Emirates Likely To Apply For Dubai-Atlanta Route After Delta Withdrawal

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Emirates is poised to apply for servicing the Dubai – Atlanta nonstop route after Delta announced this week that it would discontinue their service effective early 2016.

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Delta cited overcapacity as a reason to drop out of the Middle East destination, however Emirates estimates (based on D.O.T. data) that this route is very profitable.

LoyaltyLobby wrote yesterday about Delta’s exit from the Dubai route (see here) while stating in a press release that it can’t ‘compete on a level playing field that’s distorted by subsidized state-owned airlines’.

It could be expected that an answer from the ME3 carriers wouldn’t take long and sure enough, not even a day later Emirates announced that they are studying options of operating the route themselves.

The National, an Abu Dhabi based newspaper, cited Emirates sources in an article today (access here).

Emirates Airline is considering a service between Dubai and Atlanta, Georgia, in place of Delta Airlines, which last week signalled its intention to withdraw from the route next year.

The airline said: “Our route planners are now closely studying the opportunity for Emirates to fill in the gap when Delta exits the non-stop Atlanta to Dubai service.”

In an escalation of the row between US and Arabian Gulf airlines over an “open skies” policy, Emirates said that the withdrawal by Delta, the most vociferous of the American critics, was a “political move to position Delta as a victim of the Gulf carriers, which is laughable considering Delta’s size and profitability”.

Indeed, Delta Airlines and especially their CEO Richard Anderson were not shy to voice their often baseless criticism towards the ME3 carriers in the media.

Delta said it would stop its service, the only direct flight between Atlanta and Dubai, next February, because of “overcapacity and competition from subsidised Arabian Gulf carriers”.

But according to studies conducted by Emirates economists, the Atlanta to Dubai route was a cash generator for Delta, the world’s most profitable airline.

“Our studies indicate that the route was a highly profitable one, with an estimated route profitability of over US$10 million (Dh36.73m) a year, or a route net margin of 7 per cent. …

The average seat load on Atlanta to Dubai has been consistently more than 85 per cent, according to the American department of transport, which indicated that demand or overcapacity was not the issue, Emirates said.

The data which is publicly available through the information airlines provide to the Department of Transportation (D.O.T.) allows analysts to draw a detailed picture of how profitable a route is. The low fuel prices this year also contribute to the profitability on a large scale.

Conclusion

It’s hard to detect the real reason for Deltas withdrawal because they are obviously leaving money on the table by doing so. Maybe they are short on planes and require this Boeing 777 on another, even more profitable route?

The excuse of not being able to compete on this route in a fair manner is groundless. If you are running such a high occupancy rate it means there is plenty of money to be made and reflecting on the ticket prices I can’t see that Delta was bargaining off their tickets either. The fares were very stable over the year with no excessive sales taking places for the Dubai route.

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