New Data Show Steep Decline in International Bookings in Orlando, San Francisco, and Chicago after Gulf Carriers Launch New Service
Subsidized Gulf Carriers Growth Undercut U.S. Aviation and American Jobs
Washington, D.C. (January 27, 2016) – Massively subsidized Gulf carriers are undercutting U.S. carriers and costing American jobs as they rapidly expand in American markets, according to new data released today. International passenger bookings on global U.S. carriers and their joint venture partners from Orlando, San Francisco, and Chicago to the Middle East, Africa, Indian Subcontinent and ASEAN Countries dropped sharply after the Gulf carriers’ most recent entry into those markets without regard for true operational costs. In an effort to dominate global aviation, the three Gulf carriers have used billions in government subsidies to add or announce plans to add extensive new service in the United States, expanding their daily seats to and from the U.S. by more than 35 percent since January 2015.
Economists from Compass Lexecon reviewed booking data in three cities that the Gulf carriers serve. The data show that following the most recent entry by a Gulf carrier into a market, passenger bookings for international itineraries on U.S. carriers and their joint venture partners declined an average of 13.3 percent in Orlando, 13.1 percent in San Francisco and 8.8 percent in Chicago. A previously released analysis showed a similarly dramatic 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.
The analysis underscores the fact that massively subsidized Gulf carriers – Emirates, Etihad Airways and Qatar Airways– are undermining the U.S. carriers’ international air service.
“In Orlando, San Francisco, and Chicago, the governments of the UAE 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, chief spokesperson for the Partnership for Open & Fair Skies. “Until the U.S. government steps up and addresses the massive subsidies, the unprecedented growth by the Gulf carriers will only continue, causing great harm to the U.S. aviation industry, American workers and critical airline service that communities across the country rely on.”
Qatar and the United Arab Emirates (UAE) have provided more than $42 billion in subsidies and other unfair benefits to their state-owned airlines, in direct violation of the Open Skies agreements. The subsidies are severely distorting the global aviation market and hurting the ability of U.S. carriers to compete. In recent months, Delta Air Lines announced the cancellation of its service between Atlanta and Dubai and, similarly, United is canceling its Dulles to Dubai route, citing in part unfair competition with the Gulf carriers. For every route ceded to a Gulf carrier, economists estimate that more than 1,500 American jobs are lost.