Evidence continues to pile up to prove, beyond any doubt, that the hugely-subsidized Gulf airlines - Emirates, Etihad Airways, and Qatar Airways - are damaging U.S. airlines and their transatlantic partners, and costing U.S. jobs. According to new data from the respected economics firm Compass Lexecon, international passenger bookings on U.S. carriers and their European partners from San Francisco, Chicago, and Orlando to the Middle East, Africa, South Asia, and Southeast Asia declined significantly after the Gulf carriers' most recent entry into the three U.S. markets.
To the Gulf carriers, the normal commercial imperative to earn profits and thus satisfy investors doesn't matter, because their governments provide them wheelbarrows of cash - totaling more than $42 billion in subsidies and other unfair benefits since 2004. Given their Santa Claus financing, they can quickly expand worldwide - just in the U.S., the three Gulf airlines have added, or announced plans to add, 35 percent more seats since last January.
Compass Lexecon economists found that following the most recent entry by a Gulf carrier into San Francisco, passenger bookings for international itineraries on U.S. carriers and their joint venture partners declined an average of 13.1 percent; respective numbers are 8.8 percent in Chicago and 13.3 percent in Orlando. A previously released analysis using the same method showed a similarly large decline in bookings, with an average drop of 21.4 percent in Seattle, 14.3 percent in Washington, D.C., 10.8 percent in Boston and 7.6 percent in Dallas-Fort Worth
You might be wondering, "How do we know these numbers?" That's a fair question.
The booking data come from a source called MIDT, collected from the ticket-distribution systems like Sabre and Amadeus that travel agents and other selling intermediaries use. MIDT information covers all airlines and all routes. The data have for decades been an essential tool in understanding sales patterns in the airline industry worldwide.
An example of the lost traffic: in the past, an electrical engineer from Silicon Valley would fly home to India to see her parents on United from San Francisco to Frankfurt, then on United's Star Alliance partner Lufthansa to Mumbai. Now she flies San Francisco to Dubai to Mumbai on Emirates. Indeed, it is precisely in the enormous U.S.-India market where U.S. carriers and their joint venture partners (United with Lufthansa, as in the example above; American with British Airways and Iberia; and Delta with Air France and KLM) have suffered the biggest traffic losses.
Contrary to Emirates, Etihad, and Qatar Airways assertions, they are emphatically not growing the market, but diverting traffic to their own state-owned carriers and harming U.S. airlines, their employees and their communities. For every route handed to a Gulf carrier, economists estimate that more than 1,500 American jobs are lost, directly and indirectly. It's time for the Obama administration to take action. The ask from the U.S. carriers and their workers is modest: no protectionism, no special favors, just a negotiation with the United Arab Emirates and Qatar governments to resolve the unfair-subsidy issue and restore balanced competition.