Late in the week The New York Times ran an article entitled “Open-Skies Agreement Challenged.”
It tackles a topic that isn’t exactly new, but sure is interesting.
Much of the growth in the global airline industry has happened thanks to open-skies agreements, which has opened up more international routes for more carriers. It’s a win-win, both for the airlines and for consumers:
For more than two decades, domestic airlines and successive administrations have pushed for, and achieved, broad international agreements that have fostered greater competition, lower airfares and more flights to hundreds of destinations like Tokyo, Beijing and Rio de Janeiro.
So while the US airlines have for decades been fighting against government intervention, it seems they’re now somewhat reversing course, crying foul at the growth of the “big three” Middle Eastern airlines — Emirates, Etihad, and Qatar:
But now, with the rise of Persian Gulf airlines and other nimble foreign carriers, those pacts, called open-skies agreements, are under attack from an unlikely alliance of domestic airlines and unions.
The chief executives of American Airlines, Delta Air Lines and United Airlines recently joined together to quietly lobby the Obama administration to restrict access by fast-growing rivals based in the Persian Gulf. They cited unfair competition from the Middle East carriers Emirates, Etihad Airlines and Qatar Airways, which they say receive large government subsidies that put domestic carriers at a disadvantage.
So, are the complaints of the US airlines against the Middle Eastern airlines warranted?
Middle Eastern carriers are run differently
This is something a lot of people don’t get. Let me leave out Emirates for a second, since they’re somewhat run like a for-profit business.
But Etihad and Qatar are unarguably not for-profit businesses. They lose money, and they’re proud of that.
Why? Because the goal of both airlines isn’t to turn a profit on flying, but rather to put their countries/cities on the global map, to try and build up an economy beyond oil in their respective homes.
I think if you asked Qatar Airways’ CEO Akbar Al Baker if the airline turns a profit he’d probably scratch his head and say “why would we? I am responsible for building up the infrastructure of Qatar.”
Can them not being for-profit be held against them, though?
But here’s where it gets interesting. I think reasonable people would agree that some Middle Eastern carriers aren’t for-profit. That being said, is there anything wrong with that? Can we really hold it against them that the goal of the airlines is to return a different kind of “shareholder value?”
It’s a slippery slope, when you think about it. The Middle Eastern airlines often aren’t run to generate a profit. So if the US airlines think that’s not fair, what is fair? Is it acceptable when a European or Asian airline is bailed out by the government? Or when a US airline is allowed to go through Chapter 11 bankruptcy protection? Or when an airline is government owned in China, but doesn’t really represent that much of a threat?
As Emirates’ CEO says:
“If you go down this minefield, you must ask yourself,” he said, “to what extent all the foreign carriers serving the U.S. are subsidized? Take China, take Thailand, take Malaysia, take Japan, take New Zealand. I could go on forever.”
This fight will only get worse
What’s funny is that the US airlines are bitching (to a large extent understandably) about “unfair competition.” But this is only the very beginning, given how few routes US airlines and Middle Eastern airlines compete on.
Middle Eastern airlines are slowly buying up pieces of European airlines, clearly as a way of shutting the airlines up as they try to expand. Qatar Airways is buying 9.99% of British Airways, and British Airways is buying Aer Lingus, and Etihad Airways owns 5% of Aer Lingus. Of course that’s just one small example, but it’s amazing how interconnected the airlines are.
One of the major expansion goals for Middle Eastern airlines is more nonstop flights to the US, ideally out of Europe. Emirates has a Dubai to New York flight via Milan, and has pick up rights between the US and Italy. Long term they’d love to set up shop somewhere in Europe and operate flights directly from there to the US.
And it might not be too far off. Qatar Airways’ CEO sits on the board of Heathrow Airport and they’re in the process of buying part of British Airways. If nothing else, they know that British Airways’ management will have a harder time complaining about the “unfair competition” from Middle Eastern airlines when they’re partly owned by one.
Bottom line
This isn’t a new debate, and it will only continue to get more interesting over time. Is it “unfair” that some Middle Eastern airlines aren’t operating for-profit, and for-profit airlines are having to compete with them? Yes. Do the differing labor laws and cost structures put US and European airlines at a disadvantage? Yes.
That being said, as Emirates’ CEO says:
Tim Clark, the president of Emirates, said their attacks threaten “the bedrock of the modern-day aviation system.”
“By challenging open skies, you are not just challenging the aero-political situation, you are challenging the very essence of economic liberalization that the U.S. has championed for decades,” Mr. Clark said in an interview. “I hope the administration will not stand for this nonsense.”
Where do you stand on this issue? Should the growth of the “big three” Middle Eastern airlines be stopped in any way because they’re not run entirely as for-profit businesses?
It's a competition. I don't know why no one talk from business standpoint. Come on guys, a lot of money can be made from US3. Where little money can be made from ME3 as investors.
US3 are money maker for my portfolio at least... Will i fly US3 with my earnings? hmm i will let you guess that.
@peachfront, you can invest on them too you know. middle class should have disposable income. if you're...
It's a competition. I don't know why no one talk from business standpoint. Come on guys, a lot of money can be made from US3. Where little money can be made from ME3 as investors.
US3 are money maker for my portfolio at least... Will i fly US3 with my earnings? hmm i will let you guess that.
@peachfront, you can invest on them too you know. middle class should have disposable income. if you're lower class, then LCC is available too and can't complaint too much about quality no? you get what you paid for...
As a passenger I prefer not to give my money to the ME so come on the rest of the world. Up your game!
Believe that the it's the time the US carriers stop thinking their very traditional way achieving highest margin at the lowest cost and customer always the one who has always to pay for everything even the cost of its growth.
The new competitors recently arrived to the market place are thinking completely different and untraditionally.
The only way for those US carriers to survive is to listen more customers and stop thinking only...
Believe that the it's the time the US carriers stop thinking their very traditional way achieving highest margin at the lowest cost and customer always the one who has always to pay for everything even the cost of its growth.
The new competitors recently arrived to the market place are thinking completely different and untraditionally.
The only way for those US carriers to survive is to listen more customers and stop thinking only bottom line with the least amount of discrimination.
Those bi American carriers and Australian Carrier Qantas could expand and use Birmingham International UK as a stop to Far East and Middle East inc Asia from USA - demand is high and they will make such hugh profits Birmingham UK needs such a link before competitors reveal their hopes in Birmingham UK - only Emirates -PIA - Turkmenistan and Air India play Long Haul as well as two New York flights with AA and...
Those bi American carriers and Australian Carrier Qantas could expand and use Birmingham International UK as a stop to Far East and Middle East inc Asia from USA - demand is high and they will make such hugh profits Birmingham UK needs such a link before competitors reveal their hopes in Birmingham UK - only Emirates -PIA - Turkmenistan and Air India play Long Haul as well as two New York flights with AA and United - we need more airline routes with BIRMINGHAM RE-FUEL STOP to succeed - thank You
Why are being eyebrows raised against the middle eastern airlines. They are absolutely run for profit. Yes US airlines have failed because of their attitude. Emirates and Qatar employ personnel from the world over. But US airlines have restricted personnel from many nations due to so called big brother security attitude. So stop blaming and start thinking why others couldnt achieve what Emirates has. For that matter Lufthansa and Turkish airlines from europe. Singapore from...
Why are being eyebrows raised against the middle eastern airlines. They are absolutely run for profit. Yes US airlines have failed because of their attitude. Emirates and Qatar employ personnel from the world over. But US airlines have restricted personnel from many nations due to so called big brother security attitude. So stop blaming and start thinking why others couldnt achieve what Emirates has. For that matter Lufthansa and Turkish airlines from europe. Singapore from asia and Cathay Pacific from australia are doing really good.
The thing is with ME airlines, they fly from LOCAL airports, unlike BA and Virgin Atlantic. I'm forced to go to London if I want to somewhere west (well - in the UK, they do). Maybe British based airlines should consider this.
I think a major issue is that the middle eastern carriers don't really have to worry about pensions they can kick people out at any time. They also have lower costs since many of their (foreign) employees living in places like Dubai don't have to pay any taxes. This is causing major issues for carriers like Lufthansa which is a pretty well run airline.
That creates an unlevel playing field.
Dear Mr./Ms. Endlosluft, I would like you to read this -> http://www.eurasiareview.com/14022015-ralph-nader-letter-jeff-smisek-ceo-united-airlines/
United Airlines should probably introspect within before casting allegations on others!
I would like to differ on this. Qatar Airways, Emirates fares are always on the higher side with Qatar airways fare always high. So you can't blame them for undermining any other carriers by means of lower fares. American Airlines quietly earned about a billion dollars last year just on baggage charges. Is anyone blaming them for this?? The american carriers are no saint either!
@Kiwi Flyer- Correct but they both have the same government which is rich and like I said emirates has a better reputation then etihad so the government is betting their money on emirates to bring tourists in the dubai so thats why etihad isn't getting as much as emirates because emirates is a better "Investment" to the government. This would explain why etihad only ordered 10 A380's and emirates has 140 even though abu dhabi is where the oil is
Airlines are only one (small) part of the commercial aviation industry. The big 3 ME carriers buy a lot of airplanes and those airplanes are loaded with U.S. content. Their existence is unquestionably a benefit to U.S. industry. That is what is important.
if you forget the money for a second..... the big 3 arab airlines have the highest level of quality in terms of airplanes and airports (just 2 or perhaps 3 asian airlines reach that level of quality). they are better than europeans... and who has the worst aircrafts and airports of the western planet?
the US.
who is complaining the most?
the US.
Dax, there is no need for red herring. Discussion is not about the ethical practices or LGBT friendly corporations.
The big three of USA are not trying not whining to the government because they care about any of those topics...it's about the money.
Lucky seems like a really smart guy and a caring person so it disappoints me that it apparently means little or nothing to him if his favorite airline bases openly discriminate against gays or Jews or liberals or atheists or even their own employees. Because... cult of personality?
@peachfront
Are you for real? "I don’t understand why it’s important for airlines to operate for profit to begin with."?
It is kind of hard for a company to stay operational if they don't make a profit, or do think the that the tooth fairy hands out planes and fuel for free to anyone that fly passengers?
I don't understand why it's important for airlines to operate for profit to begin with. When airlines were unprofitable in the US, it was a golden age for middle class leisure and business travelers alike. If we want a global world, our primary goal should be to provide affordable transport to the end user. Only a few ultimately benefit where profit is the goal, and those few won't be the middle class. DOJ should have...
I don't understand why it's important for airlines to operate for profit to begin with. When airlines were unprofitable in the US, it was a golden age for middle class leisure and business travelers alike. If we want a global world, our primary goal should be to provide affordable transport to the end user. Only a few ultimately benefit where profit is the goal, and those few won't be the middle class. DOJ should have never allowed these huge mega-mergers but they did, and if we want to preserve the right of the middle class to travel by air, we need competitors to come from somewhere.
I want to fly an Emirates A380 from JFK to LAX. Let's make it happen!
Seriously though, the European and ME carriers should be getting their buddies to lobby Congress to end cabotage rules within the US. Let's get EasyJet and Emirates over here. Then UA, AA and DL will have something to cry about.
As a Jew I don't feel safe flying any of those three Airlines.
@ The Value Traveler - The U.S carriers , though selfish, have to put up with labor costs and unions. Emriates on the other hand, can just import Indians on low labor charges .
@Billy Fallon - you have it backwards. Abu Dhabi (home of Etihad) has oil money, Dubai (home of Emirates) does not.
@The Value Traveler - Very well put!
@globetrotter...your rant sounds more like a recruiting kiosk at a hicktown state fair. ME airlines aim for top notch quality, while domestic carriers here keep cutting them. As for geopolitics, they are free to run their economies as they wish--providing social programs for their citizens, and even some non-citizens. Is there a dark side? Of course there is, but don't think your so called system of governing here at Plymouth Rock is some beacon of...
@globetrotter...your rant sounds more like a recruiting kiosk at a hicktown state fair. ME airlines aim for top notch quality, while domestic carriers here keep cutting them. As for geopolitics, they are free to run their economies as they wish--providing social programs for their citizens, and even some non-citizens. Is there a dark side? Of course there is, but don't think your so called system of governing here at Plymouth Rock is some beacon of superiority. If the majors feel they are getting beat by Emirates, Etihad, et al, then they should revamp customer service, start providing a value fare, and stop their whining...its that simple.
What the Big Three US carriers (AA, DL, UA) are trying to do with this complaint is to further decrease or altogether eliminate competition, which the last three mega-mergers have dangerously curtailed in the US.
Why do you think DL and UA can concoct a consumer unfriendly monstrosity like the revenue-based system (R-B.S.) or DL can hide award charts from the consumers and get away with it? Well, simply because the 3 mega-mergers have...
What the Big Three US carriers (AA, DL, UA) are trying to do with this complaint is to further decrease or altogether eliminate competition, which the last three mega-mergers have dangerously curtailed in the US.
Why do you think DL and UA can concoct a consumer unfriendly monstrosity like the revenue-based system (R-B.S.) or DL can hide award charts from the consumers and get away with it? Well, simply because the 3 mega-mergers have so greatly decreased competition in the US that the three resulting large US airlines have the license to institute unfriendly practices, impose ridiculous fees, or provide subpar to mediocre service without suffering any consequences. While the 3 mega-mergers have decreased the consumer's options by a factor of two, the US public's appetite for flying has only increased. This has resulted in a playing field that's been dangerously tilted in favor of the Big 3 US airlines. Customer retention, the key to forcing the airlines to try to provide the best service that they can, is no longer a priority of the US airlines because the customers have nowhere else to turn. That is why I am rooting for the three ME airlines to prevail in this transparent attempt by the the Big Three US carriers to further consolidate their monopolistic hold on the increasingly unfriendly skies for the US traveler.
The US government needs to intervene, but not to support the US Big Three's hypocritical complaint about the ME Big Three. Rather, the DOJ and FAA should step in to take a good hard look at the three monsters that they created by approving the DL+NW, UA+CO and AA+US mergers. Without these mergers DL, NW, UA, CO, AA, US, WN, VN, etc, would be competing for the US flyers' attention and business, resulting in a more level playing field and greater benefits for the consumer with better service,and more competitive ticket and ancillary costs.
The ME economy is run on monopoly not competition. It does not allow foreigners to own property. It does not permit the right to practice different religions. We do not know any of their enterprises earn profits because they do not open their financial records. But it is highly unlikely any of them is profitable,except the gas and oil industries. Singapore and HK governments do not engage in any deals that are not profitable. But...
The ME economy is run on monopoly not competition. It does not allow foreigners to own property. It does not permit the right to practice different religions. We do not know any of their enterprises earn profits because they do not open their financial records. But it is highly unlikely any of them is profitable,except the gas and oil industries. Singapore and HK governments do not engage in any deals that are not profitable. But you can never compare ME with HK, Singapore,Taiwan, South Korea and Japan because their human resources are much superior than those of ME. ME only has natural resources that enrich them while the other island nations have no natural resources, but they still prosper from their tiger economies, except Japan to a lesser extent. When ME airlines set up shops and conduct business on American soil, they will have to be subject to American labor and financial laws. The outcome may be a rude awakening to them. Who would have thought Japan economy tanked in early 1990s when they spent the 1980s buying up American iconic/trophy properties and precious paintings. As for US airlines, both the executives and rank and file must take pay cut, reduced compensation/benefits and put their companies ahead of their selfish and greedy interests.
@caveman - Singapore Airlines is in fact profitable. They charge fares so high when there aren't any promos there's almost no question about it. Cathay is also profitable, but not quite where Singapore Airlines is.
For a window on the subsidies that US airlines enjoy today, see http://www.ajc.com/news/news/state-regional-govt-politics/lawmaker-rips-delta-lobbyists/nj3sJ/
Hypocritical to the max. That's why we have governments.
An apalling lack of understanding how the airline business makes money is being demonstrated in the comments. U.S. airlines aren't subsidized, directly or indirectly. The aviation system is self-supported through ticket taxes that amount to 23% of the fare you pay when you fly. The only industry that is taxed higher are alcohol and cigarettes.
We, as Americans, have the air transportation system we're willing to pay for. Cheap, frequent flights all over the country...
An apalling lack of understanding how the airline business makes money is being demonstrated in the comments. U.S. airlines aren't subsidized, directly or indirectly. The aviation system is self-supported through ticket taxes that amount to 23% of the fare you pay when you fly. The only industry that is taxed higher are alcohol and cigarettes.
We, as Americans, have the air transportation system we're willing to pay for. Cheap, frequent flights all over the country every day. Remember that airfares today are lower than they were at any point in history aside from 2009. We have chosen this. if you want what the ME3 are selling, you're gonna have to pay for it somehow. Either through lower wages for airline employees (not bloody likely as they really can't go lower without hiring overseas) or through cheaper infrastructure (meaning fewer flights) or through cheaper aircraft (paycuts at Boeing anyone?). Fuel is already cheap right now, but as soon as it goes back up watch those profits that US airlines are making right now evaporate.
I say let them have their flying rights just as soon as they play be the same rules that U.S carriers must. No one is saying they can't or won't compete on a level playing field.
Sorry also mean Qatar airways is like Emriates
I think Ethiad and Qatar business is somewhat fair but Emriates injustice downright cheap. I think Emriates is the airline to be limited.
I think that the US Airliners have a point referring to emirates mainly.
Emirates is most probably sponsored by the government which would explain why it has so much money to begin with. Dubai is oil rich so the government should be rich enough to generate about enough money for 140 A380's 100+ B777-300ER's And Orders for 140 777X Yea that sounds right and emirates has the money to invest in these products without any...
I think that the US Airliners have a point referring to emirates mainly.
Emirates is most probably sponsored by the government which would explain why it has so much money to begin with. Dubai is oil rich so the government should be rich enough to generate about enough money for 140 A380's 100+ B777-300ER's And Orders for 140 777X Yea that sounds right and emirates has the money to invest in these products without any worry about bankruptcy.
So it is unfair about emirates and Qatar also had a lot of money to start up the company which is pretty new
But etihad is pretty legit with the emirates taking all the share of government pay etihad doesnt get much because the government feels that emirates is the better company to invest in because many people use it which makes dubai's tourist rate go up and theres an endless cycle.
So honestly I do find emirates pretty unlegit because they use dirty money to create an luxury airline I think Singapore Airlines and Cathay Pacific is better even though they are sponsored by the government they get barely 10% of what emirates is getting.
Plenty of things in life aren't fair. The US airlines don't treat their customers "fairly" now their lobbyist have paved the path to narrow the options. If they put out a superior product, people will still fly them by choice. Your product slips, don't cry unfair competition.
Can they both lose? I'm not particularly fond of either group, to be honest.
TONY CLARK IS COMPLETELY RIGHT AND ACCURATE, ME CARRIERS ARE PROVIDING NON STOP SERVICE TO THEIR HUBS THAT ARE NO CURRENTLY SERVICED BY US CARRIERS AND THEY OFFER 1 STOP OPTIONS WITH A SUPERIOR PRODUCT THAT IS MUCH BETTER THAN ANY OTHER OPTION PROVIDED BY AA, BA, UA, US, DL, AND OTHERS. I HOPE THEY CONTINUE TO SUCEED.
I dont find Emirates or Etihad to be much cheaper leaving from Aus, nor am I particularly fond of the Middle East and its ancient views towards woman and gay.
I agree with Adam. So many workers in Middle East are underpaid and not well treated. US airless might be crappy but they treat their employees with more respect then middle eastern airlines.
We like to compete when we are wining not losing. ;)
QR is owned by the government of Qatar, a country that openly supports Hamas. That's reason enough to stop them.
How can you make this post With a straight face and not mention that the Middle East airlines engage in employment practices that even if you don't think are human rights violations, would be illegal in every European or North American country?
We know you have no qualms with the ethics but failing to mention it merely serves to highlight your lack of objectivory and embrace of mysogynistic labor trafficking and sex and LGBT...
How can you make this post With a straight face and not mention that the Middle East airlines engage in employment practices that even if you don't think are human rights violations, would be illegal in every European or North American country?
We know you have no qualms with the ethics but failing to mention it merely serves to highlight your lack of objectivory and embrace of mysogynistic labor trafficking and sex and LGBT discrimination because you *really* like showers on your plane.
2 of the 3 US airlines are backtracking on their mileage program, which if I understand correctly, were created as an incentive to enocourage loyalty in face of competition and inferior product. They would like to be done with that now that the market domestically in the US is losing competition. however, just as they do this new competition is emerging from overseas. If the loyalty programs are no longer rewarding they will lose customers to these carriers.
@ caveman Yes, both CX and SQ make profits. First of all, traveller from Singapore and Hong Kong are rich. Both Singapore and Hong Kong are in the center of Asia-Pacific, so they have lots of connecting businesses from North Asia to Oceania. (Remember, China is Australia's largest trade partners. Many Chinese people are reluctant to China Southern, major carrier of Sino-Australia routes. As you know, China Eastern, China Southern, Air China are all controlled...
@ caveman Yes, both CX and SQ make profits. First of all, traveller from Singapore and Hong Kong are rich. Both Singapore and Hong Kong are in the center of Asia-Pacific, so they have lots of connecting businesses from North Asia to Oceania. (Remember, China is Australia's largest trade partners. Many Chinese people are reluctant to China Southern, major carrier of Sino-Australia routes. As you know, China Eastern, China Southern, Air China are all controlled by communist government so you know why they all have really bad reputation. Qantas only operates one flight between mainland China to Australia. )
Also,much of CX 's profit actually comes from its cargo business.
The fact is, in the world's second largest travel market, China, there isn't any decent airlines. None of China's airlines can compete with CX, SQ, NH, OZ, JL, and even KE. Not even mention big three middle eastern airlines. However, as far as I know, Chinese customers, however, have higher standards and are willing to pay extra money for outstanding services. So by exploiting from rich Chinese passengers , other Asian airlines become profitable.
As long as the U.S. allows airlines to 're-organize' under chapter 11 bankruptcy, really meaning a reset of the clock at their convenience, US carriers have no argument to stand on. Either compete, close up shop, or shut up entirely. It's that simple.
US airlines know how crappy they are compared to ME carriers so they're shaking in their boots. US carriers make mind-blowing profits while offering far less comfort and quality to their customers than international carriers like Cathay, the big 3 and Singapore because they can get away with it...and now they're feeling threatened. Maybe if US airlines didn't suck so bad, they wouldn't be so scared. Instead of thinking about improving their crappy airlines, they...
US airlines know how crappy they are compared to ME carriers so they're shaking in their boots. US carriers make mind-blowing profits while offering far less comfort and quality to their customers than international carriers like Cathay, the big 3 and Singapore because they can get away with it...and now they're feeling threatened. Maybe if US airlines didn't suck so bad, they wouldn't be so scared. Instead of thinking about improving their crappy airlines, they run scared to the government. Whiny, rich spoiled brats.
US airlines suck now, no doubt about it, but that doesn't mean they shouldn't be entitled to the chance to compete on a level playing field. yeah the ME3 product is way better across the board but that's what happens when you are new and get government handouts. In a perfect world, they should have their access limited as a penalty but you know Boeing doesn't want to hear any of that since any penalty...
US airlines suck now, no doubt about it, but that doesn't mean they shouldn't be entitled to the chance to compete on a level playing field. yeah the ME3 product is way better across the board but that's what happens when you are new and get government handouts. In a perfect world, they should have their access limited as a penalty but you know Boeing doesn't want to hear any of that since any penalty against ME3 likely results in them buying less 787/777s in retribution. So in the end, what happens? My guess is nothing.
A simple analogy is Craigslist. Their only monetization is charging for ads in a few markets and only in specific categories (jobs in SF, apts in NYC). They are leaving loads of money on the table, but don't care as the revenue they do generate is plenty to cover expenses and make a healthy profit.
Would-be competitors complain that they "can't compete with free" but consumers are happy and Craigslist is happy so who is really losing?
Seems like a pretty easy solution - OUR big 3 are public companies, the ME3 companies just should just accumulate the 49% they are allowed to own and be done with it. As someone stated above, it would be pretty hard for them to argue at that point.
If air India improves their service and food, they could be in competition with the middle eastern airlines.
If air India improves their service and food, they could be in competition with the middle eastern airlines. The prices are already cheaper than middle eastern airlines.
I think the key to stop middle eastern airlines lies with Air India. Emriates, ethiad, and Qatar make lots of money on connecting indian passengers going to India. If the legacy carries ( mostly United) want to challenge those airlines, I think they should partner with Air India.
When american airlines starts offering similar service&lounges as Mideastern airline they can start talking for the time being let them shut up.
I mean basically it's a weird argument sometimes. I mean sure Emirates might be cheaper for to fly from say LAX - ARN , but then Would i rather fly BA and connect in LHR and pay a bit more and save myself 5 hours, then yeah sure.
Same goes for when I lived in England, Emirates, Etihad, Qatar would always be cheaper to Australia or Asia from the UK compared to BA, Virgin ETC.
...I mean basically it's a weird argument sometimes. I mean sure Emirates might be cheaper for to fly from say LAX - ARN , but then Would i rather fly BA and connect in LHR and pay a bit more and save myself 5 hours, then yeah sure.
Same goes for when I lived in England, Emirates, Etihad, Qatar would always be cheaper to Australia or Asia from the UK compared to BA, Virgin ETC.
I tried them a few times Via their countries, but sometimes I did not want the 1 stop and extra 4 hour journey time. So I would pay a bit more for the non stop.
They can expand all they want if it makes prices better for the consumer.
Though I do hear they don't treat their employees that great. But thats just what I have heard.
I can guarantee you that "evil Delta" is the mastermind behind this lobby against the ME airlines. Why would they let US customers fly a better airline for less if they can continue to offer crappy planes and charge an arm and a leg for a flight with terrible service? :)
I always think competition is good so I think it's fine. If this continues, what we may see is the big 3 US airlines focusing on domestic routes where they can compete with each other (and rely on partner airlines from Europe and Middle East to bring passengers to their hubs.)
For now, I think Norwegian Air may be more of a threat to the big 3 since we've seen price wars already in the west coast to europe market.
It's true that US airlines do not receive "direct" subsidies from the US government. But there are a number of ways by which "indirect" subsidies are provided to US airlines. This goes back to '78 when Carter - working with Congress - deregulated the aviation sector. It's pretty simple - US airlines are looking at what is happening to their European counterparts (in terms of cost and better service/quality) courtesy the growth of Middle Eastern...
It's true that US airlines do not receive "direct" subsidies from the US government. But there are a number of ways by which "indirect" subsidies are provided to US airlines. This goes back to '78 when Carter - working with Congress - deregulated the aviation sector. It's pretty simple - US airlines are looking at what is happening to their European counterparts (in terms of cost and better service/quality) courtesy the growth of Middle Eastern and Asian airlines and fearing that might happen to them one day. It's proactive and smart on their part (they are far beyond the curve!).
The area that generates a lot of revenue for US airlines is across the Atlantic. Imagine what happens to their profit margins if they have to compete with the Big 3 on those routes? Europeans prefer US airlines across the pond cause more often than not they are cheaper. But if the Big 3 are allowed to operate these routes - a potential price war (along with better service from these airlines) might result in a pretty bad situation for US airlines (will Delta re-evaluate its recent moves then?) :) My two cents..
I have absolutely no sympathy for US airlines. None. They are making huge profits as noted. They've cut seats and routes to the point where I don't see what they're really complaining about. There's clearly a market for the flights EK,EY and QR are flying. The US carriers don't seem to have any interest competing on those routes. Their product is substandard compared to most foreign carriers. They've been so focused on gouging their customers...
I have absolutely no sympathy for US airlines. None. They are making huge profits as noted. They've cut seats and routes to the point where I don't see what they're really complaining about. There's clearly a market for the flights EK,EY and QR are flying. The US carriers don't seem to have any interest competing on those routes. Their product is substandard compared to most foreign carriers. They've been so focused on gouging their customers for the last several years that the only way they can compete is by limiting competition so people have no choice but to fly them.
U.S. airlines were all in favor of Open Skies when it suited them. After decades of this, they cry foul when the advantage has turned the other way. The hypocrisy is pretty galling.
Unintended consequences comes to mind, airlines should have knowed that this would happen. All they had to do was would look at the shipping industry, but guess the lure of short term profit was too high.
Hate to say this, but the fix is pretty easy. Banning 5 freedom flights (Sorry Ben, know you love em) stops ME3 carriers flying from Europe; and require that staff is hired under either the laws of the country/region...
Unintended consequences comes to mind, airlines should have knowed that this would happen. All they had to do was would look at the shipping industry, but guess the lure of short term profit was too high.
Hate to say this, but the fix is pretty easy. Banning 5 freedom flights (Sorry Ben, know you love em) stops ME3 carriers flying from Europe; and require that staff is hired under either the laws of the country/region the airline is from or from the destination stops Big Grin Kjos/Norwegian like ops from using Asian crew on EU-US flight.
Preserves the status quo and kicks the problem down the road.
Competition is good for consumers. Airlines operating at a loss by offering services below costs is good for consumers, but only for as long as that lasts.
I could see this being good in the shortterm, but once the Middle East (ME) airlines are done buying up the Euro carriers and diverting them to being ME-oriented (as is happening now with Alitalia), there will no longer be that competition that benefits consumers and then...
Competition is good for consumers. Airlines operating at a loss by offering services below costs is good for consumers, but only for as long as that lasts.
I could see this being good in the shortterm, but once the Middle East (ME) airlines are done buying up the Euro carriers and diverting them to being ME-oriented (as is happening now with Alitalia), there will no longer be that competition that benefits consumers and then what will be left to stop these ME airlines from suddenly raising their fares and reducing amenities & services? Once dismantled, it's almost impossible revive an airline from scratch, the barriers to entry and immense investment required prevent new competitors from challenging the ME airlines once they've cornered the market.
This is similar to Amazon.com, whose current low prices and lack of profits benefit consumers, but it's patient investors know that Amazon is just bidding its time until it has enough market dominance that it can raise prices almost at will. So don't assume the shortterm dynamics don't have longterm consequences.
Lucky, I am very happy you posted and briefly commented on the NY Times article. Personally I believe as though the airlines in the US need to stop wasting their time complaining and find a better way to compete. Obviously it is tough to compete for the absolute lowest fare when labor is much cheaper in the Middle East, so it needs to come from somewhere else. Maybe a campaign highlighting the "Buy American" mentality...
Lucky, I am very happy you posted and briefly commented on the NY Times article. Personally I believe as though the airlines in the US need to stop wasting their time complaining and find a better way to compete. Obviously it is tough to compete for the absolute lowest fare when labor is much cheaper in the Middle East, so it needs to come from somewhere else. Maybe a campaign highlighting the "Buy American" mentality and supporting local economies? Or how about training its employees to offer better hospitality so that it is at least competing with the Middle Eastern / Asian airlines?
Anyway back to the original question, growth should not be stopped. The Middle East is competing in their own way, and the airlines here in the states need to find a different way to compete.
in terms of foreign ownership and competition, don't forget that Virgin Australia is majority owned by Etihad, Air New Zealand and Singapore. They own roughly 20% each and their CEOs are on the board.
Qantas has been fighting that for ~2 years, citing unfair competition.
This isn't at all about some moral concept of fairness, it's all about trying to get an advantage, any advantage, over rivals. I would suggest to the US carriers...
in terms of foreign ownership and competition, don't forget that Virgin Australia is majority owned by Etihad, Air New Zealand and Singapore. They own roughly 20% each and their CEOs are on the board.
Qantas has been fighting that for ~2 years, citing unfair competition.
This isn't at all about some moral concept of fairness, it's all about trying to get an advantage, any advantage, over rivals. I would suggest to the US carriers fighting this that the solution is closer to home: your product sucks. Focus on making your customers happy and treat them with respect, like the Middle Eastern airlines do, and maybe you'll be able to properly compete.
Qatar has been profitable. A quick Google yielded this quote from the CEO but I'm sure there are more details out there.
"We are a very profitable airline. We don’t announce the results because we were private and publicly held in the past. Now we will announce profits," he said."
http://in.reuters.com/article/2014/05/05/qatar-airlines-idINKBN0DL0JM20140505
They are just not as profitable as US airlines. I've seen a report a while ago that breaks out airline profit by...
Qatar has been profitable. A quick Google yielded this quote from the CEO but I'm sure there are more details out there.
"We are a very profitable airline. We don’t announce the results because we were private and publicly held in the past. Now we will announce profits," he said."
http://in.reuters.com/article/2014/05/05/qatar-airlines-idINKBN0DL0JM20140505
They are just not as profitable as US airlines. I've seen a report a while ago that breaks out airline profit by region and the US sits at the top.
Sure, they probably won't be profitable without the government subsidy but then the US airlines are heavily subsidized too and would not be as profitable if they've lost the subsidy.
Do you know if Singapore airlines and Cathay Pacific make any profit? How do they maintain such high standards.
Unfair competition - otherwise known as lower prices and better service for flyers.