United Airlines employees and a handful of Members of Congress plan a protest on Sunday at Newark’s Liberty International Airport against Emirates. The Dubai-based airline is commencing non-stop service between Newark and Athens later this month.
The protest will take place on Sunday, March 12, 2017 from 11am-12:30pm outside the United Airlines Ticket Counter in Terminal C at Newark.
Invoking the usual talking points, the protesters contend that the Gulf carriers enjoy an unfair advantage over their American counterparts due to government subsidies.
For example, Tim Canoll, president of the Air Line Pilots Association, stated—
We want to express our displeasure with the continued expansion by these massive subsidized government entities, in direct competition with our employers, and with the adverse effect it will have on our employers and our jobs
United CEO Oscar Munoz, speaking specifically about the new Athens to Newark route, stated–
At the end of the day, the economics of it is that, if it indeed continues, it’s going to affect the jobs in this country because I’m not going to fly from Newark to Athens, Greece, every day. I fly there seasonally now, because that’s where the demand is. If they are going to fly every day, they are going to lose $25 million on that route every year. If they are going to continue to do that, then I have no business in making that route.
And how does Emirates respond? On Thursday in Berlin Emirates chief Sir Tim Clark dismissed critics, stating, “We have breached no terms of the air-service agreement that allows us to do that.” Emirates has claimed the Greek government asked it to start the route and Clark earlier said, “We are pleased to be able to help meet a strong consumer need long neglected by other airlines.”
Do U.S. Carriers Have A Winning Argument?
If United and Delta cannot operate year-around service to Athens profitably, why can Emirates? Interest groups lining up against the Gulf Carriers say–
Emirates Airlines, Etihad Airways, and Qatar Airways receive billions of dollars in subsidies from their governments resulting in unprecedented growth of their state supported carriers. These subsidies are a clear and direct violation of the U.S Open Skies agreements.
Middle East carriers are looking at the lucrative U.S. market to help build their fledgling airlines. Their collective goals is to dominate International Aviation. They are well on their way. New flights do not represent increased passenger growth. They siphon flyers from U.S. carriers, rerouting them from the U.S. to India and Asia.
This is the smoking gun (.pdf), evidence supposedly documenting the subsidies. It is open to interpretation and not the subject of this post.
I will only say this–it does not go unnoticed that the Gulf carriers have targets on them while dozens of other carriers who receive subsidies or serve as state-backed flag-carriers are not singled out. Many of those, not surprisingly, are alliance or joint venture partners. Ask Delta why it supports state-owned China Eastern and Saudia but rallies against Emirates and you’ll get a blank stare.
It always strikes me as counterproductive when airlines protest against carriers that offer 1.) better prices 2.) better service and 3.) a better product, as if that is really bad for the American consumer. Competition brings out the best in us and the Gulf carriers are hurting: I strongly doubt a route that really loses $25MN/year would stick around.
CONCLUSION
I won’t be attending the protest on Sunday.
Nice post Matthew. Articulate, interesting, balanced and intelligent. Thanks
Same reason that Saudi Arabia is not part of the current travel ban. It’s easy for the US carriers to attack those that do not profit them.
What a bunch of whining hypocrites. What about the 5th freedom flights UA enjoys (e.g. HKG-SIN)? What about the US benefits (aka subsidies) has gotten from us US taxpayers, such as transferring pension plan obligations to us taxpayers? Give Emirates credit for trying to create a market where there wasn’t one.
1. Emirates pays much better salary to their pilots (Not even saying the nice housing in Dubai and other benefits)
2. The subsidies are coming from UAE government, not the U.S… What’s the point of against it?
3. Even if there’s no subsidies, Emirates, Qatar, Etihad have better service, business class products than United…
Thank you!
As always, an interesting angle on a story.
OK, mini tangent: I think this is an illustration of the problem of how we define air travel, i.e., should it be approached more as a utility than a sheer for profit endeavor?
Can an electric provider abandon a set of consumers when it affects its bottom line? Should an airline abandon a route the moment it becomes unprofitable?
Is air travel in 2017 a luxury, or a necessity?
Is it evil for a country to use its airlines as an attempt (on which I am not sold) to enhance their economies via air traffic?
Just musing…
This is getting old. Yes, I suspect the stories about the massive ME3 subsidies are at least partially true. The next time he complains about subsidies, I’d like someone to question Oscar about how many “incentives” his company receives from Cook County and the state of Illinois to keep UA’s headquarters there. Or what federal credits and incentives UA’s tax consultants are currently working on. My guess is you’ll be met by the sounds of silence,
That ‘smoking gun’ fabricated quotes.
http://viewfromthewing.boardingarea.com/2015/05/01/turns-out-the-us-airline-white-paper-trashing-the-gulf-carriers-did-some-very-naughty-things/
Oh wow. Not surprising at all.