MIAMI — Emirates, Etihad and Qatar Airways are making significant capacity adjustments on several of their ultra long-haul flights to the Americas region, following a period of rapid-fire growth in the past five years.

In recent weeks, all three carriers have announced a series of schedule and aircraft changes affecting their North American routes that may reflect an excess of seat supply beyond what the region can capably absorb. This comes also at a time when virtually every U.S. carrier is pulling the plug on operations to the Middle East,  leaving the North America – Middle East market entirely to the Big Three.

It also happens to be during a period when oil prices fell below $35 per barrel. It therefore begs the question about whether or not the Gulf carriers are indeed subsidized by their respective governments, as many foreign airlines have claimed against them for “unfair competitive practices.”

The Middle East “Big Three” (plus Turkish Airlines) added 30 new routes to the Americas in the past 5 years

Since 2011, the major Gulf Carriers (as well as Turkish Airlines, which is often lumped into comparative analyses given certain similarities in geographic positioning of its Istanbul hub and overall network breadth) have added 26 new routes between their respective hubs in Dubai, Abu Dhabi, Doha and Istanbul to 19 markets in the Americas region, with four additional routes are slated to commence in the following months.

Opening months and years for Middle East Carriers and Turkish Airlines to destinations in the Americas since 1988. (Credits: Author)
Opening months and years for Middle East Carriers and Turkish Airlines to destinations in the Americas since 1988. (Credits: Author)
Presence of the Middle East carriers and Turkish Airlines in the Americas. (Credits: Author)
Presence of the Middle East carriers and Turkish Airlines in the Americas. (Credits: Author)

Emirates, the leading carrier in terms of weekly seats and frequencies across the Atlantic, will pull off A380 services from Dallas/Ft. Worth and Houston Bush Int’l, which now will be served with 777-300ERs. At the same time, it will be adding a second A380 frequency to its Los Angeles route and upgauging its Washington Dulles service with an A380 as well.

Additionally, its highly-glamorized route to Panama Citythe first ever non-stop flight from the Middle East to Central Americahas been delayed 2 months to startup on March 31, 2016 instead of its original timetable of February 1. The carrier cited that the reason for the deferral was due to extra time needed to receive all regulatory code-share approvals from carriers within the region. The route is expected to overtake Qantas’ DFW to Sydney flight as the world’s longest route.

Etihad Airways also intends to adjust capacity on its U.S. and Sao Paulo routes by replacing its wet-leased Jet Airways aircraft from 1 of its 2 daily New York routes, and on 3 weekly services to San Francisco. Instead, the carrier will deploy its own 777-300ER variant on its second daily New York route (the first of which is operated by an Airbus A380) and send its own 777-200LR frame to San Francisco. Meanwhile, it will upgauge its Sao Paulo route from a 777-200LR to a Jet Airways 777-300ER. The Etihad 777-200LR and 777-300ER will offer a newer product on-board the SFO and JFK routes in Premium cabins over Jet Airways aircraft, as well as on-board Wi-Fi, which has now become a major selling point. Still, the changes overall reflect a decrease in weekly seat capacity to both markets.

On the other hand Qatar Airways will be the sole carrier to increase seat capacity, as well as add additional frequencies and open new markets to the U.S.

Qatar added service to Los Angeles on January 1, and it will launch Boston (March 16) and Atlanta (June 1). The carrier will also add a second daily frequency to New York JFK on March 1, utilizing an Airbus A350-900. So far, the Doha-based airline is the only Gulf Coast carrier that has unveiled plans to launch new U.S. routes this year, and presumably intends to add between one or two more additional destinations in 2016.

Qatar is also increasing the seat density on its 777-300ER routes by moving from a 9 to 10 abreast configuration in economy class, thereby increasing seats from 293 to 316 on certain variants and from 356 to 388 on others, without changing its business class. The North American routes affected by such changes will be Chicago O’Hare, Dallas/Ft. Worth, Miami, Montreal, New York JFK and Washington Dulles.

Capacity and aircraft allocations to the Americas on Middle East Carriers and Turkish Airlines for Summer 2016. (Credits: Author)
Capacity and aircraft allocations to the Americas on Middle East Carriers and Turkish Airlines for Summer 2016. (Credits: Author)

The Middle East carriers have been reticent about providing the logic behind certain capacity allotment changes, which is fairly true to character, but needless to say these decisions certainly cast a shadow of doubt on the subsidy allegations the U.S. has levered against them for unfair competitive practices.

In theory, one would think that as carriers such as Delta and United cull services from the Middle East, the Middle East three would expand their presence in the Americas thanks to the open skies agreement with the US. In reality, however, the current scenario of Gulf Carriers in the Western Hemisphere resembles more to a game of musical chairs rather than a game of chess, contrary to popular belief.

Emirates, for instance, long pegged as a perpetrator for “capacity dumping” in Europe, Australia and more recently, the Americas, has seen load factors slip on several of its U.S. routes. For example, its Dallas/Ft. Worth route has faced the competition from Emirates and Etihad, while its Houston service has been impacted by the downturn in the oil industry. Houston has also seen foreign carrier competition rise with the recent entrances of EVA Air and All Nippon Airways, both of which compete with Emirates for 6th freedom traffic to Southeast Asia.

The U.S. market needs time to catch-up before additional stations are opened

Put simply, the U.S. – Gulf market has to allow demand to catch-up to supply before additional growth can be viably absorbed. Even as Delta and United withdraw services from the Middle East (United dropped its Dulles – Kuwait – Bahrain flight on January 13, and its Dulles – Dubai service on January 23, while Delta will cancel its Atlanta – Dubai service in February), the market does not need additional capacity. The adjustments implemented by the Gulf Carriers underscore the fact that contrary to popular belief, they are not entirely insulated against supply outstripping demand in the ultra long-haul route spheres.

Ultimately, if the end-game is about tapping into the 6th-freedom traffic that the Gulf carriers transport over their respective Middle East hubs, then the focus instead should be targeting the Indian subcontinent and Southeast Asia regions rather than trying to compete to end-of-line markets like Dubai, where there is little terminating traffic.

Air India and Air Canada have both launched non-stop services to Delhi from San Francisco and Toronto, respectively, while Delta and KLM intend to grow alliance ties with Jet Airways next year. oneworld has Qatar Airways, which, although limited in terms of growth opportunities in the subcontinent, it still provides a massive network to the region.

Air Canada’s recently launched flight from Toronto to Dubai will shed more light on the impact of protectionism versus open skies, should the flight succeed (it is operated 3x per week, against 3 weekly services from Toronto to Abu Dhabi on Etihad and 3 weekly services from Toronto to Dubai on Emirates). Ultimately, however, the fact remains that the Gulf carriers are not as untouchable as once perceived, and the growth may have finally started to abate.

Disclaimer: The views expressed in this article, as well as any of Rohan’s published articles on Airways, are strictly his and do not reflect opinions of his employer in any capacity.