Saturday, February 6, 2016

Domestic airlines complain about international competition

A group of U.S. airlines complain that domestic carriers have lost about 13 percent of international passenger travel at Orlando International Airport because of foreign airlines such as Emirates entering the market.

"In Orlando, San Francisco and Chicago, the governments of the [United Arab Emirates] and Qatar are using billions of dollars from their treasuries to take away business from U.S. airlines and harm American jobs," said Jill Zuckman, spokeswoman for the Partnership for Open & Fair Skies, whose members include American Airlines, Delta Air Lines and United Airlines.

The federal Open Skies agreement allows U.S. airlines broader access to destinations in more than 100 countries. In exchange, carriers from those countries are given similar access to the U.S.

Tourism officials, including leaders at Orlando International, said U.S. air carriers have been accustomed to controlling most aspects of travel in the country. Now that airports are courting new air service, however, domestic airlines face increasing competition.

"Central Florida benefits from the global access provided by the Open Skies agreement by offering opportunities as a gateway to the United States," said Phil Brown, executive director of the Greater Orlando Aviation Authority, in a statement.

Partnership officials said they're pushing now because they recently finished a "two-year investigation" into government subsidies some of the airlines are receiving. The group met with President Barack Obama's administration in January 2015 to discuss the issue.

"We've spent the last year urging the Obama administration to stand up for American jobs that are being lost and threatened by Emirates, Etihad and Qatar," Zuckman said.

Emirates' leaders said travelers are not "proprietary" to airlines.

"The latest rhetoric by the Partnership for Open and Fair skies, the proxy lobby organization for Delta, United and American (Big 3), once again demonstrates how the Big 3 are only concerned with their narrow interests, as the expense of consumers and the broader economic interest," Emirates said in a statement.

Emirates also says its contributing to the main goals of the federal agreement, which include increased flight frequency, consumer choice and greater competition in the aviation industry.

For a 12-month rolling period, international passenger traffic at Orlando International is up more than 17 percent, according to airport leaders, and 9 percent overall.

Economists from Compass Lexecon, a global economic consulting firm, reviewed booking data in Chicago, San Francisco and Orlando to determine how U.S. carriers and their joint venture partners in those markets had been affected by Emirates, Etihad Airways and Qatar Airways starting flights.

In addition to Orlando's decline, San Francisco had a 13 percent decline and Chicago had nearly a 9 percent decline in international booking on U.S. carriers, according to the partnership.

Emirates started nonstop service between Orlando International Airport and Dubai in September. Qatar and Etihad airways do not fly to Orlando.

More than 20 other international carriers fly out of Orlando International, including Ireland-based Aer Lingus, Canada-based WestJet and Brazil-based Azul.

Ady Milman, a professor at the UCF Rosen College of Hospitality Management, said the argument over the Open Skies policy boils down to competition in the market.

By opening up air service to other carriers, the market has essentially been deregulated, said Milman. Some flights on international carriers may have a higher price tag, but they offer convenience travelers will pay for.

Milman said Emirates has opened travelers up to nonstop service to Dubai, with connections to other markets, without needing to make stops at any of the U.S. carriers' domestic hubs.

"It's just a matter of competition," Milman said. "If they would like to reduce the prices, they would obviously not be impacted."

Partnership leaders said its three major carriers have expanded their daily seats to and from the United States by more than 35 percent since January 2015.

Citing the increased competition, Delta announced the cancellation of service between Atlanta and Dubai. United is ending service between Washington and Dubai, citing similar reasons.

Zuckman said Emirates' service in Orlando has not resulted in U.S. carriers looking to cut service.

"Emirates entered the Orlando airport in September of 2015 and the impact is only just beginning to be felt by U.S. carriers," she said.

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