The dispute between America’s three largest domestic airlines — American, Delta, and United — and the Middle Eastern trio of Emirates, Etihad, and Qatar Airways just got more complicated.
A coalition of four US airlines — JetBlue, Hawaiian, Atlas, and FedEX — have spoken out against a request from the legacy carriers, which they refer as the “Big 3,” to renegotiate America’s respective Open Skies agrements with the UAE and Qatar.
The alliance — known as “US Airlines for Open Skies” (USAOS) — submitted a letter on Monday to the US Government detailing the harm that could be done to their respective businesses, consumers, and the US economy should the government comply with the wishes of the Big 3.
“The Big 3 do not speak for all, or even most, U.S. airlines,” Hawaiian CEO and President Mark Dunkerley said in a statement.
“Our coalition believes that the United States should honour its Open Skies commitments, which opens markets for U.S. carriers, promotes competition on international and domestic routes, and facilitates U.S. exports.”
In the letter, which was addressed to the secretaries of State, Commerce, and Transportation, USAOS stated its belief that any restrictions placed on the Open Skies agreements with the UAE and Qatar would constitute a violation of the agreement itself.
USAOS also point out that there could be political and national security consequences to restrictions placed Middle Eastern airlines.
“The unilateral actions demanded by the Big 3 likely would provoke retaliation by the UAE and Qatar, encourage other Open Skies partners to take restrictive actions, deter countries from entering into Open Skies agreements with the United States, and raise questions about the United States’ commitment to the Open Skies regime,” USAOS wrote in the letter.
This is particularly crucial for major cargo carriers such as FedEX and Atlas — both of which have significant operations in the Middle East.
FedEX currently operates a major sorting facility in the Dubai and 44 flights a week in and out of the emirate.
According to the coalition, both Atlas and FedEX operate support flights for US military operations in the Middle East.
While the large legacy carriers use their own interational flights to feed its domestic routes, smaller airlines such as JetBlue and Hawaiian credit the growing presence of international airlines such as the Middle Eastern three with increasing traffic for its domestic service.
In fact, JetBlue believes Big 3’s goal is to roll back the clock on the airline business.
“JetBlue is not unfamiliar with efforts from the legacy carriers to stifle competition” JetBlue general counsel James Hnat said on a conference call with the media.
“Legacy carriers are trying to protect themselves from competition. Open Skies is good for trade, economic growth and politics.”
Furthermore, USAOS claim that increased competition in the airline industry through Open Skies agreements “generate approximately $US4 billion in annual savings for passengers on U.S.-international routes.”
USAOS also dimisses United, American, and Delta’s claims that 800 airline jobs will be lost for every route they lose to a Middle Eastern airline.
“The threat of job loss is just a distraction from the whole picture,” Hnat said during the call. “There are other jobs to be created. It’s a just political distraction.”
The Big 3 haven’t taken today’s announcement without comment. In a swift response, the Partnership for Fair and Open Skies — the lobbying group representing United, Delta, and American — didn’t mince words about the formation of the USAOS.
“This is a meaningless coalition without a cause,” Partnership for Fair and Open Skies spokesperson Jill Zuckman said in a statement to Business Insider. “The only risk to our Open Skies agreements is the Gulf carriers themselves and their massive, market-distorting government subsidies. Of the 117 Open Skies agreements with the United States, 115 are working beautifully.”
Obviously, this is a dispute that’s not going away anytime soon, and today’s entry of a third party has added an extra wrinkle to the story. Stay tuned for more action.
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