U.S. Airlines Seek Ban on Gulf Carrier Trips From Outside Region

Why U.S. Airlines Are Sparring With Gulf Carriers

The biggest U.S. airlines, sparring with three Persian Gulf carriers over flights into the country, have asked the Obama administration to consider new limits on that service, Delta Air Lines Inc.’s chief executive officer said.

Regulators could bar the Gulf trio from trips that don’t stop or start in the United Arab Emirates or Qatar, CEO Richard Anderson said Wednesday in an interview. He said the government also could keep Emirates, Qatar Airways Ltd. and Etihad Airways PJSC from expanding further into the U.S.

Anderson’s comments shed light on how Delta, American Airlines Group Inc. and United Continental Holdings Inc. are lobbying the U.S. over what they call unfair support for the Gulf carriers from their nations. Speaking Tuesday in Washington, American CEO Doug Parker said only that the U.S. should cap the Gulf airlines’ flights at current levels while reviewing aviation treaties with their home countries.

“There’s a reasonable remedy that still positions those carriers to be able to operate,” Anderson said at Delta’s Atlanta headquarters. “We’re espousing a more level playing field given the huge size of the subsidies.”

The State Department said this week that the administration is still reviewing a report from the airlines asserting that the U.A.E. and Qatar have given Emirates, Etihad and Qatar Airways more than $42 billion in subsidies and other unfair benefits. The group also shared the findings with European Union regulators.

Gulf Flights

The three Gulf airlines average a combined 25 daily flights to the U.S. from their home countries, compared with two for the U.S. carriers to those nations. The Gulf trio has rejected the U.S. group’s subsidy claims, and Emirates President Tim Clark says a detailed rebuttal is in the works.

“I expect once we have done that to be given the benefit of an apology from the people who have actually made these allegations,” Clark said Tuesday in Washington.

A Milan-to-New York trip marketed by Emirates has drawn particular scorn from the U.S. airlines, because that route doesn’t involve the carrier’s Dubai base. That flight shows how U.S. airlines’ overseas networks are at risk, according to their advocacy group, the Partnership for Open and Fair Skies.

Anderson said that from a technical standpoint, Emirates’s Milan flights from New York do continue on to Dubai after a stop in the Italian city. However, Emirates sells the Milan leg as if it were passengers’ departure point, without regard to the continuing flight to Dubai, Anderson said.

American, United

American isn’t commenting on what it wants to see emerge from any U.S. talks with the U.A.E. and Qatar.

“Our goal is consultations,” said Casey Norton, a spokesman for the Fort Worth, Texas-based airline. “If the governments agree to open those discussions, they should determine any possible remedies. We have asked to put a freeze on current operations until the matter is discussed by appropriate governments.”

Megan McCarthy, a spokeswoman for Chicago-based United, said Wednesday that the airline had no immediate reaction to Anderson’s remarks.

Anderson, 59, has been a leading critic of the Gulf airlines, which have accused the U.S. carriers of hypocrisy for accepting government support in the past.

Last month, Anderson told CNN he saw a “great irony” in airlines from the Arabian Peninsula criticizing U.S. aid to domestic carriers after the Sept. 11 terrorist attacks since many of the hijackers hailed from that region. He also has attacked the U.S. Export-Import Bank, whose financing for Boeing Co. jets helps cut borrowing costs for the Gulf airlines.

Industry Turnaround

American, United and Delta are the biggest airlines in the world by traffic. They’re taking on the Gulf trio in Washington with the U.S. industry in a position of strength after $58 billion in losses in the nine years ended in 2009.

Buoyed by mergers, a resurgent economy and a 42 percent drop in jet-fuel prices in the past 12 months, U.S. carriers have been posting profits and rewarding investors.

In January, the Bloomberg U.S. Airlines Index reached a 14-year high. This week, American was selected to join the S&P 500 Index, barely 15 months after former parent AMR Corp. emerged from bankruptcy and merged with US Airways Group Inc. American’s 2014 earnings excluding some charges were $4.2 billion, a record for a U.S. carrier.

The large U.S. airlines say that their Gulf rivals are offering impossibly cheap tickets on routes to Asia, through their hubs in the Middle East, flying jumbo jets with far more seats than could be filled from their home markets alone.

American, United and Delta have been especially hurt in routes to India, according to the U.S. airlines’ investigation. Since 2008, the three Middle Eastern carriers have more than tripled their share of U.S.-to-India bookings, to 40 percent. The share controlled by the U.S. airlines and their European partners has fallen slightly.

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