The US & UAE Are Nearing An Open Skies Resolution

For several years the “big three” US carriers, led by Delta, have been running a smear campaign against the Gulf carriers. I think they could have a case, but instead they’re running a campaign based on faux-patriotism, suggesting that if the Gulf carriers aren’t stopped then airline employees in the US will lose their jobs, and that we don’t be able to get our military where they need to be. Yes, unfortunately I realize campaigns like this often work, and that’s why they took such a disingenuous approach.

The US carriers didn’t have any luck pleading their case with the Obama administration, and they haven’t had much luck with the Trump administration either (which is surprising, given the “America First” agenda). Of course they (especially Delta) want to save face, so they don’t want to come out of this looking like they lost.

In January the US and Qatar reached an agreement, which was in fact a victory for Qatar Airways. Under this agreement, Qatar Airways agreed to release audited financial statements in accordance with internationally recognized accounting standards, and Qatar’s civil aviation authority had to agree that they were unaware of any plans by Qatar Airways to start fifth freedom flights to the US. That didn’t even restrict them from doing so in the future.

This deal was specifically between the US and Qatar, which doesn’t solve anything between the US and UAE. However, it looks like a deal between those two countries will follow soon.

The StarTribune reports that both the US and UAE have agreed to a broad outline of the deal, which includes the following:

Under the budding deal, Dubai-based Emirates and Abu Dhabi-based Etihad Airways would agree to voluntarily open up their accounting books, long accused by the U.S. airlines of obscuring billions in subsidies. The airlines will also assert to the United States that they currently have no plans to add additional flights to the United States from Europe or other destinations outside of the United Arab Emirates.

As you can see, Emirates and Etihad will agree to voluntarily open up their accounting books, and they will also assert that they currently have no plans to add additional fifth freedom flights to the US.

This is hardly a victory for the US carriers, but if it makes them feel like they can save face and stop wasting money and time on this useless battle, then it seems like a win-win. As you can see, this deal doesn’t even suggest what would happen if it’s found out that they are subsidized and lose lots of money. Similarly, this doesn’t restrict Emirates or Etihad from starting fifth freedom flights in the future.

It also barely gets at the crux of what the US airlines are alleging, which is that the Gulf carriers are capacity dumping in the US with unrealistically low fares, and that their capacity doesn’t reflect how small their countries are. There’s nothing here that limits future growth.

The irony here is that it’s not like the Gulf carriers are wanting to add a bunch of capacity to the US. We’ve seen both Emirates and Etihad cut capacity to the US recently to reflect demand, and that’s because of market conditions, and not because of any pressure from US airlines.

Here’s to hoping a deal will be made shortly, and that this childish battle can be a thing of the past…

Comments

  1. Lower price, better quality, treat people like human beings. If I have to choose between us3 or me3+Turkish, my choice is obvious.
    If I was Delta, making all this money, I would be very concerned too.

  2. Let them save their faces as much as they wish and allow them to live in their bubbles..the future of the US carriers is not good. They are only excisting because US pax want a good piggy bank for their mileages in combination with the seasonsal offerings of credit card sign ups…this is the basis of a contemporary US FF.. A lot of these pax only fly premium with the US3 mostly with their miles. Even if they fly with them as rev pax, they endure them only because of the generous earnings of miles…not because of a great service and experience…
    Now these US carriers are afraid that these US pax are now opening their eyes and now want the full package(good price, great service, outstanding food,big airline alliance..)…so they are trying to do whatever is possible to defeat their foreign competitors with all the resources they have..
    There is nothing bad being patriotic and fly your national carriers..but do not fool yourself and the others..stop bullying your competitors because you want to deter from your desperate situation in the future..
    Let us see if these US3 will stand the time, competition and development…Lets face it, if you have a far better choice for your money, in whatever part of the US you live or stationed, you will not fly a US carrier if you have a better choice..PanAm, Nortwest, Continental..they were once dominator in the US skies and after a fashion they are all gone as they become obsolete (bankcruptcy, merger etc..). The winner is still the pax as we can still choose to support the product which we want or not..only we can blind ourselves, not others!!

  3. the biggest hypocrisy of this is the NRA incident revealed that Delta receives billions of dollars of tax break in hard cash. if that’s not the most blatant subsidy i don’t know what is

  4. Every time I board an Airbus A-3xx with a Delta paint job I am reminded how many US jobs they are concerned about.

  5. They do have nice product but I would never support any airlines from Middle East regions. Cmon you guys know human rights don’t even exist in those shit holes, especially for women

  6. You want the best ride for lowest price, and the ME3 are good competitors. That said, if governmental subsides are revealed by this new development (the ME3 could always cook the books!), then unfair competition is proved. We as a country are against unfair competition. The laws on our books (Sherman Antitrust, etc.) and court decisions are rife with expressions of legal protections for fair competition in this country. This is what we are about business-wise. You may be all for unfair competition when it is lining your pocket with savings accruing from buying extra low, but you might feel different your business was suddenly inundated with unfairly supported businesses digging into your clientele at below-cost. You might squawk too.

  7. @RD Truitt
    “We as a country are against unfair competition.”

    I’m guessing you are talking about US ? That is cute! Open your eyes and take a hard look at the big companies and their lobbying and their campaigns. Pretty much in all the countries, big businesses strive for unfair practices. It is also ironic how much the US3 have used the fifth freedom routes but when the ME3 or other airlines do this, they go straight to mama.

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