Bloomberg: US Airlines are whiners

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Great article on Bloomberg this morning. US based airlines – mainly the large ones with huge international networks – United, Delta and American, have been in Washington, DC asking for help in competing against Gulf based carriers. The Gulf based carriers – Emirates, Qatar and Etihad are making big inroads into the US market and taking marketshare from the US based countries. These inroads are mainly due to ‘Open Skies’ agreements that allow carriers from other countries to have access to multiple city in each others markets. This has resulted in the Gulf based airlines flying into multiple markets across the US. Given their better service, people are choosing the Gulf based airlines over the US based airline (who wouldn’t? especially if you are NOT an Elite on a US based airline).

I agree with the author that asking for Congress to reduce ‘open market’ competition is not the way the US based airlines should go. They have equal access to other markets. You compete by offering a better product, at a fair price. That’s free market capitalism. Your thoughts? Share below by leaving a comment.

Comments

  1. It may not be possible for Delta, AA and UA to compete with Emirates and Etihad offering an equally good product. Those middle-eastern airlines would not exist if they weren’t government-funded. All that bling and the showers in the first class cabin? That does not turn an actual profit. Competing on even ground with those airlines would mean that the US government would also give billions of dollars a year to US airlines – then it would be fair competition, won by the best-run company.
    What’s more, Etihad’s horrible abuses towards their flight attendants are well-documented (how they get weighed and measured like cattle, and have strict curfews, that they try to get northern-european attendants of a very specific age) and they are paid tiny wages. If Etihad were a US company, they would have been buried in lawsuits long ago, and for good reason.

    Unfortunately most consumers are not principled enough to avoid an airline because of unethical practices or unfair competition. And yes, you should avoid many other airlines as well as Lucky pointed out in his post.

    This is similar as the situation with cheap goods from China – in that case too, US manufacturers cannot compete, because production in china is cheaper: artificial exchange rates (that are not market based), lower limits on pollution, fewer safety regulations.

    Free trade is a great thing, but only if basic environmental, humanitarian and safety laws are in place for the foreign companies as well. Then it is fair competition which pushes everybody to do better.

  2. One area where they have half of a point is free-market capitalism. The complaint being that the Gulf carriers are heavily subsidized by their Governments, and in some cases, are not even designed to turn a profit.

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