Report refutes claims of Gulf carrier interference

Etihad 2Research and a subsequent report by Washington, D.C.-based consultancy Edgeworth Economics, commissioned on behalf of Etihad Airways, claimed the Gulf carrier’s services to the United States have actually increased traffic numbers for the U.S.-based carriers.

The study claimed that passenger numbers for Delta Airlines, American Airlines and United Airlines have increased by 18 percent, or an additional 223,000 passengers, despite losing 4.4 percentage points in market share for economy passengers between the U.S. and the Indian subcontinent between 2009 and 2014.

The Edgeworth report also stated that the claim of the Gulf carriers dumping excessive capacity into the market do not stand up to economic scrutiny, since the markets Etihad operates in have a much higher average rate of economic growth than the global average, which drives demand for air service. The report also pointed out the existence of pent-up demand due to under-servicing by the U.S. carriers.

The U.S. carriers also had a report issued by economic consultants Compass Lexecon. It claims that the increasing traffic and routes being flown to the U.S. by the Gulf carriers is cutting into existing passenger traffic, reducing overall numbers. Edgeworth found that the Compass Lexecon report is “fundamentally flawed” and “ignores key evidence.”

Two unsupported assumptions in the Compass Lexecon report, Edgeworth said, are that the report treated as an accepted fact that Etihad Airways and other Gulf carriers have received subsidies, a point which has merely been asserted by the U.S. carriers but is the subject of the ongoing government docket process; and that the big three (U.S. carriers) “own” traffic on existing routes and Gulf carriers are only entitled to compete for traffic if they can prove they have “stimulated” this traffic. The Compass Lexecon report also establishes no “causal link” between any alleged subsidies and any claimed harm to the U.S. airlines.

 

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