You might think that with a new, anti-globalist administration in the US, foreign airlines might want to tiptoe carefully until they figure out the lay of the land. Emirates apparently didn’t get that memo. It has just announced that it will begin flying between Newark and Athens less than two months from now. Either Emirates is incredibly stupid or it’s decided to play mind games. Either way, the airline is most certainly playing with fire.
It’s been nearly two years since the big three US airlines laid out their case against the Middle East carriers. The airlines used forensic accounting to prove massive subsidies which, in their eyes, created unfair competition. The three airlines asked the US government to act and stop these Middle East carriers from having an unfair advantage.
Though there was a lot of talk about how this was hurting competition between the US and India or the Eastern US and Southeast Asia, my early assumption was that this was really about fifth freedom flights. A fifth freedom flight is where an airline has a flight start in its own country, go to a second country and then continue on to a third country carrying local traffic between the second and third country.
Until yesterday, Emirates had done this on only one route into the US: Dubai-Milan-New York/JFK, but that has been considered the canary in the coal mine with more expected to follow. It was possible to consider a future where Emirates would route aircraft from Dubai via many Asian and European destinations into the US. The much lower Emirates cost structure combined with relative regulatory freedom meant that it was a seemingly real threat. And it’s the only thing about the Middle East carriers that would truly terrify me were I running a US airline.
There has been plenty of jockeying since that time, trying to push the US government into action. But short of a tepid decision to enter into talks, nothing really happened. The US carriers received a cool reception at best. But that was under the last administration. Now we have Trump.
Though nobody knows what Trump is going to do or what he truly believes, this fight against the Middle East carriers seems like something he might like. After all, he has professed to be a huge fan of protectionism and isolationism. This fight would be right up his alley, if it can be considered important enough to attract his attention.
If you’re Emirates and you understand the situation, how would you proceed? Would you stay quiet and try to avoid upsetting the apple cart? Or would you go Putin-style. Take your shirt off, jump on a horse, and try to combat strength with strength of your own. Emirates says…
This new route between Newark and Athens comes only days after Trump was sworn in. The timing seems really odd.
The new route will start in less than 2 months on March 12, not even close to high season. Delta begins seasonal service from JFK on April 14 while United’s flight from Newark doesn’t begin until May 24. Why? Because Athens is a huge leisure market and does well in the summer, but the rest of the year it is not a good market. Now Emirates is going to come in and launch a year-round flight with absolutely no feed on either end despite what Emirates claims.
According to the travel agent note the airline sent out, “This flight will be facilitating convenient onward connections beyond Athens to the Greek islands, including Corfu, Santorini and Mykonos as well as select European destinations such as Bucharest, Sofia and Tirana.” I tried to look up connections into Santorini and Mykonos, and while there are Aegean flights that connect, they didn’t price for me on a single ticket. So… no feed. And even if they do get some, it’s still highly seasonal.
Further, the times aren’t great (it gets into Newark at 10pm with a return leaving for Athens near midnight). And then there’s Newark itself. Emirates doesn’t fly there today, so it has to open a whole new station to support this flight.
I can’t imagine any scenario where this flight is profitable on its own year-round. It seems likely that there will be additional assistance here somewhere, maybe from the Greeks? The President of Emirates, Tim Clark, started his statement with “The Greek Government and Athens International Airport approached Emirates some time ago to consider serving the route between Athens and New York. After careful review, Emirates concluded that extending one of our Dubai-Athens flights to Newark would be commercially and operationally feasible.”
By making this move, Emirates is giving the US airlines fresh blood in the fight, and it’s challenging Trump to step up. Maybe Trump will respect this kind of strength. We know he likes it in Putin. Or maybe this will be the spark to encourage him to shut down the long term plans of the Middle East carriers. It could go well or it could go very poorly. Apparently Emirates thinks this is a wise gamble.
