The IATA Annual General Meeting has been going on in Miami the past several days, which is one of the most attended events by airline industry executives.
You’d expect this would be one of the most controversial meetings yet, given the squabble between the US carriers and Gulf carriers, which is almost unprecedented in terms of vitriol.
Yesterday we saw Qatar Airways’ CEO, Akbar Al Baker, threaten to leave the oneworld alliance. Furthermore, he threatened retaliatory protectionism to any government which blocks Qatar Airways’ growth. Akbar Al Baker has virtually no filter, so all things considered I guess you could say he was on his best behavior at the AGM. 😉
Almost inarguably the most well spoken and bright CEO of a Gulf carrier is Tim Clark, who is the CEO of Emirates. He’s extremely well spoken. So far he has been measured in what he has said about the Open Skies debate:
- Clark has spoken candidly about Open Skies, in a factual but confident manner
- Emirates released The International And Government Affairs Journal Of Emirates, which sort of schooled the US carriers
Well, Clark had some choice words for the US carriers at the AGM the past couple of days. Via SkyWriter Aviation (bolding mine):
We asked Clark whether he thinks the US3’s campaign to block the Gulf carriers in getting traction with the US government. His response: “This is the most destructive campaign in the history of civil aviation, as far as I’m concerned. That’s why I think it needs to be dealt with at the highest levels of the US government. We’re a family in this business – we’re hugely competitive, but we tend to be friends. This has kind of shifted a little bit. When people state that they don’t want you on the planet, they don’t want you around anymore, then this [becomes] a fight to the death. They’re actually messing with the wrong people. We haven’t taken Emirates from nothing to where it is today, just to be seen off the block by somebody who is anxious to employ such tactics.”
How does Clark respond to American’s CEO, Doug Parker, claiming that this is really a fight between governments and not between airlines?
In response to American CEO Doug Parker’s comment earlier today that “this is a dispute between governments, not between us as airlines,” Clark fired back: “It’s totally and utterly smoke and mirrors. Believe nothing. These guys are out to take us down, and they have a fight on their hands. It’s not of our making. They’re dealing with the wrong people. This isn’t some minnow in Africa or Asia. That’s not going to happen here. We’re too big. We have a $37 billion balance sheet. We turn over nearly $30 billion a year. If you think we’re going to get pushed around by them, you’re not serious. I didn’t want this, and neither did [Etihad CEO] James Hogan. It was brought to us, and it has been constant. It has been threatening, it has been intimidatory, and frankly it’s a disgrace as far as I am concerned. It’s destabilizing the industry.”
And here’s why Clark thinks it’s important for this debate to take place at IATA, even though they don’t want it to:
Why IATA doesn’t want the debate and why Clark thinks it’s important: “It’s a difficult one for IATA [to mediate] – ‘it’s not my problem, so don’t bring it here.’ But it’s not just about us – it’s about the industry. When these kinds of tactics are going to be used, it’s almost a paradigm shift in how you go about your business. I’ve been in the business for over 40 years, and I’ve only seen this once before. There was a guy who called Freddie Laker and, before there were anti-trust laws, the European and American carriers ganged up and brought him down because they sold all their seats for nothing. They can’t do that now.”
Wow!
While Al Baker is all talk, Clark is someone who is very disciplined in what he says. Clark calling this a “fight to the death” is no small matter. Now we just have to wait for Emirates to announce hourly A380 service between Atlanta and Dubai. 😉
@Adrian - " I doubt both sides will take on this Open Skies issue in a way that the US3 airlines want, and the most realistic outcome is to ask the ME3 to back off from the fifth freedom rights, which really are not that easy to use."
As I pointed out above, there is no way to know how this will ultimately play out, given that will take months or years to decide. There...
@Adrian - " I doubt both sides will take on this Open Skies issue in a way that the US3 airlines want, and the most realistic outcome is to ask the ME3 to back off from the fifth freedom rights, which really are not that easy to use."
As I pointed out above, there is no way to know how this will ultimately play out, given that will take months or years to decide. There is no way to know what the business/political environment will look like then. None.
"But the PR campaign launched by the ME3 will be more efficient with all the negative news coming from the US airlines’ front especially the big 3."
Efficient is not necessarily the same thing as effective. Because of the factors I listed above, I think the ME3 will have a long fight on their hands. And I didn't mention the suspicion that many people in this country (rightly or wrongly) have of the Middle Eastern countries and peoples.
"I can’t see the ME3 backing away anytime soon."
Nor will the US3.
"but don’t you forget that Qatar Airways is part of OneWorld, and British Airways actually “supports” the ME3?"
I'm well aware that QR is part of OneWorld, thank you very much. And which side BA supports in this argument is irrelevant. No one in this country who will end up playing a part in any final decision will care a whit what BA thinks.
"That will put Parker in a very awkward position"
Isn't Al-Baker in the same position, publicly attacking one of his alliance partners?
"I have a feeling that’s why Anderson is chosen"
AFAIK, no one really "chose" Anderson, he just started talking. I'm simply saying that Parker would be a better spokesman for the US3 point of view.
"Boeing, who needs Emirates’ big orders as well."
I don't think Boeing will have much of an impact one way or the other. They might have an opinion, and they may express that opinion, but I doubt they'll do much more than that. Boeing doesn't need orders from the ME3 to survive. They've got a stranglehold (to a large degree) on the US defense market, and the 787 is doing OK for them. They won't shrivel up over this.
"FlyDubai has an exclusive fleet of 737s."
What does flydubai have to do with anything? They're not part of the ME3, and they don't fly to the US.
"Will they sacrifice all the other Open Skies treaties just to satisfy the US3 on this particular fight?"
They might. Politicians are not known for logic.
The military relationship between the US and Middle East is often complicated and you can argue that UAE and Qatar need the US just as much. But can you really put a balance on who needs who more? As of now, there are enough factors outside of civil aviation that affects the relationship between USA and the Middle East. I doubt both sides will take on this Open Skies issue in a way that the...
The military relationship between the US and Middle East is often complicated and you can argue that UAE and Qatar need the US just as much. But can you really put a balance on who needs who more? As of now, there are enough factors outside of civil aviation that affects the relationship between USA and the Middle East. I doubt both sides will take on this Open Skies issue in a way that the US3 airlines want, and the most realistic outcome is to ask the ME3 to back off from the fifth freedom rights, which really are not that easy to use. JFK-MXP is more like an exceptional case than a frequent happening. In some ways, the US3 is possibly afraid of the ME3 staring routes like LA to Asia or Australia, but from a historical perspective, that is almost impossible even if the US allows it.
This Open Skies battle is built on a PR campaign started from the US3. That's why the ME3 airlines are hitting back with new brochures and if you are in Facebook, you can see sponsored link. The US3 airlines use the lobbyists and I am sure ME3 uses the same lobbyists too. Sadly that is how things get done in this country now - lobbying. But the PR campaign launched by the ME3 will be more efficient with all the negative news coming from the US airlines' front especially the big 3. Surely the US3 and its lobbying firms can respond, but the ME3 has deep pockets too. I can't see the ME3 backing away anytime soon.
Maybe Parker should be the spoke person, but don't you forget that Qatar Airways is part of OneWorld, and British Airways actually "supports" the ME3? That will put Parker in a very awkward position and I have a feeling that's why Anderson is chosen...
Even if we presume that the labor unions are as powerful as before, there are other US airlines, like JetBlue and Virgin America, which will benefit from the ME3 expansion, and Federal Express and other cargo carriers, who benefit from this Open Sky, and Boeing, who needs Emirates' big orders as well. Emirates has placed a large order for 777X and both Etihad and Qatar are actually large Boeing customers too. FlyDubai has an exclusive fleet of 737s.
I honestly see this fight between US3 and ME3 as stupid, and no one will come out a winner. Both sides have government's helps in many ways and can one airline really say that their governments have not even stepped in and helped them throughout their history? Subsidies come in many forms, not only in purely monetary forms. And I don't see any government not helping out their own national/private carriers in time of crises and even in good times. Someone from other forums mention that Open Skies is a US creation and the US government has other Open Skies treaties at work too. Will they sacrifice all the other Open Skies treaties just to satisfy the US3 on this particular fight?
Tim Clark sounds like he's got mega PMS issues.
ATL-DXB would be the stuff of dreams! :)
I'm pretty excited that Qatar is coming to Atlanta next year.
"Patriotism is the last refuge of a scoundrel."
- Samuel Johnson
Hey, U3: When you'r in a trap, don't wriggle about.
When AA or United offers me a First experience that rivals Emirates or Etihad or Qatar... (oops, maybe I should have said "if"; I forgot my pill today)... then I'll become invested in their problems and their prosperity. Meanwhile...
...there's this thing called "the market" that allows you and me to choose the...
"Patriotism is the last refuge of a scoundrel."
- Samuel Johnson
Hey, U3: When you'r in a trap, don't wriggle about.
When AA or United offers me a First experience that rivals Emirates or Etihad or Qatar... (oops, maybe I should have said "if"; I forgot my pill today)... then I'll become invested in their problems and their prosperity. Meanwhile...
...there's this thing called "the market" that allows you and me to choose the airline we fly with. I like that arrangement.
@Adrian - "I feel that the US3 efforts are fundamentally in vain given"
We won't know the outcome of this for quite a while. Months, at least, possibly years. There's no way to know what the scene will look like that far away. Don't forget the US has Presidential & Congressional elections in 2016 (only 7 months away), during which time, it will be largely impossible to get anything significant done in Washington). I doubt...
@Adrian - "I feel that the US3 efforts are fundamentally in vain given"
We won't know the outcome of this for quite a while. Months, at least, possibly years. There's no way to know what the scene will look like that far away. Don't forget the US has Presidential & Congressional elections in 2016 (only 7 months away), during which time, it will be largely impossible to get anything significant done in Washington). I doubt this gets resolved, one way or the other, before then.
"1. U.S military interest is always the number one priority, and given our recent rather cool down relationship with Saudi Arabia, the US will not do anything to jeopardize relationships with UAE and Qatar."
Don't forget, UAE & Qatar need the US just as much as, if not more than, we need them. The US is the only country that can really stand up to Iran (if it wants to, but that's another story). The US is the only country with the political, economic, and military ability to stop Iran from dominating the Persian Gulf region. When push comes to shove, UAE and Qatar may not be willing to risk having the US take a more hands-off approach to Iran.
"2. US3 has not really been customer friendly lately."
That's not really relevant to the issue of protectionism (legally, at least).
"I don’t know if US3 will get strong supports from American citizens."
Maybe not from FFers, but they'll get PLENTY of support from the stereotypical "Merica" crowd (I dislike that term and consider it patronizing, but really can't think of a better one). There are a lot of those people, and they can make a lot of noise. And they vote. Politicians will pay attention to that. And then if the airline unions decide to get involved and complaining about the expansion of the Gulf carriers putting American jobs at risk (whether or not that's actually true isn't really the point), then you'd have the unions and their political folks involved. They can make just as much noise as the "Merica" folks. And they vote, too.
"3. I feel that there must be some “behind the scene” actions that have somehow made the ME3 taking a stronger stand."
There are always behind the scenes actions behind things. This is no different from anything else in that regard.
"Or there will be a wave of advertisement coming from the ME3 soon, regarding the myths created by US3!"
Maybe, maybe not. If there are, the groups I mentioned above (Merica & unions) are more than capable of responding with their own ads, marketing, and political gimmicks.
"I can’t wait to hear from CEO Anderson soon!"
Parker would be the best choice for a spokesman for the US3. Anderson's stuck his foot in his mouth one too many times when he's spoken about this. I doubt anything RA says will affect the outcome one way or the other, but Parker would be FAR better (much as I loathe him). Even Smisek would be better than RA.
The US carriers are worried about one thing and that is more flights like Emirates' JFK-MXP flights. They don't want these carriers setting up shop and flying from the US to Europe which is where the US carriers make a lot of money. The US carriers don't care about people flying to Asia and Africa via DXB, AUH or DOH, it's all about preempting future US-Europe service. Longer term, it is probably about preventing fifth...
The US carriers are worried about one thing and that is more flights like Emirates' JFK-MXP flights. They don't want these carriers setting up shop and flying from the US to Europe which is where the US carriers make a lot of money. The US carriers don't care about people flying to Asia and Africa via DXB, AUH or DOH, it's all about preempting future US-Europe service. Longer term, it is probably about preventing fifth freedom flights from Asia-US as well (but you don't hear US3 complaining about SQ flying NRT-LAX, HKG-SFO and ICN-SFO).
Emirates rocks ;) These idiot US carriers behaves like a child. If they're not good enough then they want to block the competition like in non-democratic country... Interestingly Lufthansa or British Airways didn't say anything... they're just working hard not like these US airlines that flies veteran planes...
+1 ATL-DXB hourly ;)
I would be so happy if Emirates would start an A380 flight to Atlanta. Flyers in Atlanta need better options than what's currently available. It's nice that Qatar Air will start an Atlanta flight next year, but it would be great to have the option of flying an A380.
Given how crappy the US airlines are, competition is badly needed--and welcome--to stimulate, and force, change.
Just let the damn customers decide what they want! Jeez.
"I believe that the three should target Emriates so it won’t jeopardize relations with Qatar and the U.A.E and it would be much easier."
Ummmm...Dubai is part of the UAE. Just FYI.
What's the best way to transfer miles from chase UR / Citi TY / Amex Rewards to book EK F?
@ Narwhal -- There isn't a great way. You can transfer from AmEx to Emirates or from Chase to Korean Air, but neither have the best redemption rates for travel on Emirates.
Emriates just has a lot of money to spend and I don't believe it comes from their profit. On the flip side, the three legacy carriers should focus on customer service and their soft product.
I personally think that Emriates is the biggest threat to the 3 U.S. Carriers. While Ethiad and Qatar Airways do make surprising descions on routes, at least they don't put an a380 on every route. I believe that the three should target Emriates so it won't jeopardize relations with Qatar and the U.A.E and it would be much easier.
I feel that the US3 efforts are fundamentally in vain given:
1. U.S military interest is always the number one priority, and given our recent rather cool down relationship with Saudi Arabia, the US will not do anything to jeopardize relationships with UAE and Qatar.
2. US3 has not really been customer friendly lately. The amount of stories in the press has always all negative for the past month, such as the Diet...
I feel that the US3 efforts are fundamentally in vain given:
1. U.S military interest is always the number one priority, and given our recent rather cool down relationship with Saudi Arabia, the US will not do anything to jeopardize relationships with UAE and Qatar.
2. US3 has not really been customer friendly lately. The amount of stories in the press has always all negative for the past month, such as the Diet Coke incident - Yes most of them are on various regional subsidiaries but those flights are still sold as Delta and United. Frequent flyers are all irritated with all these "enhancements" resulted by mergers and all these consolidations. Every week, you read about stories regarding the fight for overhead bin and how seats are getting smaller. I don't know if US3 will get strong supports from American citizens.
3. I feel that there must be some "behind the scene" actions that have somehow made the ME3 taking a stronger stand. Or there will be a wave of advertisement coming from the ME3 soon, regarding the myths created by US3!
Let us get the popcorn out! I can't wait to hear from CEO Anderson soon!
Adrian
This is interesting. In 18th century, when China did not want or need any business dealing with the western countries, the westerners (headed by the British) came with overwhelming military power and knocked down the doors and "flew into" China, setting up in various ports and cities, selling opium in exchange of Chinese made merchandises. The point is let's do away with philosophy and loving pretence, the power that be has the final say.
What does the Open Sky arrangement really entail? Would it allow the ME3 to:
1) Fly direct/non-stop services from U.S. ports to European, Asian and South American ports?
2) Fly domestic US routes?
If the answer is yes, then the spread of the ME3 is going to be toxic.
But if it's no, then heightened capacity to the U.S. by the ME3 is a good thing for U.S. pax, allowing better access to parts...
What does the Open Sky arrangement really entail? Would it allow the ME3 to:
1) Fly direct/non-stop services from U.S. ports to European, Asian and South American ports?
2) Fly domestic US routes?
If the answer is yes, then the spread of the ME3 is going to be toxic.
But if it's no, then heightened capacity to the U.S. by the ME3 is a good thing for U.S. pax, allowing better access to parts of the developing world not currently serviced by U.S. carriers.
Can some please confirm the scope of the Open Skies arrangement?
@ TheRealBabuska -- It doesn't allow them to fly domestic routes within the US. Here's a good explanation of what it does allow:
http://en.wikipedia.org/wiki/Open_skies
Ben, not to get all English teacher on you, but I've seen you make this mistake many times. It is "inarguably", not "unarguably".
Would be nice to see more US-Europe routes by ME3 or Asian airlines.
Clark's language seems pretty inflammatory. I'm not sure it's wise for him to use language that strong (irrespective of whether he's right or not).
Calling the US3's attitude a paradigm shift is spot on. Now I kinda wish I had waited a semester to take my Airline Management class so I'd have an opportunity to discuss these goings on in an academic environment.
Tim Clark's new theme song? Hang bags at ten paces ladies!
https://www.youtube.com/watch?v=dVQBtgke8bs