Keep Our Skies Open to Competition
Most people probably don’t even hear the flight attendants’ final message when they reach their destination, so glad are we to be done with the brutal and demeaning experience that domestic flying has become.
As we’re gathering our belongings from the overhead bins – which may well have shifted to another plane during our flight – the attendants say, “Thank you for choosing Delta/American/United, etc. We hope you will choose us again the next time airline travel is in your plans.”
Did I choose them? I suppose so. But only because they offered the flight time I needed at the lowest price. Flying is not quite a commodity like corn or pork bellies, but it is close.
Indeed, the airlines are quick to “match” their competitors when prices rise or fall, and their service costs – bag fees, price for a glass of wine on the plane – are too close to make much of a difference. They say they are on our side, but their fuel costs have collapsed like everyone else’s, and if they’ve passed along any of those savings to us, I missed it. Aren’t the big three – Delta, United and American Airlines – all profitable at this point?
So it should come as no surprise that competitors have begun to make them nervous. Specifically, the big American carriers have become concerned about competitors from the Middle East. Emirates Airlines from the United Arab Emirates, Etihad Airlines from Abu Dhabi, and Qatar Airways, the carrier of the Qatari government, have broken out of the pack, and it has the U.S.-based airlines seeking protection from their government in Washington.
The U.S. airlines, with their allies in the labor movement, have asked the government to review its ‘Open Skies’ agreements with the United Arab Emirates, Abu Dhabi and Qatar. These agreements, which date to the 1990s in the cases of these three countries, pave the way for airlines to operate in each others’ airports. The goal is to restrict these competitors’ ability to operate in the United States or extract promises of price increases and reductions in services that will make it easier for the U.S. airlines to compete.
The U.S. airlines, which have been bailed out, refinanced, subsidized and virtually assured their market share for decades, now say the three Middle Eastern airlines have received $42 billion in subsidies from their governments, which have enabled them to provide the service innovations and aggressive (read: favorable to customers) pricing that could give these airlines what they consider an unfair leg up.
Sir Tim Clark, president of Emirates Airlines, said it was made clear to him from Day 1 there would be no government subsidies, that the company was to turn a profit. Losses from fuel trades in 2008 and 2009 were paid entirely from the company’s reserves with no government help, he said. It has been through hard work, economic improvements in his area of the world—Dubai’s GDP has quintupled in the last 20 years—and a commitment to investment and innovation that his airline and the others have flourished.
According to USA Today, Emirates Airline is responsible for half the world’s orders of Airbus A380 super jumbo jets. The president of Etihad says his firm has 120 aircraft on order from Boeing, an American company, and has supply contracts with numerous American firms, including Atlas, Panasonic and others worth millions more. The UAE, with 9 million people, now boasts an airport in Dubai that is busier than Chicago’s O’Hare.
These airlines understand their customers in a way most U.S. carriers do not. If you have a layover in Dubai, Abu Dhabi or Doha and you’re flying business class or above, you get a hotel room and a car and driver. On some flights, you can basically get a small apartment, complete with a sitting area, shower, lavatory and double bed. All at prices the Americans can’t beat.
In other words, competition is spurring these airlines to improve the flying experience to attract customers. In the U.S., where government regulation essentially enshrines the existing oligopoly, we endure a race to the bottom. They charge for bags, cut back on snacks and cram as many ever-larger Americans into smaller and smaller seats as they can.
What’s truly bugging America’s airlines is not may-or-may-not-exist government subsidies. It is not unfair business practices or anything of the sort. It is the fact these airlines, which offer superior service over longer routes in a part of the world where economic expansion is prompting more and more people to fly, have become the world’s top carriers.
Emirates now carries more international passengers than any other airline. This costs American carriers money, just as it cost GM, Ford and Chrysler when Americans discovered the superior dependability and lower fuel consumption of Japanese cars in the 1970s.
I personally don’t care whether the voice that thanks me for “choosing” an airline speaks on behalf of Delta, American, Emirates or Qatar airlines. I want clean, safe, comfortable, efficient travel on my schedule. If they offer it, I don’t want my government and a bunch of labor unions and airlines that have never put my needs first to get in the way.