The ongoing duel between three big US carriers and three Persian Gulf carriers over accusations of subsidies took a dramatic twist yesterday, with a fourth US carrier apparently coming out on the side of the Middle Eastern carriers campaigning for a continuation of Open Skies in the US.In a letter to the secretaries of the US State, Commerce and Transportation departments, JetBlue Airways charged that the so-called Big Three – American, Delta and United Airlines – use international alliances with antitrust protection to stifle competition and control pricing.
US regulators should regularly review the deals known as “immunised joint ventures” to ensure they are “truly benefiting the travelling public,” JetBlue stated.
The JetBlue stance is sure to delight the Middle Eastern carriers. It follows a statement by the US Travel Association, which said recently that “more data continues to surface confirming what we believed early on: that the US Big Three’s complaints about being net-losers in the subsidy game are suspect in the extreme. Their definition of subsidies for themselves is narrow, while their definition for their opponents is broad and imaginative.
The US Travel Association continued: “Meanwhile, the Big Three themselves have put out a report confirming something else we have been sadly forced to believe: that they are afraid of competition, and their solution – note the irony here – is to beseech their government to intervene. Their argument about losing market share is rendered even weaker by the fact that the inbound US travel market is growing by an average of 6% annually, reaching a record 75 million international travelers last year.”
JetBlue’s argument struck a similar chord. Commenting on antitrust exemptions that let member airlines co-ordinate pricing, schedules and marketing, JetBlue said: “Left unchecked, this US government-sanctioned collusion will continue to stifle innovation and competition in international aviation and will directly harm JetBlue and consumers.”
Delta, American and United Continental Holdings accuse Etihad Airways, Qatar Airways and Emirates of receiving subsidies from their governments that allow them to compete unfairly. The Middle Eastern carriers emphatically deny the charges.
JetBlue says Delta, American and United control 65% of the US domestic market after a series of mergers, as well as over 82% of US-European Union traffic through the immunised ventures.
Written by Peter Needham