Export/import as well as passengers will lose out if America cuts the Gulf carriers’ flights to industry’s top airports - FedEx
AirCargo archive stories issue #237
Thursday, 11 June 2015
GLOBAL freight-only giant carrier FedEx has stepped into the growing row between three US carriers and Gulf airlines Emirates, Qatar Air and Etihad (and their respective governments) and has pointed out that the three ‘foreigners’ not only carry a tidy proportion of US exports that travel by air, FedEx itself has a stake in maintaining the status quo because of its flights to and investments in the gulf region.
FedEx – which flies a fleet of 660 cargo planes across the world - has warned the US White House that any action it takes to limit foreign competitors will be seen by many as “the cold wind of US protectionism.”
And, with a major hub expansion under way in Dubai, it has stated bluntly that “we (FedEx) would potentially be subject to the greatest harm” if the United States moved against its gulf competitors.
Two other US companies with stakes in the game, United Parcel Service (UPS) and plane maker Boeing, have been coy about the case until now, but both know any changes to bilaterals would impact them severely.
While Dubai-based Emirates SkyCargo alone carries about 1000 tonnes of outbound freight a week from the USA, until now the row has been focused on the cabins, with Delta, United and American airlines claiming that the three Gulf carriers are able to offer ‘cheap’ fares to US international travellers thanks to government subsidies totalling about US$42 billion given over many years.
The three Gulf airlines have since asked for time to counter these allegations, but say any funds/benefits from their governments are only offered to them on commercial terms.
In the meantime, The US airlines had hoped the gulf carriers would freeze flights to the United States while talks between the various governments were under way, but both Qatar and Emirates continue to boost their US networks, with no halt planned. In terms of freight, Emirates SkyCargo in particular, with strong freight ties to the US, offers a compelling network of international destinations for US exporters. SkyCargo – (2014-15 financial year revenues US$3.4 billion) already serves 10 US ports using freighters and belly hold space and recently announced plans to add Orlando.
The entry of FedEx – opening the dispute to include its impact on international trade – is long overdue.
Many overseas commentators have been bemused that the Obama administration has not already dismissed the three US carriers’ complaints out of hand. Considering that only Delta and United even fly to the Gulf (and only once a day each), the vast majority of passengers and air cargo that is routed to or via Dubai (Emirates’ hub), Abu Dhabi (Etihad’s) and Doha (Qatar Air’s) have no alternative flight options other than often-longer and potentially more-expensive flights via partner carriers in Europe and Asia or Asia-Pacific.
These airline partnerships – oneworld, Star Alliance and SkyTeam – currently have more than 60 international carrier members, fly to more than 500 countries and carried more than 1.6 billion passengers last year. Some of the partner airlines including oneworld’s IAG (it has Qatar Air as its biggest shareholder) have told their US partners that they can not support a challenge to the Gulf carriers.
At home, however, FedEx already faces some carrier opposition to its stance. In a 2012 case, FedEx argued that the US government should establish a level playing field for cargo and prohibit state-owned foreign enterprises from cross-subsidising FedEx’s competitors. That case may come back to bite the freight carrier.
In the meantime, FedEx managing director has written an 11-page formal filing to the US Department of Transportation that argues against any US changes to Open Skies.
The cargo company says US airlines commonly use Open Skies agreements to build their international networks and that they eliminate competitors by working with foreign airlines. “In this case, we believe consumers (who benefit from lower fares) should be allowed to be the winners,” Sparks wrote.
Open Skies agreements with more than 100 nations allow equal access to one another’s airports without interference from the respective national governments. FedEx argues that access to the three mega-airports that have been built in Qatar, Dubai and Abu Dhabi doesn’t matter much to the three US airlines, but it is important to FedEx, which routes 44 flights through Dubai each week. -JH
Export/import as well as passengers will lose out if America cuts the Gulf carriers’ flights to industry’s top airports - FedEx
AirCargo archive stories issue #237
Thursday, 11 June 2015
GLOBAL freight-only giant carrier FedEx has stepped into the growing row between three US carriers and Gulf airlines Emirates, Qatar Air and Etihad (and their respective governments) and has pointed out that the three ‘foreigners’ not only carry a tidy proportion of US exports that travel by air, FedEx itself has a stake in maintaining the status quo because of its flights to and investments in the gulf region.
FedEx – which flies a fleet of 660 cargo planes across the world - has warned the US White House that any action it takes to limit foreign competitors will be seen by many as “the cold wind of US protectionism.”
And, with a major hub expansion under way in Dubai, it has stated bluntly that “we (FedEx) would potentially be subject to the greatest harm” if the United States moved against its gulf competitors.
Two other US companies with stakes in the game, United Parcel Service (UPS) and plane maker Boeing, have been coy about the case until now, but both know any changes to bilaterals would impact them severely.
While Dubai-based Emirates SkyCargo alone carries about 1000 tonnes of outbound freight a week from the USA, until now the row has been focused on the cabins, with Delta, United and American airlines claiming that the three Gulf carriers are able to offer ‘cheap’ fares to US international travellers thanks to government subsidies totalling about US$42 billion given over many years.
The three Gulf airlines have since asked for time to counter these allegations, but say any funds/benefits from their governments are only offered to them on commercial terms.
In the meantime, The US airlines had hoped the gulf carriers would freeze flights to the United States while talks between the various governments were under way, but both Qatar and Emirates continue to boost their US networks, with no halt planned. In terms of freight, Emirates SkyCargo in particular, with strong freight ties to the US, offers a compelling network of international destinations for US exporters. SkyCargo – (2014-15 financial year revenues US$3.4 billion) already serves 10 US ports using freighters and belly hold space and recently announced plans to add Orlando.
The entry of FedEx – opening the dispute to include its impact on international trade – is long overdue.
Many overseas commentators have been bemused that the Obama administration has not already dismissed the three US carriers’ complaints out of hand. Considering that only Delta and United even fly to the Gulf (and only once a day each), the vast majority of passengers and air cargo that is routed to or via Dubai (Emirates’ hub), Abu Dhabi (Etihad’s) and Doha (Qatar Air’s) have no alternative flight options other than often-longer and potentially more-expensive flights via partner carriers in Europe and Asia or Asia-Pacific.
These airline partnerships – oneworld, Star Alliance and SkyTeam – currently have more than 60 international carrier members, fly to more than 500 countries and carried more than 1.6 billion passengers last year. Some of the partner airlines including oneworld’s IAG (it has Qatar Air as its biggest shareholder) have told their US partners that they can not support a challenge to the Gulf carriers.
At home, however, FedEx already faces some carrier opposition to its stance. In a 2012 case, FedEx argued that the US government should establish a level playing field for cargo and prohibit state-owned foreign enterprises from cross-subsidising FedEx’s competitors. That case may come back to bite the freight carrier.
In the meantime, FedEx managing director has written an 11-page formal filing to the US Department of Transportation that argues against any US changes to Open Skies.
The cargo company says US airlines commonly use Open Skies agreements to build their international networks and that they eliminate competitors by working with foreign airlines. “In this case, we believe consumers (who benefit from lower fares) should be allowed to be the winners,” Sparks wrote.
Open Skies agreements with more than 100 nations allow equal access to one another’s airports without interference from the respective national governments. FedEx argues that access to the three mega-airports that have been built in Qatar, Dubai and Abu Dhabi doesn’t matter much to the three US airlines, but it is important to FedEx, which routes 44 flights through Dubai each week. -JH
While Dubai-based Emirates SkyCargo alone carries about 1000 tonnes of outbound freight a week from the USA, until now the row has been focused on the cabins, with Delta, United and American airlines claiming that the three Gulf carriers are able to offer ‘cheap’ fares to US international travellers thanks to government subsidies totalling about US$42 billion given over many years. 
