Delta Air Lines has been the most vocal US Carrier in regards to the “Middle East 3” expansion in the North American market. While Delta claims to defend jobs for American citizens, its double-edged sword cuts both ME3 and their lobbying partner, American Airlines. For Delta, it’s win-win.
American Airlines Had The Best Middle East Partnerships
American Airlines had just a single flight into Central Asia with their Chicago-Delhi flight years ago. They canceled it, strengthened their partnerships with joint business venture (JV) carriers across the Atlantic and left it at that for a few years.
Then, a flurry of activity made American Airlines the carrier to beat for Middle East and Central Asian destinations from US carriers. Partnerships and codeshare flights with Etihad and Qatar gave American Airlines unprecedented access to a market they had otherwise struggled to develop – a market that no other US carrier had truly mastered.
US Carriers Saw The Writing on the Wall, Unfortunately, They Can’t Read For Context
US Carriers witnessed the ME3 expansion into Europe before Etihad, Emirates and Qatar Airways grew their market share in North America and it frightened them. Why shouldn’t it? The Ultra-Low-Cost Carrier (ULCC) adapted from Southwest for Ryan Air that made the ULCC the fourth largest international airline in the world drastically eroded the marketplace for Delta, American and United’s European partners. With ME3 carriers expanding throughout Europe, throwing huge capacity, opulent products, and lower prices – there was good reason for concern.
Unfortunately, the writing that US Carriers saw on the wall didn’t really make sense for the US market. European flights east to Asia and south toward Australia pass by the Middle East without much of a diversion in their routing. If you live in Manchester, England, or Lisbon, Portugal and want to fly to Ho Chi Minh City, Vietnam, you’re going to take a connection somewhere. Why not make that connection en route, halfway to the destination in Abu Dhabi, Doha, or Dubai? But from the US, far east and Pacific destinations will be faster flying west and there are plenty of nonstop/one-stop options in the most developed air market in the world. No sensible passenger is flying from Dallas to Dubai to Hong Kong when they can instead fly the direct with American. The European markets needed to protect different route patterns than what makes sense for US passengers.
None of the US carriers have a significant presence in the Middle East or Central Asia so the market could not have been important enough directly to pursue in retaliation and even if they did, their product would not be competitive enough to win business away O&D traffic at the same price point.
Delta Enlisted Partners
Delta led the charge and enlisted American and United to lobby and fight against the ME3 and their subsidized carriers unfair expansion into the US. To some degree, the US carriers had a point. The ME3 could lose money every year because they were backed by government entities that would fund their losses at the expense of what Delta, American, and United as standalone companies could not. The points they made may have been in dispute, but the carriers are government-backed.
Delta, however, ignored their own subsidies from the US government to support their operation including tax breaks (all three have huge breaks at their hubs), financing deals and guaranteed traffic from the US government as a matter of law. They also ignored the Mexican government-backed Aeromexico of which Delta now owns 49% nor their partners in China which are also state-backed. Somehow, those carriers are not a threat to US jobs or sovereignty. American also has a financial interest in a state-backed Chinese carrier.
Despite these glaring omissions and exceptions, United and American Airlines went along for the ride.
Delta Had Less To Lose, More To Gain
If Delta could be successful in their blockade of ME3 carriers expanding into the US, they protect their own market for long-haul flights to the region. Sure. But they also revert American’s Middle East cooperation back to an even playing ground with United and, most importantly, Delta’s.
American was pressed to put their money where their mouth was and terminate their codeshare partnerships with Etihad (understandable) and Qatar Airways, a fellow oneworld carrier – an unfathomable move. Remarkably, perhaps even stupidly, American Airlines leadership has settled their disputes with the ME3, yet still has not resumed codeshare partnership with their own alliance member.
American had to risk their relationship with Qatar, an alliance member (in a smaller alliance) and a financial partner in Etihad to participate effectively in the effort, Delta had to risk none. If the lobby was fully successful, American’s potential gain would have been negligible, but Delta’s substantial.
American Already Suffering, Delta’s New Feud Hurts American Again
With oneworld already on shaky ground, Delta presses again on Qatar Airways by way of an investment they have made in Meridiana Air (Air Italy). Qatar Airways has substantial investments in other carriers, many of which reside within oneworld. They own 20% of IAG (parent company of oneworld carriers British Airways, Aer Lingus, Iberia, and LCC Vueling), 10% of Cathay Pacific and have made an investment in boutique US carrier JetSuite.
After effectively crushing American’s Middle East partnerships, Delta has now taken aim in a misguided op-ed attacking Air Italy, suggesting that the carrier is nothing more than Qatar’s new attack on US carrier’s Atlantic sovereignty. Air Italy is a partner with five oneworld carriers and offers American a chance to rebuild their relationship with Qatar, but Delta’s new feud further strains their relationship and could cause American Airlines further harm to support their fellow Airlines for America member.
Delta’s attack is ironic in that they have mirrored investments like Qatar Airways but don’t want other airlines to be able to do the same. American Airlines continues to fall victim to Delta’s wily tactics with no end in sight.
What do you think? Is Delta using Nationist tactics to cause harm to American while benefiting themselves? Is Delta right to call attention to Qatar Airways substantial ownership of Air Italy?