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US airline attacks on Gulf carriers: more rhetoric than consistency - but it makes for good politics
5th November, 2014
© CAPA
Airlines from the United States are escalating their rhetoric against Emirates, Etihad Airways and Qatar Airways, even suggesting the near unprecedented action of rescinding open skies agreements, which the US has with the UAE and Qatar. The refrain is loud and echoes much of the European airline resistance - but US airlines cannot seem to agree on their target.
Allegations about receiving subsidies are muddled. United CEO Jeff Smisek at one time said Gulf airlines are not subsidised, but then said they are "heavily subsidised". American Airlines CEO Doug Parker said they are "perhaps" subsidised. Delta CEO Richard Anderson bemoans the role of state-owned airlines despite having many national carriers (Saudia, China Eastern etc.) as partners n SkyTeam.
Mr Anderson said he supports policies "allowing US airlines to compete in international markets free of government distortions". But his JV partner Alitalia in Aug-2014 benefitted from its government mobilising shareholders to inject capital or restructure existing debt amounting to EUR1.2 billion as part of, ironically, Etihad taking a minority interest in Alitalia.
Are the Gulf airlines subsidised? US airlines cannot decide
The classic, and now worn, argument against Gulf airlines is that they are subsidised. But US airline managers do not have a consistent view on this topic.
United CEO Jeff Smisek, in an Aug-2013 PBS interview, made no subsidy claim, saying: "I would compare the policies of United Arab Emirates, which has done a terrific job recognising the value of transportation, of travel. They’re quite supportive. And by support, I don’t mean subsidies. I mean understanding the value and the jobs this industry drives." But at a Jun-2014 Deutsche Bank conference, Mr Smisek apparently changed his mind, saying: "The Middle East carriers are heavily subsidised by their governments."
American Airlines CEO Doug Parker is open about his undecidedness, saying in Sep-2014 (as reported by ATW): "The Gulf carriers...are encouraged by their governments to grow and are given everything they need to grow – perhaps by subsidies."
Mr Parker's oneworld joint venture counterpart IAG CEO Willie Walsh has a much clearer view. He said in 2010 of Emirates: "I just got a copy of its [financial] accounts the other day, and they look like a normal set of accounts to me. I have much more experience in dealing with Emirates, and have no doubt that they acted in a rational, commercial way in every way that I have seen."
US airlines have been subsidised, and benefit from market distortions like Chapter 11
If we take this subsidy argument at face value, it is unclear what the implication is. The US could subsidise its airlines, as it partially does through Essential Air Services and as it did after 9/11, delivering USD5 billion in direct grants and USD10 billion in loan guarantees, a package that became controversial for misappropriation and limited effects.
Airlines levy subsidies as distorting markets, yet the Big Three US airlines have benefitted (in some instances, multiple times) by Chapter 11 bankruptcy protection. This has long been a complaint of its foreign airline competitors, permitting major cost adjustments whenever their management excesses are too prolonged. To be clear, this is not a subsidy but does provide protection seldom seen elsewhere and has a distorting affect.
American Airlines for many years tried to resist Chapter 11 – an admirable aim which few analysts respected – but eventually had to join the party its peers already attended. Now Southwest Airlines, which few would label as mismanaged, faces severe competition that occurred through extraordinary bankruptcy restructuring - and the associated mergers which helped sterngthen the power of the three major full service airlines.
And, while domestic markets are typically restricted to home grown airlines, the US carriers are beneficiaries of the largest closed breeding ground in the world; they also fiercely protect even locally established airlines from having foreign investment above a threshold which is now one of the lowest in the world.
US airlines focus on Gulf airlines while ignoring subsidies to their own partners
Mr Anderson has recently been more careful with his words, saying Gulf airlines benefit from national policies like low or no taxes. References like "foreign airlines receiving government subsidies" (as Mr Anderson told a US House committee hearing in Jun-2014) are abstract and do not explicitly point fingers, even if the targets are obvious.
Mr Anderson's more focussed attack is on the topic of government-owned airlines. Yet this implies a system in which no others are government owned - or at least not liable to criticism. Mr Anderson singles out Gulf airlines while ignoring for example his own partners, many of which are government-owned, and some of which have received considerable subsidies, whereas Gulf carriers have received no known direct subsidies, aside from Emirates' seed capital at its launch.
Delta has a JV with Alitalia, which has received EUR2.7 billion in capital injections from the government. More recently, the Italian government orchestrated behind the scenes funding from private companies via political horse-trading. That proved not to be enough and the Italian government eventually gave its blessing to Etihad in Aug-2014 to take a stake in Alitalia.
As part of the Alitalia-Etihad deal, shareholders (once again mobilised by the government), agreed to inject more capital or restructure existing debt amounting to EUR1.2 billion. This would seem to conflict with Mr Anderson's Jun-2014 support of policies "allowing US airlines to compete in international markets free of government distortions".
Delta's Chinese partners, with which it says it hopes to one day have a JV, are government-owned and receive subsidies. China Southern, for example, would not have been operationally profitable in 1H2014 without subsidies. China Eastern's North American network is unprofitable but China Eastern will grow it, partially at the request (perhaps unofficially) of the government.
And there are historical examples, such as the nearly EUR3.9 billion Air France received in the 1990s, according to an Emirates study.
American and United also have partners who – unlike the Gulf carriers – are known to have received direct subsidies. American's Pacific partner Japan Airlines received from a state-controlled investment fund a capital injection of JPY350 billion (USD4 billion), which gave JAL a lower cost base than All Nippon Airways, a partner with United.
United's Star Alliance is often the most vocal against Gulf carriers but the Emirates study identified significant subsidies Star carriers have received.
Emirates study of government subsidies for Star Alliance members: 1995-2011
star.png
ource: Emirates
The Abu Dhabi pre-clearance "debate" was petty, and the US now plans more pre-clearance facilities
Norwegian Air Shuttle's attempt to secure an Irish AOC for trans-Atlantic services has brought a rare marriage of interests between US airline management and their unions (an alignment of views that should naturally be a worry for consumers).
But Air Line Pilots Association president Lee Moak differs from airline management about Gulf carriers. Mr Moak delivered a concise assessment: "I don’t have a problem with the United Arab Emirates’ government policies. Or with Qatar and Turkey, both of which are setting up super hubs… They have decided to make it their national policy to promote aviation. I can’t change what they are doing, and in fact, I envy it a little bit."
Mr Moak did have a complaint regarding the proposed (and now in service) US pre-clearance facility in Abu Dhabi. As he explained: "What I do have a problem with is what our government is doing to support those airlines to the detriment of American airlines."
The Abu Dhabi pre-clearance facility is funded about 85% by the UAE, and fulfils the American government's objective to stop potentially suspicious passengers before they enter the US. But one objection raised by Mr Anderson was that the Abu Dhabi gateway is not served by any US airline with its own metal, thus supposedly giving a foreign airline a benefit that was unavaiable to American carriers, even though there is an open skies agreement with the UAE - an argument with Alice in Wonderland overtones in its obliquity.
The facility is not necessarily of enormous benefit to the airlines concerned, even if it does support US offshore processing goals. For Etihad, the results are not yet clear and Emirates (with more extensive US services than Etihad) by contrast sees pre-clearance as a logistical challenge it would prefer not to address.
Pre-clearance requires a separate facility at Emirates' already stretched hub, and would significantly inflate minimum connection times when Emirates' objective is to reduce them even by five minutes – seemingly mere digits but a difference in traffic flows and maximising scheduling. A passenger arriving on a late inbound flight connecting to a US flight would need extra time in order to go through pre-clearance, meaning the US flight gets delayed or the passenger misses the flight.
This dispute over pre-clearance facilities seems to be a battle (an unnecessary one) the US airlines have lost. US Customs and Border Patrol said in Sep-2014 it wants to double the number of pre-clearance facilities from 15 to 30 over the next decade.
CBP aims to pre-clear 33% of all US-bound passengers by 2024. Given the relatively limited gateways that US airlines now serve internationally, much of this processing will occur at ports where they are (choose to be) absent.
The unarguable: US government needs to support its aviation industry. Gulf aviation should be a model, not casualty
Pre-clearance was a small fight that became grossly inflated at a time US carriers were not making progress on a number of domestic initiatives, including reducing taxes, which is a significant matter that could deliver meaningful impacts. The plight of US carriers for a more supportive regulatory framework is not new (and so will not be examined in detail). But Gulf carriers are accustomed to receiving far more supportive government approaches.
While this is fine, the danger some airlines incur in their rhetoric is wanting to handicap the Gulf airlines to bring them into a less conducive environment that stifles traffic and economic growth. As CAPA has observed in a European context, where the image of the mythical level playing field is often invoked, it is in no-one's interests to handicap one airline by requiring it suffer from the same disdain as the European airlines' own governments apply to them. And, as Mr Smisek remarked, "Our government clearly is not here to serve or protect in relation to the Gulf carriers… They don't have the teeth, nor do they have the desire."
First, it should be noted one of the world's largest airlines is effectively asking for protectionism.
Second, Mr Smisek seems to imply that if the US at present will not support its own airlines, it should hurt others. The objective for US airlines (and others) should be to propel their government's approaches to a more advantageous framework that grows traffic and economies. After all, the US majors do have the great advantage of conducting most of their operations within a closed market - which, in today's consolidated industry, is allowing them to generate yields and load factors, along with profits, that few other airlines in the world can aspire to. That they are highly taxed is a cost, but it is margins that count.
Airline lobbying does have its positives too
In other areas Mr Anderson has proven successful in government lobbying in positive ways. He pushed the US to accelerate visa processing of Chinese nationals, which led to an increase in Chinese visitors.
Non-immigrant US visas issued in China and year-over-year change: 2003-2013
visas_issued.png
Source: CAPA – Centre for Aviation & US Department of State
But far more remains to be done, and not just in China. The US, against the repeated wishes of airlines and airports, does not facilitate international transits without visas, which would allow the US to take on a stronger hub role on many long haul routes.
There is also the matter about the Ex-Im bank, but it is not new for US carriers to raise issue with it, which is created by the US, and not the Gulf airlines or their governments. Further, the suggestion is that Ex-Im funding for Gulf carriers is used in a minority – not majority – of aircraft acquisitions. Perhaps its greatest value is not in directly funding aircraft but rather setting benchmark prices for lessors and capital markets.
There may be genuine efforts to give US airlines the sound government policy they need and deserve. But as CAPA previously wrote when looking at the cost structure of Gulf carriers and those in the UK: talk of creating a "level playing field" often actually means no more than aiming to remove the efficiencies of a new model that has clearly shown itself to be successful.
Analysing each aspect of this new model should be the starting point for every government's travel strategy. Yearning for the inefficiencies of the past may offer a level of nostalgia, but provides a poor roadmap to the future. "It is the nature of a man as he grows older, a small bridge in time, to protest against change, particularly change for the better." (John Steinbeck)
Part II: The second part of this report will examine the fifth and sixth freedom traffic flows of Gulf carriers and what this threat is, if any, to US airlines.

 

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  • 4 months later...

:boxing:

Qatar Airways boss accuses Delta of flying 'crap' planes

 

Doha (AFP) - The chief of Qatar Airways on Monday denied his company receives subsidies and accused rivals Delta Air Lines of flying "crap" older planes, escalating hostilities between Gulf and American carriers.

Speaking at an arts conference in Doha, Akbar al-Baker said any money his airline receives from the state is in the form of "legitimate" equity and added his company's fleet of aircraft were much cleaner for the environment in comparison to Delta.

"I think Mr Anderson (CEO of Delta, Richard Anderson) doesn't know the difference between equity and subsidy. We never receive any subsidy," Baker said.

"The state of Qatar is the owner of Qatar Airways and whatever funds are put into the airline is as equity, which is quite legitimate.

"The unfortunate thing is that because they are so inefficient they want to blame us -- whilst we are very efficient -- for their failures and drawbacks.

"The issue is that they cannot stand the progress the Gulf carriers are making."

Baker was responding to claims made earlier this month by three US airlines -- Delta, American and United -- that Qatar, along with Etihad Airways and Emirates, received $42 billion in "unfair" subsidies to wrest business away from competitors.

The US carriers issued a 55-page report claiming this has allowed the Gulf airlines to wrest market share from the American airlines.

These "multi-billion dollar subsidies" had distorted the marketplace, "to the severe detriment of US employment," the American carriers claimed.

They called on Washington to raise the issue with the UAE and Qatari governments and urged changes to bilateral commercial aviation agreements with them.

The UAE, where Etihad and Emirates are based, angrily denied the claims.

UAE Economy Minister Sultan al-Mansouri was quoted as calling them "false and unacceptable" by the Emarat Al-Youm newspaper.

However, European carriers have also joined the argument.

Last week, French and German transport ministers called on the European Commission to tackle the issue of subsidies to Gulf carriers.

The French transport minister, Alain Vidalies, said the Gulf airlines were benefitting from "unfair competitive practices".

- 'Going on horseback' -

Baker's attack on Monday though was not merely limited to discussions over competition.

He also defended Qatar Airway's record when it comes to CO2 emissions and unflatteringly compared Delta's aircraft to those of his company when asked about aviation pollution.

"I am delighted that Richard Anderson of Delta is not here. First of all, we don't fly crap airplanes that are 35 years old. The Qatar Airways average fleet (age) is only fours years and one month," said Baker.

"We have ultra-modern airplanes. We have invested, my country has invested, huge amounts to make sure we are the lowest CO2 contributor in the aviation industry."

And he was also damning of those who criticised the aviation industry's record on environmental pollution.

"People who make lots of noise about CO2, people who make so much noise about greenhouse gases that are emitted from airplane engines, don't realise that they are constantly travelling by airplane, so they should start walking or going on horseback if they really mean what they say."

http://news.yahoo.com/qatar-airways-boss-accuses-delta-flying-crap-planes-131601698.html

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American Consumers and Regional State Economies the Ultimate Victims of US Carriers’ Protectionist Campaign, Cautions Emirates Airline’s President

18 March 2015

· Debunks allegations of subsidy and “stealing traffic” in white paper presented by Delta, American, and United

· Highlights economic benefits of Emirates’ services to American consumers, local and regional economies, and businesses

· Discusses the impact of selective protectionism that restrict international air transport links and trade bridges in a global economy

Washington D.C., USA, 18th March 2015: American consumers, international gateway airports, local and regional economies, and businesses will be the ultimate victims of the protectionist campaign being run by Delta, American, and United Airlines, said Emirates Airline President Sir Tim Clark, at a media briefing held yesterday in Washington DC.

The media event followed meetings with officials at the US Department of Transport, State Department, Department of Commerce, and National Economic Council, where Emirates’ President presented the airline’s perspective on Delta, American, and United’s campaign.

“All the debate about what constitutes a subsidy, what is fair or unfair competition under whose laws… are just distractions from the real issue at hand – which is that the three biggest US carriers, who together with their joint venture (JV) partners already control about two-thirds of international flights from the USA, want to further limit the international air transport choices available to American consumers, airports, local and regional economies,” said Sir Tim.

“Consumers should be asking Delta, American, and United why they are amongst the most profitable[ii] airlines in the world, but nowhere close to being ranked best airlines for service or product[iii].

“Airports, tourism boards, chambers of commerce and businesses, should be asking regulators and legislators why valuable, direct international air links - which are so important for businesses and critical for tourism, should be limited only to a few airport hubs served by the big 3 US carriers and their JV partners with whom they co-ordinate prices and capacity under anti-trust immunity.”

Allegations in US Carriers’ white paper

Sir Tim said: “The US carriers took 2 years, and goodness knows how much shareholder money, to assemble their campaign and a stack of allegations which included wrong assumptions and leaps of logic. We have reviewed their white paper and can debunk all claims that Emirates received subsidies. It will take time to assemble our own point-by-point rebuttal supported with financially and legally verified documents, which we are doing. However, we can tackle the main accusations against Emirates today.”

Allegation: Emirates benefited from $2.7b in subsidies from the government’s assumption of fuel hedging losses, and the government also provided Emirates $1.6b in letters of credit:

- Emirates’ response: That is untrue. All cash losses incurred by Emirates as a result of its fuel trades in place in 2008/09 were settled in full from the airline’s own cash reserves and not paid for by the government of Dubai. The letters of credit mentioned in the white paper were in fact provided by Emirates to our owners, ICD, in support of the fuel trades novated, not the other way round.

Allegation: Emirates benefited from $2.3b in subsidized airport infrastructure since 2004, which is a “major competitive advantage”

- Emirates’ response: Infrastructure investment is long term in its nature. The Government of Dubai has made these investments, like other progressive emerging market economies (e.g China, Singapore) with long term benefits in mind. Comparably lower airport charges or charge exemptions for transfer passengers are neither a subsidy nor discriminatory as all airlines who use the infrastructure at Dubai International (DXB) benefit.

- Emirates pays the full published rates at DXB, which are highly competitive, commercially based, and in fact higher than a number of other comparable major airports such as Kuala Lumpur (KUL).

Allegation: Gulf carriers take passengers and revenues from US carriers, and force US carriers to reduce, terminate or forego services on international routes.

- Emirates’ response: Despite what some carriers may think, air passengers are not proprietary to airlines. What Emirates is doing is competing in the marketplace - we don’t “take” or “steal” customers. We offer a great product at a competitive price, which appeals to the consumers who choose to fly with us. The three US carriers’ obsession with market share makes all the more apparent what they are really after: not competition, not open markets or Open Skies, but outright government directed market allocation.

- Considering there is hardly any overlap between Emirates’ route network and that of Delta, American or United, this campaign by the US carriers is really about them protecting the revenue they earn from their JV partners. But why should the US government defend the interests of the European JV partners of these 3 US carriers? For that matter, what is the US national interest in forcing passengers to inconveniently connect in Frankfurt, Paris, Amsterdam or London – while depriving them the right to choose more efficient routing with a higher level of service?

The positive economic impact of Emirates’ services to USA

Emirates has progressively, and based on rational commercial demand, grown its services to the USA. From seven flights a week between New York JFK and Dubai in 2004, Emirates today flies 84 flights each week from nine USA gateways – Boston, Chicago, Dallas/Fort Worth, Houston, Los Angeles, New York, San Francisco, Seattle, and Washington DC.

The estimated annual economic value of Emirates’ services to these airports and their surrounding regions is US$2.8billion[iv].

Our flights carry travelers from the US to 56 destinations in Africa (18 points), Asia Pacific (25 points) and the Middle East (13 points) which are not served by any American carrier, and we do this with just one plane change in Dubai. The high average seat load factors of over 80% in 2014 on our US flights demonstrate the customer demand for Emirates’ services.

There has been a 503% growth in US exports to the UAE since Emirates started services to the USA in 2004, and today the UAE is the #1 market for US exports in the Middle East. Our flights between the US and Dubai have carried over 470,000 tonnes of high value goods since 2004.

In addition, the vital air links Emirates provides from the US to the many developing markets which are not served currently by American carriers, facilitates US foreign trade and opens up new markets for US exporters, helping to further drive American economic growth, trade and job creation.

Selective protectionism in a global economy

Rather than harming US interests as the white paper prepared by Delta, American, and United claims, Emirates’ services have increased consumer choices, filled a gap in the market by taking travelers to destinations not served by their home carriers, and helped contribute to US economies, trade and tourism. Importantly, Emirates also provides a much-needed competitive alternative to the three airline alliances with antitrust immunity permitting them to keep fares artificially high.

In January, an independent paper published by US economists and academics[v] examined the impact of gulf carrier competition on US carriers’ passenger numbers and fares in international route markets and found that “gulf carrier entry stimulated accelerated market growth” on US-Middle East traffic volumes, and concludes in respect of other markets that “gulf carrier entry has likely resulted in a more competitive market-based equilibrium that indicates, on a global basis, a net gain to society.”

Sir Tim said: “One can argue that the 3 largest US carriers themselves enjoy a number of unfair advantages including access to the world’s largest aviation market in their own backyard, anti-trust immunity for their JVs, Chapter 11 and pension relief legislation, various types of support from individual US States and fuel tax breaks. We could draw up a full list and create a dossier similar to their white paper. But again, that is really not the crux of the issue, which is consumer choice, and the benefits of direct international air links for the many US stakeholders outside of the Delta-American-United coalition.

“Last year a record 75 million international visitors came to the US, stimulating the economy. President Obama’s goal is for that figure to rise to 100 million by 2021, and Emirates is pleased to be helping make that goal a reality.

“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 interest 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, and will negatively impact the many thousands of US businesses and industries reliant on efficient air transport links to be competitive in a global marketplace.” -

ends

US DOT T-100 International Data (YTD Sep-14). Data quoted includes all Delta, United and American/US Airways’ operations (incl. regional operations, operated as United Express, Delta Connection, American Eagle and US Airways Express). JV partners include: Delta (Air France/KLM, V-Australia, Alitalia, Virgin Atlantic), American (British Airways/Iberia, Qantas, JAL), United (Lufthansa, Swiss, Brussels, Austrian, Air Canada and ANA).

[ii] Airline Business 2014 World Airline Rankings (2013 figures) show Delta was the most profitable airline in the world ($10b in net profit including a one-time $8b income tax gain), and United ($571m net profit) ranked in the top 10. American Airlines, after emerging from the US Airways merger in 2013, reported $4.2b in full year profits for 2014.

[iii] Skytrax 2014 World’s Best Airline Survey – the world’s largest non-profit, and non-subscriber based consumer survey on airline service - ranked Emirates #4, while Delta, United and American were ranked #49,#53 and #89 respectively.

[iv] According to economic impact studies from respective airports or regions

[v] “The Impact of Gulf Carrier Competition on US Airlines” – Martin Dresner (University of Maryland), Cuneyt Eroglu (Northeastern University), Christian Hofer (University of Arkansas), Fabio Mendez and Kerry Tan (Loyola University Maryland)

Fonte: emirates.com

 

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Stop trying to ground the Gulf airlines

http://www.ft.com/cms/s/0/522738cc-cbcf-11e4-aeb5-00144feab7de.html#ixzz3UlAQ6OPG

 

March 18, 2015 1:14 pm

John Gapper

 

They have come out of nowhere to steal a march on older carriers

 

Nicole Kidman looks very relaxed in Etihad Airways’ new advertisements, as she floats gently down on to a bed in its three-room Residence first-class cabin — a mere $20,000 to fly Abu Dhabi to London. The same cannot be said of rivals to Etihad, Emirates and Qatar, the Gulf airlines that are roiling the business of air travel.

 

 

The bosses of Emirates and Etihad flew to Washington this week, presumably in comfort, to rebut complaints from US airlines that they compete unfairly. American Airlines, Delta and United did better in the past, when global competition was muted and Americans flying abroad were sufficiently loyal, or unworldly, to book business-class seats that did not lie flat.

 

 

US airlines are not the only ones feeling sore. The French and German governments, prodded by Lufthansa and Air France-KLM, have complained to the EU. Lufthansa is unhappy about what it calls “unprecedented cut-throat competition in the international marketplace” — the sort of thing that benefits consumers.

 

 

Ah yes, consumers. In their 55-page “white paper” attacking the Gulf airlines, the US airlines only find space for that word once, in the opening passage about the original aims of the Open Skies deal that allows Gulf airlines to fly to cities such as New York, San Francisco and Washington. After that, they discuss passenger flow and traffic quite a lot, but the C word is absent.

 

 

What about workers? This word recurs frequently because Gulf airlines are not unionised, whereas US airlines are. The document includes in its $42bn of “unfair subsidies” $3.1bn for lower wages caused by the fact that the Gulf states ban unions. This is a peculiar notion, given that only 7 per cent of US private-sector workers are unionised.

 

 

This Washington lobbying sounds distinctly like companies that used to provide mediocre services in ageing aircraft on international flights, and only responded to competition belatedly, complaining about more energetic rivals. Willie Walsh, chief executive of IAG, owner of British Airways and Iberia, wrote recently of “protectionism rearing its head again”.

 

 

Customers enjoy what the Gulf airlines offer. Many Americans now connect through the Gulf on route to the Indian subcontinent and Southeast Asia, rather than paying more to fly direct on a US airline. The Gulf carriers have sucked business from European hubs — Dubai has surpassed Heathrow as the busiest international airport.

 

 

They have done so fast, Etihad was only founded in 2003, by exploiting their natural advantages brilliantly. The first is location. The Gulf sits at a crossroads on the “new Silk Road” between east and west, and has emerged as a continental hub for sub-Saharan Africa. The only geographical crossroads the US forms is with itself.

 

 

The second advantage is starting from scratch, without the legacy practices the US airlines and European flag carriers face. The Gulf carriers are the second wave of the low-cost revolution started by Southwest Airlines in 1971 after a failed legal campaign to block it by US airlines including Continental (now part of United), for skirting federal regulation.

 

 

The Gulf airlines have taken the essentials of that model — newer aircraft, flying from airports with lower fees direct to smaller cities rather than through hubs, with better service — and applied it globally. They are the most eager customers of Boeing and Airbus for the latest, most fuel-efficient models of large wide-body jets such as the Boeing 777 and the Airbus 380.

 

 

They have come out of nowhere, now followed by Turkish Airlines, to steal a march on older airlines. “There are always disrupters who change the game and make the incumbents squeal. There might be aspects of unfair competition at the margins but it misses the central point that they came up with a more efficient way of doing things,” says Jonathan Wober, financial analyst at the Capa Centre for Aviation.

 

 

Their third advantage is being owned by determined, autocratic governments that want to turn their economies into trading hubs rather than simply living off oil and gas wealth. Dubai, the poor cousin of Abu Dhabi, was the first to try and gained hugely, with aviation and related activity such as tourism now forming a quarter of its economy.

 

 

Has it done so unfairly? The evidence is flimsy. Ignoring the alleged unfairness of Emirates not having to negotiate with unions, the US airlines’ came up with about $5bn of “subsidies” over a decade — largely the Dubai government assuming lossmaking fuel hedges in 2009 (a claim dismissed as “tosh” by Tim Clark, Emirates’ chief executive) and $2.3bn attributed to low airport charges.

 

 

The latter is a head-scratcher. Yes, it costs nearly 10 times as much to land a Boeing 777 at Heathrow as at Dubai, and nearly six times as much at Chicago O’Hare. But Dubai has a lot of desert, and can build a gigantic airport when it feels like it. This makes it cheaper, but so what? Does the rest of the world complain that the US has plenty of arable land and shale gas?

 

 

Even taken at face value, the figures are hardly game-changing. Over a decade, $5bn is $500m per year — about 2.3 per cent of Emirates’ operating costs in 2014. The truth is that most of the Gulf success stems not from illicit subsidies but from innovation, trading on their advantages and making a bet that paid off. Good luck to them.

 

 

john.gapper@ft.com

 

 

 

Copyright The Financial Times Limited 2015.

 

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U.S. to chart new territory in Gulf airline subsidy review

BY JEFFREY DASTIN

WASHINGTON Wed Mar 18, 2015

(Reuters) - The Obama administration said Wednesday that it is in the early stages of studying claims that Gulf airlines have received market-distorting subsidies, a review involving uncharted territory for the U.S. government.

No international trade rules or precedent by the United States exists for addressing airline subsidy claims, presenting a challenge for the administration as it determines how to proceed, a person familiar with the matter said. U.S. airlines contend that Gulf carriers can lower prices and offer more amenities on newer planes because of state subsidies.

These issues do not fall under World Trade Organization rules but rather under bilateral "Open Skies" agreements that authorize commercial flying between countries.

The agreements are silent on how to handle most subsidy claims, the source said. Yet alleged subsidies of more than $40 billion to Gulf airlines make the claim the largest that the administration has encountered and must be taken seriously, the source added.

Last week, the administration asked U.S. airlines some 20 questions about the allegations.

"The (U.S. government) interagency team did in fact ask the U.S. airlines and their consultants several technical and clarifying questions about the data and information contained in their report," U.S. Department of Transportation Press Secretary Ryan Daniels said in a statement, confirming a Reuters report.

"However, we are in the early stages of thoroughly reviewing this matter in close coordination with our interagency partners," he said.

The Obama administration has filed trade complaints on issues ranging from China's imposition of extra duties on American cars to India's ban on certain U.S. agricultural goods to allegedly protect against avian influenza.

Aviation also has been at the center of a decade-old dispute in which the World Trade Organization found that planemakers from the United States and the European Union had received illegal subsidies.

But Geneva-based watchdog's rules do not apply to air traffic rights or airline services, although it keeps these under review broadly.

Meanwhile, the dispute between U.S. and Gulf airlines has escalated.

On Tuesday, Emirates airline President Tim Clark promised to rebut the allegations, while Etihad Airways Chief Executive Officer James Hogan said the company received loans, not subsidies, from its government shareholder. Both had arranged meetings with Obama administration officials.

Delta Air Lines (DAL.N), United Airlines (UAL.N), American Airlines (AAL.O) and their unions on Wednesday called on the administration to request a freeze on additional Gulf-airline flight departures to the United States.

(Additional reporting by Arshad Mohammed in Washington and Tim Hepher in Paris; Editing by Joseph B. White and Ken Wills)

http://www.reuters.com/article/2015/03/19/us-airlines-competition-regulator-idUSKBN0MF07D20150319

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Enquanto isso....

 

According to the GDS, Effective 07JUL15, Emirates will begin a second daily flight to Seattle using a B777-200LR. The schedules are:

EK 227 DXB SEA 0315 0655
EK 228 SEA DXB 0940 1055+1

With this Emirates will have 91 weekly flights across 9 destinations in the USA

 

According to the GDS, Effective 01SEP15, Emirates will begin daily flights to Orlando using a B777-200LR. The schedules are:

EK 219 DXB MCO 0350 1140
EK 220 MCO DXB 1420 1230+1

This will be Emirates' 10th destination in the USA with 98 weekly flights.

 

http://www.airliners.net/aviation-forums/general_aviation/read.main/6351139/

 

 

 

Posted: 4:42 p.m. Tuesday, March 24, 2015

Orlando International Airport announces direct flights to Dubai

 

Orlando International Airport announced Tuesday afternoon that it will offer direct flights from Orlando to Dubai.

Airport officials held a press conference Tuesday afternoon to make the announcement.

For the first time, the airport will offer nonstop flights to Dubai on Emirates airline.

Raw: OIA announces direct flights to Dubai

"In terms of economic impact this means just north of $100 million to our community," Chairman Frank Kruppenbacher said.

When the service begins in September, a Boeing 777 will fly from OIA to Dubai once a day.

"It offers up regions that have not been efficiently opened for us without taking multiple multiple flights," Kruppenbacher said.

A coach seat on the flight will begin at around $1,100, officials said.

http://www.wftv.com/news/news/local/orlando-intl-airport-announces-direct-flights-duba/nkdfy/

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Agora é a vez das ME3 (Etihad) acusarem as americanas de subsídios e outros incentivos:

 

AMERICA’S LARGEST AIRLINES RECEIVED BENEFITS WORTH US$71.48 BILLION, NEW STUDY SHOWS
CAPA
15th May, 2015
Research commissioned by Etihad Airways, the national airline of the United Arab Emirates, has quantified a range of government and court-sanctioned benefits and concessions received by the three biggest US carriers, Delta Air Lines, United Airlines andAmerican Airlines Group, and other airlines with which they have merged.
These US airlines have received benefits valued at US$71.48 billion, more than US$70 billion of which has been since 2000, enabling the nation’s three largest carriers to transition from the verge of bankruptcy to today’s industry leaders, each achieving multi-billion dollar profits.
Last year, the three big US carriers generated collective net profits of US$8.97 billion, equivalent to 45 per cent of the total US$19.9 billion profits achieved in 2014 by the global airline industry. The trend has continued into 2015, with all three major US airlines announcing strong net profits for the first quarter.
The international consultancy The Risk Advisory Group, which conducted the research for Etihad Airways, identified that the majority of benefits which accrued to Delta, United and American came from restructuring under Chapter 11 of the US Federal Bankruptcy Code, yielding them at least US$35.46 billion, and additional pension fund bailouts totalling US$29.4 billion from the US Government’s Pension Benefit Guaranty Corporation.
Etihad Airways has consistently denied claims by Delta Air Lines, United Airlines and American Airlines that it received subsidies, and has stated publicly that it has received equity and shareholder loans from its sole shareholder, the Government of Abu Dhabi, the largest emirate and capital of the UAE.
Releasing the findings by The Risk Advisory Group, the General Counsel and Company Secretary of Etihad Airways, Jim Callaghan, said today: “We do not question the legitimacy of benefits provided to US carriers by the US government and the bankruptcy courts.
“We simply wish to highlight the fact that US carriers have been benefitting and continue to benefit from a highly favorable legal regime, such as bankruptcy protection and pension guarantees, exemptions from certain taxes, and various other benefits. These benefits, which are generally only available to US carriers, have created a highly distorted market in which carriers such as Etihad Airways have to compete.”
Mr Callaghan said the figures produced by The Risk Advisory Group were conservative, quantifiable and credible, and obtained from public records and statements.
Mr Callaghan referred to a 2011 interview, published by America’s National Public Radio, in which a former Vice President of Continental Airlines, Pete Garcia, was quoted as saying: “Bankruptcy, for the airline industry in particular, is just a way to refinance the business. It is a financial move to keep you in business and give you time to renegotiate with your lenders.”
The Risk Advisory Group identified the largest beneficiaries of Chapter 11 restructuring and bailouts from the Pension Benefit Guaranty Corporation as:
United Airlines, with combined benefits estimated at US$44.4 billion;
Delta Air Lines with combined benefits estimated at US$15.02 billion; and
American Airlines with combined benefits estimated at US$12.05 billion.
Of these figures:
United achieved one-time bankruptcy debt relief totalling US$26 billion, and pension termination benefits totalling US$16.8 billion;
Delta Air Lines achieved bankruptcy debt relief totalling US$7.9 billion, and pension termination benefits totalling US$4.55 billion; and
American Airlines achieved bankruptcy debt relief totalling US$1.56 billion, and pension termination benefits of US$8.08 billion.
These figures include restructuring and bailout benefits achieved by other US airlines, since absorbed by Delta Air Lines, United Airlines andAmerican Airlines.
Mr Callaghan said the current claims by United Airlines, Delta Air Lines and American Airlines that they were being harmed by Etihad Airways were baseless, and an attempt to obstruct higher-quality competition.
“There is no evidence whatsoever of any harm caused by Etihad Airways to any of the three big US airlines,” Mr Callaghan said.
“The US Open Skies policy has delivered more choice and better service for millions of consumers, more airline access to and from America, and record profits for the biggest airlines in the US. It is time to refocus on the real issue here – that the Open Skies policy is delivering the benefits it was designed to deliver, and that everyone is a winner.”
For more information about Etihad Airways’ campaign to keep the skies open, please visit: www.KeepTheSkiesOpen.com
This report includes original source company information.
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Todo empresário abomina o subsidio dos outros. Pois prejudica a livre concorrência, o capitalismo ético, bláblábláblá quando são os outros que recebem subsídios...

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Fácil resolver,

Proibam os vôos de cada uma para o pais dos outros, e pronto..... aguardem quem sucumbir primeiro.

Todas recebem subsídios, evidentemente, mas as USA datam de 1920, começaram na sua maioria com aventureiros, arriscando o pescoço. As do ORIENTE têm em média 30 anos, vão me falar que todo este patrimonio não veio de ajuda do estado e que tem altos subsídios?

Deveria de ser assim, toma-lá-dá-cá, voa uma vez para o meu pais, tenho o direito de voar para o seu uma vez também..... se te dou o direito de voar mais que isto, tenho o direito de proibir a hora que bem entender, a não ser que me dê muita vantagem.

 

Abs,

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E a guerra está esquentando. JetBlue e Hawaiian são a favor do Open-Skies "doa a quem doer".

 

http://centreforaviation.com/analysis/hawaiian-airlines-and-jetblue-combine-to-oppose-the-big-3s-gulf-campaign-and-challenge-closed-jvs-239592

 

E o CEO da HA sobre a 3 majors americanas: "elas não nos representam".

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Eu sou a favor do open skies, acho que com concorrência todos saem ganhando, os EUA estão provando o que fizeram com o mundo todo, eles querem ceus abertos desde que isso só beneficie a eles. Mas qual é o papel internacional da Jetblue ou da Hawaiian pra falarem alguma coisa a respeito?

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Eu sou a favor do open skies, acho que com concorrência todos saem ganhando, os EUA estão provando o que fizeram com o mundo todo, eles querem ceus abertos desde que isso só beneficie a eles. Mas qual é o papel internacional da Jetblue ou da Hawaiian pra falarem alguma coisa a respeito?

A B6 tem uma operação robusta no Caribe e com os A321NEO não duvido chegar em alguns cantos do Brasil. Já a Hawaiian tem crescido na região do Pacífico, com vôos para HND, KIX, PEK, CTS, ICN, HKG, apesar de terem cancelado Fukuoka e Taipei.

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A B6 tem uma operação robusta no Caribe e com os A321NEO não duvido chegar em alguns cantos do Brasil. Já a Hawaiian tem crescido na região do Pacífico, com vôos para HND, KIX, PEK, CTS, ICN, HKG, apesar de terem cancelado Fukuoka e Taipei.

 

Tudo bem, mas se analisarmos, as ME3 não concorrem com HA nem com a B6, a primeira porque DOH/AUH/DXB-HNL nonstop não é interessante, alem de ser um voo extremamente longo, quem faria HNL-DXB-SIN/CDG/LHR...? É bem mais perto conectar em LAX/SFO(europa)/TYO/ICN(asia) Existe um fator distancia bastante forte pesando contra as ME3.

Sobre a B6, é meio claro.. ela não tem planos para wides, então no máximo chega ao norte da America do Sul ou Oeste Europeu(partindo de NY), novamente, ninguém vai fazer MAO-DXB-JFK ou JFK-DXB-LHR podendo economizar muitas horas de viagem.

 

O que tentei mostrar(não sei se meus exemplos foram os melhores possíveis) é que as ME3 afetam muito mais AA/DL/UA que possuem uma malha internacional mais complexa e tentam chegar nonstop(ou com uma escala) a maioria dos destinos distantes dos EUA(SIN/BKK/SYD/JNB...) do que a HA/B6 que tem um foco mais local e de voos curtos. Então realmente quem deve reclamar são essas majores.

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