QR is now part of Oneworld, and also have a codesharing agreement with EY on its ORD-AUH nonstop. Plus AA has been weak in Asia since pretty much the beginning of time, so they likely benefit more than most carriers in being able to sell one stops to most of south/southeast Asia via Doha and Abu Dhabi. At least for now.
If DL, AA and UA would spend as much time and effort to become customer-friendly, they would not have to complain about EK et. al. Unfortunately, all the US dinosaur airlines have to offer is horrible customer service, ever-increasing fees and those horrible new “slimline” seats that are less comfortable than a park bench. I have no sympathy for them.
There is no such thing as good customer service in this country no matter what the industry. I am dealing with Social Security and I am dealing with people who absolutely hate their jobs and they have take it out on me. Maybe we’d be better off with Emirates, Qatar, and Eithad just take over the US.
Social Security is a government agency… Why would you expect them to have good customer service versus say a high end restaurant in the us?
AA/DL/UA seem like a bunch of cry babies don’t they. They just don’t like that people are going via the middle east to a lot of cities mostly in India as an example that can be on a single connection, instead of going via AMS/FRA/CDG/LHR on partner hub with limited flights to India and then a domestic AI/9W connection to their final destination. Plus the middle east carriers are keeping costs down and offering more connection option with multiple daily flights.
And I never understood the backlash of EK’s NYC-MIL-DXB, when the U.S. carriers don’t seem to mind SQ’s JFK-FRA-SIN OR IAH-DMESIN, 9W EWR-BRU-BOM, KU JFK-LHR-KWI, or for many years AI JFK-LHR-BOM.
If you look at the big picture AA/DL/UA fly to more of the world then EK/EY/QR, and as mentioned the only issue is really one stop service via the middle east that can’t be done via Europe which isn’t really that vast compared to what they are the alliance partners can do
If the big 3 wanted to sink EK all they have to do is offer to hire most the US pilots flying there. They are waiting for any opportunity to quit and go home. Would be hard for EK to compete with lack of flight crews.
With mass dismissal of Russian pilots, ME3 will be able to easily fill the void.
Spot on about Canada – complete protectionist for the god-awful Air Canada. The Canadian govt is scared shi*less about the big 3 flying to Canada. Air Canada will be flying to Dubai in Nov….and unless they improve their inflight Business Class, no way they can compete with EK and EY or QR.
In terms of hard product, the gulf carriers are ok – but not so amazingly different than the Americans.
As KFA right says, all the US and other carriers need to do is hire back the pilots and crews. And in one shot, all the Middle Eastern carriers will have a bunch of planes that are sitting on the tarmac.
My problem with the Middle Eastern airlines is based on 9/11. Just suppose that all of Emirates’ huge A380s decide to commit Jihad on the same day here in America. I know it sounds crazy — and I have never been one for conspiracies — but think about it. They are loaded with fuel, fly all over our country, and are growing daily here in the US adding city after city. Add to that their 777s and the other two Middle Eastern airlines, and well….
What’s to stop them from plowing into 15, 20, 25 cities one day bringing the US to a standstill?
Call me crazy, but it’s something to think about. In this world, it could happen. Would make a great movie if nothing else.
What about Aeroflot? Are you terrified of them also??
Well. Its better than the US deciding to commit a Jihad in Iraq and Afghanistan.
Ultimately one of the things that protects the US for better is that we have a large military and we’ll use it. Sure ME3 countries could use the commercial airliners as bombs, but they’re effectively ending their government by doing so.
Likewise Russia, China and other Nuclear powers already have the power to wipe out US cities. The only reason they don’t is because we’ve made it known that we’ll respond to those attacks immediately in kind. Nuclear weapons work and aren’t used, because its well known that we’ll use them. (E.g. Mutually Assured Destruction)
Err.. Its no different than the US deciding….
If I’m correct I believe the “crash into skycraper” option is outside of the Airbus performance envelope, and is thus disabled on all aircraft. And remember, pilots can’t override it – one of the big differences between Boeing and Airbus.
So that would never happen, unless Toulouse is one of those cities that Fox news has labeled under control of nefarious elements….
Except the ME3 also fly Boeing equipment.
Sent from my computer that moonlights as a phone. Please forgive any misspellings or terseness.
And all the ME3 pilots that other posters unthread want to recall to US airlines are… Jihadists?!
“Call me crazy”
ok you are crazy.
US airlines enjoy government protection and subsidy by virtue of the limitation on foreign ownership of domestic airlines. So go cry me a river that you have an oligopoly on the single largest aviation market in the world.
Undermining the ME3 via the EXIM Bank will hurt US industrial production, Boeing, GE, the defense contractors civil divisions would all face backlash and struggle to be on a level playing field with their competitors. Don’t forget, the US carriers get similar EXIM-like benefits when they buy Airbus through the European export banks. Is it worth the US production jobs that are supported by the facilities made available by the EXIM bank over the crying of 3 of the largest airlines in the world, they are no paupers.
Rather than invest in their product or improve their operations efficiencies to offer broader service or a higher quality product that attracts better yields, UA decided to return over $300 million to shareholders, essentially saying there is nothing we can invest in that is worthwhile. How much has EK, EY, and QR returned to their owners, rather they are scrambling to find planes and space to park them as they grow to reach critical mass that supports their connecting traffic model. Let us not forget that London has maintained its economic footing in part because it acted as an international air traffic hub, something of course very much in the mind of ME3 for their post-fossil fuel futures.
To anyone wondering whether the ME3 are really about the bling and luxury all throughout, I think they are missing that these guys are doing the business where it matters way back in Coach. Their fares are ultracompetitive and while not luxurious by any stretch, they do offer a humane and improved service when compared to their competitors. In coach a decent meal, refreshments and quality IFE will be enough to make journey tolerable, anyone who has flown UA TPAC on a 747 can attest to how low a bar the US carriers set.
The US customers are the only ones that can lose if the big 3 get their way and get the govt to restrict the ME3. You want to see what their approach can do to a market that was previously ignored or just abused for profit? In Sub-Sahara Africa average airfares are amongst the highest, dominated by a few big carriers. It has been the case that the big European carriers carved up the continent per their former colonies and worked with the bigger African carriers to hold the line on regional and international fares at the highest levels and maintain absurd connectivity (e.g. you generally would find that to fly between a former french colony and english one, you would have to connect via Paris, Abidjan-CDG-Nairobi). South African Airways has not made money on its long haul flights even with avg $4-6k biz fares from/to the US, but its total loss is is actually not as bad because of their ultra-profitable continental flights. Finally enter the ME3, and consistently they will offer connecting flights via ME that are cheaper than flying direct, especially on the business heavy routes, JNB-NBO or JNB-LOS or NBO-LOS. More importantly, the ME3 have democratized air travel and facilitated an explosion in trade between Africa, ME and Asia, the number of small entrepreneurs who can get to trade with over 4 billion people for the cost that used to be only be able to get them JNB-CPT is massive.
For US travelers who have been fleeced via the TATL and TPAC JVs the ME3 should be embraced and not allow US carriers bullying them away just to increase Exec equity compensation on the backs of travelers.
To answer your question regarding ExIm and US production jobs: An emphatic yes. If ExIm followed GAAP its “profits” would disappear. If it actually supports any jobs, it only does so by distorting other areas of the economy by using resources on favored and profitable lobbying constituents. See Frederic Bastiat on the unseen versus the seen. If Europeans are dumb enough to give me cheaper airplanes, I am all for it. I just don’t want my tax dollars to give JPM banksters bigger closing bonuses using the government’s imprimatur to benefit perfectly fine on its own Boeing.
It will be interesting to read the report the US airlines are circulating in Washington. I haven’t seen a copy yet. FWIW, I don’t buy the argument that this is sour grapes on the part of the US airlines. There is clearly something odd about the way Emirates and the other Middle Eastern airlines do business. They seem to defy Airline Economics 101. Nobody has ever survived in the airline industry offering full-frills CONNECTING service from a small population hub with gi-normous aircraft. If you could make this business model work in Dubai (population 2 million), it would work many other places in the world. But, for some reason (undoubtedly Airline Economics 101) it doesn’t. Emirates now serves 9 USA markets with super jumbo aircraft to Dubai. If it were that easy to dispatch A380 aircraft around the world and make a real profit from it, can you imagine how many A380s Delta would fly from ATL to all points on the globe? Or what about United from EWR? They don’t dispatch any super jumbos, and they are WAY more cautious adding new int’l routes. Something just doesn’t add up, and we’ll eventually find out what it is.
Considering their order book, they will have to find a lot more markets than those nine.
As mentioned, labor costs are much much lower than US based airlines when labor rules are included.
It’s not labor costs. I believe American, Delta and United would still lose a ton of money dispatching A380s to small ultra long-haul markets like Dubai even if they paid their flight crews ZERO!
The math is insanely fishy here. Something is going on. The Middle East airlines operate with economics that exist nowhere else in the int’l aviation world.
As a UK/US dual national, with Asian lineage, I notice that many of the comments refer to the perceived low quality of the ME3 coach product. My experience with British and Asian family and friends is that they don’t care as much about comfort on a long haul flight. I recall back in the 90s when I lived in Orlando, that our British visitors would rave about Virgin Atlantic, and the fact that they served ice cream. These are people who are used to arriving at the airport at least 4 hours before a flight, and are used to being treated like cattle. They think it is just wonderful that they can fly from the UK to Singapore nonstop for an affordable price. They don’t care if it is 9-across or 10-across seating.
I followed the recommendations of some friends and tried Virgin Atlantic for a trip back to the UK; I could not believe how small the seat pitch was. That was the last time I flew them.
I now work in the Middle East with a lot of Asians. They don’t seem to care about comfort either; they are happy to be able to get home within a few hours. I don’t know if this type of advertising appears in the US, but the UAE airlines like to state that 60% of the world’s population is within an 8-hour flight, or something like that (don’t quote me).
So my point is, from this perspective, that the ME3 are providing an adequate level of service in coach at an affordable price to the millions of Asians and Europeans who care more about the destination than the journey.
My coworkers actually feel sorry for me that I have to usually make 2 long haul flights with a connection in Europe to get home to the US, whereas they are home within 6-8 hours, usually with only one connection in the UAE. Cranky already is well-aware of my preference for non-US carriers for those journeys.
There are some trade-offs in addition to basic ticket price. The biggie is always the gulf carrier’s on-board, ‘soft product.’ None of the U.S. flagged legacy carriers come anywhere close to matching the gulf boy’s service. And the legacy carrier’s ‘hard product,’ that flying aluminum tube, is generally older and far less clean than those operated by the gulf boys. Whatever the many additional reasons, the legacy carriers do not complete well with most A-string foreign carriers. Lots of unknown variables here, but I think the legacy carriers do not WANT to complete; they just want protection for their sub-standard products. And do the legacy carriers want Uncle Sam to become a majority stock holder? They do not, nor do we. Government subsidies or not, I think those Gulf carriers simply have better senior management teams that do our carriers. This battle is far from over and I have no idea where it will end. If the legacy carriers truly want to compete, they must offer better services.
Look on seat guru for the seating chart of UAL’s 777’s and 747’s and compare them to those of the Gulf Carriers and you can see why in 1st and Business travelers choose the Gulf Carriers. UAL has eight seats per row on most of their 777 and 747 aircraft. I admit that in economy there isn’t that much difference except the entertainment part in which the gulf Carriers exceed.
Green747 – Not really a very fair comparison. You could look at the DL fleet which has a superior seat with direct aisle access on all widebodies. AA is going there. United has a much better seat on the Continental aircraft and has stopped installing the pre merger United seats long ago.
Meanwhile, Emirates doesn’t even have flat beds on the 777-300s that ply the skies. It’s 2-3-2 across and a much worse seat. It’s not fair to make a blanket statement using the worst comparison possible.
the travel experience offered by the Gulf 3 is without a doubt superior to US carriers
the question is why, as capitalism normally produces the superior product
this article to be a good read:
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Other Carriers Can’t Compete With Gulf Airlines Under The Current System — Here’s Why
FEBRUARY 18, 2015 BY LUCKY
[It is not acceptable to copy and paste an entire article from another site due to copyright law. The text of the article has been removed from this comment. You can read it here:
http://onemileatatime.boardingarea.com/2015/02/18/other-carriers-cant-compete-with-gulf-airlines-under-the-current-system-heres-why/%5D
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Also, not in this article, but from what I have been told, labor rules in the Gulf are very onerous, such as flight attendants are fired for getting pregnant, etc. (just think how Gulf women are treated in general)
I think it’s hilarious on this post that Americans, usually the home of capitalism and “get the government out of my way” is whinging about asking for government intervention about ME3. So basically you guys only prefer less government intervention when it works to your advantage and when it doesn’t work you bleat for it. (This is coming from an Aussie who is used to hearing about Qantas asking for govt intervention when profits are down).
Okay my bias is that yes I traveled on Emirates recently from JFK-DXB(stopover)-SYD and having watched Nat Geo Ultimate Airport that I can sort of figure out their economic model. Basically Emirates throws capacity at markets through the use of both capacity and frequency through their wide-bodies. Emirates don’t care if people get off at Dubai to look at the mega-malls. Their main business is to connecting passengers to other destinations. Before Emirates, for instance every UK person would have to travel to London Heathrow to fly intercontinental, now Emirates travels to most British large airports such as Glasgow, Manchester and Birmingham which is closer to where people live.