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Sun 9 Oct 2016 01:42 PM

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Delta CEO reignites Gulf subsidies row, despite record summer traffic

CEO Ed Bastian said subsidies allow Gulf carriers to offer 30 flights a day to the US at fares substantially below what US airlines can offer

Delta CEO reignites Gulf subsidies row, despite record summer traffic
Ed Bastian, CEO of Delta Airlines. (Paulo Nunes dos Santos SANTOS/AFP/Getty Images)

The CEO of Delta Air Lines has reignited the row with Gulf carriers, reiterating that government subsidies have made it uncompetitive for American airlines to fly to GCC countries.

Speaking at an event in New York, Delta Air Lines CEO Ed Bastian claimed Qatar Airways, Etihad Airways and Emirates had received $50 billion in state subsidies, which he said allows the Gulf carriers to offer some 30 flights a day to the United States at fares substantially below what US airlines can offer.

Bastian said the UAE and Qatar together have a population the size of the US state of Ohio, but "they have more widebodies on order than all the Chinese airlines and US airlines combined," Bastian said at an event in New York.

"That doesn't sound fair, that doesn't sound free," he said.

The Gulf-based carriers dispute that view, saying they have received investments, not subsidies.

Delta, United and American Airlines have protested the alleged support for months, saying it has made it uncompetitive for US airlines to fly to Dubai, Abu Dhabi and Doha.

Bastian’s comments come on the weekend that Qatar Airways finalised a deal to buy 40 Boeing widebody jets valued at $11.7 billion and signed a letter of intent for up to 60 narrowbody 737 MAX 8 jets worth $6.9 billion.

Despite the criticism of Gulf carriers, Delta Air Lines reported its best summer ever for passengers this year, despite a major computer outage in August.

"We had the strongest summer in our history," Bastian said, adding that three days in July "set all-time records in terms of volume of traffic and volume of passenger flows."

Bastian said traffic was up because fares were about 6 percent lower than last year. That meant revenue per passenger was down, but the airline's profit margins were "still strong," he said.

*With input from Reuters

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Bharat Jashanmal 3 years ago

These US carriers did not take opportunity of the markets of China; India; the Middle Ease; South East Asia when they were opening up, concentrating instead on the highly regulated domestic market, and the highly competitive, relatively low-yielding European market, and thus missed the boat, allowing instead these GCC carriers to step in and take advantage of these opportunities and incidentally, offer a far more superior product.