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Anti-ME airline claims by US majors grow louder, what if they win?

Crikey, 16 May 2015

Let’s consider the possible consequences if the major US airlines, American, Delta and United, succeed in restricting if not reversing the expansion of the major middle east carriers Emirates, Etihad and Qatar Airways. Casualty number one could be the Boeing 777-X, since 225 out of the 286 officially confirmed orders for the next iteration of the hugely successful 777 family are from those leading Gulf zone carriers.

The balance of orders come from All Nippon, Cathay Pacific and Lufthansa. None are from US carriers. In fact US carriers have not even been big supporters of the best selling current version the jet, the 777-300ER.

In general, America’s flag carriers are not leaders when it comes to embracing new aviation technology, although they do have a very good eye for picking up run-out models of current jets, whether from Airbus, Boeing or even Embraer, at bargain prices that could easily trump in overall economics the premium pricing the jet makers try to charge for their latest offerings.

And then there is the matter of route developments. And route recriminations.

None of the American majors seem to give a toss for competing with the ‘evil Arabs’ with non-stop flights to the ME hubs of Dubai, Abu Dhabi or Doha, or India, since much of the India-US passenger trade aggregates itself at Dubai in particular.

If that disinterest were to continue the India-USA trade would largely default to connections in Europe, where London Heathrow and Frankfurt are already choke points when it comes to northern trans Atlantic services anyhow.

And where Etihad and more recently Qatar Airways are investing in such UK or EU carriers as British Airways and Iberia (through IAG) and Alitalia, Aer Lingus and airBerlin, of which the last named hasn’t mastered basic English capitalization of titles as yet but is making some progress in screwing German rival Lufthansa.

The derogatory language used by some voices on the American side of the debate is to be regretted. They can do better than trash talking about their rich and determined competitors.

American and Delta in particular have good stories to tell about turning their fortunes around, courtesy of the effective subsidy they get through access to the anti-competitive US Chapter 11 laws at certain times, and United might get there one day too, once it stops losing guitars and generally engaging in warfare with its top tier frequent flyers and customers at large.

Route retaliation ought to be of concern if the US carriers prevail in this dispute and not just with the Gulf countries.

All of the objections American, Delta and United have made against Emirates, Etihad and Qatar Airways could be leveled at China’s carriers.

Flying between the US and China via Frankfurt could become a real drag.

And if you think (correctly) that Frankfurt is less than fantastically traveller friendly now, just wait until it cops the trade between American and Chinese cities.

A fast boat to China, anyone?

Insults aside, the US major’s arguments about Middle East subsidies seem to miss the point. It’s their money, and if they want to spend billions of it on new Boeings, or Airbuses, and cut trips times to distant markets by considerable hours flying non-stop, then why not get-over-it, or even compete?

The anti-Arab argument is significantly inarticulate, or perversely a bewildering recital of the wicked disposition of sovereign funds in countries not in America to have the impertinence to invest in their own best interests.

The US carrier message seems to be that success and competition is fine so long as it occurs at a pace that they are comfortable with, and to hell with everything else.

A reasonable person could conclude that both sides of the dispute engage in massive subsidisation, whether direct or indirect, of their airlines and other industries, and that this is a good thing. A ‘go-for-it’ good thing, in that the end result is more mobility, prosperity and generation of government revenues.

Aviation is arguably the leading source of investment in fuel efficiency, and new fuel technologies, not because it is genuinely committed to reducing the dangerous liberation of excess fossil sourced carbon into the environment, but because it will make the stakeholders fabulously rich in the medium to longer term.

Of real concern to Australia, and other parts of the outer darkness that comprises the non-American part of the world, is that if the US loses its leadership in the promotion of free trade and redefines its policy settings to suit three airlines, the downsides of protectionism will surely begin to poison global trade, and everyone will end up losing.

http://blogs.crikey.com.au/planetalking/2015/05/16/anti-me-airline-claims-by-us-majors-grow-louder-what-if-they-win/

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