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Emirates: Delta's Dubai-Atlanta route should've been a moneymaker
Emirates airline argued Friday that Delta Air Lines doesn't need to drop its route between Atlanta and Dubai because it should be profitable – and one that Emirates will consider adding to its 10 U.S. destinations.
The route dispute is the latest spat between U.S. and Middle East airlines over alleged subsidies making competition between the carriers unfair.
Delta announced Wednesday that it would stop flying to Dubai effective Feb. 11, 2016, and move its Boeing 777 aircraft to a different route across the Atlantic. Delta complained that 11,000 daily seats have been added between the U.S. and Dubai, Doha and Abu Dhabi from 2008 through 2014, with rivals at Emirates, Etihad and Qatar "heavily subsidized" by their government owners.
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But the Delta planes were 85% full and should have generated a 7% profit margin on the Dubai route, or $10 million per year, according to an Emirates analysis of industry data.
"By any airline's standards, these are lucrative conditions and hardly reason to cease the Atlanta-Dubai service," Emirates said in a statement. "Our route planners are now closely studying the opportunity for Emirates to fill in the gap when Delta exits the non-stop Atlanta-Dubai service."
Delta spokeswoman Kate Modolo said airlines don't cancel profitable routes, as a rule, and didn't in this case.
"The route has been losing money for two years because of government-subsidized capacity from the Gulf carriers that have flooded the U.S. market, violated the Open Skies agreement and ultimately forced Delta to cancel the route and redeploy the aircraft to a market not distorted by government subsidy," she said.
The dispute over the Dubai route comes as the three largest U.S. airlines – Delta, American and United – have accused their rivals in the Persian Gulf of receiving $42 billion in unfair subsidies during the last decade from their government owners.
Delta dumps Dubai, blames 'subsidized capacity' from Gulf rivals
Besides Delta dropping out of Dubai, United announced this week that it would drop its nonstop service between Washington Dulles and Kuwait. That route, which includes a one-stop continuation between Kuwait and neighboring Bahrain, will end in January.
The U.S. airlines have asked the departments of State, Transportation and Commerce to open formal consultations with the United Arab Emirates and Qatar over the so-called Open Skies agreements that call for unhindered travel between countries. The U.S. airlines want to stop the alleged subsidies or halt additional flights from those airlines.
No deadline is set for a decision.
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But the Gulf carriers – Emirates, Etihad and Qatar – adamantly deny getting subsidies. They've argued in response that their U.S. competitors have received unfair advantages from bankruptcy law unavailable in the United Arab Emirates and Qatar. And they say they haven't hurt U.S. airlines.
Meanwhile, the Gulf carriers all have continued to beef up their offerings to U.S. destinations. Qatar Airways, for example, announced Wednesday it would add 29 U.S. destinations to its offerings by expanding its code-sharing partnership with JetBlue through Boston. That will eventually help funnel passengers to Qatar Air's Doha-Boston route, which is set to begin in March,