By Ted Reed
Not surprisingly, when Gulf carriers enter a U.S. market, they take passengers from U.S. airlines and their joint venture partners. A new report quantified the decline in Chicago, San Francisco and Orlando.
The report was prepared for the Partnership for Open and Fair Skies, which representsAmerican (AAL – Get Report), Delta (DAL – Get Report) , United (UAL – Get Report) and their unions. It said that in the months following the entry of one of the three subsidized Gulf carriers into a market, U.S. and partner traffic to select destinations in the Middle East, Africa and Asia fell 8.8% in Chicago, 13.1% in San Francisco and 13.3% in Orlando.
“The numbers don’t lie.” said partnership spokeswoman Jill Zuckman. “It is undeniable that the billions of dollars in subsidies funneled to Emirates, Etihad Airways andQatar Airways are harming American businesses and jobs and it will only get worse the longer the U.S. government waits to act.”
The problem is that subsidies enable Gulf carriers to price below cost on U.S. routes. The result is that U.S. carriers either lose traffic or reduce flying, resulting in a loss of jobs to carriers that appears to violate provisions of the Open Skies treaties that enable their flying to multiple U.S. cities, in return for which U.S. carriers can fly to Dubai and Abu Dhabi.
United flew its final flight to Dubai on Jan. 23, from Washington Dulles, with the last Dubai departure on Jan. 25; Delta will end Atlanta-Dubai service next month; American does not fly to Dubai or Abu Dhabi.
The total number of lost passengers annually is in the tens of thousands in each city, according to study results provided to TheStreet.
The statistics include flights to Mideast destinations except for Israel; to Indian subcontinent countries India, Pakistan, Bangladesh, Nepal, Maldives and Sri Lanka; and ASEAN countries Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. In every case, these destinations are reached via connecting flights.
In Chicago, the report looked at the traffic decline after Qatar began service in April 2013 and Emirates began service in August 2014; it does not consider the impact of Etihad service that began in 2009, which also had a significant impact. Generally, Chicago passengers to Africa, the Mideast and Asia would begin their journeys with a trans-Atlantic flight.
Study results indicated that in Chicago, losers include hub carriers American and United, United partner Lufthansa, and Delta.
In San Francisco, the study measured the impact of an Etihad flight that began in November 2014, but doesn’t consider the significant impact of the start of Emirates service in 2008. Passengers to the select destinations could fly either across the Pacific, most likely connecting in Tokyo, or across the Atlantic, most likely connecting in Frankfurt or London.
In San Francisco, hub carrier United and American partner British Airways have lost the most traffic, the study indicated.
In Orlando, Emirates began service in September 2015. Delta and United lost the most traffic. British Airways, which flies non-stop to London, also lost traffic, but far less than Delta and United.
Results of an earlier report, released in July 2015, indicated that in four U.S. gateway cities — Boston, Dallas, Seattle and Washington, D.C. — the combined decline in the year after Emirates began service to its Dubai hub ranged between 8% and 21%.
Originally found on TheStreet.com