FedEx and Jetblue speak out in support of Gulf airlines

11 June 2015

Dispute with US carriers outshines 80 per cent profit forecast on back of falling oil prices

  • FedEx, JetBlue and cargo groups oppose open skies restrictions
  • FedEx operates 44 flights per week to the Dubai International Airport

US cargo carrier FedEx and budget airline Jetblue have voiced their opposition to major US international airlines’ calls for government measures to restrict Gulf airlines’ landing rights expansion into the US.

FedEx argued that it has the most to lose in the event that the US government recalls its open skies agreement with the Gulf airlines, an action that would likely invite retaliatory move from the UAE and Qatar, home to three major travel and logistics hubs in the GCC.

FedEx currently operates 44 flights a week through Dubai International airport compared with a single daily flight each for Delta Airlines and United Airlines, two of the three US airlines that have filed a formal complaint with US regulatory bodies. The airlines allege that Emirates, Etihad Airways and Qatar Airways have received a total of $42bn in government subsidies, violating open skies agreement.

According to FedEx, a unilateral action from the three US carriers to freeze open skies agreement “would violate the current open skies pact and invite retaliation or renunciation of their agreement by the UAE”.

At least two other groups representing US cargo carriers have adopted the same stance on the issue as FedEx and JetBlue.

Meanwhile, Germany’s Lufthansa has aligned itself with the American airline companies citing that the simmering dispute goes beyond subsidies to the overall protectionist stance of the state-owned Gulf carriers. The investment regulatory framework in Europe has essentially allowed Gulf airlines to acquire major stakes in several European airlines, whereas European carriers could not acquire shares in state-owned Gulf airlines.

Etihad has taken a 49 per cent stake in Air Serbia, 30 per cent stake in Air Berlin and 49 per cent stake in Alitalia. Qatar Airways owns 10 per cent of International Consolidated Airlines Group, which owns British Airways and Iberia.

Discussions on the dispute did not fail to dominate the annual general meeting of the International Air Transport Association (IATA) held in Miami, Florida, which began yesterday. Qatar Airways CEO Akbar al-Baker wasted no time during the conference opening session to refute the allegations on unfair subsidies asserting that a change in liberal market access will have far-reaching consequences leading to retaliation.

The rift between the airline groups tended to overshadow a rosy profit forecast, some 80 per cent to reach $29.3bn in 2015, for the global airline industry on the back of falling oil prices and most airlines’ improving operational efficiencies. Fuel consists of about 30 per cent of an airline’s operating cost.

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