UAE carriers don’t need to be patronized. If anything, they hold all the keys
US carrier American Airlines (AA) is trying to patronize local UAE carriers with AA’s CEO Doug Parker recently raising the possibility of partnering on routes as codeshare agreements with UAE airlines on the condition those airlines freeze expansion plans into the US in the coming months.
“We haven’t had enough time to make sure that those resolutions have the effect that we hope for,” Parker said at the International Air Transport Association’s annual general meeting in Sydney, Australia, referring to a recent deal UAE and US airlines signed to end disputes over alleged violations of the Open Skies Accord of 2002.
Local media reported that AA ended its last codeshare partnership with Etihad in July 2018, accusing the Abu Dhabi airline had been “dumping capacity into the US on the back of airline operations that received billions in government subsidies”, but that the UAE’s airlines, Emirates, and Etihad, have been adamant in denying that.
“It should be noted that the UAE-US Open Skies pact does not prevent the likes of Emirates or Etihad from freezing new route launches. This is at odds with what AA is saying,” Saj Ahmad Chief Analyst – StrategicAero Research, told AMEinfo.
“However, AA would be better off partnering with a UAE carrier instead of complaining – not only would it give them a competitive edge over United and Delta, but they would have a footprint in the Middle East and enjoy the spoils of the traffic available from the region.”
Saj added that Emirates does not need American/Delta/United to partner up with if they don’t want to, especially when Emirates has extensive codesharing pacts with JetBlue and Alaska Airlines.
New US route
Dubai’s Emirates has begun its first new US route since the UAE signed a deal to resolve claimed violations to Open Skies policies, Gulf Business reported.
The non-stop service from Dubai International Airport to New York’s Newark Liberty International Airport touched down on Friday, June 1.
“A lobbying group for US carriers Delta, American and United said that service violated air service agreements between the UAE and US,” it said.
Emirates said the latest addition would add to its route network of 12 US destinations.
Emirates aims to grow its services to Canada on the back of proposals to increase the number of direct flights between the UAE and Canada and strengthen business ties, the National revealed.
UAE Economy Minister Sultan Al Mansouri recently met Canadian Minister of Transport Marc Garneau to negotiate bilateral relations following the country ’s refusal to grant more landing rights to UAE airlines.
The UAE daily reported that under a 1999 agreement, the UAE is allowed to operate six flights per week to and from Canada.
Emirates operates three weekly flights from Dubai to Toronto using its Airbus A380. Etihad operates three flights a week between Abu Dhabi and Toronto, while Air Canada has operated a thrice-weekly service between Toronto and Dubai since 2015.
The May 11 deal in jeopardy
The US and UAE signed a deal on May 11, 2018, to resolve US claims that Gulf carriers have received unfair government subsidies, the U.S. State Department said, Reuters reported.
The UAE’s ambassador to the UAS, Yousef Al Otaiba, praised the deal.
“The UAE is very pleased that our understanding with the US preserves all of the benefits of Open Skies for travelers, airlines, communities and aerospace companies in both countries and around the world,” Otaiba said in a statement.
“All the terms and provisions of the Air Transport Agreement including Fifth Freedom rights remain fully in place, with UAE and US airlines free to continue to add and adjust routes and services.”
Since 2015, the largest U.S. carriers – Delta Air Lines Inc, American Airlines Group Inc and United Airlines – have urged the U.S. government to challenge the conduct of the three major Middle Eastern carriers under “Open Skies” agreements, according to Reuters.
“The U.S. airlines have contended the Gulf carriers are being unfairly subsidized by their governments with more than $50 billion in subsidies over the last decade.”
The UAE told the US in a letter that the two UAE airlines have no current plans to add additional “Fifth Freedom flights” that allow an airline to fly between foreign countries as a part of services to and from its home country.
“UAE said it agreed to ensure financial transparency, and when Etihad Airways’ restructuring is complete it will issue regular financial statements as Emirates does,” Reuters reported.
Middle East carriers thriving
The International Air Transport Association (IATA) expects that airlines in the Middle East will enjoy a $1.3 billion rise in profits in 2018 or $5.89 per passenger, Forbes reported.
“The rise of oil prices is helping revenues and the oil-based economies in the region, aero-political relations with the U.S. have improved, while the Gulf airlines have substantially curbed growth,” IATA said in a recent statement.
Last year, Middle East carriers saw a $1 billion rise in profits or $4.81 per passenger.
Emirates Group last month announced that its revenues rose by 67% for the financial year ended March 31, netted around $27.2 billion, with $1.1 billion, up 8% over last year’s results.