U.S. use of Mideast carrier irks airlines

Visitors watch the United Arab Emirates’ Al Fursan aerobatic team perform at the 14th Dubai Air Show in Dubai, United Arab Emirates, in this file photo. U.S. airlines complained last year to the General Services Administration after it chose JetBlue and its partner airline, Emirates, to fly government employees on a New York to Dubai route.
Visitors watch the United Arab Emirates’ Al Fursan aerobatic team perform at the 14th Dubai Air Show in Dubai, United Arab Emirates, in this file photo. U.S. airlines complained last year to the General Services Administration after it chose JetBlue and its partner airline, Emirates, to fly government employees on a New York to Dubai route.

WASHINGTON -- U.S. airlines, which already see themselves at war with subsidized Persian Gulf competition, now are aggrieved with their own government after a pair of choice routes to Europe and the Middle East were effectively awarded to a Middle East airline.

"We view it as a violation of the Fly America Act," said Jill Zuckman, spokesman for a coalition of U.S. carriers.

Congress decided in 1981 that federal employees, their families, and federal consultants and contractors had to travel aboard U.S. carriers when on official business paid for by the government. Selecting routes for approved federal travel was left to the General Services Administration, the agency that manages the inner workings of government.

The U.S. airlines complained last year when the agency approved JetBlue -- a New York City-based carrier -- to fly to Dubai. And they complained again when JetBlue got approval to fly from New York to Milan.

It's all a ruse, Delta Air Lines said in a letter to the agency's general counsel this month, arguing that JetBlue does not have any planes that can fly that far. Instead, Delta said, the passengers will fly on JetBlue's partner airline, Emirates, the United Arab Emirates airline that bases its operations in Dubai.

The General Services Administration counters that JetBlue was a legitimate bidder for the routes -- regardless of its connection with Emirates -- and got the nod because it offered cheaper fares than the three larger U.S. airlines.

JetBlue said in a statement that "GSA awards contracts that deliver the best value to the U.S. taxpayer and JetBlue is honored to have this traffic with our codeshare partner" -- a partner that shares a flight. The General Services Administration said that opting for JetBlue was "in compliance with the Fly America Act."

The dispute comes as the big U.S. airlines that ply long international routes -- Delta, United and American -- are in the midst of a protracted fight to limit the expansion of Persian Gulf carriers.

Eager to diversify from an oil-only economy, the United Arab Emirates and Qatar governments have given generous help to develop three muscular airlines: Emirates in Dubai, Etihad Airways in the UAE capital of Abu Dhabi, and Qatar Airways in Doha.

The U.S. airlines have asked federal officials to intercede on their behalf by renegotiating Open Skies agreements that govern international air travel. But the U.S. Transportation Department has yet to show any inclination to wade into a situation that could lead other nations to revisit their pacts with the United States.

Open Skies agreements with more than 100 nations allow airlines from different countries equal access to one another's airports without interference from their respective national governments. There have been informal talks with the two Persian Gulf nations, but they have not been kicked up to the level of formal renegotiations.

"We find it frustrating that while we're trying to find a resolution and a path forward to level the playing field [with the Persian Gulf carriers], the GSA is awarding additional services on Emirates," said American Airlines Vice President Howard Kass.

Airline observers say the U.S. carriers probably would be assuaged if the three Persian Gulf airlines unilaterally agreed to pull back their efforts to expand, particularly in the U.S. market for trans-Atlantic and trans-Pacific flights.

But the Persian Gulf airlines show no signs of backing off. Emirates is now the single largest operator of the Airbus 380, the world's largest passenger jet, with 76 on order. Qatar has six, and it has four more on the way. Etihad owns eight, with two on order and options to buy 15 more.

When United Airlines announced in December that it no longer could afford to compete with Emirates in flying to Dubai, the Chicago-based airline issued a statement: "It is unfortunate that the GSA awarded this route to an airline that ... will rely entirely on a subsidized foreign carrier to transport U.S. government employees, military personnel and contractors. JetBlue merely serves as a booking agent for Emirates."

Two weeks ago, Delta's general counsel, Peter Carter, sent a letter of protest to the General Services Administration after JetBlue was approved for the Milan flight.

"As you are well aware, this award is for JetBlue in name only, as 100 percent of the flights on the contracted route will be operated by Emirates Airline," Carter wrote.

Business on 08/31/2016

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