Concedes now is the time to restore focus on the best interests of customers, employees and shareholders.
Over five years ago, Delta Air Lines, American Airlines and United Airlines (“Big Three”) launched an anti-competitive, anti-consumer lobbying campaign against longstanding U.S. bipartisan Open Skies policy. Their target was Emirates Airline, Etihad Airways and Qatar Airways (“Gulf Carriers”) and the high-quality, much-needed competitive choice they offer consumers. The Big Three wasted tens of millions of shareholder dollars, squandered substantial political capital and suffered a humiliating defeat when they presented their complaints directly to President Trump in an Oval Office meeting last July.
In that meeting, President Trump told the Big Three to either file an International Air Transportation Fair Competitive Practices Act (IATFCPA) complaint with the U.S. Department of Transportation (DOT) or quit bombarding his Administration with incessant whining. Tellingly, the Big Three never filed an IATFCPA complaint because they knew from the outset that such a complaint would be dismissed because to succeed it would require a showing of competitive harm as evaluated by serious DOT career professionals focused solely on facts and well-settled IATFCPA precedent.
So, what is next?
Doug Parker, the CEO of American, just declared that the anti-Open Skies campaign is over. After engaging in a verbal war of words for years with Qatar Airways’ straight-talking CEO Akbar Al Baker, including accusations that Al Baker’s airline, Americans’ oneworld alliance partner, received more than $25 billion in government subsidies, Mr. Parker announced that American is restarting its commercial codeshare relationship with Qatar. In doing so, Mr. Parker declared “[t]he issues that led to the suspension of our partnership two years ago have been addressed.”
Exactly what were those issues?
American, and its oligopoly partners Delta and United, told the Obama and Trump Administrations, Congress and anyone who had the misfortune of crossing their path that alleged competition-distorting government subsidies were masked by the resistance of the Gulf Carriers to provide financial transparency. They called for the Gulf Carriers to publicly release annual audited financial statements consistent with international accounting standards to prove that they are not competitive cheaters. In doing so, though, they conveniently overlooked and were silent on the fact that Emirates had done so for decades, and its audited financials completely debunked the Big Three’s allegations.
What does Mr. Parker’s announcement truly reflect?
First, it is a declaration of failure. Backed into the IATFCPA complaint-or-bust corner by President Trump, Mr. Parker realized the jig is up. The Big Three’s anti-competitive scheme has been exposed for precisely what it is. Mr. Parker realized there was no successful pathway forward because the law and the facts are overwhelmingly against the Big Three.
Second, Mr. Parker has finally refocused on the best interests of his employees, customers and shareholders. He acknowledged this when explaining in his statement “[w]e believe resuming our codeshare agreement [with Qatar] will allow us to provide service to markets our customers, team members and shareholders value, including new growth opportunity for American Airlines.” While refreshing and long overdue, it begs the question why Mr. Parker ever lost sight of these three pillars of his airline in the first place.
Third, it represents an acknowledgment that the real competitive threat to American is oligopoly partner Delta, not the Gulf Carriers. American was completely blindsided last year when Delta stole its critical South American partner, LATAM Airlines. Just prior to that game-changing announcement, Mr. Parker went to the Oval Office meeting to make the case on behalf of Ed Bastian, Delta’s CEO. Mr. Bastian skipped the White House meeting to vacation in celebration of what has proven to be a commercially embarrassing, power-play LATAM victory over Mr. Parker and American shareholders.
Is it simply a case of bad luck that Delta’s market capitalization is nearly four times greater than American’s while United’s is about double? Again, American’s share price is flirting with a 52-week low. It is reported that President Trump, during the Oval Office meeting seven months ago, repeatedly ridiculed and teased Mr. Parker about American’s then lagging share price. Not many successful companies would end a commercially lucrative partnership like American’s with Qatar that was generating hundreds of millions of dollars per annum for the two partners. Mr. Parker, however, made that costly choice to ignore his shareholders’ best interest and instead allowed himself to be led around by the nose by Mr. Bastian, the anti-Open Skies ringleader.
American’s public declaration that the war against Qatar Airways is over is great news for its many stakeholders. What about Emirates and Etihad, though? Emirates, as already noted, has publicly released audited financials for decades. If American’s gripe against Qatar has been addressed without Qatar releasing audited financials, then it follows that American never had a legitimate complaint about Emirates in the first place.
As to Etihad, it is undertaking a major business restructuring. American, Delta and United did not publicly release audited financials when they were undergoing their business restructurings under the Chapter 11 bankruptcy reorganization process. As such, they surely cannot expect Etihad to do so until its reorganization is completed. If Mr. Parker is satisfied that Qatar’s issues have been fully addressed, without public release of audited financials, then he and his anti-competitive co-conspirators obviously have zero standing to complain about Emirates or Etihad – during its reorganization.
Let’s hope that Mr. Parker’s declaration that the war against Open Skies has ended is indeed a wooden stake through the heart of this now 5 year-long embarrassing and anti-competitive charade. The leadership at Delta and United may have other ideas. However, as Mr. Parker has said, the time has come to move on, and restore focus on the best interests of employees, customers and shareholders.
*by Kevin Mitchell, Business Travel Coalition
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
