Big 3 Battle with Gulf Carriers Heats Up
by Barbara Peterson /The ongoing war of words between the big three U.S. airlines and their counterparts in the Middle East is about to get nastier—and more public.
The U.S. government has launched a proceeding to examine charges made by American, Delta and United that they can’t compete with Gulf carriers like Emirates because of the lavish support those lines allegedly receive in violation of Open Skies treaties between their governments and the U.S.
Any “interested” party will be able to weigh in and the comments will be open to the public, which should make for interesting reading given the controversy this dispute has stirred thus far.
Three U.S. government departments – Commerce, State and Transportation – will be accepting comments and are expected to begin reviewing them at the end of May.
‘Dire consequences’
While various travel groups have taken sides, the U.S. Travel Association (USTA) and the Airports Council International are all lining up against the U.S. big 3 and labor unions.
ASTA hasn’t taken a position.
The USTA said it has concerns over the wisdom of reopening Open Skies treaties that have vastly expanded international air travel.
"Contravening these open and transparent agreements that were negotiated in good faith holds dire consequences,” Roger Dow, USTA president and CEO said in a statement.
A source at the association said this also makes the case for why "consumers and travel agents should be concerned" about where the current proceeding will ultimately lead.
Agent voices
But will travel agents be among the voices that will be heard?
Several agents contacted by Travel Market Report said they are concerned that if the dispute is carried much further it could lead to flight restrictions and a dampening of competition.
“I’ve been in the industry long enough to believe that competition in every area is positive for the consumer, and it is certainly good for the agent,” said Tama Holve, branch manager of Willett Travel, a Frosch company, in Studio City, Calif.
“Anything that would interfere with competition would not be good,” said Holve, who is also vice president of ASTA’s SoCal Chapter. (She was not speaking for the association).
She noted that the airlines that are the target of the accusations – which also include Etihad Airways and Qatar Airways – have a reputation for high service standards that earn them top marks in consumer surveys on airline service.
“I just flew on Emirates and I got better and more attentive service from the Emirates crew than I have gotten from the U.S. airlines,” Holve said. “I was with five other travel agents and all of them felt the same way.”
Strong denials
The Gulf airlines have strongly denied the charges – detailed by the U.S. in a 55-page report – that they’ve benefited from subsidies to the tune of $42 billion over the past decade.
The Business Travel Coalition (BTC), among others, has said that the U.S. airlines stance is the end result of the wave of consolidation that has swept the industry.
Terry Regan, owner and president of Berkeley’s Northside Travel in Berkeley, Calif. agreed.
“Since there are only three big airlines left, they don’t want any competition coming in here,” he said.
Not united
In fact, the U.S. airlines aren’t united on this front.
JetBlue is in favor of the status quo—not surprisingly since it code-shares with Etihad and Emirates.
But Goran Gligorovic, executive vice president of Omega World Travel, in Fairfax, Va., had a different take on the matter.
If the U.S. airlines can prove their case, it would be serious, Gligorovic said.
“If it is proven that this assistance is actually a subsidy it shouldn’t be allowed in any industry,” he said.