Daily Management Review

Airlines at War for priority positioning in the Global Market


The recent catfights between the three major Gulf carriers and the three major US Airlines has sparked off a lot of back and forth also conspiracy theories trying to find rhyme and reason behind this occurrence. Be it financial gain or shoddy service, the airlines are lashing out each other big time.

The three bigwigs of Persian Gulf region - Emirates Airlines, Qatar Airways, and Etihad Airways are currently in a war of words with the big three of American skies- American, United and Delta. The three major American Airlines or the Big 3 have chosen to launch a scathing attack on the finances, image and integrity of the Gulf airlines after they started making aggressive inlays into the American market. The attack has been aggressive and long enough for the Gulf airlines to now publicly call them out via reports, public conferences etc

Emirates CEO Sir Tim Clark, a veteran of British skies, has publicly condemned the quality of service provided by the American airlines to their regular customers. According to him from low quality food to overworked badly behaved staff, American airlines are more interested in making huge profits rather than provide quality flying experience than the Gulf airlines have been providing consistently. The Qatar Airways honcho Akbar Al Baker has called the American giants “greedy” and out to demean the gulf companies as they cannot compete with “the extraordinary services” provided by the Gulf carriers.

Etihad has now gone ahead to compile a 19 page report to be made public on the American Big 3(and their acquisitions of the past few years), to show how government subsidies, tax benefits and shoddy service has allowed them to swallow up profits of around $71.5 Billion which shames the $42 Billion that the Big 3 claim, Gulf companies have been receiving as subsidies from their own parent governments. The legal counsel of Etihad has claimed that the Big 3 have also benefited unbelievably from bankruptcy proceedings and pension write-offs that are unique to USA. Also the subsidies obtained by these companies from the US government for keeping their fleets on standby in case of war makes their coffers pretty fat.

The point of wonder now becomes why all this fighting, why now. Industry watchers all seem to debate probable reasons but no single factor has contributed to this. Reasons doing the rounds are:
  • American airlines have woken up to the losses their European counterparts have faced due to the expansions of the Gulf carriers and their services.
  • US carriers are fighting on behalf of their European alliances
  • The leaders of American and United even though less threatened are rallying behind the Delta administration that has higher stakes involved.
  • The Big 3 are using the Gulf companies as the face of evil to instigate their labor organizations to fight beside them instead of against them.
  • Also the focus on the profits of the Gulf carriers can help distract the public from the reasonable margin of earnings being accumulated by the Big 3.
Not one side can be considered totally innocent here, also proving any of the allegations leveled by both sides is close to impractical as whatever results may come they are all dependant on variables like judges, bureaucrats, politicians etc. Also the court of public opinion is the most noteworthy here which has never been favorable towards greedy conglomerates. No matter what happens now, this squabbling is not sure to last long as most corporate fighting goes. Future would show how quality service fares over convenience.