Post: #1

Can someone tell me why this is such a big deal? U.A.E owens the major 3 in middle east I think. Oil for them is cheap so they can offer cheap tickets.

Why are US airlines being little bitches? Mid east airlines arent nickel and diming like us airlines are.


DUBAI, May 5 (Reuters) - Dubai carrier Emirates will deliver a "sledgehammer" response to a report compiled by U.S. carriers accusing major Gulf airlines of receiving more than $40 billion in unfair government subsidies, its president Tim Clark said on Tuesday.

"Having read the report, you could drive a bulldozer through just about everything ... We will deal a sledgehammer to that report as far as Emirates and Dubai is concerned," Clark said at a conference in Dubai.

Clark did not say when any formal response would be delivered, but the airline's CEO Sheikh Ahmed Al Maktoum told reporters in Dubai it would be fair if it had two years to put together a reply since the U.S. carriers took that long to produce their report.

Clark, who previously said he would resign if the report proved accurate, invited the heads of the three U.S. carriers making the accusations to follow suit if they are disproved.

"If you are wrong, and we show you to be wrong ... will you resign? What will do when this rebuttal comes back at you and shows the political entities that you've managed to orchestrate to come behind you that you are fundamentally wrong?"

U.S. Airlines: Yes, This Time Really is Different Barrons.com q 5 hrs ago
Emirates airline vows "sledgehammer" reply to U.S. subsidy allegations Reuters 5 hrs ago
More
Delta Air Lines, American Airlines and United Airlines alleged in January that Emirates, Etihad Airways and Qatar Airways received more $40 billion in state subsidies in the last decade, allowing them to drive down ticket prices and push competitors out of key markets.

More than 250 members of Congress signed a letter urging the U.S. departments of state and transportation to seek consultations with Qatar and the United Arab Emirates over the allegations.

Clark said the argument of stealing market share was weak as many of the destinations in the Middle East, Africa and Asia were minimally served by U.S. carriers.

"We have never been subsidised. We have never received from the government of Dubai any kind of ... special treatment," Clark said, adding that the airline's growth had been achieved without state intervention or state funding but instead came from its own cash flow, debt issuance and earnings.

The airline has also played up its purchases from U.S. and European manufacturers, such as last month's $9.2 billion engines order from Rolls-Royce.

Post: #2

US3 (United, Delta, AA) want's to limit competition to profit more by accusing ME3 (Emirates, Qatar, Etihad) receiving unfair subsidies and demanding restrictions to their operations. It's a little hypocritical, they have themselves benefited from massive subsidies and business friendly bankruptcy laws in the past. It would also hurt customers of course.

from Leeham News

Quote:I haven’t weighed in on the current battle between the Big 3 US
airlines and the Big 3 Middle Eastern carriers because it’s largely beyond
the scope of LNC. But I like commercial aviation history, so I thought I’d
bring up a little.
In the era immediately post-World War II, when third, fourth and fifth
freedom rights were being negotiated between the US and the Rest of the
World, there was a member of Congress, Claire Luce Booth of
Connecticut, summed it up nicely: “American postwar aviation policy is
simple. We want to fly everywhere. Period.”

At the time, the US civil transport industry was miles ahead of anyone
else. During the War, the US built fighters, bombers and transports (the
Douglas C-54/DC-4 and, toward the end, the Lockheed C-
69/Constellation). Great Britain concentrated on bombers and fights, but
no transports. The US airlines were ready to fly “everywhere;” the Allies’
airlines were not and the Axis countries weren’t allowed.

International service was restricted, of course, in order to nurture and
protect national airlines owned by governments. Pretty much pick any
non-US flag airline today and at one time it was a government-owned
operation.

Go forward to more recent history.The US government negotiated what
was called Bermuda One (or Bermuda Two, I don’t recall which) with the
British government that, among other things, regulated US airline access
to London Heathrow Airport to just Pan Am and TWA or the “corporate
successors.”

When Pan Am and TWA began to fail and sold off important international
routes to try and survive, the US government realized it had been
snookered. The route sales, including Heathrow, were to United and
American airlines as asset sales, not as “corporate successors.” The Brits
exacted a huge set of concessions to allow the route transfers. British
carriers got authority to a number of US cities in trade.

As the US, in the name of free enterprise, negotiated Open Skies with one
country after another, I remember thinking at the time, “these are one-
sided deals.” KLM got access to “everywhere.” The US got access to
Amsterdam. Air France gets “everywhere,” the US gets France–but there
still is pretty limited demand from the US to, let’s say, Toulouse…. Sure,
there are other cities in France that at one time or another that’ve had
direct service to the US, but they hardly compare to access to the USA’s
major metropolitan cities.

This is, to me, what makes today’s fight so silly. The US negotiates Open
Skies with United Arab Emirates (Emirates Airline and Etihad Airways) and
Qatar (Qatar Airways). They get “everywhere” in the US and we get Abu
Dhabi, Dubai and Doha.

And then we’re surprised when their airlines exercise their rights and the
“power of the hub” of the Middle East Big 3 makes it impossible or nearly
so for our carriers to fill their airplanes?

US carriers complain the Middle East Big 3 get. or have gotten subsidies,
and this present unfair competition. Where have we heard this before?
(Can you say “Airbus” and “Boeing”?) And, as I pointed out, pick a non-US
flag airline that wasn’t founded on state control, ownership and subsidies.

Go back into our own history. There were postal “subsidies” for just about
all early US carriers, including American, United and Delta. All the local
service airlines received subsidies (Ozark, Allegheny, Mohawk, etc). After
9/11, a number of US carriers received government loans and guarantees.

Most particularly, every single US major airline except Southwest and
Alaska went through bankruptcy (some twice or even three times),
cutting billions in costs in the process. I well remember Robert Crandall,
then CEO of American Airlines, decrying the “subsidies” (in the broadest
sense) of the bankruptcy courts of his competitors. At one time 40% of
the US capacity was operating under bankruptcy. This is one reason I
have little empathy for the US Big 3’s whining. (The fact that US carriers
generally have, at best, fair international service is another.)

I’ve never flown the Middle Eastern carriers. Frankly, the Middle East is
not exactly on the top of my Bucket List. I’d sooner go to Iceland and
Greenland, which are, thank you very much.
If Open Skies are to be reopened, it shouldn’t be just for the Middle
Eastern carriers that take advantage of the international agreement. It
should be for all Open Skies agreements, which are lop-sidely in favor of
the Little Countries from the get-go.

But that’s too radical. And it shouldn’t be done. Instead the Big 3 should,
as has been suggested, actually compete on service.

What a concept.

Remember when Pan Am, TWA, British Airways and BCal lined up against
Laker Airways for low-fare trans-Atlantic service?

Then it’s been the fight against Norwegian Air Shuttle’s long-haul, low-
fare service.

Now it’s the Big 3 vs the Big 3.

See a pattern here?

Post: #3

If the US airlines want to compete, then just use some of our own oil for jet fuel and really elevate their service all around.

You get spoiled on the ME airlines like Qatar airways, who actually give a shit about customer service and passenger comfort. Until the US airlines shape the fuck up, they will never compete with the ME airlines.

Someone should tell that right to the US Airlines CEOs faces.

Post: #4

I fly regularly to JFK from LHR and from the UK to DBX and onwards wherever I am going.

I'd do just about anything to avoid the US carriers; their planes are awful, their on board service is awful, their staff are not what one expects when you think of American customer service. It's a horrible experience.

Each and every time, I pay more to fly Virgin to the States and plan my trips elsewhere using as much Emirates as is possible.

The American carriers need to up their game if they want to compete, not just drag the others down to their level.

Post: #5

Emirates and its ilk have two massive advantages over the other airlines.

1) Geography - they are at the intersection of 3 continents and just close enough to the other 3 populated ones. They have the perfect location for a hub.
2) Like you said (something I had never thought of), they have cheap oil to fuel the planes, which is the first or second largest cost (after labor) for an airline depending on what oil prices are.

I have definitely gotten the impression that Emirates (which while "Middle Eastern" is pretty much run and flown by British commonwealth executives & pilots) realized that if they could run a first world airline with good service and safety, they could become an enormous player, which they have. Before them, the perception of ME airlines were that they were pretty dodgy. Now, it certainly feels to me that everyone seems to love them almost as much as Singapore Airlines.

When I took a developmental economics course, we actually discussed how poor ME nations like Egypt could utilize their geography for an airline hub. Looks like Emirates pulled the trigger on the obvious smart business move (though UAE isn't poor).

Other big carriers whining isn't a new experience for Emirates. Air Canada got butt hurt over Emirates stealing their what sounds like very lucrative business of flying Indians in Toronto to and from India and demanded they not get new landing slots at Pearson. The UAE retaliated by shutting down a staging base for the Canadian Armed Forces in Afghanistan.

Wonderfully childish behavior on both sides

Basically, the only thing keeping legacy Flag Carriers (which Delta, American, and especially United are for the US and AC is for Canada) is their lock on inter continental routes due to ridiculous restrictions put on how airlines may operate internationally. Their domestic and close nation routes are getting destroyed by airlines like Southwest and Ryan Air. In addition the Big 3, like the auto Big 3, have massive legacy costs with unions that really drag on them. If the rules were ever to change on how airlines could operate on long haul international flights, the Big 3 would be finished.

Post: #6

This hopefully won't amount to anything, as there is nothing wrong with more competition in the market.

The US airlines are now doing very well, albeit by offering a horrible product at a sometimes inflated price. We always see good products on competitive routes (like JFK-LAX) at fair prices. Sometimes there are situations that make flying miserable (like trying to find a fair price on Delta from MSP or DTW).

The ME 3 offer a more attractive product across all of their cabins of service. The economy seats offer better meals, amenity kits on longhaul flights, and of course better in-flight entertainment than anything a US-based airline offers. The business class seats aren't always the best (Emirates has 2-3-2 seating on it's 777-300's), but there is consistency across the fleet and the cabin crew generally cares more about their job than their counterparts at United do.

Of course, the main factor in their rapid growth is the geographic location of these airlines' hubs coupled with the rapid growth in the region. The US isn't exactly growing at the pace that that region of the world is its airlines find the need to charge $10 for a sandwich in order to please the greedy shareholders.

Essentially, if the US airlines have their way, they won't have to elevate their levels of service to compete with the other airlines. Interestingly they don't seem to care about Turkish Airlines, which is essentially expanding at the same rate in the US as the ME 3 are.

Post: #7

(05-05-2015 02:46 PM)chyamor Wrote:  Can someone tell me why this is such a big deal?

Why step your efforts up when you can instead complain about the stacked deck? Easy and obvious parallel here to game-denialists.