After two and a half years of intense lobbying by Delta, American, and United they haven’t been able to get the US government to abrogate its Open Skies treaty with the UAE and Qatar and impose limits on flights and on price discounting by Emirates, Etihad, and Qatar. The Obama administration flat refused to do it.
The US carriers put their hopes in Trump but the departure of Steve Bannon set that back. The administration hasn’t acted in nearly a year, despite early meetings with US airline CEOs. However lobbyists are bringing many members of Congress onboard so there’s risk of legislative action where the executive branch refuses to move.
Ultimately at this point it appears not to really matter whether the US airlines officially ‘win’ the battle, getting Congress or the administration to take action against the US airlines. They’ve already won by creating background uncertainty.
Emirates cut back on US flying as a result of the Trump administration’s dangerous laptop ban (requiring lithium ion batteries to be checked into the cargo hold of commercial aircraft) and travel ban. They haven’t added a single US destination in two years. And despite a surplus of Airbus A380s they’ve been downgauging rather than increasing capacity on US routes. Their only new route touching the US is Newark – Athens, a leisure route with a densely packed Boeing 777.
Etihad killed their San Francisco flight. They’re reducing Los Angeles frequency. They’re ending Dallas Fort-Worth service. The Dallas flight is hurt by the end of their American Airlines codeshare, of course, and Etihad’s willingness to lose money in the short term as they build routes is limited as a result of their big losses in air berlin and Alitalia. But the risk of US government action against them makes investment in building routes riskier. They may lose money now, and never have the chance to make it up later.
Though they wouldn’t put it this way, the Gulf carriers have scaled back their investment in the U.S. and that’s at a time when the U.S. economy is in the midst of one of its longest economic expansion periods since World War II.
The Trump administration’s travel ban had its injunction lifted by the U.S. Supreme Court. Already travel to the U.S. is down. U.S. consumers may be traveling, and that’s great for airlines based here earning a disproportionate amount of their business on this side of the origin-destination equation, but not as helpful for airlines relying on local markets abroad.
The truth is that the winner in all of this isn’t Delta, American, and United. It’s Delta. American is severing ties with Etihad. It is losing its Jet Airways partnership and its Gulf Air partnership. It lacks meaningful reach into India because London Heathrow connections on British Airways. BA doesn’t fly to Pakistan. They don’t fly to Bangladesh.
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United at least has its partnership with Star Alliance member Air India. American played the greater fool in going along with this because Delta scooped up a deal with Jet Airways while the world’s largest airline is mostly shut out of the very emerging market they’d fight Emirates, Etihad, and Qatar for a piece of.
By the way uncertainty over whether the United States will honor its international agreements doesn’t help us to fight terrorism or address North korean nuclear proliferation. But an unwillingness to publicly stand by Open Skies — and shut down airline lobbying efforts — is merely consistent with an overall theme created by the U.S. withdrawal from the Transpacific Partnership and demands to renegotiate NAFTA