United Airlines has announced that they will discontinue the route from Washington Dulles (IAD) to Dubai (DXB) effective January 23rd 2016 after losing a key contract from the U.S. Government.
This could be seen as tweaking the rules and United for sure wasn’t happy about this decision. They even formally complained about it to no avail. Subsequently United Airlines announced that the route will be discontinued since ‘they can’t compete against the state subsidized airline Emirates’.
There was an article in Forbes (access here) yesterday that shined some light on the matter.
United says it will end its Washington Dulles-Dubai flight next month due to the difficulty of competing with the subsidized Gulf carriers, especially after a federal agency has determined that government employees traveling on the route should fly on Emirates aircraft.
In August, the General Services Administration awarded the 2016 contract for the Washington-Dubai route to JetBlue, which does not actually fly the route but does have a codeshare agreement with Emirates. As a result, an estimated 15,000 government employees will fly Emirates to Dubai in 2016, United said.
“It is unfortunate that the GSA awarded this route to an airline that has no service to the Middle East and will rely entirely on a subsidized foreign carrier to transport U.S. government employees, military personnel and contractors,” said Steve Morrissey, United regulatory and policy vice president, in a prepared statement.
“We believe this decision violates the intent of the Fly America Act, which expressly limits the U.S. government from procuring commercial airline services directly from a non-U.S. carrier,” Morrissey said. “For the Washington to Dubai route, JetBlue merely serves as a booking agent for Emirates.”
It’s ironic that United says that because I still remember back in the day when United Airlines Business Class was really horrible and they entered into AtlanticPlus revenue sharing with Lufthansa. United marketed Lufthansa flights en masse, of course they got their part of the revenue which is probably not the case with Jet Blue who will likely receive only a small portion of the fare.
In abandoning Dubai service, United follows Delta, which said in October that it will end Atlanta-Dubai service on Feb. 11, 2016. After that, no U.S. carrier will serve Dubai, but the United Arab Emirates will still have frequent service from a dozen U.S. cities on the region’s three subsidized carriers: Emirates, Etihad and Qatar.
United’s last departure from Dulles to Dubai will be on Jan. 23, 2016, while the last Dubai departure will occur on Jan. 25.
The market finally talks and puts non-competitive players out of the playing field. The U.S. legacy carriers crusade against what they call ‘state subsidized airlines’ has reached rough tones in 2015 with the CEO’s of United, Delta and American calling for a review of antitrust agreements and openly attacking their competition with claims that so far await to be proven.
I can very well imagine that some key people in the GSA got p’d off with United for whatever reason and decided to go this route.
Without knowing the details I can very well imagine that this new agreement is also somewhat cheaper and on top of that offers a far more advanced, luxurious product. Most of us have flown United Business Class, I think there is nothing more to say about that.