Got Georgia on ya mind?
Emirates* Airline says it is “closely studying” whether to launch Dubai-Atlanta service after Delta Air Lines pulls out from the route next year, a decision it announced earlier this week and which the US carrier claims was prompted by over-capacity by the Gulf carriers.
Atlanta-based Delta operates the only passenger service between its home hub and Dubai, but announced Oct. 28 that it will cease the route from Feb. 11, 2016.
Delta said its Dubai pullout decision was made “amid overcapacity on US routes to the Middle East operated by government-owned and heavily subsidized airlines.”
Dubai-based Emirates, however, has issued a statement rejecting Delta’s accusation that competition from Gulf airlines forced it to cancel the service. Emirates says industry data show that Delta’s Dubai flights have had average seat loads consistently over 85% and that Emirates own studies indicate that the route was “highly profitable” with “an estimated route profitability of over $10 million per annum, or a route net margin of 7%.”
“Delta effectively has a monopoly on the Atlanta-Dubai route, they can carry ‘Fly America’ traffic that is protected from non-US carriers, and enjoy high seat loads and yield on the route. By any airline’s standards, these are lucrative conditions and hardly reason to cease the Atlanta-Dubai service,” an Emirates spokesperson said.
“We can only conclude that this is a political move to position Delta as a ‘victim’ of the Gulf carriers—which is laughable considering Delta’s size and profitability; or it is perhaps because they wish to redeploy their aircraft on other trans-Atlantic routes that have even higher yields due to the anti-trust immunity Delta enjoys with its alliance partners. In which case, Delta should admit that its goal is to make even more money, and leave the Gulf airlines out of it.”
The spokesperson added: “Our route planners are now closely studying the opportunity for Emirates to fill in the gap when Delta exits the non-stop Atlanta-Dubai service.
Qatar Airways, a oneworld alliance member, announced earlier this year that it will begin Doha-Atlanta service next year.
Delta has led a campaign, joined by American Airlines, United Airlines and some labor groups, to address what it says are billions of dollars of government subsidies given to state-owned Gulf carriers in violation of fair competition rules in the Open Skies between the US, the UAE and Qatar.*
Delta EVP and chief legal officer Peter Carter told Atlanta’s WABE public radio station this week that the airline “would applaud and embrace the opportunity to compete with the Gulf carriers if in fact they were living consistent with the terms of the Open Skies agreements we’ve entered into. The problem we have is with the subsidies they’re receiving.”
“Emirates has been flooding the market with capacity,” Carter said. “We know this is not the first route we’ve had to cancel as a result of the subsidized Mid-East carriers.” Delta, American and United have asked the US government to hold consultations with the UAE and Qatar on the alleged subsidies and the Open Skies treaties. But several other US carriers, including Alaska Airlines, FedEx and JetBlue Airways, are opposed to the campaign and each of the Gulf carriers has strongly refuted the subsidy allegations.* Some have counter-argued that the major consolidated US carriers have benefited from the US Chapter 11 bankruptcy process, government loan guarantees and other forms of financial assistance.
Delta also announced this week that it was immediately quitting its membership of the Airlines for America (A4A) lobbying association. The airline said the trade group had failed to support Delta on several key issues, “including the growing harm of government-subsidized carriers in the Middle East and the damage the Export-Import Bank does to US airlines.”