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If you have to fly from New York to New Delhi on April 1, you can book through one of the three big U.S. airlines for at least $1,100 round trip. Or you can take one of Emirates’ luxurious Airbus A380s for less than $900.
That choice is at the heart of the complaint raised by Delta, American and United Continental with U.S. regulators. They say handouts from Persian Gulf governments let the region’s major carriers offer artificially low prices and flood the market with wide-body aircraft that have far more seats than could be filled from their home markets alone.
Emirates President Tim Clark called the assertions “bluster and flimflam,” Etihad Airways said it’s reviewing the evidence, and Qatar Airways had no comment. Clark travels to Washington this month to present his rebuttal. All three Gulf airlines have long denied getting subsidies from their governments.
As the U.S. reviews the complaints, here are some questions and answers for fliers.
Aren’t cheaper fares and more service good for consumers?
The three Gulf carriers offer an average of 25 daily round trips to the U.S., to cities including New York, Washington, Los Angeles and Miami. Collectively, the U.S. airlines offer just two daily flights to Dubai.
So, thanks to the Arab airlines, there’s more choice in reaching the major cities in the Persian Gulf. This week, Emirates sweetened the deal with an offer of a $1,299 round trip to Dubai from any of nine U.S. cities for two people on tickets purchased by March 12.
Is there a downside for passengers?
The U.S. airlines say their Middle Eastern rivals are just taking market share from other carriers, rather than responding to new demand. As Emirates, Etihad and Qatar undercut Delta, American and United on some international routes, the U.S. carriers will be forced to reduce service, they warn.
More on Open Skies:
- US–UAE Business Council Tells U.S. Airlines to Compete More and Complain Less
- U.S. Airlines Reveal Evidence They Say Proves Gulf Carriers Get Unfair Subsidies
- Etihad Adds Residence Suite to New York Route in Open Skies Amenities Escalation
- Roundup: The Blowback From Delta CEO’s Open Skies Escalation
They contend that cheaper tickets to international destinations could wind up hurting passengers. If U.S. airlines can’t compete with Gulf carriers on certain international routes, they’ll be left with fewer passengers on connecting domestic flights. That could make flights to small and midsize cities unprofitable, they say.
Have the Gulf airlines really changed travel behavior in the U.S.?
The Gulf carriers have more than tripled the share they and their European partners have of U.S.-to-India bookings since 2008 to 40 percent. The U.S. carriers’ share has dropped in that time, bouncing in a range of 36 percent to 39 percent for several years before falling to 34 percent, the airlines’ report says.
Emirates ranked 30th globally in international capacity in 1998 and today ranks first, according to the U.S. carriers’ report. Qatar has shot up the rankings to 10th place from 90th in that time, while Etihad, which didn’t exist in 1998, today ranks 13th.
Another concern for U.S. airlines is Gulf carriers flying between the U.S. and Europe without stopping in the Middle East. Emirates already flies one such route between Milan and New York. What do the U.S. airlines want?
The three major U.S. airlines met with the Obama administration in January to present their findings on what they say is $42 billion in subsidies to the Gulf airlines and request that the government open talks with Qatar and the United Arab Emirates over air treaties. The Departments of State and Transportation have approved more than 100 such “Open Skies” agreements with countries over the past two decades, allowing flying between countries essentially free of government intervention.
The U.S. airlines also want the administration to ban the Gulf carriers from adding any new routes while it considers the issue.
The Big Three showed their investigative report to the European Union to help partners such as Air France-KLM Group and Deutsche Lufthansa AG. Those European airlines have their own complaints of unfair competition from the Gulf carriers.
But really, if the U.S. airlines don’t fly much to the U.A.E. and Qatar, who cares?
Travel to the Persian Gulf itself isn’t the issue, according to the U.S. airlines, which say most passengers to the region don’t actually begin or end their trips there. The Gulf carriers’ goal is to link the U.S. and Europe with Asia and Africa, using their home cities of Dubai, Abu Dhabi and Doha as points where passengers connect to their destinations. As Emirates flies more people from Mumbai or Singapore to Dubai and on to New York, it cuts the U.S. and European carriers and their hubs out of the picture.
In the long run, the Big Three argue, that will come back to hurt U.S. fliers.
This article was written by Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network.