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Wed 29 Apr 2015 07:48 PM

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US, Gulf carriers row 'could move airlines towards alliances'

Dubai airport chief Paul Griffiths warns that open skies dispute could lead to far bigger threat to competition

US, Gulf carriers row 'could move airlines towards alliances'

The escalating row between Gulf and US carriers over the open skies policy is threatening to push airlines towards alliances, which Dubai Airports’ chief has warned could be a far bigger threat to fair competition.

Dubai Airports CEO Paul Griffiths, in an interview with the BBC, said alliances have the ability to distort competition.

“My main concern - what could backfire with this - is that the spotlight would move away from the Middle East, where we are able to demonstrate clearly the successful commercial basis on which we operate, towards things like alliances, which are far more questionable in terms of distortion of competition,” said Griffiths in the interview.

Alliances, like Oneworld and Star Alliance, have been heavily criticised in recent months. Speaking last September, Etihad Airways’ CEO James Hogan described global airline alliances pursued by some rivals as a ‘fractured’ model.

“The model of alliances is fractured. See what happened to Qantas, Emirates and British Airways," Hogan said. “We believe partnerships are better, strong codeshare relationships and equity investments.”

Meanwhile, aviation analysts OAG have said in a new report that airline alliances have run their course and will not survive.

In the new analysis report ‘The Fight for Global Markets – Is Three the Magic Number?’, John Grant, from OAG’s EVP Data and Market Intelligence, says joint ventures, equity stakes and less formal partnerships are increasingly being used, which will challenge existing structures and operations.

“There are currently more airlines than can realistically exist and in a truly global market where barriers were eased, we would expect to see a consolidation of carriers,” says Grant.

“The global aviation outlook is transforming and there have to be changes to the business structure, the key players and shape of the industry. Alliances are not a long-term solution – they are a fixed solution which have run their course for many circumstances.”

Three US airlines produced a white paper in March this year claiming that Qatar Airways, Abu Dhabi's Etihad Airways and Dubai's Emirates Airlines have received more than $42 billion in subsidies from their respective governments in the past decade. The claims have sparked between the carriers, with all three Gulf airlines denying claims that they have received government subsidies.

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