Air fares to India may go up because of United, American, Delta lobbying against Gulf airlines

Big Three campaigning to crack down on Emirates, Etihad and Qatar in US.

By Raif Karerat

WASHINGTON, DC: On May 15, CEOs of the “Big Three” of US air travel — Richard Anderson of Delta Air Lines, W. Douglas Parker of American Airlines, and Jeff Smisek of United Airlines — appeared together at the National Press Club in Washington, DC, to speak about “Restoring Fair Competition to the Skies.”

The purpose of the joint appearance of the three honchos was to reinforce their campaign against three Persian Gulf-based airlines that have been eating into their long-haul market share in the past decade. Emirates Airlines, Qatar Airways and Etihad Airways are unfair competitors that take huge subsidies from their governments, which allow them to offer cheaper seats to customers, the CEOs alleged. The “exploitation” of Open Skies policy by the Gulf carriers is putting tens of thousands of US jobs are at risk, they argued.

Open Skies Agreements are bilateral air transportation agreements between the US and other countries that aim to expand international passenger and cargo flight by eliminating government interference. According to the Department of State, America has some sort of Open Skies agreement in place with 116 countries, including Qatar and the UAE, which were signed in 2001 and 2002, respectively. The treaties with the Gulf States directly affect less than 2 percent of all international traffic to and from the United States.

The endgame of the Big Three airlines is getting the US government to restrict the direct flight services of the Gulf airlines, who now dominate the US-UAE and US-Qatar long haul sectors. With that goal in mind, they have created a lobbying group, Partnership for Open & Fair Skies.

The CEOs’ Press Club appearance followed what many call a months-long campaign that has since turned into a global spitting match of epic proportions. It is spearheaded by Partnership for Open & Fair Skies and Americans for Fair Skies, another grassroots group that sprang up at the beginning of the year.

But the Big Three campaign now has many Indian Americans and travelers who frequently use the Gulf carriers in the US-India sector worried. They fear that the ticket fares to India could go up drastically if Delta, American and United succeed in convincing the federal regulators to halt Gulf airways’ expansion onto US soil.

Ticket prices remained stable

The prices of air tickets in the sector have remained remarkably stable largely because of the entry of the Gulf carriers and the competition among them. Except for a bump in the high season—summer and during Christmas—one can buy a return ticket to India for less than $1,000, more or less the same price as the late 1990s.

In a letter addressed to Secretary of State John Kerry, Secretary of Transportation Anthony Foxx and Secretary of Commerce Penny S. Pritzker, president of the Capital Area Telugu Society Madhusudhan Kola asked the officials to refrain from taking any action that would undermine the “Open Skies” agreements.

“We believe that that current Open Skies agreements are serving their purpose in supplying greater consumer choice and easier access to many international destinations that were, prior to the entry of the Gulf carriers, very difficult to reach,” he wrote in the letter dated May 27, 2015.

Another reason Qatar Airways, Emirates and Etihad have become very popular with Indian Americans traveling to India in recent years, in addition to the relatively lower prices, is the better connectivity to India from Gulf airports and lower layover time.

Kola wrote that the Gulf carriers “currently offer the most convenient access to the Indian states of Andhra Pradesh and Telangana where many members of our organization migrated to America from and where we still have extended family.” He added that “most other carriers access the area through Delhi and Mumbai,” and the three Gulf carriers “offer single-connection flights through their hubs in the Middle East to get to Hyderabad and Chennai,” which he described as “two key cities for Telugus hailing from the states of Andhra Pradesh and Telangana.”

Telugu Americans, numbering around 800,000, are among the largest Indian American subgroups.

Doha, Dubai and Abu Dhabhi, the hubs of the three careers have large Indian diasporas, and, therefore, Qatar, Emirates and Etihad operate daily flights to a number of Indian cities, including Hyderabad. For instance, Qatar Airways serves 12 Indian cities across the country: from Amritsar in the north to Thiruvanananthapuram in the south; and from Kolkata in the east to Mumbai in the west.

As a result, layover time in these cities are also much shorter compared to European cities that the US airlines typically use as transit points. Also, most US and European carriers fly into only Tier 1 Indian cities—Mumbai, Delhi, Kolkata, Chennai, Bengaluru and Hyderabad.

“The connection [flights] are very, very crucial,” said Kiran Meegada, an IT entrepreneur and filmmaker based in the Washington, DC, area. “After such a long flight the last thing I want to do is taking another flight within India.”

Meegda said he flies twice a year to the southern city of Hyderabad and, in recent years, he has been taking either Qatar, or Emirates.

Narayanan Kutty Menon, who works for the Montgomery County, said he also flies the Gulf airlines for the same reason.

Gulf airlines are the only true options for him to fly into Kochi, his hometown. “None of the US or European airline flies into Kochi, while Emirates, Qatar and Etihad have daily flights,” he said. “If I fly United or Continental, I have to fly via Europe. Secondly, I will be transiting through an additional airport.”

Transit times at the Gulf airports are also relatively shorter. Typically, from Doha to India, it is anywhere between three and four hours.

Menon, a former president of the Kerala Association of Greater Washington, a cultural organization based in the DC area, said he is apprehensive about prices in the US-India sector going up because of the lobbying efforts by the Big Three.

Meegada, a Germantown, MD, resident said he faced visa restrictions — he is a Green Card-holder — when he transited through European cities, the transit points for most American and European airlines take.

Nonstops flights to India are available from only two US metropolitan areas, New York and Chicago, and two Indian cities, Delhi and Mumbai. Only two carriers operate nonstop flight between the two countries: Air India, which has 21 weekly flights, and United, which has 14.

Air India, the national carrier of India, has daily nonstop flights from Delhi to two US airports: John F. Kennedy International Airport in New York and Chicago O’Hare International Airport. It has a nonstop flight from Mumbai, India’s commercial capital, to Newark Liberty International Airport.

United operates daily nonstop flights from Newark to both Mumbai and Delhi.

With just five nonstop flights connecting the two countries, the choice for a vast majority of passengers, especially for who fly from cities other than New York and Chicago, the choice is limited: transit through either European cities or the Gulf cities. (Lately, Turkish has also been attracting India-bound passengers.)

Meegada said he found the customer service in the European airports to be poor the last two occasions he flew via Europe. “I have experienced it a couple of times,” he said. “The customer services in Gulf airports is much better for Indians.”

Poor customer service is a point the CEO of Emirates, Sir Tim Clark, a veteran British airline executive, emphasized somewhat mockingly in responding to the Big Three campaign.

“Have you been on a US domestic flight?’’ Clark asked in an interview with The National, an English-language paper in Abu Dhabi, Etihad’s home base. “It’s like travelling with a low-cost bus company. The terminals are full of frightened people sitting on the floors because they’ve no facilities, being shouted at by airline agents and cabin crew who are stressed themselves because of the working conditions,” he ridiculed.

Price and connectivity

A travel agent based in Washington, DC, who spoke to The American Bazaar on the condition anonymity because he does business with the Big Three and European carriers, as well as the Gulf carriers, said price and connectivity are what make many passengers flying to India prefer the latter.

Huge popularity among travelers to India is a big reason the Gulf airlines were able to expand their US operations in the past decade at breakneck speed. Roughly 95 percent of the 11,000 new daily seats added between the United States and Dubai, Doha and Abu Dhabi from 2008 to 2014 were added by Emirates, Qatar and Etihad, according to figures provided by Bloomberg Business.

The three Gulf carriers now operate more than 250 direct flights from 10 cities in the United States. Qatar Airways alone operates direct flights to Doha from six US cities—New York, Washington, DC, Dallas/Fort Worth, Houston, Chicago, Philadelphia and Miami, and— new flights are being planned from more cities, including Los Angeles. All these metropolitan areas have a significant Indian American population.

The expansion of the Gulf carriers have no doubt posed a threat to the Big Three, which is the reason Messrs Anderson, Parker and Smisek have come out swinging against their Middle Eastern competitors. The Big Three have the support of airline labor unions and a number of members of Congress.

They argue that the Gulf airlines have received more than $40 billion in subsidies from their governments and they give them a distinct advantage over the Big Three US companies, who have a combined market capitalization of $93 billion.

The Gulf carriers deny that they are financially supported up by their governments in any way, shape, or form. The head of Qatar Airways, Akbar Al Baker, lashed back at criticism after meeting with US transportation regulators, calling US airlines “greedy.” The increase in flights by Qatar and other gulf carriers had been in the pipeline for a long time and were not a result of the US carriers’ charges, he said.

According to Forbes, it is unlikely that the American Big Three could convince the US government will negate 20-plus years of “arduous diplomatic work in building a global network of ‘Open Skies’ treaties that have greatly loosened the rules of international air service and benefitted consumers everywhere.”

Whether the US government will do anything to help the Big Three or not, Indian Americans — beneficiaries of treaty and the expansion of the Gulf carriers in the United States — say the agreement is working precisely as intended.  “This success would be curtailed were the US to back out of these agreements,” Kola wrote in his letter.

Leave a Comment

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.