Region's carriers reject competitors' claims of predatory pricing and capacity dumping.
Rivals vent fury on Gulf airlines
KUALA LUMPUR // Struggling airlines from North America and Asia complained about losing market share to Gulf carriers Monday, amid accusations of predatory pricing and capacity dumping as the industry experiences its worst slump on record. But the region's carriers rejected their rivals' complaints, made at an international conference in the Malaysian capital, saying they were generating new demand by opening up previously untapped markets.
Executives from Air Canada and Air New Zealand attacked the "Big Three" carriers from the Gulf - Emirates Airline, Etihad Airways and Qatar Airways - which have built their airlines on a go-it-alone strategy, rather than joining alliances with established players. They said Monday that the Gulf airlines served to only redirect traffic at the expense of the airlines based in large consumer markets.
Robert Milton, the chairman of ACE Aviation Holdings, the parent company of Air Canada - which has consistently opposed allowing Emirates Airline to fly daily services into the country - said Gulf carriers were developing themselves into big and powerful airlines. "They are building fine service airlines and coming into markets at a starting point in terms of a capital base that others would love," he said at the annual meeting of the International Air Transport Association (IATA).
"My view is, let them fly 100 times a day into Canada if they want, but only flying customers from Canada to Dubai and not connecting to every other market on the planet." Emirates has argued that consumers benefit the most when access is free. The strategy of Emirates and other Gulf airlines is to take passengers from North America and Europe to Asia, stopping only once in the Gulf. Other airlines without bases in this region have to make two stops.
Rob Fyfe, the chief executive of Air New Zealand, said "predatory pricing" and "capacity dumping" were concerns whenever a large airline entered new markets, arguing that services to the Middle East from New Zealand had "created very little new traffic". James Hogan, the chief executive of Etihad, rejected the claims. Etihad's entry into markets such as Geneva and Dublin showed that it stimulated new traffic, he said.
"We are opening up new markets and the pricing has not been predatory because we are there to make a buck," Mr Hogan said. "We are the only airline that operates east out of Dublin. At the end of the day, more access for the consumer is better for all of us." The concern over the Gulf comes as the region's airlines remain committed to contracts to acquire billions of dollars worth of new aircraft, even as other carriers seek to survive a severe contraction in air travel demand through delaying and deferring deliveries.
The IATA Monday revised its estimate for losses by the global aviation industry to US$9 billion (Dh33.04bn) this year, from a previous projection of $4.7bn. Qatar Airways, which has aircraft on order worth about $27bn, wants deliveries speeded up, Akbar al Baker, the chief executive, said Monday. Etihad is also standing firm on 11 aircraft scheduled to arrive this year, and Tim Clark, the president of Emirates, said he has had to fight Airbus against slight modifications in the delivery of Superjumbo Airbus A380s next year. "These airplanes are fully allocated," he said. "We need them."
By contrast, Jet Airways of India is cutting capacity by 20 per cent this year and Singapore Airlines said it planned to ground 16 aircraft to better match capacity with demand. Defending Gulf carriers, Mr Hogan said airlines such as Air Canada catered to the same intercontinental traffic as Gulf carriers through their participation in airline alliances. Air Canada is part of the Star Alliance, and carries traffic to the Indian subcontinent by way of its Star partner, Swiss International.
But Etihad, Emirates and Qatar have opted to build their own operations organically, and they have done so with considerable results, he said. Emirates is the fourth-largest air operator in terms of capacity or "scheduled passenger kilometres", and only trails three airline alliances: Star Alliance, Sky Team and One World, representing dozens of carriers, according to the IATA's latest World Air Transport Statistics report.
Middle East carriers are positioning themselves to boost market share when the economy recovers, said Abdul Wahab Teffaha, the secretary general of the Arab Air Carriers Organisation. "It's a game of market share for a period of time, until the crisis is over." email@example.com Airlines face tough year, b5