A three-year battle started by American Airlines, Delta Air Lines and United Airlines against the major Gulf carriers appears to have ended with little to show for the millions of dollars of campaigning by the US airlines and affiliated unions.

“Airlines in America fail in their campaign against the Gulf carriers” ran the headline in the UK business magazine The Economist. And, indeed, it’s difficult to view the outcome any other way.

Nevertheless, the three US majors, via their Washington DC lobbyist Partnership for Fair & Open Skies, attempted to put a silver lining on the result of the Open Skies negotiations between the US and United Arab Emirates governments that was announced mid-May.

“A truly significant moment,” Delta CEO Ed Bastian said via the Partnership’s press release. ALPA union president Tim Canoll was more reserved. “The UAE’s pledge as reported by the US government would represent a promising development. However, the UAE’s actions will serve as the true test of its commitment to fair competition,” he said.

Attempts by the White House to play up an achievement quickly backfired when remarks by assistant to the President and trade council director Peter Navarro spoke of a “routes freeze.” The White House clarified the next day that there was an “understanding” that UAE airlines had “no current plans” to add fifth freedom flights, but made no mention of a routes freeze.

As if to underscore that the UAE Open Skies accord remains fully intact, the UAE then issued a statement by foreign minister Abdullah bin Zayed in which he said that discussions with the US "validate all the rights and benefits—including fifth freedom services" of the original air transport agreement, signed in 2002.

A similar agreement with Qatar, not changing the Open Skies terms but with side talk of “no plans” to add more fifth freedom flights, was sealed in January. The real target of the campaign, however, was not so much Qatar Airways as Dubai-based Emirates Airline, the largest of the three Gulf carriers and the one that began using the fifth freedom rights embedded in both the Qatar and UAE Open Skies agreements. Emirates began with a Milan-Malpensa, Italy-New York JFK service, igniting concern by the US majors that this was the beginning of wider encroachment in the lucrative transatlantic market, and in 2017 added Athens-New York Newark. Qatar Airways and Abu Dhabi-based Etihad Airways have so far never used their fifth freedom rights, but US cargo carriers like FedEx, which operates a hub in Dubai, depend on them.

However, the fifth freedom promises and, indeed, the entire US campaign, have become almost irrelevant in the years it has taken to try and prove that the Gulf carriers were in breach of their countries’ Open Skies agreements because of their reliance on heavy government subsidies (allegations the Gulf carriers strongly deny).

For one thing, in a demonstration that there are more creative ways to enter the transatlantic market that do not require fifth freedom rights, Qatar Airways now owns almost half of Air Italy, an airline it is growing rapidly and supplying new, long-haul aircraft. Air Italy, whose rebranding makes it look an awful lot like Qatar Airways, can fly to the US as much as it likes-subject to slots—within the terms of the European Union-US Open Skies.

Secondly, the US campaign was never a unified effort. Far from it, US cargo carriers and independents like Alaska Airlines and JetBlue Airways were opposed. This meant that the US airline lobbying organization, A4A, could not take a stand because it had members on both sides of the cause. There was no clear, unified message to Congress, which is fed up with US airlines ancillary fees and service failings, and also had to take into account the thousands of jobs that large purchases of Boeing aircraft by the Gulf carriers help support.

Most importantly, the US majors could show no harm done by the Gulf carriers. On the contrary, American, Delta, United (and for that matter, Southwest Airlines) are now the world’s perennially most profitable airlines. And employees at those airlines have benefited from that profitability with new, world-class compensation packages. Delta alone is on a 25,000 worker hiring spree over the next five years. 

But while American and Delta have invested some of that profitability in significant products and customer service products, United’s service record has spiraled from bad to appalling these past 18 months.

Meanwhile, the Gulf carriers are experiencing tough financial times that are making them work all the harder on their customer service. Factors behind this were sometimes local—the Arab blockade on Qatar, the financial stress related to Etihad’s stakes in airberlin and Alitalia-but some was inflicted by the US government. The ill-conceived cabin laptop ban and the Trump administration’s travel ban mostly targeted Arab and Muslim countries, dissuading travelers and causing drops in ticket sales to the US that particularly affected the Gulf carriers.

While all this was happening, other “threats” to the US majors emerged. There was heavy campaigning against LCC Norwegian, whose application to operate transatlantic flights from its Ireland base under EU-US Open Skies was long delayed. In the transpacific market, the major Chinese carriers have grown significantly and improved their products. Rather like the emerging, now fast-growing Indian subcontinent market, China seems to have been an opportunity that the US majors were slow to realize.

But here, so far, the US carriers retain an advantage; there is no US-China Open Skies accord and Air China, China Southern and China Eastern are running up against their quotas to US cities.

And that’s a status quo that American, Delta and United will be happy to maintain.


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