When the Big 3 US airlines — American, Delta and United — claim that foreign carriers are being improperly subsidized and that treaties negotiated over the past two-plus decades need to be revoked or renegotiated, the American public needs to be wary. Believe the airlines at one’s peril when they inform passengers that the frequent flier programs are being “improved,” or seats are being squeezed together with less legroom, “because of passenger demand.”
Today, when airlines are spreading their selfless claims that, “we are only doing this for the good of the American system and our national economy,” the American Public who repeatedly has been stung by the airlines, should be twice shy. The same credibility can be assigned to their howls about competition as their claims of transparency. Airlines are never selfless.
International consolidation has hurt consumers
Specifically, in terms of the raging battle between Gulf carriers — Emirates, Etihad and Qatar — and the Big 3 — American, Delta and United — the battle is one over maintaining Big 3’s near monopoly control over transatlantic flights, limiting consumer choice and competition, as well as keeping the lid on route capacity.
This oligopolistic Big 3 putsch translates into higher transatlantic airfares and less transatlantic capacity. The lack of competition results in poorer and poorer service, less room in coach for leisure travelers, limitations on transfers of baggage among airlines, less cooperation between carriers in case of irregular operations and undisclosed fees and charges. For consumers, the creation of airline alliances — Oneworld, SkyTeam and Star Alliance — is a lose-lose-lose-lose-lose disaster. For the airlines it has become Nirvana.
Delaying approval of Norwegian Air International hurts consumers
Last year, along came Norwegian Air International (NAI) with lower airfares, new aircraft and good financing. The airlines struck, together with their union cohorts, to do everything possible to stop consumers from having an alternative to flying on the Big 3’s airline alliances. The Big 3, with the collusion of an airline-influenced section of DOT, has managed to delay permission to expand Norwegian’s operations. That permission should be granted immediately.
The US Big 3 airline attack on Gulf carriers is about stopping competition
Now, the airlines are now snorting about “unfair” subsidies that Gulf carriers are receiving. So far, nothing has been proven and the Gulf carriers have pledged to open their books to demonstrate that the Big 3 airline arguments are nothing more than fabrications. However, the rationale for this action is again anti-consumer.
The rapid airline growth over the past decade centered in Abu Dhabi, Dubai and Doha, is anchored by a major middle-class population shift and middle-class population growth in southern Asia and southern Africa. These are the two regions of the world where the middle class is growing fastest. That growth has fueled the need for international airline service. And, the Gulf States are in the perfect spot to be a hub for that aviation development.
A similar situation developed in Singapore when southeast Asia was booming. Singapore Airlines developed rapidly because of an economic and geographic need. That airline is still a powerful force in that region just as the Gulf carriers are in the Middle East and Africa on the opposite side of Asia.
US airlines forgot about south Asia and southern Africa markets
Rather than developing long range plans for the world’s changing economy, the US carriers were preoccupied with staying solvent. Their focus was on solidifying their transatlantic and transpacific alliances as well as domestic consolidation. They have just come out of that cycle (which, incidentally, included strong support of Open Skies treaties that provided American carriers more access to world markets) and the US Big 3 are faced with a new geographic and demographic dynamic.
Hence, American, Delta and United are crying foul in any way that they can.
As the regions of southern Asia and Africa were growing exponentially, the Big 3 US airlines were ignoring those markets. As Abu Dhabi, Dubai and Doha grew, the Big 3 US airlines did not spend resources on those markets. As the Gulf carriers grew, US carriers doubled down on their alliances with European carriers that served many of the same markets; however, with connecting flights with longer flying times. And as the Gulf carriers purchased large, long-range aircraft such as the Airbus 380, US carriers stood aside and decided not to make those kinds of investments. Now, they are paying the price for lack of vision, emerging economy miscalculations and inaction.
In the world of airlines, having non-stop long-haul routes that can shave several hours off of flight time and connecting times changes the playing field. The Big 3 US airlines made a mistake and did not see the explosive growth coming from the southern hemisphere. Now, the US Big 3 airlines can only complain and blame themselves.
Of course, it is everyone else’s fault.
The US government should support its consumers and businesses and the larger economy
The longer the US government appeases the Big 3 US carriers, with a denial of service for NAI and with examinations of Open Skies treaties, the more they hurt US consumers.
In the case of NAI squelching service because the Big 3 do not want low competition is wrong.
In the case of the Gulf carrier claims, more than two decades of treaties cannot be ignored because the Big 3 US airlines didn’t pay attention to the dramatic demographic shift that was taking place in the southern hemisphere.
In both cases, the US government should stand with its citizens and businesses and not with the greedy, selfish, deceptive and anti-consumer Big 3 airlines and their unions. Transparency, competition and open comparison shopping are what allow the free market to work.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
