Are the Open Skies Closing?

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by: Kurt Knackstedt, President, Association of Corporate Travel Executives.

Speaking of chatter, there’s certainly been a lot of it going on recently between a few US-based airlines and several from the Middle East. In short, American, Delta and United aren’t happy about how “open” the skies are between the Gulf and the US, nor do they believe that their competition should have (as accused by Delta, American and United) direct or indirect support from the governments of the countries they fly from.

The war of words has escalated a bit recently, with big salvos being fired by Richard Anderson of Delta and responding back have been Tim Clark of Emirates, Akbar Al-Baker of Qatar and James Hogan at Etihad. If there wasn’t so much at stake this might be fun to watch, but in the multi-billion dollar aviation industry which is undergoing a geographic transformation not seen before in our lifetime, it’s no laughing matter.

At stake is who will survive and thrive in a global aviation market that is clearly shifting eastward from North America and Europe. As the map on this site visually represents there’s a certain palm-shaped, man-made island that’s pretty much right in the middle of where most the world’s people now live. Thus the fact that Dubai airport is now the world’s largest in terms of international passenger movements is no accident.

The Gulf carriers have, arguably, seized the initiative with respect to changing the way the world travels by air. No longer do travellers consider London, Paris, New York, Frankfurt, Chicago, Atlanta or Singapore the world’s major transit points, but it’s now Dubai, Abu Dhabi and Doha that are positioning themselves as the place to fly through.

Perhaps it’s not a coincidence that Atlanta-based Delta has been the most vocal about challenging the rise of the Gulf carriers, since Atlanta airport is still the world’s busiest in terms of total passenger movements (over 88m in 2014.) Now that Dubai is tipped to have nearly 100 million passengers pass through their massive duty-free malls by 2020 it’s not surprising that Delta is trying to fight back.

However, time and again when airlines and politics mix it tends to either exacerbate things (see: Aer Lingus, Alitalia, Malaysia Airlines, to name but a few) or just be a distraction. As example, Qantas has tried numerous times to get the Australian Government to change the law governing their foreign ownership restrictions; recently they’ve just gotten on with running their airline and went from a $2 billion annual loss to a $203 million half-year profit in just 6 months. Politics in business often is a distraction that doesn’t end up doing much good, so perhaps best to just get your planes flying, costs under control and customers happy and then who needs politicians?

So where will this war end? ACTE just so happens to be descending into Atlanta in just 3 weeks’ time for our Global Education Conference, and we’re delighted to welcome Ed Bastian, President and Board Member of Delta Air Lines to the Conference where he will share his thoughts on the state of the global aviation industry. So, corporate travel professionals, what do you think about the way the world’s airlines are changing? Is it for the better? Are US-based carriers getting a raw deal? Are the Middle East carriers unfairly subsidized? Or do the Gulf carriers just have an edge thanks to the change in global demographics and so who can blame them for taking full advantage?

Come join us in Atlanta and have your say!

Thanks for chattering.

Kurt Knackstedt, President, Association of Corporate Travel Executives

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