–Richard Anderson, Delta CEO, in a criticism of how the Gulf’s three major airlines, including Qatar Airways, do business. Anderson was quoted in a Wall Street Journal article this week about American companies balking at the success of the state-backed GCC carriers, which also include Emirates and Etihad.
The main reason for the companies’ success, Anderson charged, is that “profitability doesn’t matter.”
According to the WSJ, the Gulf trio have expanded into Europe and the Americas because their small home markets could not sustain their growth. It continues:
“The Gulf three now send nearly 120 large, new and lavishly appointed planes weekly to a growing number of American cities. They offer U.S. passengers flights to far-flung cities around the globe via connections in what have become geographically advantaged hubs in the Middle East, bypassing older, traditional air routes served by U.S. carriers and their foreign partners.
… The Gulf carriers, critics say, have used the resources of their state backers to exploit the huge U.S. market, while American carriers have gotten access only to their tiny Mideast city-states.
‘The Gulf states clearly out-traded our negotiators,” said Jeff Smisek, chief executive of United.’ “
Not all American carriers feel so threatened. American Airlines has had a long-standing agreement with Etihad that allows them to sell each other’s flights. AA also entered into a code-sharing deal with Qatar Airways this week, when the national carrier joined the oneworld global alliance. And JetBlue has a deal with Emirates, WSJ reports.
Meanwhile, the GCC carriers are dismissing the growing criticism. The CEO of Qatar Airways, which plans to launch its sixth US destination, to Miami, next year, told the newspaper:
“We have never been a threat to anybody,” said Qatar Airways Chief Executive Akbar Al Baker. “We have only been a threat when we are challenging them in the kind of product we offer.”
That Al Baker last week was awarded ‘business leader of the year’ by the local chapter of the American Chamber of Commerce is one indication that things aren’t going to look up for US carriers any time soon.
Despite a proliferating number of legal challenges, it looks unlikely that the US airlines will succeed in keeping Gulf carriers out of their markets, the newspaper concludes:
“Many industry officials say U.S. opposition has little chance of thwarting the Gulf carriers in a deregulating aviation world. Washington is unlikely to antagonize its Mideast allies, and Boeing, the U.S.’s biggest exporter, gets a 10th of its widebody order book from the Gulf trio.
James Hogan, Etihad’s CEO, said his company has been unfairly criticized as being subsidized. ‘The only advantage I have is I’m not a legacy airline,” he said. “I started with a clean sheet of paper…And I’m within three hours of huge emerging markets.’ “
The article, however, makes no mention of US carriers competing on price, as GCC airlines charge a significant markup for their flights.
Thoughts?
