Emirates, Etihad Airways and Qatar Airways are “all state-owned and enormously subsidised, therefore not bound by the commercial imperatives of real airlines like Swiss, Lufthansa and SAS”.
That’s the outspoken opinion of Rob Britton, adjunct professor at the McDonough School of Business at Georgetown University in Washington DC.
Britton lectures on airline topics and says students frequently ask him about the Gulf carriers. He tells them that “nearly all of their labour force is sourced from poor countries, and thus paid far less and treated inequitably compared to standards in Europe and North America.
“Because of the subsidies and unfair benefits they receive, the Gulf airlines pose an enormous threat to European and US airlines, and the international aviation marketplace. As a result, the US airlines have rightfully urged the Obama administration to intervene in this growing trade dispute.”
Writing in the Huffington Post, Britton goes on to cite a series of airline decisions which he said were caused by the presence of Gulf carriers.
Philippine Airlines (PAL) had accused the Gulf carriers of creating “a distortion in the market” that “could possibly lead to PAL pulling out” of new routes to London and New York, he said.
Similar concerns had been echoed by European Union transport ministers, including the German and French ministers, Britton said.
In a June filing to the US government on the Gulf airline trade dispute, Air France KLM had said “European carriers have closed routes and reduced overall capacity. Air France during this period terminated services to Abu Dhabi, Doha, Jeddah, Chennai, Hanoi and Phnom-Penh and lost major growth opportunities to these regions”.
Rounding off his argument, Britton said the time had come “for the Obama administration to recognise the damage to US airlines and to take action to restore fair competition”.
Britton’s full article can be read here: www.huffingtonpost.com/rob-britton/subsidized-gulf-airlines-_1_b_8294892.html
A reader from the University of Illinois, however, came up with a quick riposte.
“US airlines are hurting?” the reader asked incredulously. “Delta just reported a record quarterly profit of $1.4 billion dollars. Not revenue. PROFIT. How is THAT for hurting??”
That is correct. Delta shattered the airline industry’s record for quarterly results last Wednesday, reporting USD 2.2 billion in pre-tax income. Delta’s third-quarter earnings announcement had Wall Street buzzing. The USD 1.4 billion profit soared past analysts’ expectations, causing stock shares to climb.
Delta, for one, seems to be weathering the Gulf airlines storm.
Written by Peter Needham