Emirates: Delta's Dubai-Atlanta route should've been a moneymaker (2014, renting)

[jsvh]

munna21977 - Yes, I agree there is more room for free market mechanisms in airports. But the US is still better off than state-owned airlines. It is not all or nothing. Flying into a public airport is different than being owned by the government.

ME3 are violating Open Skies agreements and not playing on a level playing field.

Also, I don't think you are being fair to how bankruptcy works. When you go bankrupt you don't get "free government money", it just means you default on some of your private debt / money owed private investors.

[Atlwarrior]

Originally Posted by jsvh

munna21977 - Yes, I agree there is more room for free market mechanisms in airports. But the US is still better off than state-owned airlines. It is not all or nothing. Flying into a public airport is different than being owned by the government.

ME3 are violating Open Skies agreements and not playing on a level playing field.

Also, I don't think you are being fair to how bankruptcy works. When you go bankrupt you don't get "free government money", it just means you default on some of your private debt / money owed private investors.

1. The Gulf is a better location logistically and can serve Africa, Asia, Indian Subcontinent, Europe

2. The US carriers are unionized with rude and overweight flight attendants

3. Other legacy carriers such as BA, Qantas, Singapore offer similar levels of CS to the Gulf carriers

4. Delta should use some of its $2.7B in FCF last year to improve their CS and stop whining and complaining

5. US airlines don't even compare to the Gulf ones in terms of customer service and quality. Most people I know happily pay more to fly Emirates vs a US carrier. As far as subsidies go, isn't bankruptcy effectively a subsidy? US airlines can file bankruptcy and completely screw all their pensioners and bond holders and still operate.

6. Btw Emirates is studying the Atlanta market to see if it should enter.

Emirates poised to bid for Atlanta route | The National

Delta: I bag free, 2nd bag $50. $100 RT
Emirates: Both bags free. $0 RT
Delta: Extra for seat selection
Emirates: None
Delta: Stingy on meals, drinks and snacks
Emirates: Better food, etc.
Delta: Sometimes surly service. FAs go to sleep after dinner/lunch
Emirates: FAs always available.

[jsvh]

Atlwarrior - None of your points address the fact that Emirates doesn't have to make a profit like the private US carriers do.

[Poncey]

The general public could care less if Emirates (or other flag carriers) has to make a profit (or not) to operate. Our main concerns are about safety, pricing and service.

You're also not going to find much public sympathy for the U.S. carriers. Many of us felt price gouged even in light of lower fuel prices, record profits from baggage fees or record profit announcements in general.

[jsvh]

Not true Poncey. Most americans support free market principles and airline tickets have halved in price since deregulation in the 70s.

We also have laws / international agreements that need to be enforced to keep the playing field level.

I am all for more air carriers for people to choose from, but it needs to be a fair game.

[jsvh]

http://www.bizjournals.com/atlanta/n...criticism.html

...

Atlanta is Delta’s (and indeed the world’s) busiest hub, and is heavily reliant on connecting traffic to support its international service. Customers traveling from the U.S. to Dubai today have a choice of 16 daily departures from 12 U.S. cities – 14 of which are operated by Emirates. That airline’s extensive interline and code sharing agreements with U.S. carriers means most passengers traveling to Dubai can easily book one-stop service on Emirates through the gateway of their choice. Delta is competing with every one of those flights, all of which are heavily subsidized by the United Arab Emirates.

Unlike Delta, the Gulf carriers don’t have to worry about being profitable or operating under the normal constraints of a free market, making fair competition impossible. Indeed, Delta’s Atlanta-Dubai route lost money for two years before we made the difficult decision to cancel the service.

Walker also noted that the Gulf carriers are boosting U.S. service in part to connect American passengers to the Indian subcontinent through their Middle Eastern hubs. She correctly notes that “Delta does not have a sub-Indian continent network (nor do any of the U.S. carriers).”

There is a reason for that. In the past Delta had flown nonstop to Mumbai from both New York and Atlanta. Today the U.S. airlines operate almost no service to India because they have been driven out of the market by the subsidized Gulf airlines. The same phenomenon has occurred with European airlines, which have been driven out of the market by Gulf subsidies. It is shocking to realize that U.S. airlines have just two flights to the second most populous country in the world.

The point that Walker omits is, of course, is the stunning level of subsidy enjoyed by the Gulf carriers. At $42 billion and growing, it is one of the largest trade-distorting subsidies on record, and without question violates the Open Skies agreements between the U.S. and Qatar and the United Arab Emirates. That is why Delta, United and American and airline labor unions continue to urge the U.S. government to open consultations with those nations to resolve the issue. The impact is real and growing fast – and thousands of U.S. airline jobs are at risk. A long-haul international flight like Atlanta-Dubai directly supports 800 airline jobs.

Emirates, meanwhile, touted an “analysis” claiming that our Atlanta-Dubai service was wildly profitable, and accused us of cancelling it to make a political point. That’s just nonsense. Airlines don’t cancel profitable routes, and Delta is no exception. Our Dubai service lost money for nearly two years, for the reasons stated above – we have been competing with heavily subsidized Gulf carriers that simply don’t have to worry about whether routes are profitable, since they are supported by their governments.
...

(Emphasis mine)

[munna21977]

What about Tax-Payer Subsidies enjoyed by American carriers. I know that Amarillo, Texas was giving 1 Million Dollar every year of local Tax-Payer money as subsidy to American Airlines to fly to Amarillo from Dallas. How many other cities are there who pay Tax-Payer money to Airlines?

Amarillo Aiding American // City Pays to Keep Airline's Jet Service - Tulsa World: Archives

Amarillo officials calm in face of American Airlines bankruptcy | Amarillo Globe-News

Before blaming Foreign Airlines, we should look that how American Carriers are enjoying Tax payer paid and subsidised Airports, Tax-Payer funded Bankruptcy Protection and also enjoying Tax Payer money to fly to Small Cities and then have the audacity to block other Airlines saying they get Subsidy? First they should look at their own tax payer subsidy. shoddy service and then complain!!!

[jsvh]

Yes, ESA is a small subsidy for flying to small airports. We should get rid of that too. And Delta doesn't fly any of those routes, only smaller connection carriers: https://en.wikipedia.org/wiki/Essential_Air_Service

So yes, the $240M in subsidies spread across dozens of small carriers for ESA is no where near the $42B the middle east carriers are getting.

[munna21977]

Originally Posted by jsvh

Yes, ESA is a small subsidy for flying to small airports. I am fine getting rid of that. And Delta doesn't fly any of those routes, only smaller connection carriers: https://en.wikipedia.org/wiki/Essential_Air_Service

So yes, the $240M in subsidies spread across dozens of small carriers for ESA is no where near the $42B the middle east carriers are getting.

I think that the subsidy given by City of Amarillo was different then ESA. It will be interesting to know that how many Cities have funded Airlines above the Essential Air Service Program. 3.5 Million Dollars was just one City. There must be hundreds of such funding programs across USA in different Time-periods.

This article claims that total Tax Payer Subsidy enjoyed by American Carriers can be close to 150 Billion Dollars.


US Airlines Have Received More Subsidies than Middle East Ones - View from the Wing

[munna21977]

Four US Airlines have taken the side of Gulf Airlines and they are trying to expose the myth of Subsidies enjoyed by Big 3 American carriers.

Four U.S. airlines side with Gulf carriers, against American Airlines, Delta Air Lines and United Airlines in Open Skies battle | | Dallas Morning News