Monday, February 6, 2017

Emirates’ Clark stands firm on merits of Athens-NY route

Emirates Airline president Tim Clark is standing firmly behind his decision to launch a daily fifth-freedom service between Dubai and New York via Athens even though the route prompted a new outburst of protest from the three US majors.

Dubai-based Emirates announced in January it plans to start the Athens-New York Newark route in March. The service is legal within the US-UAE Open Skies agreement and is Emirates’ second use of fifth-freedom rights within that treaty. Emirates operates a Dubai-Milan Malpensa-New York JFK route, a service that started in 2013 and is regarded by many in the industry as the catalyst for US majors to start a campaign against Gulf carrier expansion.

That campaign—waged by American Airlines, Delta Air Lines and United Airlines and the Air Line Pilots Association (ALPA) union—leveled complaints of unfair competition and government subsidies by Middle East carriers Emirates, Etihad Airways and Qatar Airways. But the campaign fell mostly quiet in 2016 after the Obama administration did not pursue any action.

The Partnership for Open & Fair Skies, formed to campaign against the Gulf carriers, immediately reacted to Emirates’ Athens announcement and appealed to the Trump administration to block it.

However, in an exclusive interview with Clark, the Emirates’ president stood staunchly behind the decision, pointing out its legality and the under-served Greek-US market. Clark also said the Athens-New York route had been in consideration for some time and that the Greek government approached Emirates about the possibility after the Milan route was announced.

“The Greeks said no one is taking us seriously. Americans come with their old aircraft in the summer, then disappear in the winter,” Clark told ATW. “Athens is a major European city. The notion that there is no winter demand doesn’t add up. There are 1 million Greek immigrants and nationals in metropolitan New York.

You have an Open Skies agreement that allows us to do exactly what we are doing. So last year we decided to exercise our rights more extensively on Athens-New York. Yes, the election was in process, but a Trump administration was not deemed likely. It was a continuum. I could not see any reason to hold back. Whatever we do, the timing is surprising in the eyes of many, but I fall back on the legality of our actions.”

Talking to ATW, Clark reiterated his strong defense against allegations of operating on the back of heavy government subsidies.

“I have fought back against whoever wants to throw bricks at us. Our financials are as transparent as they are long. We have responded [to the subsidy allegations] with a 400-page document,” he said.

“We built Emirates over 31 years ago based on $10 million and I know how hard it has been. We have had to use our wits and really, really tough it out year after year. Athens-New York is a continuation of what we have done.”

Clark said that within a week of the Athens announcement, he received requests from two other European Union countries with no direct service to the US asking why Athens was selected before their cities. “People value what we bring to them. There is a litany of plus points when Emirates touches a city,” he said.

Emirates will operate a Boeing 777-300ER on the route, in a three-class configuration comprising eight first-class, 42 business- and 304 economy-class seats.

Clark said Greece is already one of Emirates most profitable routes after London and that it works across all three cabin classes.

“People forget, there is quite astonishing wealth in the Greek Islands with its private jets and yachts. Athens used to be s broken down port, but now it is a huge port—modern and efficient. This is a place that’s buzzing,” he explained.

“We bring a lot of cruise passengers into Athens. There’s a lot of tourism, a lot of Indians go there, and there’s the maritime industry. I think Athens-New York is a slam dunk. I will be surprised if we don’t pick up 200 passengers a day. The quality of our product will help us. We are tenacious.”

Asked if he felt the launch of a second fifth-freedom route was provocative, Clark responded, “Provocation is an interesting word. Our very existence as a carrier seems to be a provocation. We have progressively grown our capacity into the USA and been very upfront about it. We said how many cities we were going to do and how many aircraft.”

Clark also emphasized that the US-UAE Open Skies agreement was a “full, unencumbered” treaty that permitted everything apart from cabotage. “For me, it was a wonderful breath of fresh air,” he said. “It was a sea change in thought and when the US did it, the rest of the world followed. It works for growth, for civilization, for the [aircraft] manufacturers and even for the low-cost carriers, so countries, economies and consumers all benefit. For people to regress in their thinking would be bad for everyone.”

Meanwhile, he pointed out, the US majors have consolidated and are among the world’s most profitable airlines. “They are able to push fare prices up. I am not going to knock them for that because that’s capitalism at work. But it’s ironic when they have got here from Chapter 11 and they then turn on us for ‘cheating’. That does not stack up,” he said.

Clark reiterated that Emirates—and the Gulf carriers in general—bring “billions of dollars into the US” through large aircraft and engine orders with Boeing and GE Aviation.

“In the middle of the 787 fiasco we went to Boeing and told them to take 787 technology and put it into the 777. If you do the right thing, I said, I promise we will give you an order to die for and that’s exactly what we did; [the 777X order] was the single largest launch order in the history of the widebody,” Clark said.

“On the job creation side of things, the Gulf carriers have done an amazing job for the industry base and for GE and Boeing. That’s a very good story and we will say to the Trump administration that these guys are really good for the US economy, so don’t mess with them, don’t cut them off. It’s the same for multiple entities in the US; the cities we fly into, the cruise ship industry in places like Fort Lauderdale. We have increased demand; we did not take away demand. We have increased the size of the cake.”

Clark pointed out that it was “within the gift of government” if it is unhappy with a bilateral to give notice that it wants to enter into negotiations. “But the strong groundswell of opinion would be that that is not a very good idea,” he added.

So far, the Trump administration has not signaled how it will handle the issue. Cargo carriers FedEx and Atlas Air Worldwide Holdings, along with Hawaiian Airlines and JetBlue Airways, have formed a campaign group that supports Open Skies and liberalized access to the US. The cargo carriers, in particular, rely on the Open Skies’ fifth-freedom rights to operate important bases out of places such as Dubai.

(Karen Walker - ATWOnline News)

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