There’s a huge ongoing battle between the big US carriers and the big Gulf carriers, specifically about whether Gulf carriers should be able to participate in air treaties allowing the “freedom” of routes, given that they’re heavily government subsidized.
Based on the arguments on both sides, you’d think this was an argument happening during recess in elementary school. Delta’s CEO has linked the Gulf carriers to terrorism, while Qatar Airways’ CEO has called Delta’s CEO weak, unpatriotic, and unethical. US carriers have argued that these evil subsidized Gulf carriers will eventually prevent US airlines from operating to US airports with subsidized flights (oh, the irony!). The US carriers have also shamed any company or person which does business with the Gulf carriers, completely overlooking the fact that American partners with both Etihad and Qatar.
Qatar Airways will be launching daily flights between Doha and Atlanta as of June 1, 2016, a route which Qatar Airways’ own CEO admits is simply to “rub salt into the wounds of Delta.”
Now Delta is fighting back. Delta is saying that the demand between Atlanta and Doha is less than five people per day, so how can that possibly be the basis of a route? Per Forbes:
“Demand is less than five people a day” for Atlanta-Doha service, incoming Delta President Glen Hauenstein said Thursday on the carrier’s first quarter earnings call. He referred to the demand for travel between Atlanta and Doha, not including connecting passengers at either destination.
Later, asked whether Delta operates any routes where it has only five origin and destination passengers a day, Hauenstein responded sarcastically, “We don’t have any flights crossing the world that have less than 10 people a day.”
Delta president and incoming CEO Ed Bastian added, “We do have some markets that we have four or five passengers on.
“We call that Delta Private Jets,” Bastian said, referring to Delta’s luxury jet charter subsidiary.
This is a very unsophisticated argument on Delta’s part. We all know there’s not much demand for travel on the Gulf carriers to their actual hubs, but rather that their business models are based around offering connecting flights. That’s the whole argument the US carriers make, so I’m not sure why they’re trying to undermine it with this point.
And for that matter, I’d bet there are many Delta routes with similar numbers. I’d be very curious what the daily demand is between Minneapolis and Amsterdam, a route which Delta serves daily. It’s pretty disingenuous for them to pretend the don’t rely on connecting traffic just as much in many markets.
Delta wants to have it both ways — if they’re poking fun at Qatar Airways operating a route with demand of just five people per day, they should love that. It means they won’t be poaching many of their customers. But the real concern is that Qatar Airways will steal passengers traveling to India, Asia, Africa, etc.
This continues to be Delta’s number one priority in Washington:
“This is our number one priority in Washington,” Delta EVP and chief legal officer Peter Carter said on Thursday’s call. “We have reason to believe the US government will do the right thing. Having said that, this is a diplomatic issue and it will take some time.”
All this comes as Delta reports a first quarter profit of $1.56 billion. Clearly they’re really struggling as a result of all these horrible new routes by Emirates, Etihad, and Qatar.
(Tip of the hat to Apurva)
@mark
"yeah i wonder how big the demand is in johannesburg to fly to atlanta and not connect anywhere else. agree that this is a silly argument"
O&D demand for this route is actually very high. There is a large South African community here in Atlanta as well as a lot of business ties with several major Atlanta companies I know of who have a South African presence which requires frequent travel. The fares and...
@mark
"yeah i wonder how big the demand is in johannesburg to fly to atlanta and not connect anywhere else. agree that this is a silly argument"
O&D demand for this route is actually very high. There is a large South African community here in Atlanta as well as a lot of business ties with several major Atlanta companies I know of who have a South African presence which requires frequent travel. The fares and load factors stay high on the route as a result. Premium cabins are consistently full.
in that case, I take back what I said. Good to know!
China Eastern, in which Delta holds 5% shares, is heavily subisidized by the Chinese government.
@Mark H
Define government subsidized?
Chapter 11 gives US airlines great advantages verses EU airlines when it comes to shedding debt and future obligations, does this mean that the US3 should not be allow to operate in to Europe?
Open Skies was pushed heavily by the US GOV and US airline industry on the rest of the world, to give US airlines access.
Be careful what you wish for, you just might get it comes to mind.
Both the Chapter 11 and post 9/11 loan program arguments are huge red herrings. Comparing Chapter 11 to direct government cash subsidies is absurd. In Chapter 11, the people actually subsidizing the airline are the employees, in the form of lost wages and pensions. There is zero transfer of cash from the government. As far as the post 9/11 loan program, which I'm sure someone will bring up, they were loans not cash gifts which...
Both the Chapter 11 and post 9/11 loan program arguments are huge red herrings. Comparing Chapter 11 to direct government cash subsidies is absurd. In Chapter 11, the people actually subsidizing the airline are the employees, in the form of lost wages and pensions. There is zero transfer of cash from the government. As far as the post 9/11 loan program, which I'm sure someone will bring up, they were loans not cash gifts which is what the ME3 are getting. Secondly, the government made a profit off of all the loans that it made. Thirdly, and most importantly, none of the four largest carriers in the U.S. received a dime from that program.
The real question is, of course, should the Middle Eastern carriers have the protection of Open Skies agreements when they are government subsidized? There is no question whatsoever that these carriers are operating many, many routes ar a loss to gain market share. They have already decimated many carriers in other countries (QUANTAS for example), are we willing to let that happen here too? Pretty shortsighted.
2 of the 5 pax on the June 3rd flight will be me and Hubs... ;)
I know that keeping the Delta International FF agent on the line long enough to go thru 6 months of fares and availability, nothing was available but full fare/ top dollar for an upgrade with miles, and NO SEATS for a free ticket. The agent said that the flight is always full. Finally in order to end the call, the agent said "it must be a glitch in the system and I will report it....
I know that keeping the Delta International FF agent on the line long enough to go thru 6 months of fares and availability, nothing was available but full fare/ top dollar for an upgrade with miles, and NO SEATS for a free ticket. The agent said that the flight is always full. Finally in order to end the call, the agent said "it must be a glitch in the system and I will report it. Some one will call you back as soon as the problem is corrected." Still waiting. I had an incredible flight on Qatar. My only problem was trying to decide whether to get the pink or white champagne.
Such silliness. Focus on improving the product and your loyalty program Delta.
Why dont we look at delta's five direct flight per day flint to kabul!
"How about we take a look at Delta’s AMS routes? I would bet they have about 5 O&S passengers on ATL-AMS every day too."
Then you would lose whatever you bet.
Whoops, meant O&D passengers, not quite sure what O&S is...
How about we take a look at Delta's AMS routes? I would bet they have about 5 O&S passengers on ATL-AMS every day too. A complete failure of an argument.
yeah i wonder how big the demand is in johannesburg to fly to atlanta and not connect anywhere else. agree that this is a silly argument