US review of Gulf carriers should establish facts vs fancy | ATW Editor's Blog
ATW Editor's Blog
US review of Gulf carriers should establish facts vs fancy
by Karen Walker Apr 19, 2015
As the campaign led by American Airlines, Delta Air Lines and United Airlines sped from secret briefings in Washington DC to the broad media and loud finger-pointing, one thing became clear. The US carriers are eager for a fight against Emirates, Etihad and Qatar and their state owners. So if there’s to be a bruising, then the facts should be established in as far as they are directly relevant to what is or is not fair competition.
The US government review, therefore, is a welcome step. But its fact-proving (or dismissal) must be a fully public and transparent process. All parties and stakeholders should be given full access to the evidence, and both sides be given a full, fair and equal hearing.
Most important, regulators must not look at this as an American issue. The CEOs of the three US carriers, backed by labor groups, are painting this as an issue about American jobs. That’s a ploy to gain local support in what is indisputably a global issue.
America’s draconian restrictions on foreign ownership of US airlines and prohibition of cabotage mean that American airline jobs benefit from a very high level of government protection – not just from the Gulf carriers, but from any foreign airline that might wish to compete within what is still the world’s largest commercial aviation market.
Those American benefits extend to the hugely important and lucrative transatlantic market, where each of the three US carriers has antitrust agreements with Europe’s largest airlines.
It is against those significant and highly advantageous terms that the Gulf carriers have had to establish themselves from scratch and compete in the global market. Yes, the Gulf carriers have injected new competition into the US market, but only on international routes, the vast majority of them in markets the three American carriers were not willing to serve. For as long as American, Delta and United were focused on fighting each other in the higher-yield US domestic and transatlantic markets, their interest in India and the sub-Indian continent was weak to non-existent. They regarded it as an operationally expensive and difficult market with no clear return on investment.
The Gulf carriers viewed it differently; they saw an emerging market gap and were willing to take a risk.
Even if the US campaign somehow manages to roll back the US Open Skies agreements with the UAE and Qatar – which would be a travesty – or curtail the growth of US city destinations served by the Gulf carriers, regulators should carefully examine evidence that the US carriers would, indeed, step up and operate to those sub-Indian destinations.
Regulators could note, for example, the recent behavior of Delta which, having been given the Seattle-Haneda route on a basis that locked out competitors, blatantly abandoned the service.
If the Gulf carriers are locked out of the services they currently bring to US passengers, what’s to say the US airlines won’t sit back and say, ‘mission accomplished’?