The writing was on the wall when just over 12 months ago we reported that the African airline industry was losing out heavily to Middle Eastern-based airlines such as Emirates, Etihad and Saudi Airlines. We had seen Middle Eastern carriers outstrip performances from all other regions, where total passenger traffic (both domestic and international) was up 12.9% in terms of revenue passenger kilometre (RPK) growth in the month of October 2013 alone.
Today it would seem that the US is now under similar pressure as a 55 page white paper, yet to be published, has revealed that the combined share of bookings of flights between the United States and the Indian subcontinent for United, American and Delta had fallen to 34% in 2014 from 39% in 2008. This 5% drop also includes bookings for these airlines’ joint-venture partners – British Airways and Air France.
Over the same period of time, Qatar Airways, Etihad Airways and Emirates have increased their market share from a meager 12% in 2008 to an impressive 40% in 2014. Where Southeast Asia is concerned, the market share for US airlines and their joint-venture partners’ has been seen to fall from 43% to 36% , the region including Malaysia, Indonesia, Vietnam, the Philippines and Thailand. The three Gulf airlines however have seen their market share for Southeast Asia increase from just 1% to 13% over the same period of time.
Concerns have been raised in the US that the ‘Open Skies’ agreement created 10 years ago, is not working to their advantage and that it should now be scrapped. The white paper also cites confidential financial information revealing that the Gulf carriers have been receiving state subsidies to allow them to be more competitive on price. The principal area where these subsidies seem to be involved is in aircraft acquisition. Any form of subsidy breaches US trade policy and creates an uneven playing field. The report goes on to say that loans, tax exemptions and other support has exceeded USD$40bn since 2004, which the Gulf carriers have utilized to pay expenses that airlines have to typically cover themselves. “We fully expect the government to act on the evidence,” Ben Hirst, Executive Vice President and Chief Legal Officer for Delta Air Lines said, adding, “From the US airlines’ standpoint, we’re competing with (foreign) governments, not private businesses.”
As far as the ‘Open Skies’ agreement is concerned, travellers say that cutting prices and improving service is exactly what they want the agreement to achieve. Erik Hansen, a senior director at the US Travel Association, a non-profit industry group based in Washington said, “From the passengers’ point of view, they want as many choices as possible.”.
Things look no better for the US airlines with their routes to Milan either. Since Emirates targeted the airport as a stopover point for their flights between Dubai and the USA, their market share has risen dramatically to 19%, while US airlines’ and their partners’ share has fallen 7% to 78%.
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[email protected]
Mailing Address
AviTrader Publications Corp.
Suite 305, South Tower
5811 Cooney Road
Richmond, BC V6X 3M1
Canada