Clash of the carriers: bad news for pax?

GULF carriers have
responded to US
carriers’ attempts to limit
their operations to the States,
saying protectionism would
restrict competition and be bad
news for customers.
But US carriers argue that
Gulf carriers, which receive
government subsidies, are
creating an uncompetitive
environment. Delta Air Lines,
American Airlines Group, and
United Airlines have lobbied
the Obama administration to
renegotiate the existing openskies
agreements with the UAE
and Qatar.
The airlines released a
contentious report, Restoring
Open Skies, outlining that
Etihad Airways, Emirates
Airline and Qatar Airways
have received US$40bn
(R494bn) in government
subsidies, which are “fuelling
a massive expansion in the
Gulf carriers’ fleets – and, in
the case of Etihad and Qatar,
their continued existence –
and seriously distorting the
commercial marketplace to
the detriment of US and thirdcountry
airlines”.
Emirates president, Sir Tim
Clark, has reacted to the
White Paper, saying it is based
on “wrong assumptions” and
“leaps of logic”. “Open skies
between the USA and UAE
have been hugely successful
for US consumers, trade
and the overall economy.
There should be no reason
for the US government to
do a freeze or a U-turn just
to protect the interests of a
narrow few and their European
JV partners, especially not
when the restriction or denial
of competitive choice on
international routes will be to
the detriment of consumer
interest.”
James Hogan, president and
ceo of Etihad Airways, says
open skies has been “a model
of success” and to limit this
would be to limit consumers’
choices. “No US carrier flies
into Abu Dhabi. There are
very few US carriers operating
to where we do in the Indian
subcontinent, in SE Asia or in
the wider Middle East.”
Any restriction of competition
is bad for the consumer,
says Jim Weighell, director
of operations Southern Africa
for the GBTA. He says, with
this report, US carriers are
attempting to set definitions
of ‘fair competition’ based
on their own criteria. “The
likely effect of any restriction
to the open skies policy
would technically be a form
of ‘re-regulation’ favouring
incumbent airlines.” He says
it would limit competition on
the route, which is bad for
customers.
Chris Zweigenthal, ce of
Aasa, says: “SAA operates
two daily direct services to the
US and there are many daily
operations via the EU by SAA
and its alliance partners. If
there is huge demand, there
are sufficient frequencies
available to increase flights to
the US and the EU by the nonGulf
carriers.”
However, Jim says if the US
carriers were successful and
their subsidisation criteria were
to be applied globally, it could
be found that SAA would also
be deemed to be receiving
state subsidisation.