IATA: Lufthansa welcomes US carriers to Mid-East dispute

Carsten Spohr, CEO of Lufthansa Group

June 7, 2015: The chief executive officer of Lutfhansa Airlines said he welcomes the Big Three US airliners to the dispute over whether the Big Three Middle Eastern carriers are unfairly competing against legacy airlines.

Carsten Spohr, CEO of Lufthansa Group, told a press conference on the opening day of the IATA Annual General Meeting that LH has long been complaining about Emirates Airline, Qatar Airways and Etihad Airways and their aggressive expansion, first in Europe and now the US.

American Airlines, Delta Air Lines and United Airlines are challenging open skies and subsidies to the ME3.

Spohr called on regulators to look to the World Trade Organization (WTO) and its mechanism used to determine whether unfair competition and/or illegal subsidies exist. The US3 have called on the US government to revisit the Open Skies agreement with the Middle Eastern countries, a move opposed by some US carriers, including JetBlue (a partner of Lufthansa, interestingly enough) and FedEx, as well as The Boeing Co.

Spohr said that “openness” and “fairness” are required for competition, neither of which he believes exists with the ME3. These airlines receive favorable support from their governments, Spohr said, a refrain echoed by the US3.

Spohr said some governments have restricted the ME3’s growth ambitions. He noted that Germany restricts destinations and Austria restricts frequencies. Other regulators should consider doing the same, he inferred.

Declining main deck cargo

Spohr, whose Group include Lufthansa Cargo, continues to see a shift of cargo from main-deck, dedicated freighter to greater use of belly capacity in passenger airplanes such as the Boeing 777-300ER. He said his European competitors are all exiting the dedicated freighter business and LH Cargo is downsizing its fleet, replacing its Boeing MD-11Fs with fewer, but larger, Boeing 747-400Fs.

Fifty percent of Lufthansa’s freight business moved by cargo aircraft when Spohr joined the company. Today only 40% does.

At the ISTAT conference in March, The Seabury Group predicted that in five years 75% of freight will be in belly capacity of passenger airlines.

 

7 Comments on “IATA: Lufthansa welcomes US carriers to Mid-East dispute

  1. I believe some restrictions on frequency and/or destinations is a good idea so that the ME3 will not take over lucrative routes from US3 and drive them to near bankruptcy. At the same time, some competition from ME3 is essential to improve customer treatment by US3. Look what competition from Japanese car manufacturers did to auto industry! It forced them to make better cars. Hopefully, some restricted competition from ME3 will make US3 stop treating their customers like cattle.

  2. I am really really pissed off by the us3 and eu3. The try to find every single way to stop competition and protect their markets. That is not fair competition. It ironic talking about subsidies when the us3 have taken about 155 billion dollars in subsidies. All of that is hurting the customers. I do not words to describe the situation. They are a situation that were in the past but when they cannot put their hands anymore in federal money they promote as false.

  3. First time for me:

    “LH Cargo is downsizing its fleet, replacing its Boeing MD-11Fs with fewer, but larger, Boeing 747-400Fs”

    I had expected LH to be one of Boeing’s customers for the 777F – to bridge production to 777-X models.
    But where will they receive those freighter 747 from – rebuild their own?
    ( I dont think so, – LH use to park their 747 fleet with ^+100.000 hours on the clock).
    But why 747-400F? – and not new 747-8F ?
    LH has some 15 MD-11F – they recieved the last ever produced MD-11 from the production line in 2001 as far as I remember.

    KR/Airboe

  4. It’s ironic that a company (or companies) try to limit competitors instead of fixing their own house. The fact that politicians are listening to the EU3 and US3 is more worrying. We’ve spent decades trying to free aviation from the shackles of government over regulation only to turn face and ask the same governments to reintroduce these shackles because we don’t have the stomach to change with the times. After all this, what right do we have to ask for more liberalization in the industry?

  5. The funny thing about this conversation about the ME3 and the US airlines complaining about the “competitive imbalance” is that I read a lot of posters rolling in and chastising the US carriers over their proclamations, but nary a peep about how the European carriers and their fight, which appears to be over the same issues (at least from the 30K ft view of it).

    I wonder why the US carriers get chastised and cajoled to “improve their product” and “compete with better stuff and the ME3 will not be a problem”, but European carriers are facing the same threat and don’t get the same admonishments from the same people? In fact, their silence on the matter (when it seems the European airlines began to complain and get measures enacted to “correct” the situation much earlier than the US carriers) is quite telling.

    • @Neutron: Your statement about the EU carriers isn’t quit correct. British Airways isn’t complaining, though Lufthansa’s CEO said this is because British already has a protected hub in London Heathrow. Lufthansa has been raising the alarm since 2004. Air Canada (obviously not an EU carrier) got the Canadian government to impose restrictions. Austria, Germany and now Amsterdam have restrictions. India also had restrictions.

      • @Scott,

        FWIW, I think the carriers are complaining a wee bit much, but, Scott, what I’m saying is that one of the biggest reasons many commentators are all over the US carriers is because they believe the US carriers should “step up their game” when it comes to product, and then they’d have no problem with the ME carriers. Which is kinda funny because as you said, other carriers (not US based) have good product and are still feeling the pressure from the ME airlines.

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