Earlier in the week I posted about how Delta will be discontinuing their Atlanta to Dubai flight as of Spring 2015, as part of the seemingly never-ending battle between the “big three” US carriers and “big three” Gulf carriers.
Not surprisingly, Delta took a jab at the Gulf carriers in their press release, claiming that they were “forced” to cancel the route due to “subsidized Gulf carriers.” This came after Delta reduced their frequencies on the route a couple of months back, using similar logic. At the time, Emirates quickly refuted their claims.
To quote a true Atlanta legend on the situation:
Not surprisingly, Emirates has issued a response to Delta’s claims that they were “forced” to discontinue the Atlanta to Dubai route. And it’s brilliant. Via Air Transport World:
Emirates says industry data show that Delta’s Dubai flights have had average seat loads consistently over 85% and that Emirates own studies indicate that the route was “highly profitable” with “an estimated route profitability of over $10 million per annum, or a route net margin of 7%.”
“Delta effectively has a monopoly on the Atlanta-Dubai route, they can carry ‘Fly America’ traffic that is protected from non-US carriers, and enjoy high seat loads and yield on the route. By any airline’s standards, these are lucrative conditions and hardly reason to cease the Atlanta-Dubai service,” an Emirates spokesperson said.
“We can only conclude that this is a political move to position Delta as a ‘victim’ of the Gulf carriers—which is laughable considering Delta’s size and profitability; or it is perhaps because they wish to redeploy their aircraft on other trans-Atlantic routes that have even higher yields due to the anti-trust immunity Delta enjoys with its alliance partners. In which case, Delta should admit that its goal is to make even more money, and leave the Gulf airlines out of it.”
The spokesperson added: “Our route planners are now closely studying the opportunity for Emirates to fill in the gap when Delta exits the non-stop Atlanta-Dubai service.
Brilliant! Where do we even begin?
- I don’t think Delta discontinuing the route is purely political; rather, I think they could simply achieve higher margins deploying the plane on another route.
- That’s very different than being “forced” off a route, though not surprisingly Delta is using this as grounds to make a point to further their agenda.
- It’s amusing that Emirates is now using the opportunity to explore Atlanta to Dubai service, which I’m sure they’ll launch, and which I’m sure they’ll do well on. Qatar Airways is already launching service to Atlanta next year, and I don’t think there’s a route in the world which makes His Excellency happier.
Bottom line
Kudos to Emirates on this sassy and reason-based response. I don’t think anyone denies that the route wasn’t the best utilization of the plane. That being said, the route cut may have more to do with other routes being more profitable, as well as reduced activity in the oil industry and the strong US dollar.
It’ll be amusing when Emirates launches service to Atlanta.
The more this battle brews between Delta and the Gulf carriers (after all, they seem to be the most vocal here, and arguably American doesn’t really agree with their mission), the more I want to take the inaugural Qatar Airways flight to Atlanta.
I do not know that I would call this response by Emirates "brilliant." In fact, I think Delta may a point. Not saying that are certainly correct in their claims, but there is reason to question whether the ME3 are being subsidized and, thereby, engaging in unfair competition. Emirates claims this route was profitable, Delta says the opposite per it's CLO's response. Considering we do not know who is right, I can't say that Emirates...
I do not know that I would call this response by Emirates "brilliant." In fact, I think Delta may a point. Not saying that are certainly correct in their claims, but there is reason to question whether the ME3 are being subsidized and, thereby, engaging in unfair competition. Emirates claims this route was profitable, Delta says the opposite per it's CLO's response. Considering we do not know who is right, I can't say that Emirates has a brilliant stance. I did look DL's 3Q15 financial statement and their net profit margin is about 11.3%. If the ATL-DXB route was proving 7% margin as EK suggests, then I would ask why? There are certainly plenty of reasons not related to unfair competition that this route was less profitable than the company overall. But there is also a chance that subsidies did have an impact.
I live in Atlanta and I have always liked Delta. However, I see some validity that their motivations were not due to unfair competition. I take a wait and see approach and don't naturally assume that one side is necessarily right or wrong. They both are looking out for their own business interests and will make public statements to support that. While I have never flown EK and can't comment on the quality of their service, I fly Delta frequently and the airline I fly on does not resemble some of the claims made about their service, so I would urge all to be objective as this is a serious matter of international trade and should be adjudicated fairly by the authorities that oversee this.
http://www.debriantravels.com/blog/2015/11/3/delta-emirates-in-a-war-of-words-over-atl-dxb-route
To claim that because they computed an 85% load factor the flight is wildly profitable could be the most ignorant statement Emirates has made throughout the whole ME3 v US3. Load factor has no bearing on profitability.
And I'm inclined to believe Delta when they say they have been losing money on the route for years, considering they know the financials while Emirates is just throwing around random numbers they concluded based on irrelevant statistics.
As a former Delta employee and a former target of their bullying tactics I can tell you that Delta bullies others and then cries foul and victim when they're called out. You wouldn't believe how many resources they have dedicated to keeping any further unions off their property. Now they're challenging Alaskan in the Seattle market. Too big for their own good.
@Justin
>>"And with the exception of a single gate supervisor at DCA, Delta staff has been tremendous..."<<
Uh, no, one of the problems with Delta is that they didn't lose enough of the "lifers" from both NWA and DL in the bankruptcy and mergers. Bad attitudes, short tempers, snarky service. They all win the bids for the longer routes and it's abysmal. Not ALL of them but enough of them that you are pretty...
@Justin
>>"And with the exception of a single gate supervisor at DCA, Delta staff has been tremendous..."<<
Uh, no, one of the problems with Delta is that they didn't lose enough of the "lifers" from both NWA and DL in the bankruptcy and mergers. Bad attitudes, short tempers, snarky service. They all win the bids for the longer routes and it's abysmal. Not ALL of them but enough of them that you are pretty likely to encounter at least one DesultoryDeltaDame in every flight crew.
It's political. The route was profitable for DL especially given the 77L costs.
How is this a brilliant response? Rumor was ever since Military and Government traffic dried up the past couple years, DL has been losing millions on the route - not to mention the ridiculous routing they have to take to avoid conflict zones. Emirates analysis seems incredibly flawed (as usual) since load factors don't equal profitablity - especially on a 17 hour flight. It's a necessity to fill the plane on an ultra long haul...
How is this a brilliant response? Rumor was ever since Military and Government traffic dried up the past couple years, DL has been losing millions on the route - not to mention the ridiculous routing they have to take to avoid conflict zones. Emirates analysis seems incredibly flawed (as usual) since load factors don't equal profitablity - especially on a 17 hour flight. It's a necessity to fill the plane on an ultra long haul - looking at fares since the rapid expansion of Emirates, I can fly from the U.S. to Dubai for $600rt now where before it was always $1500+. I'm not sure how Emirates comes to their numbers but in my mind this is just Emirates throwing around figures (that aren't even close to true) to attempt to capture more political support. I really hope Delta comes back with factual P&L figures for the route and publicly announces them - how would Emirates be able to dispute that?
Lucky; Is there a responsibility on the part of the flyer to choose a more ethical airline?
I am certainly no fan of Delta or any U.S. based carrier, I avoid them when possible, but I also find Emirates and Qatar distasteful in the extreme. I teach ESL, and many of my former students go on to work as F/A's. I manage to keep in touch with many through social media, email and visits...
Lucky; Is there a responsibility on the part of the flyer to choose a more ethical airline?
I am certainly no fan of Delta or any U.S. based carrier, I avoid them when possible, but I also find Emirates and Qatar distasteful in the extreme. I teach ESL, and many of my former students go on to work as F/A's. I manage to keep in touch with many through social media, email and visits on layovers. The ones working for Qatar and Emirates share heartbreaking stories about the treatment and restrictions they encounter. Conversely I do not hear the same stories from students that have gone on to work for JAL, EVA, ANA, Singapore, and Lufthansa. These stories are not coming from privileged weak flowers, but strong young people used to hardship and hard work. They aren't complaining about small issues like appearance guidelines, but draconian issues involving control of daily life and several forms of harassment. There also appears to be little or no way to report on the issues without severe repercussions. My students that work 14 hour split shifts, 7 days a week, 6 months straight on cruise-lines complain about fewer issues.
Not defending Delta here, I would never fly them on an international flight given the choice. They are at the other end of the spectrum in terms of service and often lag in hard product.
This has nothing to do with a strong dollar or the oil industry. There's very little demand to fly to the arabian gulf - doha, dubai, abu dhabi - from the US. Other than bloggers and some business travel, no one is going there. The reason why emirates, qatar, etihad are successful is because they feed customers on connecting flights to africa, south east asia, etc. This is all about your route network. Delta cannot...
This has nothing to do with a strong dollar or the oil industry. There's very little demand to fly to the arabian gulf - doha, dubai, abu dhabi - from the US. Other than bloggers and some business travel, no one is going there. The reason why emirates, qatar, etihad are successful is because they feed customers on connecting flights to africa, south east asia, etc. This is all about your route network. Delta cannot be successful in the long run having flights terminate in the gulf. This is why american's route to abu dhabi will work better because they can feed passengers on connecting flights with etihad. qatar will be successful because you can do atl-dxb-del/bom/khi/etc. I mean qatar is flying to place like nagpur in india and multan in pakistan! Just take a look at http://www.qatarairways.com/global/en/route-map.page at their indian subcontinent, africa, south east asia destinations. The US airlines need to focus on their product in the markets they can serve.
"Well what would YOU rather fly an older generation aircraft with marginal service and FA’s with an attitude OR fresh current generation aircraft, old fashions service and what real FOOD offerings? And it doesn’t smell ?"
Well, to be fair, this isn't a question of United or American (which is at least making strides) vs Emirates; it's Delta vs. Emirates. Delta business class (particularly the 77L that was deployed to Dubai) beats the pants off...
"Well what would YOU rather fly an older generation aircraft with marginal service and FA’s with an attitude OR fresh current generation aircraft, old fashions service and what real FOOD offerings? And it doesn’t smell ?"
Well, to be fair, this isn't a question of United or American (which is at least making strides) vs Emirates; it's Delta vs. Emirates. Delta business class (particularly the 77L that was deployed to Dubai) beats the pants off Emirates business class--bar or no bar. And with the exception of a single gate supervisor at DCA, Delta staff has been tremendous in the past 2-3 years, especially. They're not as deferential as Emirates staff, but they're just as helpful...
@Levy Flight : The Dirham is pegged to the dollar at a fixed rate of 3.6725 AED = 1 USD and has been pegged at that rate since 1997.
This route obviously referring to middle east rather than DXB
One reason could be that they did not want to compete with QR on this route.. And chickened out of the competition a few months earlier giving this lame excuse
@Dima - not so on the currency pegging. In the last 5 years the Dirham has ranged from 150 to 135 to the Dollar.
They could have added something about the flight being too long for the 80 year-old FAs that typically staffed it. If Delta had been losing money on this route, they would have included that data in their PR. Perhaps they can make more money re-deploying the aircraft, but lets not pretend that they don't know how to get more planes. This is primarily a political move, and one that I don't think will ultimately benefit Delta.
Looks like Delta opened their mouth and stuck their foot directly into it. As good as a marking machine the Delta operation is, it’s amazing they set themselves up for such a losing PR battle. This isn’t really a hill they want to die on.
It really is a great response. I'm amazed that the battle of DL vs ME3 is still in place. It's clear that there will be no war, so why bother?
BTW: you mentioned the strong US dollar. I think that the last few months it has been too much mentioned in the media. As for Americans going to UAE the strong US dollar is a moot point as AED has a fixed exchange rate with USD.
Well what would YOU rather fly an older generation aircraft with marginal service and FA's with an attitude
OR fresh current generation aircraft, old fashions service and what real FOOD offerings? And it doesn't smell ?
I think it would be a hoot to see EK go into ATL. What is really cool to watch is EK's snuggling up to AS in the NW THAT is a shot across "tricky Dick's " bow.