The fight over Open Skies: Business as Usual


Open Skies agreements, the deals which US-based carriers clamored for back when it was in their best interests, seem to no longer be in style. The CEOs from Delta, United and American recently met with US government officials in an effort to try to rein in some of the freedoms afforded to airlines of other countries. Most notable as targets are the “Big 3” of the Middle East – Emirates, Etihad and Qatar Airways – and also Norwegian Airlines. In each case the executives claim that subsidies and other benefits create a false competition. And I guess it should not be surprising that the executives are fighting against competitive pressure. But the real question is whether that competition really exists.

Looking at overlapping markets between the US carriers and the Big 3 ME carriers there are really not too many places with a ton of traffic which is competitively served by either option. A relatively recent CAPA study calls out the US carriers for making a fight over a market which mostly does not exist.

[T]he US airlines in their still-protective rhetoric against Gulf carriers do not target this sixth freedom element. The source markets for Gulf carriers’ US flights are highly fragmented, and even the largest source markets – from Hyderabad to Dhaka to Kabul – are not served by US carriers and seldom have high frequency, if any, from their international partners.

That said, India is a HUGE market for all three, and United does offer non-stop service between India and the United States; Delta also offers connecting service via Amsterdam and has offered non-stop service in the past. But in those cases the US carriers terminate in the major cities of Delhi and Mumbai, offering generally poorly timed connections to smaller cities. The Big 3 have much better connecting options from their hubs a few hours flying west of India.

But not all US carriers are fighting the Open Skies battle. Or at least not all on the same side. Airlines For America, the lobbying organization in Washington, DC for US carriers, has chosen to sit this one out, for example.

And smaller carriers are actually supporting the Open Skies efforts. JetBlue has code-share agreements with the Big 3 and feeds traffic at hubs where the airlines both have service. That’s big for smaller gateways like Boston where JetBlue feeds Emirates service with flights to many destinations within the US. And, unsurprisingly, JetBlue has voiced strong support for the current Open Skies agreements, fighting the efforts which would effectively scale back its feed in secondary gateways. Similarly, Orlando International Airport recently added Norwegian to its roster of airlines and benefits from the additional visitors and competition.

The US carriers loved Open Skies when it meant expanded access to London‘s Heathrow airport. Because that was good business for them. But similar agreements allowing others to play are being fought tooth and nail. It is just business, after all.

 

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.

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