Will fuel American, West Asian airlines war

The Trump administration’s decision to ban all electronic devices larger than a cellphone/smartphone (read laptops and tabs) in cabin baggage in carriers departing from airports in West Asia, including Dubai and Abu Dhabi and parts of Africa, is likely to give fresh ammunition to the war among airlines. This war has American, Delta and United Airlines in one corner and the three big West Asian carriers (ME3 as they are more commonly referred to) — Etihad, Emirates and Qatar Airways — in the other.

Though the American decision also covers airports and airlines in Africa, it isclear the biggest impact is going to be on the West Asian carriers. In the recent past, the West Asian carriers have virtually taken over the skies. Low fuel costs and patronage by sheikhs have ensured these airlines are providing competition to other carriers, including American ones, across the globe.

The American carriers have maintained for long that sheikhs in West Asia are helping the ME3 carry passengers who would otherwise have flown on American carriers. While the ME3 deny these allegations, a very public display of this fight was visible at the Annual General Meeting of the International Air Transport Association in Miami in June 2015. American airlines had also approached the Obama administration for help.

After the Trump administration’s latest decision, what would be interesting to see is how the ME3 are going to react. Those effected by the ban, particularly Emirates, which operates the world’s largest fleet and carried nearly 52 million passengers in 2015-16, could well decide to switch loyalties from American aircraft manufacturer Boeing to European manufacturer Airbus.

A case in point here is flydubai, the low-cost arm of Emirates. It has an all-Boeing fleet, and is to start taking delivery of the first of the 75 Boeing MAX aircraft it has ordered, later this year. What if it decides against going ahead with the order and instead goes with Airbus? If this happens, the US administration will have a problem on its hands. At the moment, no one has commented on how this will play out, though.

There are other implications as well. For instance, Emirates said in November 2014, after the Port Authority of New York and New Jersey completed an assessment of the economic impact of Emirates’ operations in New York: “That assessment estimated that Emirates flights to and from John F Kennedy (International Airport) in 2013 supported 3,720 jobs in the New York-New Jersey metropolitan region, with $190 million in wages as well as $530 million in total regional activity. A study by the Los Angeles County Economic Development Corporation found that a long-haul flight such as ours to Los Angeles generates $623.5 million in annual benefits to the US economy, sustains 3,120 direct and indirect jobs in Southern California, and produces $156 million in annual wages.”

In June 2015, Etihad Airways had urged the US government to “keep the skies open”, in a comprehensive formal response to the joint campaign by Delta, United and American Airlines to block competition and roll back the benefits of Open Skies.

The Etihad Airways response also emphasised the many benefits delivered by Open Skies to consumers, American workers, US carriers and US trade and tourism.

Of course, there is also a flip side to the ban. With the UK also joining the US in banning electronic devices in cabin baggage, the impact is going to be felt by the West Asian carriers as well. The US is a big market for the West Asian carriers, and the ban is likely to hit their operations as well. With reports coming in that other countries too are likely to join the ban, the situation will merit closer attention.

The question now is, who will blink first: the Americans or the West Asian carriers.

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