USA: Airline Wars Flare Between US Airlines And Gulf Airlines

Late last month, Delta Air Lines posted a video on its public relations website attacking Emirates, Etihad, and Qatar Airways.

Now, the airline's rivals have hit back at Delta with an economic impact study and an attack ad of their own.

The long-running feud between America's three legacy carriers and their Middle Eastern rivals continues to be most the volatile and heated business dispute in recent memory.

Here's the shorthand version of the feud: Since 2015, American, Delta, and United Airlines have been complaining about competition from three huge and fast-growing Middle East-based rivals — Emirates, Etihad, and Qatar Airways (the ME3).

The US3's position, which is succinctly explained in Delta's 15-minute-long video, argues that the ME3's growth has been fueled by more than $50 billion in subsidies over the past decade. As a result, they believe this allows the ME3 to flood the international market with un-sustainably low prices designed to drive out competitors and threaten the job security of US aviation workers.

They're taking our jobs, they're taking our markets, and over time, they want to take over international flying, Delta CEO Ed Bastian said of the ME3 in the video.

Delta and its allies believe the playing field is inherently unbalanced and that it is unfair to expect a private company to compete against the resources of a national government.

As a result, they also say the ME3 are in violation of the Open Skies agreements that govern air travel between the US and 120 nations including the United Arab Emirates and Qatar.

The US3 has asked the Trump Administration to re-examine the Open Skies agreements with the UAE and Qatar while prohibiting any further expansion into the US by the ME3.

In reaction, Emirates released a study on Monday claiming the airline's activities generated $21.3 billion worth of economic impact in the US during 2015.

The report by Virginia-based consulting firm Campbell-Hill Aviation Group posits that Emirates' activities, directly and indirectly, supported more than 104,000 jobs in the US that year.

Emirates, while closely associated with the government of the Dubai, has always maintained that it is an independent profit driven enterprise. In an interview with the Business Insider earlier this year, the airline's president, Sir Tim Clark, called the US3's unrelenting campaign against his company as "infantile".

Delta Air Lines declined to comment on the matter and instead referred Business Insider to the Partnership for Open & Fair Skies, the lobbying organization representing the US3 in the dispute.

Emirates’ new study is based on fundamentally flawed assumptions and is simply meant to distract from their trade cheating behavior, the Partnership's chief spokesperson, Jill Zuckman, said in an emailed statement.

Economists have already empirically demonstrated that the presence of Gulf carriers fails to meaningfully stimulate new demand in U.S. markets."

Also on Monday, US Airlines for Open Skies (USAOS) released a new 30-second attack ad calling for the Trump Administration to ignore the US3's demands which they characterize as merely an attempt to limit competition.

The group whose members include JetBlue, Hawaiian Airlines, FedEx, and Atlas Air believe the US3's actions put US airlines operating in the UAE and Qatar at risk for retaliatory actions.

In fact, the USAOS believes the US3's campaign will destabilize the whole network of more than 100 Open Skies agreements that support hundreds of thousands of US jobs while saving consumers $4 billion annually in airfares.

The presence of USAOS represents a faction of the US aviation industry that operates in an environment very different from the nation's three remaining legacy carriers.

FedEx and Atlas Air are two of the world's largest international freight carriers with major operations in the Middle East and around the world.

Although they do depend Open Skies agreements to do business around the world, they are not in direct route competition with the ME3.

While most major US airlines, including American and Delta, benefit from direct business dealings with the ME3 and their subsidiaries, JetBlue is the most open about it.

The New York-based boutique airline is a major partner for Emirates and takes on much of the airline's connecting traffic within the US.

In 2016, JetBlue was awarded a Fly America Act contract for all US government travel to Dubai as well as between New York and Milan, Italy.

Since JetBlue does not operate any long haul international routes outside of the Americas, all of its Fly America passengers will actually travel on Emirates planes.

In response to USAOS, Zuckman said:

Our opponents have chosen to stand with foreign airlines that want to kill U.S. jobs and undermine international trade agreements. It’s outrageous and offensive that any American business would defend these foreign trade cheaters over the livelihoods of over 1.2 million American workers. We hope that President Trump and his administration will see through this misleading campaign and enforce our trade deals to protect American jobs.


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