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New Study Confirms Gulf Carriers Creating No New Travel Demand, Instead Causing Severe Harm to U.S. Aviation Industry

August 29, 2015 Corporate, Headline News 1 Comment Email Email

Despite false claims by the three Gulf carriers that passenger traffic has “massively” increased since the airlines entered U.S. markets, fresh research confirms that the state-owned Gulf airlines have not stimulated any meaningful new demand and are instead diverting passengers from other airlines, inflicting harm on the U.S. aviation industry.

Change in U.S. and JV Carrier Bookings (PRNewsFoto/Partnership for Open & Fair Skie)

This expanded data is included in a major, 400-page legal submission that the Partnership for Open & Fair Skies filed with the U.S. Department of Transportation on Monday. The filing categorically disproves misleading statements by Qatar Airways, Etihad Airways and Emirates to the U.S. government and demonstrates substantial harm to the U.S. carriers and American jobs.

Emirates recently asserted that U.S. carriers “suffer no loss at all— they are actually growing their business” as a result of the Gulf carriers’ subsidized expansion to the United States. The data, however, tell a different story.  Following Emirates’ entry into four of the key markets examined, bookings on U.S. carriers and their joint venture partners dropped an average of 10.8 percent in Boston, 7.6 percent in Dallas-Fort Worth, 21.4 percent in Seattle and 14.3 percent in Washington, D.C.

Top economists from Compass Lexecon have analyzed this and other recent claims put forth by the Gulf carriers and have determined they do not withstand scrutiny.  The study concludes that entry into a U.S. gateway market by a Gulf carrier results in a steep decline in U.S. carrier international bookings to and from the region. The result is a loss of booking share and harm to U.S. service to communities across the country and loss of American jobs.

“The numbers tell a compelling story: The Gulf carriers are causing serious harm to U.S. airlines, their workers and service to communities across the country because they don’t stimulate new demand among passengers,” said Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies. “Time and time again the Gulf carriers manipulate the facts in order to support their false claims. The Obama administration should closely review this evidence and quickly request consultations with theUnited Arab Emirates and Qatar to ensure Open Skies agreements are being adhered to so all airlines can compete on a level playing field.”

The harm inflicted by the decline in bookings over time results in cuts in service to American cities by the U.S. carriers.  For example, Delta Air Lines recently announced plans to cut service between Atlanta and Dubai, beginning October 1st, citing the overcapacity of the government-subsidized Gulf carriers as one of the reasons.  The glut of Gulf carrier capacity has also precluded U.S. carriers from restoring (much less expanding) their non-stop services to India.   Each daily nonstop frequency cancelled or forgone by a U.S. carrier results in an average net loss of over 800 U.S. airline and related jobs.

Qatar and the UAE have provided more than $42 billion in subsidies and other unfair benefits to their state-owned airlines in direct violation of the Open Skies agreements they signed with the United States. Monday’s legal filing from the Partnership further strengthens the case that the Gulf carriers and the governments of Qatar and the UAE are attempting to dismantle core Open Skies principles, transforming a market-oriented policy into one that uses tens of billions of dollars in subsidies to distort the international market on behalf of state-owned airlines that are insulated from market forces and used as instruments of state industrial policy.

The Partnership, along with over 260 members of the U.S. House of Representatives, 22 U.S. senators, the U.S. Conference of Mayors, representing over 1,400 mayors of major U.S. cities, and dozens of business, trade and economic groups around the country, is asking the U.S. government to request consultations with Qatar and UAE and for an immediate freeze on the introduction of new passenger service by the Gulf carriers during these consultations.

Click to view the Partnership’s submission to the U.S. government.

Background on Partnership for Open & Fair Skies

The Partnership for Open & Fair Skies is a coalition that includes American Airlines, Delta Air Lines and United Airlines, along with the Air Line Pilots Association, the Allied Pilots Association, the Southwest Airline Pilots’ Association, the Association of Professional Flight Attendants, the Association of Flight Attendants-CWA, the Communications Workers of America, and the Airline Division of the International Brotherhood of Teamsters. The Partnership presented a white paper, Restoring Open Skies: The Need to Address Subsidized Competition from State-Owned Airlines in Qatar and the UAE, to the U.S. government. The Partnership called on the Obama Administration to request consultations under the Open Skies agreements with Qatar and the United Arab Emirates to address the flow of subsidized capacity to the U.S., and to seek a freeze on new passenger service during the consultations.

Currently there is "1 comment" on this Article:

  1. Andrew says:

    It is amateur of competition. One cannot compare the service on Qatar/Etihad with that offered by the US airlines. I find US airlines international services woeful and lacking in good pax service – the Gulf airlines are totally different. So instead of bleating the US airlines should lift their service levels, which costs very little.

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