I’m sure you’ve all just been dying to get an update on the US-Middle East airline fight, right? There’s little to discuss of substance, but if you’re looking for fireworks, nothing beats what’s happening across the Pond. The European carriers are really starting to take sides, and you won’t be surprised to see which airlines support which position.
In the US, the fight slowly continues to move forward. Since my last post on this subject, the US carriers did get the Departments of State, Transportation, and Commerce to take a deeper look into the issue. A public comment period is now open, so feel free to have your say as the government decides whether or not to take action.
Meanwhile, Middle East carriers have been challenging US carriers to show proof of these alleged subsidies. The US carriers have now responded. If you feel like wasting an entire weekend, you can sift through the more than 1,000 pages of subsidy-proving documents that have now been posted. It’s just backing documents to support the claims that have already been made and nothing new.
The numbers may be there, but this is still going to be a long, uphill battle for the US carriers. So, let’s come back to that down the road. In the meantime, take a look at Europe where airlines are starting to take sides. It’s getting ugly. The Association for European Airlines (AEA) is a trade group representing European carriers not unlike Airlines For America (A4A) here in the US.
The AEA represents legacy carriers big and small within Europe. You won’t find easyJet or Ryanair as members, but you’ll find everything from Air Berlin to British Airways. Or, uh, I should say you used to be able to find that.
Air Berlin just quit the group, and nobody should be surprised. Other members of the group, notably Air France/KLM and Lufthansa Group, have been hostile toward the gulf carriers and want policymakers to tighten the screws, just as the big three in the US are asking. The AEA has generally followed that line of thinking. Money-losing Air Berlin, however, almost certainly wouldn’t exist if not for the continuous financial injections from Etihad, so there’s no doubt it supports its big brother. I imagine we’ll see the same from Alitalia, which is now another Etihad-supported zombie airline. But Air Berlin isn’t the first to make this move.
Last month, British Airways and Iberia (jointly owned by IAG) quit the AEA. Among the big 3 in Europe, IAG sees things very differently. Willie Walsh, CEO of IAG, has long been a supporter of letting the market decide what lives and what dies. And if the European airlines can’t compete, then that’s their problem. He has impressive results to show for it, even turning Iberia into an airline that isn’t drowning in a sea of red ink. Recently, Qatar Airways even took a 10 percent stake in IAG.
The AEA is falling apart and that’s because the airlines in Europe simply don’t agree on a way forward. In the US, you have that as well but it’s quieter. The big three are unified in their feelings that gulf carriers need to be restricted, and Southwest is likely ambivalent. The airlines that are most likely to go against the grain are smaller: JetBlue, Virgin America, and Alaska. In general, those airlines that a) benefit from gulf carrier traffic without being hurt by it, or b) are partially owned by a gulf carrier, are going to support open skies for all. That’s going to create big divides in the airline community, and we already see the battle lines forming.
