Emirates President Tears Apart US Airlines In Op-Ed

Filed Under: Emirates, Media

For years the “big three” US carriers (American, Delta, and United) have been engaged in a smear campaign against the “big three” Gulf carriers (Emirates, Etihad, and Qatar). Last year we thought the situation got a bit better when the US reached agreements with both Qatar and the UAE, basically maintaining the status quo, while giving US airlines something to show for all of their wasted time.

But nope. The US carriers have been going on and on, and this even lead to a meeting a bit over a week ago between President Trump and some airline CEOs. Trump allegedly told the US carriers to pound sand, made fun of Doug Parker for American’s low stock price, and kept commenting about how Delta CEO Ed Bastian couldn’t make it.

My problem with US airlines’ arguments

My issue with US carriers in this debate is that their argument has been based on creating paranoia rather than based on fact. If the US carriers want to have a discussion about the role of government stakes/subsidies in airlines, I think that’s totally fair. But that can’t just be about Emirates, Etihad, and Qatar.

This discussion would have to involve so many more airlines. Looking at SkyTeam airlines, what about Saudia, or Kenya Airways, or Alitalia? There have been reports that Delta may take a stake in Alitalia, even though the airline is making huge losses and has been kept alive by the Italian government. How are they okay with that?!

But instead US airlines have focused on these three airlines, and have claimed that American jobs are at risk, and that the entire US aviation industry could collapse. At one point they even claimed that if the Gulf carriers aren’t stopped, we might not be able to get our military where they need to go.

That obviously isn’t the case, and it’s incredibly frustrating how disingenuous that argument is.

Well, Emirates President Tim Clark is one of the brightest guys in the airline industry, and he has just written an op-ep with the title “It’s time US ‘big three’ end their anti-Gulf carrier campaign.” As Clark notes, “facts regrettably have always been a stranger to the big three’s vocal protests.”

There’s something really, really shocking about this op-ed. It has… facts. Let’s take a look at some of the highlights.

Why US airlines don’t file a formal complaint

Clark notes that President Trump told the US airline CEOs to file a complaint under the International Air Transportation Fair Competitive Practices Act of 1974 (IATFCPA).

In the past the airlines have had no problem going this route if they had international competitive concerns. So why haven’t they done so here? As Clark explains:

Instead of following an established 180-day process, the big three pursued their four-and-a-half-year, multi-million dollar lobbying campaign to try to limit consumer choice and marketplace competition. They even went so far as publicly refusing to file an IATFCPA complaint. Today, after more than 1,600 days and tens of millions of shareholder dollars wasted, they are where they didn’t want to be.

President Trump’s message was clear: the big three need finally to begin the customary IATFCPA review, which they have been desperately avoiding.

Why are the Big Three so averse to using IATFCPA? To prevail, they must show they have suffered commercial harm as a result of the alleged unfair competitive conduct. Having collectively earned more than $40 billion in profits since starting their campaign in January 2015, it is extremely difficult to do so. Similarly, US DOT Bureau of Transportation Statistics (BTS) data directly contradicts the other big three claim that Gulf carrier competition is an existential threat to US airline jobs. BTS data shows the employee count at Delta, American and United has grown 9,516 (11.8%), 9,347 (9.5%) and 6,582 (7.8%), respectively, between 2015 and 2019.

US airlines mischaracterizing agreements

As mentioned above, last year the US and UAE reached an agreement, which essentially maintained the status quo. There’s a huge difference between what was actually agreed upon, and how US airlines choose to interpret it, as explained by Clark:

As part of their anticompetitive and anti-consumer campaign, the big three have mischaracterized a 9 May 2018-dated side letter from the United Arab Emirates (UAE) government, stating that UAE carriers, as of the date signed, had “no current plans” to begin new fifth freedom flights. The big three wrongly claim this constitutes an ongoing moratorium on UAE carriers adding future fifth freedom flights to the US fifth freedom flights allow carriers to operate between two separate foreign countries so long as the flight originates or terminates in the carrier’s home country. The US-UAE Open Skies agreement authorizes fifth freedom flights, without limitation, by airlines of both countries.

The pattern of selective misinterpretation continues. The Joint Statement of the Sixth US-UAE Economic Policy Dialogue signed in June 2019 specifically reaffirmed the “ongoing commitment of the United States and United Arab Emirates to fully maintain all aspects of their Open Skies relationship.” Somehow, the big three afterwards interpreted these unequivocal words to indicate a continuing moratorium on UAE carriers launching new fifth freedom flights. Nothing could be further from the truth.

Bottom line

It’s nice to see someone call out the US carriers on their rhetoric in this way. Clark is very well spoken, and this perfectly sums things up. This is the way to go about it — not like Qatar Airways’ CEO does, by talking about US airlines have “sh*t aeroplanes” and “grandmothers.”

I’m not complaining that there should be no discussions regarding the role of governments in airlines. However, I do take serious issue with:

  • Making this argument about something that it’s not about (US airline jobs, and the industry on the whole, isn’t at risk)
  • Picking on three airlines, when there are plenty of money-losing airlines that have an unfortunate level of involvement with their governments
Comments
  1. GREAT post Ben, instead of rehashing events you jump right in with meaningful insightful post.

    Clark is right on point and as a long time business traveler as well as person I am so sick of the likes of Anderson/Parker etc whining while they suck in all the subsidies and advantages of our bankruptcy system. Poor service dirty planes is all they offer. I have not flown US metal overseas for 12 years and have no plans to do so in the future. My choice is EK and AF

  2. Why didn’t you link to the actual op-ed anywhere in the post? You’ve hyperlinked the title of Clark’s piece, but the link just direcets to another OMAAT post on this topic.

  3. Lol @ “Made fun of Doug Parker for American’s low stock price, and kept commenting about how Delta CEO Ed Bastian couldn’t make it.”

  4. I love Tim Clark for being so polished and for his uniquely British way of telling the US3 to bugger themselves without resorting to such boorish language. But I also love Akbar Al Baker for sometimes just directly saying what most of us think about the US3 – less the histrionics and sexism, of course.

  5. These whining Americans are like a broken record. But it’s not unique: Apple, Facebook, Starbucks, Microsoft and dozens more have rushed off to Trump, complaining about the nasty Europeans trying to make them pay ( some) tax in the countries in which the profit is made. “How unfair “, they screech in unison.
    Keep it up and it won’t be long before someone decides to just kick them out, in the way India did with corporate miscreants 30 years ago.
    The double standard is staggering.
    At least Trump had the good sense to tell them to bugger off.

  6. Cool, thanks. What context can you (or anyone else with industry knowledge) give us about the platform he published on? I was expecting to see something like WSJ or the Financial Times, but this appears to be an aviation publication. I would think there’s more value in publishing this for a general audience, since I’m guessing the readers of an aviation journal already have pretty set opinions on this matter.

  7. I think Ed Bastian missing the White House meeting was intentional. Whether it’s because he’s seen the light of his own hypocrisy, or (more likely) just realized it was time to cut his losses and not embarrass himself any further. Flaws of the SkyMiles program notwithstanding, he’s got arguably the best domestic product going and they’re raking in profits left and right. Give it a few years as they continue to upgrade their wide-body fleet and retire the 767s, and it’ll be hard to recognize it as the same airline it was 10 years ago. He doesn’t need this petty crap to mar his tenure as CEO any further.

  8. Ghostrider5408 odd as you assume no change for 12 years. US3 Have made huge investments and delta has a great updated product. It’s the same as people saying the airport was terrible in 1985 . Never going back there. Meantime the entire terminal was rebuilt

  9. If one of your talking points is trump making fun of something, you should probably do the world a favor and get off the internet now. He declared bankruptcy how many times and he wants to tell people how to run a business. This site becomes increasingly more of a joke by the day.

  10. @Nigel if after reading this article your takeaway was what Trump did, does or has done, then you’ve missed the point entirely and YOU should get off the internet.

  11. @Paolo

    Good one. American companies are so different than the righteousness exemplified by Glaxo and SAP and Bayer. How’s the view up on that high horse?

  12. I think your article is a bit off base here. It’s not just the “big three” that are lobbying against Emirates for the record. If you’re to take a look at the global market as a whole airlines have had to shift their international markets and focus cities based on the business model of Emirates. They throw 10 777’s or A380’s on a new route, make it so that the other airlines can’t compete with pricing or any departure time, push that airline out of the market then once they have pushed competition out of that market increase price and decrease volume. Essentially developing what in some countries is known as a monopoly on a route, don’t know if everyone here is familiar with that idea. I am not quite sure you all know much about the industry or even work in it based on your comments. The idea is that this is sustainable for them because they have subsidies by the government which show net revenue and profits that are untrue because they are bleeding money, yet they have subsidies from the government that allow them to compete on an unlevel playing field. However this conversation is not worth the time. It’s not a surprise that Emirates is not only bleeding cash but pilots also. They are losing so many pilots that the ME3 is loaning pilots to each other’s companies to cover routes. So you might want to interpret it this way, maybe the big three should stop their campaign simply because pilots who have worked for the ME3 and then switched back to the big three are noticing that work conditions at these companies are terrible in comparison. If you are an ex-pat they are literally holding you hostage right now and not letting you leave the country and saying you owe them hundreds of thousands of dollars, almost forced slavery, until you are allowed to leave the country and return to the US for a big three airline. Time will tell when enough pilots leave these places, they crumble because like many others working 120 hour lines and having 9 days off or less a month is a terrible schedule that only scabs would work for. My opinion and a throwaway name and account.

  13. There’s a difference in taking stake in another airline and having codeshare agreements etc. and what is going on with Air Italy. An airline taking massive losses suddenly buying multiple wide bodies and expanding like crazy? Nothing fishy there.

  14. @TM I think you nailed it. This whole luncay was Richard Anderson’s baby. Guess where Anderson is now? If you guessed Amtrak (one of the largest consumers 0f US subsidies) your are right. Apparently subsidies are fine as long as they only benefit you.
    I must say I was impressed by the Tangerine one’s handling of the situation too (dont hit me)!

  15. @skedguy

    There’s room for more on the Trump train. Best hop on board before 2020 so you aren’t left with a whimpering Rachel Maddow and her creepy world’s longest neck! MAGA!

  16. @Icarus – do you mean the investments AA has made in their sardine cans? Or maybe UA in their boxing/ufc game?
    @aw, the difference is American companies can get away with it because the system is set up to reward corporations at the expense of consumers.
    On that note, the US3 are quite happy to be completely for-profit and have shareholders as their Number 1 priority (while still receiving government subsidies in the form of reduced fuel costs and bankruptcy “bail-outs”). From a passenger perspective, who cares if the airline is government-owned. It seems that is the only way to enjoy a decent product!

  17. @Scabs – they don’t make it “so that the other airlines can’t compete with pricing or any departure time…” The US carriers don’t even bother trying to compete on routes heading east from the US and have no interest in competing on those routes via the Middle East. They leave it to their alliance/JV partners to deal with, so all they care is the initial or final US leg, so their whining is completely off base. The US carriers even managed to get a tax provision included in the early versions of 2017 US tax reform legislation that was intended to include a punitive tax on the ME3 (in contradiction of US transportation tax rules in effect since 1921), but the problem is that it was drafted so poorly that it would have applied to much smaller carriers too, including Turkish, Ethiopian, Royal Air Maroc and even more minuscule carriers after that, even though have so far not been the targets of the wrath of the US3. Fortunately, saner heads prevailed and the provision got pulled before tax reform legislation was finalized. The US carriers need to grow up and stop acting like temperamental teenagers. If they provided good service for a competitive price, everyone would fly them, whatever the price.

    As an example, I have a bad back. A recent AA J class flight between the US and LHR was excruciatingly painful and I could not get comfortable at all during the flight. I was delighted to get off that plane – the only real memory I have was the pain. In contrast, I recently took a QR Suites flight through DOH to BKK. It was truly the most comfortable business class flight I’ve ever had and I’ve never had a 15 hour flight pass that quickly. I would do it again any day, even if it cost a lot more. That’s the competitive edge. Not price or destination.

    The airline industry is by design either a monopoly or oligopoly. The rules were developed in a nationalistic era post WWI. It is probably time for a change, but national security claims will prevent too many changes.

  18. Id Guess the reason the big 3 do not go after Alitalia or Kenya is because they are losing money and/or do not pose a threat Whereas clearly the Mid East transfer to Southeast Asia/Australia has competitive advantages and flying to Milan is filled with people like me who like Emirates over AA and Alitalia. I hardly see anyone headed to Dubai on that flight. Bottom line is every airline in every country has gotten government assist historically and even today. But why fight Vietnam Airlines when they are not flying a better product to London?

  19. @Nigel Tufnell — “… He [Trump] declared bankruptcy how many times …”

    I’m guessing that you do *not* understand the difference between having one of Trump’s companies file for bankruptcy, versus Trump, himself, filing for bankruptcy? Please enlighten everyone as to when/where Trump, himself, had ever filed for personal bankruptcy?

  20. Tim Clark is right of course, the 3 buddies are whining like a baby that just loaded up its own diaper.
    But the real question here is why are US people still flying those 3 airlines with their pathetic service. For domestic flights you may not always have a choice but for international fights any option is better. I just don’t get why you guys keep flying them.
    I have used all 3 and while United and Delta are just about acceptable when no alternative is available, AA I will not ever use again.

  21. Wish there was international airlines flying domestically frequently in the US then the Crap 3 would know about competition and service, especially AA. Its not so much the hard product, often, that’s the issue, its the hideous soft product that’s provided… Always.

  22. @Scabs – I would be glad to learn on which routes Emirates deployed that many 777s or 380s. The only route I know is the LHR route, which, as far as I can tell, are operated very consistently and making good revs. As for the accusations against the accuracy of financial statements… EK is audited by PwC and QR is audited by Ernst & Young, so you really need to try harder to prove they are faking all the numbers.

    Let’s just be realistic: US carriers simply suck when it comes to international competitions.

  23. @MKLDH — “Let’s just be realistic: US carriers simply suck when it comes to international competitions.”

    So here’s my two bits about “international competitions” (I’m referring to onboard cabin services) — I’ve flown monthly from SFO to Asia on United and my experience has been that Polaris Business Class service can range from really good to just OK, depending on the particular group of flight attendants on those flights. I’ve never experienced any truly “rude” flight attendants over my years of flying in Polaris … however, when I fly in the rear Economy Plus cabin, the service there can be very different and I *have* experienced “rude” service behavior.

    I think that the problem with USA airlines’ service quality centers around constraints imposed by our “Politically Correct” labor laws and unions, that can allow flight attendants to become complacent with their work attitudes, but without serious accountability, unlike with many foreign airlines, where staff can get fired just for being a tiny bit overweight or not appearing their best on any particular day. Therefore, those foreign airline flight attendants must always strive to provide the best passenger services onboard at *all* times! Also … foreign airlines will spend much more on their onboard cabin facilities, drinks, meals, and amenities, so their flight attendants might naturally desire to show more pride in their working attitudes to complement those advantages.

    I often get the impression that our Big 3 appear to be more interested to merely compare themselves solely among themselves, rather than against those more impressive foreign airlines that are their *true* competitors on international routes!

  24. @Scabs

    As of today there is no proof of any subsidies. Where are the proofs? I can’t accuse you of anything without proof. Moreover I don’t know where you live. I live in Dubai and know little more facts. Emirates is not owned by the UAE but by Dubai government which has no intention to subsidize such a large operation because since a couple of decades has no more oil money income. Besides accounts are audited as per international practices. EK is simply a very well managed airline. As simple as that. And I know it’s hard to accept but it’s a fact. Most of my friends are ready to pay little extra to fly with Emirates. It’s one of the top three safest carriers. Has a young fleet compared to most. Has a route coverage which makes it the largest carrier for international operations. It’s located half way between East and West which gives a geographical advantage.

    By the way I’m mostly flying BA and AA as for me Emirates is too expensive for direct flights.

  25. @BillC

    Here are some facts with regards to Trump’s “corporate” bankruptcies:

    In 1992, not only was Trump forced to sell his Airline as well as his 220 foot yacht to cover debts he had accumulated under his Taj Mahal Casino business, but he also had to give up 50% ownwrship of that property in oder to renegotiate his loans.

    1n 1992 and after filing BK on his Trump Castle and Trump Plaza Casinos, he again, had to give up 50% ownership on both those properties in order to get bettee loan terms from his lenders.

    Also in 1992, Trump also filed BK on his Trump Plaza Hotel (NYC) and ended up giving up 49% ownership in that property for lower interest on loans he had on that property.

    Fast forward to 2004 and after having consolidated his companies into one, he managed to rack up in excess of 1.8 Billion in debt and was once again forced to reduce his (personal) owmership in that conglamorate from 47% to 27%.

    Wiat…. He wasn’t done yet…. Bevause after changing the name of his companies to Trump Entertainment Resorts, and after filing for bankruptcy again, he was forced to reduce his ownership in his company to 10%…

    So all together, he went from 100% owner…. To a measly 10% owner….

    Point is, I think you need to enlighten us as to what difference it makes if these were “personal Bankruptcies” or “Corporate Bankruptcies” that he filed if in fact, each time Trump filed one, he ended up giving a major part of his own “personal ASSets” only ending up with 1/10 of what he started with???

  26. Lol @scabs

    That’s the exact BS that Tim Clark is speaking about.

    You have no idea, everything you said is demonstrably untrue – you’re simply repeating union leader rhetoric. It’s embarrassing.

    I’m sorry your pensions got wiped out. But it’s not a reason to blame other airlines, and be so easily manipulated to divert attention away from your real struggles.

    Be smarter than a sheep.

  27. It’s all about customer service

    America lost the concept of this important product amenity long ago

  28. @A-Flute_Not_A-Trumpet —

    Once again — those corporate bankruptcies were *corporate* matters and did *not* affect him personally in terms of *corporate liabilities*! It does *not* matter that his personal holdings got reduced in those filings because, in the *legal* realm, he, himself, did *not* become personally liable! As a shareholder, his holdings could have even gone down to 0%, but that *still* does *not* reflect upon his *personal* legal consequences, as compared, instead, to cases of having filed for *personal* bankruptcy!

    So the original statement that “he filed for bankruptcy N times” is *still* totally *IN-accurate* with respect to all of his corporate bankruptcy filings!

  29. I don’t understand why corporate suits keep complaining of unfair advantage of other companies. In this specific matter, airlines will complain yet they have been provided with infrastructure, security, market, capital, r&d etc. All they have to do is make the customer choose their services.

  30. Readers can and will make up their own minds but if you perform even a cursory investigation on the postings, VLOGS and commentaries by Ben Schlappig (aka Lucky) you will find MANY readers accusing him of being bought out by the travel industry, foreign airlines, credit card companies etc. As to the validity of the U.S. airlines fight with the middle Eastern big 3 airlines this again seems to be the case.

    The beef the U.S. airlines have with the middle eastern carriers is a simple one. The middle eastern airlines signed an open skies agreement with the US government. An important part of the agreement was that they would not receive government funding. In return the US government opened up its markets to them. They’ve not honored the agreement and it should be revoked and Emirates, Etihad and Qatar banned from flying to the US.

    The U.S. airlines have produced the proof, there are Youtube videos of the the CEO’s of the ME3 admitting during interviews that they use their airlines as a government jobs program. Do a little research. Jobs programs aren’t bad in and of themselves…it’s just the ME3 signed and Open Skies agreement which they have violated before the ink was dry.

    What is really troubling is that the governments supporting the middle eastern airlines are DYNASTIC MONARCHIES, AUTOCRACIES and have no consideration of human rights or the rule of law. They have every intention of using their artificial advantages to fly to every corner of the world, though they have NO INTENTION of growing beyond a feudalism (circa the 700’s) and actually open their closed societies. If you support Emirates, Etihad or Qatar…you are anti-American worker and either a pro-monarchist (brutal dictator), communist or socialist (pro-government owned companies).

  31. @Jim Lewis
    I live in Dubai and many of my friends are pilots. Mostly westerners like ourselves. Some of them working for over ten years with better pays and perks than they were enjoying before. To you and many like you it’s just difficult to consider for a second that some airlines are just and simply successful. A proof that at least the UAE big two are not subsidized is that while the US three are enjoying great profits, Etihad is losing billions. Are you sure it’s subsidized? I’m proudly European and living in Dubai since almost 15 years. Are you sure that employees in this country are treated that bad? Do you know that any company that delays wages is heavily penalized with an instrument called WPS? Talk to current airlines employees and then I’ll be happy to read what you write.

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