A Deal to Be Made: Three Gulf Carriers, Three Alliances, Three JVs, Milan-JFK Goes Away...

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For the three global U.S. airlines, the Gulf carriers became a high priority issue because they are taking record deliveries of new widebody aircraft and need to put them somewhere and have decided on the U.S.

American, Delta and United cannot go after the Open Skies treaties that enable this growth, even though the Gulf carriers take advantage of ridiculous deals in which U.S. carriers get to fly to Doha and Abu Dhabi and Gulf carriers get to fly to Chicago, Dallas, Los Angeles, New York and anyplace else they choose.

So the U.S. carriers go after subsidies. They produced a carefully researched report, documenting the subsidies, a masterpiece of investigative accounting. For the past two weeks, the report has been sitting out there for all the world to see. So far, not a single person has disputed a single portion of it in any substantive way.

But so what?

Even though the Gulf carriers absurdly proclaim that they receive no subsidies and that U.S. bankruptcy law is a form of subsidy, and even though the U.S. government does little to nothing to help U.S. airlines financially, subsidy battles are tough to win. Many countries have historically subsidized airlines, particularly startups. The U.S. enabled the birth of our airline industry through contracts to carry mail.

Despite the rancor, this week Emirates President Tim Clark and Etihad CEO Tom Hogan both proclaimed during U.S. visits that they have sought cooperation with U.S. carriers. “When I first took over as CEO, we looked into our options for the global alliances – to find we had none,” Hogan said. No global alliance “wanted a Gulf member at that time,” he said.

Clark said that before American’s bankruptcy, Emirates approached the U.S. carrier about a partnership and was rejected, although he did not offer specifics.

Also, regarding Emirates’ controversial Milan-JFK flight, Clark seemed to indicate it doesn’t mean that much to Emirates, declaring that it is “not part of the main facet of our business model.”

 


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