Cabotage, can PAC stop it?

[densoo]

Cabotage. Can PAC stop it?

Dear fellow ALPA members,

After announcing more than $162 billion worth of widebody aircraft orders at the Dubai Air Show last week, Emirates Chairman Sheikh Al Maktoum and Etihad CEO James Hogan were both asked if they believed U.S. and European governments would allow their airlines access to airports on a scale large enough to accommodate so many aircraft. Hogan was somewhat measured saying ?the economic impact of well over $100 billion in new aircraft orders clearly far outweighs any perceived negative impact on U.S. airlines operating internationally.? Al Maktoum was more direct: ?We are buying a product from their countries. So why would they not allow us to fly to these airports? If they don?t, they can take their planes back.? In as many words, these men admitted that their carriers are attempting to secure support from our government by hinting at economic repercussions if they don?t get their way. I hope you?ll join me in standing up against this blatant threat to our industry and our careers.

The 150 B-777s and 50 A380s Emirates ordered last week are capable of carrying more than 80,000 passengers and 1.3 million cubic feet of belly cargo at a time. By the time all of the aircraft Emirates currently has on order arrive, they will be the largest airline in the world several times over. That huge amount of excess capacity will need to land somewhere and the United States, as the largest and most lucrative airline market on the planet, will be their principal target.

As Al Maktoum?s comment makes clear, these carriers are relying on our government to tip the playing field in their favor. Emirates is already one of the top customers at the U.S. Export-Import Bank, where it receives very large subsidies from our government to purchase planes like the ones noted above. Currently, they are also trying to convince the Department of Transportation to allow them to fly individuals whose travel is being paid for by the U.S. government ? a move that runs completely counter to the Fly America Act. Not to be outdone, Etihad is still pushing forward on a new Customs and Border Patrol pre-clearance facility in Abu Dhabi, where no U.S. carriers fly. Over the next ten years, these airlines will be reaching out to our government time and again and asking for support as they invade our routes, undermine our industry, and weaken our profession; ALPA and ALPA-PAC are working to ensure those requests are denied.

This direct and aggressive attack on our careers cannot be allowed to go unchallenged. We are facing an avalanche of money from these carriers and we have to be able to fight back. Our unity in purpose and a fully funded ALPA-PAC are our greatest weapons in countering this very real threat; I hope I can count on your support for the PAC and your advocacy as we battle to ensure our industry stays strong and our careers secure for decades to come.

President
Air Line Pilots Association, International

 

[waveflyer]

Not if we aren't donating to our PACs

 

[SplitBar]

Please donate to PAC people. Only about 25% of ALPA members support PAC. If we can get everyone to kick in just a few bucks a check it really will make a big difference. This threat to our careers is to big to ignore.

 

[ROSWELL41]

ALPA alone can't stop cabotage. We need to decide as a country if having an airline industry is worthwhile. The UAE, Turkey and Qatar have decided it is. Don't mistake EK adding Milan to JFK as cabotage. It's legit and there's nothing we can do about it except compete.

 

[General Lee]

Will Middle Eastern Carriers Crush the U.S. Airlines?


By Adam Levine-Weinberg Motley Fool
November 24, 2013

In the wake of big aircraft orders from the Persian Gulf region's top three airlines, much ink has been spilled over the fates of other international carriers. Indeed, the fast growing Gulf carriers are rapidly gaining market share for international travel. Emirates -- the largest of them -- has already become the top international airline by passenger traffic, and it is continuing to grow rapidly.


Emirates, Qatar Airways, and Etihad Airways pose a very real threat to the top European airlines. Luckily, the threat to U.S. legacy carriers such as Delta Air Lines (NYSE: DAL ) , United Continental (NYSE: UAL ) , and AMR (NASDAQOTH: AAMRQ ) is fairly minimal. For a combination of geographical and strategic reasons, Emirates and its cohorts are unlikely to make much headway in the U.S. market.

A geographical problem

Emirates, Qatar Airways, and Etihad Airways have exploited favorable geography to drive lots of connecting traffic through their hubs. For travelers heading between Europe (or even South America) and Asia or Australia, the Persian Gulf region is a reasonably convenient connection point.

Emirates has taken this strategy to its logical extreme: It operates only wide-body aircraft, and its fleet skews toward the very largest wide bodies on the market. These big planes are typically the cheapest to operate on a per-seat basis, which allows Emirates to offer lower prices to attract more customers. Since Emirates has a single mega-hub in Dubai, it can fill these seats with passengers traveling on to many different final destinations.

By contrast, for travelers going from the U.S. to Europe, East Asia, or Latin America (i.e., all of the top international destinations), the Persian Gulf is thousands of miles out of the way. India and the Middle East are two of the few destinations for which Dubai, Doha, and Abu Dhabi are sensible connection points.

As a result, the Gulf carriers' business models don't work well in the United States. Few travelers heading from New York to Shanghai will be interested in going 3,500 miles out of the way to Dubai. Moreover, the additional flying distance would increase costs. The Gulf carriers can still fly to a handful of the top U.S. metro areas, but they need to manage supply based on the comparatively limited demand for travel between the U.S. and the Middle East/South Asia.

A new threat?

Some industry observers think Emirates can pose a more direct threat to Delta Air Lines, United Continental, and AMR by flying nonstop between the U.S. and cities in Europe and Asia. This fear ratcheted up when Emirates began flying from New York to Milan this fall. On that route, it competes with all three top U.S. carriers and Alitalia, each of which has one daily flight.

Delta Air Lines and joint venture partner Alitalia each operate one daily flight from New York to Milan.

However, Emirates has characterized the New York-Milan route as a "one-off" thing. Indeed, that route is somewhat unusual, because while Milan is a large business market, it is underserved because of Alitalia's decision to locate its main hub in Rome instead. This created an opening for Emirates to fill a very large plane (a Boeing 777-300ER) without relying on the connecting volume of its Dubai hub.

By contrast, for high-volume routes such as New York-London, New York-Paris, Chicago-London, or Los Angeles-Tokyo, the U.S. carriers and their international partners will be much harder to unseat.

AMR has joint ventures with British Airways and Japan Airlines; Delta Air Lines has joint ventures with Air France and Virgin Atlantic; United Continental has joint ventures with Lufthansa and ANA. For most major routes, at least one of these joint ventures benefits from hubs on either end, allowing frequent service. Emirates would have more trouble breaking into these well-supplied markets.

United flies Boeing 757s like this one on many international routes.

On the other hand, for lower-volume routes (especially to Europe), U.S. carriers use smaller aircraft such as the Boeing 757 or 767. The 757 typically seats fewer than 200 passengers in an international configuration, whereas most of Emirates' planes have 300 to 500 seats. If a carrier like United can only fill a 757 for an international flight, despite having a large hub at Newark Airport to generate passenger "feed," Emirates doesn't have a prayer of filling a much larger 777.

Foolish bottom line

Emirates -- and its regional rivals Qatar Airways and Etihad Airways -- is clearly looking to expand. After two huge orders last week, Emirates has 385 widebody planes on order, worth as much as $166 billion at list prices. Emirates is already the largest airline in the world by international traffic, and it is clearly on pace to become the largest by overall traffic within the next decade.

Fortunately, the U.S. carriers can hide behind favorable geography and strong U.S. hubs. While Emirates and the other Gulf carriers are well positioned to steal traffic from European and Asian competitors, their hubs cannot offer reasonable connections for most international routes to and from the United States. There are also very few routes like New York-Milan, where Gulf carriers could feasibly compete "away from home."

The top European and Asian airlines need to gear up for a costly battle with Emirates, Qatar Airways, and Etihad Airways. Otherwise, they could lose a large part of their high-value international business traffic. However, for the U.S. legacy carriers -- Delta, United, and American -- this threat is overblown.



Just posting an article EK guys.... This from a M?tley Fool analyst. It's interesting at least...



Bye Bye---General Lee

 

[Raoul Duke]

If There was a commitment to use PAC funds solely for this purpose perhaps more would participate. Unfortunately we all know the recipients of PAC funds are all too often the very people most of us are voting against. I'm not willing to chance it

 

[Andy]

Age 65. Never forgive, never forget. Now that you'll get the opportunity to get tested for sleep apnea (thanks age 65), you should be able to remember more once you pay for a CPAP and are hooked up to it every night for the rest of your flying career - because you'll get 'better' rest.
... by the way, that CPAP will 'snitch' on you if you leave it in the closet.

ALPA and ALPA PAC - working for those on the very top of the seniority list to the detriment of all other members.

Cabotage - who does it hurt most? Those at the very top of the seniority list.

 

[Jetjockey]

Age 65. Never forgive, never forget. Now that you'll get the opportunity to get tested for sleep apnea (thanks age 65), you should be able to remember more once you pay for a CPAP and are hooked up to it every night for the rest of your flying career - because you'll get 'better' rest.
... by the way, that CPAP will 'snitch' on you if you leave it in the closet.

ALPA and ALPA PAC - working for those on the very top of the seniority list to the detriment of all other members.

Cabotage - who does it hurt most? Those at the very top of the seniority list.

Andy,

I got to disagree with you on a few points. OSA testing isn't in in effect yet. The Feds tried to get truck driver's tested and it went through normal policy making channels and was shot down in Congress. There is a bill, HR 3578 that basically says any changes made in medical standards has to go through normal rule making procedures. http://beta.congress.gov/bill/113th-congress/house-bill/3578

I see this passing as it has bipartisan support and there is a lot of money involved for all stakeholders. The science behind the FAA medical chief's proposal isn't a strong case and there basically isn't a real threat in commercial aviation.

AS far as ALPA PAC only helping the top, that is truly short sighted. While I feel your pain for being furloughed twice, to make a blanket statement like that reflects your recency bias. The seniority list system we have is one big food chain. If its good for the top, it trickles down to the bottom. If it's bad for the bottom, it most likely effects the top.

Bottom line....send ALPA PAC a few Benjamins a year. For me, $200 isn't breaking my bank.

 

[Dan Roman]

ALPA and ALPA PAC - working for those on the very top of the seniority list to the detriment of all other members.

Cabotage - who does it hurt most? Those at the very top of the seniority list.

Not sure I understand how Cabotage hurts the top of the seniority list??? The threat is increased flying by foreign carriers resulting in less flying for U.S. carriers correct? That means furloughs from the bottom of the list.
An angry "never forgive never forget" mentality is going to cloud your whole life and give you a perspective that isn't exactly healthy or accurate.

 

[General Lee]

From the article again, it needs to be pointed out again:

"Fortunately, the U.S. carriers can hide behind favorable geography and strong U.S. hubs. While Emirates and the other Gulf carriers are well positioned to steal traffic from European and Asian competitors, their hubs cannot offer reasonable connections for most international routes to and from the United States. There are also very few routes like New York-Milan, where Gulf carriers could feasibly compete "away from home."

The top European and Asian airlines need to gear up for a costly battle with Emirates, Qatar Airways, and Etihad Airways. Otherwise, they could lose a large part of their high-value international business traffic. However, for the U.S. legacy carriers -- Delta, United, and American -- this threat is overblown."



That being said, having extra lobbyists doesn't hurt...


Bye Bye---General Lee