United Airlines employees and union representatives as well as local politicians are planning to stage a protest against Emirates at Newark Airport at the same time their 5th Freedom flight to Athens takes off.
United alongside American Airlines and Delta are up in arms against the Middle East carriers commonly known as “ME3” as they accuse them of receiving government subsidies and playing by fair market rules.
In recent years the ME3 carriers expanded aggressively with flights to North America, especially the U.S. flying to all the major gateways or the U.S. legacy carriers now.
Etihad even opened a U.S. Immigration Pre-Clearance facility in Abu Dhabi making it much easier and enjoyable for people to take a trip across the pond as the flight will arrive as a domestic arrival without any additional customs formalities.
This of course eats away on the revenue of the legacy carriers since most reasonable people will select the product with the best service offered at the lowest price. Almost always the ME3 carriers come out ahead when these factors are compared.
So what is this protest all about? Business Insider (access here) has a news article about it yesterday.
United Airlines announced Wednesday that its employees, along with several members of Congress, would stage a protest on Sunday at Newark Liberty International Airport.
The protest, which United and its unions expect to draw between 150 and 200 people, is in reaction to the inaugural flight of Emirates’ new daily service between Newark, New Jersey, and Athens, Greece.
The fury surrounding Emirates’ new flight is just the latest episode in the contention between the Middle East’s trio of mega-carriers (Emirates, Etihad, and Qatar Airways) and their US rivals (American, Delta, and United Airlines).
Last year, Qatar Airways’ inaugural flight to Atlanta proved to be equally dramatic, leading to a showdown with Delta. The soap-opera-worthy incident left more than 500 Qatar Airways passengers without a gate to deplane, an Atlanta landmark without Delta’s sponsorship dollars, and allegations of poor etiquette bandied about by both parties.
However, the US trio, or US3, accuse their Middle Eastern rivals of being fueled by more than $50 billion in subsidies from the governments of Qatar and the United Arab Emirates that unfairly tilt the playing field against US airlines. The US3 even contend that most of the ME3’s expansion into the US would be untenable without those subsidies. The ME3 have repeatedly denied these allegations. …
“At the end of the day, the economics of it is that, if it indeed continues, it’s going to affect the jobs in this country because I’m not going to fly from Newark to Athens, Greece, every day,” Munoz said. “I fly there seasonally now, because that’s where the demand is. If they are going to fly every day, they are going to lose $25 million on that route every year. If they are going to continue to do that, then I have no business in making that route.”
An Emirates representative denied these accusations and told Business Insider that the airline’s launching of the flight fulfilled consumer demand for a service other airlines weren’t offering. …
The article goes on a lot further and in detail but these are the main arguments that were made. Essentially that same old talk from subsidies the ME3 get and how that distorts the market.
First of all I think Mr. Munoz is talking nonsense when he speaks about demand on the NYC-Athens route. New York is THE multicultural, eclectic city in the world and there is a big ethnic-Greek community there. Olympic used to fly this route frequently. It won’t be any problem to fill a plane between New York and Athens even on a daily basis.
Emirates isn’t going to operate this routes at a substantial loss just to make a point. In fact the ME3 are tightening their belts and cut cost wherever possible at the moment.
There are other arguments to disprove Mr. Munoz and his position. If United so far chose to not operate Athens on a daily basis then that was their call. United judged this route to be a leisure destination which it isn’t. Not for a city like New York. Of course this will end up eating away at United’s revenue because you bet that each mentally sound person would choose the Emirates product in either class of service, especially premium cabins over what United offers.
Fifth Freedom routes are flights that a carrier operated between two foreign airports that are not their home country. Airlines are permitted to sell tickets on these international routes, however domestic flights such as the JFK-LAX on Qantas Kevin wrote about the other day can not be sold and are for through-passengers only.
Popular Fifth Freedom routes that also end in the U.S. are the Singapore Airlines flights Singapore-Tokyo-Los Angeles, Singapore-Seoul-San Francisco and Singapore-Frankfurt-New York JFK. These pose the same if not a greater threat to United/American/Delta revenue than this one Athens to NYC route since Tokyo and Seoul are cash cows for the airlines.
The irony of it all: The U.S. carriers operate multiple Fifth Freedom routes themselves, especially in Asia. For example United still flies from Tokyo to Seoul and Hong Kong to Singapore. Delta operates Tokyo-Shanghai and Tokyo-Singapore. Both carriers just recently gave up their Tokyo-Bangkok route.
And speaking about illegitimate business practices and operating flights at a loss: United knowingly bribed the Chairman of the Port Authority in Newark with a scheduled flight to his vacation home that flew at convenient times for a long weekend and was always empty. It was dubbed ‘The Chairmans Flight’ and incurred huge losses for United Airlines. This affair was one of the reasons why United Airlines suddenly lost their widely disliked CEO Jeff Smisek in 2015 (we wrote about it here). So look who’s talking!
This entire conversation is nothing but the pot calling the kettle black. The US3 have received hundreds of Millions USD in quasi subsidies by taking advantage of the Airline Deregulation Act but most importantly tax cuts and Chapter 11 Bankruptcy protection which allowed them to undergo a restructuring and shaving off financial liabilities and pension burdens, the latter on the shoulders of their employees.
Of course it’s going to cost jobs if you have to fight in a free market against competitors and you offer a bad product at a horrible price point. Instead of constantly whining about the same things maybe the employees and unions that are representing United Airlines at this pathetic protest that’s supposed to happen today should think about improving the product (read: their service and attitude) instead of engaging in tear wrenching and trying to gain sympathy from the public. Because there is none.