Are Gulf Carriers Worried about The Next US President?
Photo Illustration By Barry Kaufman
There is no doubt that the next President of the United States will have the Open Skies debate tossed into his or her lap soon after taking office. But how will they handle it? First, some background:
American carriers have long been extremely critical of Gulf airlines as they try to expand into the U.S. marketplace by offering long haul flights from the Middle East to the U.S. The main complaint from the executives at Delta, United and American is that Emirates, Etihad and Qatar Airways are all government owned, and they receive financial support that allows them to compete on certain routes even though they are not earning any profits.
American carriers do not rely on any subsidies. They have been forced to drop some routes between the Middle East and the United States because the services are no longer profitable. There is not enough demand for multiple airlines on some of these routes. The criticism from Delta and its peers is that the Gulf carriers simply operate at a loss on these contested routes. Since they are supported by their governments, they have the funding to wait out their competitors and take over the route once other airlines start losing money and decide to stop the service.
READ MORE: Qatar, Emirates Again Upping the Stakes
Delta, United and American have complained to the U.S. government about what they claim is an unfair strategy being used by Gulf carriers. All three Middle Eastern airlines deny that they are receiving subsidies directly from their governments. However, the issue is not going anywhere. European countries have also taken a closer look at the practices of Emirates and its peers in recent months.
Policies could very well change in the future, especially in the United States where airlines have a well organized lobby, with a special group called Partnership for Fair Skies working in Washington specifically on the issues related to Gulf carriers. European carriers are also trying to establish a unified voice that they can use to lobby the European Union to reign in the Gulf carriers.
Delta, for one, has said that it will focus on getting Washington to revisit its current open skies treaties. Delta’s chief legal officer, Peter Carter, explained that his airline would push for action from the government: “This is our number one priority in Washington. We have reason to believe the U.S. government will do the right thing. Having said that, this is a diplomatic issue and it will take some time.”
Could the next president of the United States change the way Washington deals with Gulf carriers? Could he or she speed up the “diplomatic process” and force Qatar and Emirates to reign in their American expansion plans? Possibly. U.S. airlines will certainly approach whoever makes it into the Oval Office, to inquiry about protections against what they deem as unfair competition.
The CEO of Emirates, for one, is not worried about the next president changing the current Open Skies policy. Sheikh Ahmed bin Saeed Al Maktoum has said that a change in power in Washington won’t have much effect on his airline’s plans in the U.S. market, even though U.S. airlines will undoubtedly push for a change to the current treaties. He thinks that cooler heads will always prevail: “We've been dealing with it in the last 30 years. I think people and governments come and go and they have different views, but always we are there to prove to the people who are really on the bilateral side, doing business with any country that we will always be positive things to open up.”
He also said that further expansion under the current Open Skies agreement is a possibility, and that there are no limits on where Emirates could fly in the U.S. “We have a bilateral (agreement) which stands today and that's an open skies policy that we have signed with the Americans in 1999. We started our first flight in 2004. As we speak now, we can open to any point within the U.S. if we want to.”
Qatar Air’s outspoken CEO, Akbar al Baker, seemed similarly unconcerned during a recent press conference in Boston. al Baker was in town to celebrate his airline’s recently-started Doha-Logan service. During his remarks, he also hinted at expansion plans in other U.S. cities (though he did not give any hints about which cities were being targeted by the airline).
For now, the Gulf carriers seem unconcerned with the results of the next presidential election. They remain confident that their ability to build bilateral ties in the U.S. will keep Washington from restricting their expansion plans.
More by Josh Lew
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