United Cuts Washington To Dubai Flight

The “big three” US carriers and “big three” Gulf carriers have been going at it all year over the Open Skies agreement. The US carriers think the subsidized Gulf carriers shouldn’t be allowed to compete with for-profit airlines under Open Skies agreements, while the Gulf carriers are pointing out how hypocritical the US airlines’ arguments are, and defending their own stance (and in some cases more).

In October Delta announced that they would discontinue their flight between Atlanta and Dubai, following capacity cuts earlier in the year. Does them canceling the route have something to do with Emirates and Etihad? Sure. But they phrased it as if they were the world’s biggest victim, claiming they were “forced” out of Dubai and that the route was unprofitable. They also threw in a bunch of the usual rhetoric about subsidies.

Dubai-2

What Delta’s press release failed to recognize is that them pulling out of Dubai might have more to do with the overall worldwide economy, and especially activity in the oil industry. Lower oil prices have made a lot of routes unsustainable, including SAS’ flight from Houston to Stavanger. But you don’t see them complaining about the Gulf carriers.

Well, Delta isn’t the only airline discontinuing flights to Dubai. United will be discontinuing their Washington to Dubai flight as of January 23, 2016. Via Live and Let’s Fly, here’s the notice United sent to employees regarding the route:

Even though we successfully operated the IAD-DXB route for the past seven years, the entry of subsidized carriers such as Emirates Airline (EK) and Etihad Airways (EY) into the Washington, D.C., market has created an imbalance between supply and demand to the United Arab Emirates (UAE). As they’ve added subsidized capacity, our IAD-DXB route has become less profitable.

I actually don’t think United is being nearly as ridiculous as Delta here:

  • There’s no doubt supply between the US and UAE has increased considerably over the past many years, so it’s not unreasonable to suggest there’s an “imbalance”
  • United actually isn’t claiming they’re losing money on the route, but rather they’re just saying it has become “less profitable”

The nail in the coffin for this route was the GSA awarding the contract for the Washington to Dubai route for 2016 to JetBlue. JetBlue doesn’t even fly to the Middle East, but rather just codeshares with Emirates. In other words, flights paid for by the US government will be on Emirates rather than United. United estimates that this contract will cover about ~15,000 passengers, or about ~40 per day. It’s not surprising that could have a significant impact on United’s performance on the route.

JetBlue

Here’s United’s position on JetBlue being awarded the contract for the route:

“It is unfortunate that the GSA awarded this route to an airline that has no service to the Middle East and will rely entirely on a subsidized foreign carrier to transport U.S. government employees, military personnel and contractors,” said Regulatory and Policy VP Steve Morrissey. “We believe this decision violates the intent of the Fly America Act, which expressly limits the U.S. government from procuring commercial airline services directly from a non-U.S. carrier. For the Washington to Dubai route, JetBlue merely serves as a booking agent for Emirates.”

On the surface I actually sort of agree with them. What I’m not sure of is how the GSA goes about awarding these contracts, but if the point of the Fly America Act is to keep people on US carriers as much as possible, then this seems like a technicality more than anything. Yes, I realize the Fly America Act allows for codeshares on foreign carriers, but there’s still something a bit odd about an airline which doesn’t even operate the route getting the contract. Which is why I’d love to learn more about how these contracts are awarded, if anyone has any insight (I googled but couldn’t figure it out).

Emirates-777

Bottom line

With United discontinuing their Washington Dulles to Dubai flight, no US carrier flies between the US and a Gulf country anymore. There are rumors of American possibly starting flights to Abu Dhabi, though as time goes on that seems less likely, given the not-so-hot state of the oil industry at the moment.

What do you make of United discontinuing their Washington to Dubai flight, and do you think it’s right for the GSA to award the route authority to JetBlue?

Comments

  1. Wait, so UA complained that EK and the ME3 are subsidized… but then blamed the fact they lost their own specific subsidy on the IAD-DXB route for the cancellation? Wow, sometimes I wonder if they even speak their own PR out loud before hitting send.

    On the upside, US govt employees & contractors heading to the middle east got a definite upgrade!

  2. @qasr your analysis is off to say the least. Most government and military must use the GSA city pairs and others have the option to use them. In the DC market this is a HUGE share of traffic especially to markets like Dubai, Africa, etc. Calling the GSA City Pairs a subsidy is a joke. It is not a subsidy. The federal government is essentially buying seats on the plane for their employees when they travel on official business. Now the employees must use a foreign carrier via JetBlue. United was only paid when the government needed to send their employees to that city pair on official business. This is like any other business buying a flight except that it should in all possible cases be on a US flag carrier. As a federal government employee in the DC region this shocks me and JetBlue/Emirates should have the GSA Award rescinded.

  3. I smirked when you wrote “Lower oil prices have made a lot of routes unsustainable.” When oil prices are high, people mostly complain of the higher fuel surcharges & airfares. When oil prices are low, airlines complain that certain routes become unsustainable. Just seems like whatever oil prices are at, no one will be happy! 😉
    I think it is odd on how GSA awarded that contract to JetBlue since it doesn’t physically fly to the middle east. However, since it is a codeshare, then I presume JetBlue profits from the deal? I believe it’s our tax dollars that pay for the flights of US contractors/gov’t folks and if that money goes to US airlines, then I’m ok with it. Since JetBlue is the marketing carrier in the codeshare agreement, I believe JetBlue gets the money (or at least for X amount of seats on the EK flights.)

  4. The GSA contract are awarded annually and all the airlines that are interested bid on them. The bid is done via city pair (i.e., each point A to point B is bid). The selection is based on price as well as quality of service and frequency (if someone is really interested the FY 16 RFP is at http://www.gsa.gov/portal/mediaId/242363/fileName/FY16_CPP_RFP_QMACB-KB-150001-N_%28AMENDED%29_03-26-15.action).

    The prices are fixed but many times are much higher than the price you’ll get on the open market. But the tickets do come with greater flexibility. As a reference United got FY15 contract for $979.00 unrestricted Y, one way, and JetBlue got the FY16 contract for $699.00 unrestricted Y, one way.

  5. Lucky,

    You should read up more on the Fly America Act. It is a pretty big subsidy to American carriers, although they shoot themselves in the foot a bit by having so many codeshares.

  6. I’m not going to claim to be an expert on the city pair program, but im pretty sure UA only has one single flight to DXB. JetBlue probably bid not only the direct flight but also connecting options through BOS and JFK. Multiple flight times would have helped their score. Besides, if the taxpayers are saving money by putting feds on a subsidized foreign carrier, what’s the problem?

  7. They’re also discontinuing their flight to Kuwait as well at about the same time. But I guess Dubai is a sexier address, so no mention from you about that route 😉

  8. If it saves taxpayer money to fly the employees on Emirates, that should be the only consideration. Heck I’d send them on WOW if it made fiscal sense.

  9. Why would someone want to fly United from the US to Dubai versus flying on Emirates or Etihad is beyond me. Unless UA offered tickets for 1/2 of the price I would never even consider flying with them.

  10. @Joey
    What Lucky was saying about low oil prices had nothing to do with the savings the airlines see in lower fuel. He was referring to the fact that the oil industry is hurting because of lower prices and that travel by people in that industry is way down. So routes that are normally heavily used by people in that industry are seeing much lower traffic.

  11. New look to Avios award booking. First and last time I’m sure that I will have seen it before a post.

    Keep up the good work despite the shitheads!

  12. United of course sees no problem with the GSA awarding them routes on codeshares operated by a foreign carrier with a UA code e.g. IAD-VIE. The Fly America Act is entirely outdated and needs to be scrapped. Let market forces decide. The US taxpayers would likely save money. As someone else pointed out, with so many codeshares these days, the whole thing becomes clouded anyway.

  13. “Why would someone want to fly United from the US to Dubai versus flying on Emirates or Etihad is beyond me. ”

    If you’re a government employee who has to fly Y a decent bit longhaul, let’s see, 9 across Y on a UA 777 with E+ or 10 across Y on EK 777s with no E+ (or 11 across on A380s)?

    This doesn’t seem like rocket science to me. Yes, I know, showers and Krug in F, but that’s not an option for a government employee, nobody’s going to pay $20,000 in taxpayer money to fly F without some Congresscritter or Inspector General going through the roof. The hard product wins on this one, and while EK premium classes and IFE are nice, EK rams them in in Y.

  14. What I love about OMaaT: nobody has any conception of what coach cabins are like on longhaul, beyond things like saying “cattle class” and “gate lice”.

  15. @eponymous: Yes, you have a good point. I was probably looking at people like me that work for a multinational company and have options. I fly paid business class when travelling for work and unless a US airline offers a way cheaper fare flying a ME, Asian or European business class is a no-brainer to me. Also, when flying coach with family for vacation service means a lot. I would rather fly for 15 hours with a smiley FA than with a grumpy one that is typically what you get on US airlines.

  16. So I have an award flight from DXB-IAD in February. Can I use the old (but I think still active on United) Rule 240 to get them to put me on the Emirates flight two hours later instead? That’s now the only direct flight b/t the two.

  17. @dcmdflyer –

    While I would love to believe “the selection is based on price as well as quality”, I just cannot any longer. I’ve seen too many cases of contracts being awarded based on lowest bid, as long as that company met the minimum requirements of the RFP.

  18. If United offered a competitive product maybe they would have been able to retain this contract. But they DON’T so it was given to someone else. Boo Hoo. Maybe United should take a look at what they offer and wonder why they are the most hated airline in the country and then start improving it? Just a thought. Seems to me a far more productive way for them to spend their time. Oh right we’re talking about United….so productive is probably not a concept they are aware of. Flights on time: Why bother? Flights not be re-routed for technical difficulties mid flight: silly people don’t over react! Comfortable seats, friendly staff, good food: sorry we are in the hostility industry not the hospitality industry.

    Ok I feel better now 😉 Can you tell I was a United FF?

  19. @Santastico:

    I’ve flown a lot of US airlines in coach and don’t generally get grumpy attendants. And I’ve flown TATL in Y on LH in 31″ knee-crunching pitch and DL/AA on 33″ (DL) or bulkhead (AA). No comparison- interaction with FAs is for a few minutes at a time (and if you’re luckier than me you can fall asleep sitting up in planes in Y), a cramped seat or a non-cramped one is what you’re going to live with for 10-15 hours. LH has better beer, but I can drink that at sea level, I can’t bring a better seat on the plane.

    When it comes to longhaul Y, it’s mostly longhaul Y and a fairly generic experience no matter where you fly. The differences are really marginal IMO compared to premium classes (the difference between LH longhaul Y and UA/AA/DL are nowhere near the difference between LH/CX F and, say, UA F).

  20. I would never, under any circumstances, fly in Y on a 777 in 10-abreast configuration. This aircraft was not designed for this abomination and I think it’s ashame that Boeing left just enough room so the seat manufacturers could figure a way to jam in another seat per row. We talk about letting competition take care of the problem: If you don’t like it, don’t fly it. Well guess what? Those poor government employees don’t have a choice now! They are stuck on EK in a seat that is less than 17 inches wide! On a long haul TATL flight! I think the GSA should figure that into the “score” and not just the bottom line. Hey, it would be even cheaper to just stack up the pax in the back like cordwood. Safety? Evacuation time? Obviously not important. Why doesn’t someone propose that so they can win in 2017?

  21. UA has been capitalizing on this route since Iraq and afghan war. Ua was the gsas airline to move us personnel between screens and us to those countries and they continue to do so with iAd to kwi which has easy access to Iraq.

  22. Correct me if I am wrong but Pre-Clearance Facility is only allowed in countries that have US carriers flying to them.

    With the UAE now loosing Delta and United and no longer host any US carrier post-February, does this mean the Abu Dhabi Pre-Clearance Facility must shut down?

  23. The narrow view that the Gulf is only an oil destination is a bit dated. Oil and gas might underpin their wealth, the Gulf has a growing and substantial services sector that is attracting traffic, I just don’t think oil matters as much for the marginal things like air traffic. Delta and UA cannot attract the premium yields for the route and are better redeploying the frames.

    Re: the GSA award and UA’s tantrum demonstrates and confirms that the US3 are utter hypocrites. The route merely existed to serve the economical and political interests of the govt, so how different from Etihad being used as a tool for economic promotion of the UAE? The whole JetBlue thing is a red herring, outside the U.S. all the US3 leverage their codeshares to deliver on GSA contracts at eye watering rates and they never complained about the practice until now that one of the big 3 has lost a route they were Hosing the USA taxpayer at least $270 each way.

  24. All those government employees and military personnel still have to fly their final segment into Kabul, Djibouti, etc. on foreign carriers anyway so United’s complaints seem pretty hollow to me.

  25. @Martin,

    If you look at the RFP you’ll see exactly how they are making the decision. The city pairs are divided to Group 1 which is awarded by price and quality, and Group 2 which is based on price alone. Quality as the RFP defines is basically how easy it is to get a direct flight (my paraphrasing).

  26. “But you don’t see them complaining about the Gulf carriers.”-Lucky

    Maybe they aren’t complaining about the Gulf carriers because SAS is 50% owned and controlled by the governments of Sweden, Denmark and Norway. I think if you are going to make a snipe like that you should first compare apples to apples and get your facts straight.

    As someone who would never be caught dead on an Emirates, Qatar or Etihad flight, I would agree with United on this. They have plenty of other routes to service and work to do to improve their airline. As a non-rev, non-status passenger, I’m completely happy with my service on United and am happy to support them when I do fly on a revenue ticket. They have never done me wrong in 25 years.

    It will be a a cold day in hell when I willingly agree to give my money to airlines like Emirates, Qatar and Etihad who abuse their employees, play crazy games with policy and hire CEOs with personality disorders who have no effing clue what they are talking about-I think we all know who that is-hint-Qatar! In addition, I’ve said it before, how a number of gay males in the blogging world such as yourself and others in your business continue to pimp these airlines is beyond me and highly questionable. You do know what can happen in Qatar if you are found expressing physicality with another male right? There are plenty of other airlines in the world (and countries) that do not pull this crap. I would argue that if we are not all a bunch of sellouts, we should support them and not these idiots.

  27. Oops, sorry to see UA cut this route, along with the IAD-KWI-BAH route they announced to cut earlier this year… I’ve been on both flights before and I have to say that these are two of UA’s few quality transcon flights, even though still uncompetitive comparing to the Gulf 3…

  28. McMunch,
    To bring sexuality into a topic about UA pulling out of a route is just plain ignorant and impolite.
    If that is the kind of filth you type out, Etihad Emirates and Qatar are already better off without your business. And I wouldn’t want the kinds of you seated next to me either.

  29. I just flew this route for my Oman trip. Purchased business, thank god I used miles to upgrade to first. Business was 2-4-2, aisle access from aisle seats only. Unbelievable (Sen McCain & Graham in business on the return)

    BTW, I work for the Feds. Wouldn’t surprise me if united gets this route back. These contracts change all the time. United was longtime contract for IAD-CDG, one year it went to Delta but flying Air France aircraft, now back with united

  30. just downloaded the GSA’s excel spreadsheet listing every single approved city pair and the approved carrier. many city pairs have contracts to airlines that don’t fly the route. here are a few interesting ones i noticed:

    Chicago-Abu Dhabi on AA (i don’t think AA serves UAE)
    Chicago-Doha on UA (remember that qatar just became an OW member)
    Chicago-Vienna on AA (OS is a *A member and flies this route nonstop. AA to my knowledge doesn’t serve VIE either)
    Dallas-Dubai on UA (UA of course just dropped Dubai)
    Houston-Doha on AA
    Houston-Dubai on UA
    LA- Abu Dhabi on DL
    LA-Dubai on UA

    the list goes on and on

  31. Also interesting to note that PHL-TLV is held by UA despite the nonstop AA has (though its being cancelled in January)
    Dayton, Ohio and Denver, CO-TLV are held by AA.
    El Paso, TX – Dubai is held by UA
    El Paso, TX -TLV is held by UA
    Fayetteville, NC to Doha is held by DL while Fayetteville to Dubai is held by UA.

    There doesn’t seem to be any clear pattern in these contract awards.

  32. Any clue how they’ll handle the rebooks? Had a BF Saver ticket in April. Not the best flight ever, but I was happy about forward facing flat-bed non-stop. Worried sick about what’ll happen now (UA shows heavy availability saver awards on Ethiopian w/connections, angle lie-flat, and frankly I’m thinking they’ll push me onto those)

  33. @HT

    I think you missed the point my friend. If you think I’m impolite for advocating LGBT have rights in the world and in the countries served by Etihad, Qatar and Emirates perhaps you should read up a little bit. What’s impolite is getting locked up, abused or worse for who people are. Have you read anything about how these airlines treat their employees? I invite you to present your case why you think that kind of advocacy is “ignorant.” Here’s your shovel, go ahead and dig a bigger hole.

  34. Now that no US airlines fly to the UAE, what value does an open-skies agreement have to the US? It seems the only winners here were the ME3 who pushed out the competition. Seems like a bad treaty with no benefits for US businesses.

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