United States: Gulf Carriers Hit Back at Accusations of Unfair Competition

Airlines and Aviation

Three American airlines say government subsidies to Middle Eastern air carriers have created an unfair playing field, which poses a serious threat to the health of the US aviation industry.

It used to be said that what was good for General Motors was good for America. That was before Japanese carmakers started dumping automobiles in the United States at lower prices than what similar vehicles were old for in Japan.

The dumping caused consider damage to the US automobile industry, helping to turn once thriving Detroit, Michigan, into what is now known as the Rust Belt.

But given the choice, many American consumers opted for Japanese cars – and not just because they were cheaper. Many people simply preferred the product as well as the after sales service that Japanese brands offered.

Are airlines to the Middle East what the auto industry is to Japan?

Annual Aviation Summit

As representatives of 3 Middle Eastern Airlines attended the US Chamber of Commerce Foundation’s 14th Annual Aviation Summit in Washington, DC, last week, a spokesman for a powerful union accused Emirates Airline, Etihad Airways, and Qatar Airways of benefiting from massive government subsidies, which they maintain pose a serious threat to American jobs and the US airline industry.

“The massive government subsidies that have flowed to these Gulf carriers have tilted the playing field, posing a serious threat to U.S. jobs and the long-term viability of our nation’s airline industry,” says Captain Keith Wilson, President of the Allied Pilots Association.

“Government subsidies have enabled Gulf carriers to dump product into the marketplace irrespective of demand or profit-and-loss considerations. It’s time for Gulf carriers to open the books.”

But the Middle Eastern air carriers are having none of it, saying that Open Skies have created tremendous benefits for American consumers as well as consumers in other parts of the world. 

David vs Goliath

“As one of the newest national airlines anywhere in the world, we’ve had to create everything from scratch: every bit of product, every bit of our operations, every bit of our infrastructure,” says James Hogan, President and Chief Executive Officer of Etihad Airways.

“Etihad is a David, a David who’s been facing Goliaths since 2003, when we started. In virtually every market we’ve entered, we’ve had to face existing competitors, with established businesses, established infrastructure, established sales and marketing, established brands, and established customer bases.

“In many cases, those established airlines were gifted amazing infrastructure – airports, terminals, slots, landing rights – over decades. To take them on, we’ve had to work harder and we’ve had to work smarter. That’s called competition.”

It all gets down giving consumers s choice, Hogan maintains.

“This is ultimately all about consumer choice. Customers choose to fly Etihad Airways because we offer a great product, with outstanding service, on the routes they want to fly, at prices that are competitive within those markets,” he says.

“They choose us against many different competitors, depending upon which market we are in. But quite honestly, it is very rare that US carriers offer those alternatives,” Hogan says, pointing out the there no American airlines serving Abu Dhabi, the airline’s key hub.

“There are very few US carriers operating to where we do in the Indian sub-continent, in Southeast Asia, or in the wider Middle East. We make no apologies for offering new competitive choice for air travellers. We hope to continue to do so around the world.”

Protectionism

Sir Tim Clark, Presdient, Emirates Airline, says the campaign launched by American Airlines, Delta Air Lines, and United Airlines against the 3 Middle Eastern Airlines is nothing short of ‘protectionist’.

“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 U.S. 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,” he says.

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

The Middle Eastern airlines DO have a point.The days when Pan American World Airways set the gold standard for in flight service went the way of the dodo bird. years ago.

US carriers rarely make the Top 10 list when it comes to in flight service. They nickel and dime you with all kinds of fees. And their delays on the tarmac are legendary.

Having said that, I must admit. I have flown on Middle Eastern airlines a few times, and some of their flight attendants had what I can only describe as ‘attitude’.

It’s a stressful job, and sometimes – as a passenger – you just have to keep your sense of humour.

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