Emirates CEO Tim Clark makes it clear that he finds Delta to be the most problematic of the big three U.S. carriers.
Clark doesn’t like American or United much either, but he singled out Delta during his talk Tuesday at the National Press Club.
Clark noted that Emirates delivers 500,000 passengers to U.S. carriers annually. “We do feed passengers to them (and) maybe $100 million or $150 million a year in incremental revenue,” he said. “I haven’t heard them saying they don’t want it.”
Despite the potential for even higher benefits, he said, the big three won’t code share with Emirates. He said that after merging with Continental, United cancelled a code share agreement between Emirates and Continental involving passengers who connected at London Gatwick for Dubai, Houston or Newark. American, he said, “refused to deal with us.
“And Delta is Delta – enough said there,” Clark said. He apparently referred to Delta’s role as the initiator of the campaign to challenge the Middle East carriers’ efforts to dump capacity in the U.S., a campaign that American and United subsequently joined.
Earlier, Clark blasted Delta for its aggressive effort to return capital to shareholders. “Delta is returning $7 billion to its shareholders,” he said. “Why couldn’t they spend that improving what they do – investing in product, making the consumer enjoy their product?
“But no, they return $7 billion to their shareholders – we don’t do that.”
Delta responded to Clark in a public statement, saying “While Delta has returned $3.2 billion to investors since 2013, the Atlanta-based carrier over that same timeframe has invested $4 billion in aircraft acquisitions and $5 billion in customer experience and product initiatives including terminal renovations in New York and Los Angeles, premium cabin upgrades, customer-focused mobile technology, expanded in-flight entertainment, dining and lie-flat seats, enhanced Sky Club experiences and more.”
Clark also suggested that Delta and United, which each operate single daily flights to Dubai, should boost service. Delta flies from Atlanta, while United flies from Washington Dulles. Clark said passenger load factors on the flights are in the eighties (percent) and nineties (percent), and that “under normal rules, you would put a bigger flight on – but they don’t.”
Flying to the Middle East and Asia “is a huge opportunity and one that continues to grow,” he said. “Why is American Airlines not in the Middle East at all? How can we be harming American Airlines if they don’t operate there?”
In general, the big three U.S. carriers all maintain that it is difficult to compete in the Middle East and Asia because they are not subsidized while the principal competitors -- Emirates, Etihad Airways and Qatar Airways --- are subsidized and therefore can buy newer aircraft and offer lower fares without worrying about making a profit.
Clark spoke as Emirates unveiled a 400-page rebuttal to a report by the big three U.S. carriers that lists $39 billion in government subsidies, and a $3 billion benefit from non-unionized workforces, for Emirates, Etihad and Qatar. The totals include $6.8 billion in subsidies and unfair benefits to Emirates alone.
Responding to the filing, Jill Zuckman, spokesperson for the Partnership for Open & Fair Skies, which represents the big three carriers and their labor unions, responded in a prepared statement.
“Emirates can submit as many pages as it wants, but it still won’t paper over what has been well-documented: Emirates has received billions in subsidies and unfair benefits from the treasury of the UAE,” Zuckman said. “Our investigation shows that these massive subsidies have allowed Emirates, Etihad and Qatar airlines to expand far beyond what market forces could ever support.”
Clark did cite some U.S. airlines favorably. He said he has been asked whether Emirates would want to take a stake in JetBlue. “The opportunity is there,” he said. “But we as a rule do not involve ourselves in the equity of other carriers. We prefer to strike meaningful relationships with those carriers.
“The relationship we have with JetBlue is one of the best,” he said. “But they are not alone,” he said, noting that Emirates also has a good relationship with Alaska.
