United cites Gulf rivals in axing Dubai flights

Ben Mutzabaugh | USA TODAY

United Airlines is ending its service to Dubai, saying the rapid expansion of “subsidized” local carriers and the loss of a government contract is forcing it to end its nonstop route from Washington Dulles.

The carrier’s last flight on the route will be the return from Dubai on Jan. 25.

“Even though we successfully operated the Washington-Dubai route for the past seven years, the entry of subsidized carriers such as Emirates Airline and Etihad Airways into the Washington, D.C. market has created an imbalance between supply and demand to the United Arab Emirates,” United says in a statement detailing its exit from the market. “As they’ve added subsidized capacity, our Washington-Dubai route has become less profitable.”

United's move follows a similar move by Delta, which announced in October that it would end its Atlanta-Dubai route in February. Like United, Delta blamed what it described as excess capacity from the Gulf carriers for making its route unprofitable.

As for United, it also pointed to a decision by the federal government to award the U.S. government contract for flights on the Dubai-Washington route to JetBlue. JetBlue does not fly the route, but its codeshare partner Emirates does. JetBlue is able to sell tickets on Emirates’ flights thanks to a codeshare partnership between the carriers.

In its statement, United estimated that Emirates “will be carrying an estimated 15,000 U.S. government employees, including active duty military personnel, whose official travel is funded by U.S. taxpayers."

“It is unfortunate that the GSA (General Services Administration) awarded this route to an airline that has no service to the Middle East and will rely entirely on a subsidized foreign carrier to transport U.S. government employees, military personnel and contractors,” Steve Morrissey, United’s Regulatory and Policy Vice President, says in United’s statement.

“We believe this decision violates the intent of the Fly America Act, which expressly limits the U.S. government from procuring commercial airline services directly from a non-U.S. carrier. For the Washington to Dubai route, JetBlue merely serves as a booking agent for Emirates,” Morrissey adds.

JetBlue spokesman Doug McGraw confirmed to Today in the Sky that the airline had been chosen as the government’s contract carrier for the route, adding: "The GSA awards contracts that deliver the best value to the U.S. taxpayer and JetBlue is honored to have this traffic with Emirates, our codeshare partner."

For its part, the GSA said in a statement to Today in the Sky that its "Fiscal Year 2016 City Pair Program leverages the purchasing power of the federal government to drive down the price of airfare for federal employees, estimated to save the American taxpayer approximately $2.35 billion. Under GSA’s City Pair Program, airfare rates offer a 52% discount on comparable commercial fares. The Fly America Act is a material term of the FY16 City Pairs contracts."

As for United, it has also been part of broader effort by the three big U.S. airlines to push back against the rapid expansion of the three big "Gulf carriers" that include Emirates and Eithad of the United Arab Emirates and Qatar's Qatar Airways. United, along with Delta and American, has alleged that the three state-owned carriers receive unfair subsidies that allow them add capacity that outstrips demand that can be served profitably.

"For months, we’ve been speaking out about the ways unprecedented government subsidies to Etihad, Emirates and Qatar Airways distort competition and threaten U.S. airline jobs," United added in its statement. "We continue to call on the Obama administration to request consultations with the United Arab Emirates and Qatar to ensure Open Skies agreements are being enforced."

All three of the Gulf carriers have vigorously denied the allegations of the big three U.S. airlines. And several big U.S. airlines have rallied in support of the Gulf carriers. Perhaps unsurprisingly, JetBlue is among that group, which also includes Hawaiian Airlines.

JetBlue CEO Robin Hayes said that subsidy complaints by the three largest U.S. airlines against three rivals in the Middle East are unjustified, and an attempt to prevent more competition on lucrative European routes.

“If you pore through the legacy carriers’ filings with a critical eye, it’s clear many of their arguments against the Gulf carriers just don’t pass the straight-face test," JetBlue CEO Robin Hayes said in October while speaking at the International Aviation Club in Washington. "What is indisputable is that the legacy carriers have failed to prove that they’ve suffered any harm.”

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