Of all the wealthy Persian Gulf airlines, Etihad is the most hated. If it were an NFL quarterback, it’d be Tom Brady. Beautiful, award winning, and with the benefit of a supermodel pre-clearance facility in Abu Dhabi, the capital of the United Arab Emirates, and the city that owns the airline.
Lumped together with its rival Emirates Airlines in Dubai and Qatar Airways in Doha, the three gulf carriers are the death knell to the American fliers dominating the friendly skies. At least that is what American Airlines, Delta and United want the Department of Transportation to think.
Despite being the market leaders in international travel, the big-three airlines claim the U.A.E. and Qatar-based airlines are stealing their thunder. In terms of service, they sure are. But in terms of passenger traffic and market share, the American airlines still rule. That has not stopped them from trying to get the DoT to tweak the Open Skies rules in their favor.
They argue that while their home markets are open to competition from Etihad, Etihad’s market is not open to them. They have a point…try finding a Delta flight parked in Abu Dhabi. Etihad is as dominant a fixture there as Delta in Atlanta.
Yet, as the big-three try to convince the government to do away with some benefits such as Export-Import Bank loans and allowing them to open up hubs at U.S. airports, judging by the comments received by the DoT, Etihad has more fans than foes.
Tom Noonan, CEO of Visit Baltimore, was one of the people to write to the DoT in favor of the Gulf carriers. He wrote:
Visit Baltimore believes strongly that Open Skies agreements should be preserved.By providing more competition and increased capacity and choices in the air travel market, these agreements benefit individual consumers, the entire travel industry and America’s economy through visitor spending, tax generation and job creation.
They are essential to ensure continued growth in international travel to and from the U.S. including destinations like Baltimore. … An important factor driving recent increases in overall inbound international travel has been the increased competition from new service and new entrants into the American market from places like India, theMiddle East, Africa, and Southeast Asia.
Targeting these centers of global aviation and airlines like Emirates, Etihad, and Qatar Airways puts the entire Open Skies framework at risk. We need these carriers to help bring travelers to Baltimore and destinations throughout the country for business and leisure purposes. I urge you not to limit the Gulf carriers’ access to the U.S. Preserve Open Skies.”
American airline rivals also chimed in. The British Airways’ parent company, the International Airlines Group, said it supported Open Skies rules as is.
Competition is a fact of life for all our businesses; we believe that embracing it offers IAG the greatest opportunities to deliver profitable growth and shareholder value over the long term.
This includes markets where IAG competes successfully – i.e. profitably – with all three major Gulf carriers. British Airways has faced direct competition from Emirates for over 25 years.”
Open Skies agreements were designed to expand international passenger and cargo flights to the U.S. The agreements do this by eliminating government interference in the commercial decisions of air carriers.
The Tom Brady of foreign airlines has also made the tiny United Arab Emirates an important destination for American businesses.
Trade between the U.S. and the U.A.E. are on the rise over the last five years. The U.A.E. is now America’s largest export market in the Middle East, beating Washington’s favorite nation Israel.
Most of this is big ticket airport communications and satellite equipment from places like Raytheon, military items like aircraft, and security x-ray equipment for the new port being built in Abu Dhabi. Direct Abu-Dhabi flights from Boston, New York, Washington, Chicago and Houston make this much easier.
U.S. exports and foreign direct investment there rose from $3.6 billion in 2004 to $24.6 billion in 2013.
Moreover, despite claims by the U.S. airlines, the market for air travel from the U.S. to the Indian Sub-Continent has expanded significantly from 2009 to 2014 with U.S. airlines and their European partners actually flying 223,000 more passengers during that period. Etihad acquired Jet Airways in India two years ago. However, passengers flying to Mumbai can leave the U.S., stop over in Abu Dhabi, and then fly to Mumbai. On the return, they can clear customs in Abu Dhabi instead of in the U.S.
A report by Edgeworth Economics showed that routes where Etihad competes with the big three and their global alliance partners actually carried more passengers, despite having lost market share on certain routes due to increased competition.
Passenger numbers rose by 18% and market share fell 4.4% for fights between the U.S. and India between 2009 and 2014 when Etihad started traveling there. First and business class passenger volume from the U.S. to India rose 27%.
Kevin Knight, chief strategy officer at Etihad, called American airlines “arrogant” for trying to do away with current Open Skies regulations.
“The claims made by the three U. S. carriers that Etihad Airways and other Gulf carriers are damaging their business and taking ’their’ passengers, are not only false, but also arrogant,” he said. “They do not ‘own’ these passengers, nor do they do have a right to them.”
Etihad said it will file its response with the DoT this week.
(Kenneth Rapoza - Forbes)
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