Penthouse Airline Just Small Part of International Controversy

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In an article written by Ted Reed on ForbesLife online, readers get a unique look into possibly the most expensive way to travel from the JFK airport to Abu Dhabi.  A cool $32,000 rents the penthouse suite for the transatlantic flight ONE WAY!  This apartment in the sky boasts 125 square feet, double sized bed, shower room, and a butler to make sure the customer has everything they need.  The plane also has nine first class cabins that have fold-out beds and leather lounge chairs.  The airline, Etihad Airways, clearly knows how to pamper their guests that have deep enough pockets.  The flight on December 1st sold out in just 4 hours!

War in the skies

The article also gives readers a look inside a feud between airliners.  According to Reed in the article, American based airlines Delta, American, and United accuse the Gulf based airlines of cheating the system.  They have reports that allegedly show that their governments subsidize the airlines’ costs by purchasing new planes and making it possible for them to offer ridiculously low ticket prices.  Tickets are priced so low that the American based airlines are priced out of the market.  They go on to say that the government subsidies make it possible for the airlines to run their businesses without making a profit.  Reed quotes the spokesman for the Allied Pilots Association, Dennis Tajer saying, “It doesn’t take much of a leap to conclude that these sold-out flights are made possible by massive Gulf nation subsidies and are not the result of new passenger traffic, but rather are the result of subsidized poaching of passengers.”

An article published on Bloomberg’s Business website comments on the possible dollar amount actually provided by the Gulf countries saying, “…the U.A.E. and Qatar have given Emirates, Etihad, and Qatar Airways more than $42 billion in subsidies and other unfair benefits.”  How much have the subsidies allowed the Gulf airlines to impose on U.S. based flights?  The article provides the current numbers, “The three Gulf airlines average a combined 25 daily flights to the U.S. from their home countries, compared with two for the U.S. carriers to those nations.”

What are we going to do about it?

Actually?…probably nothing.  While it seems inconvenient and possibly damaging to the U.S. airlines’ recent recovery, I really do not know if there is any recourse the United States can take to help prevent the Gulf countries from doing what they want to do.  I would think that if those countries’ governments have the money and the desire to subsidize their own airlines’ growth they can do what they want.  The articles both talk about lobbying organizations trying to influence both governments, which may make a difference, but to actually prevent what is already happening the verdict is still out.

It would make sense that Delta, American, and United would want to stop the growth of the other airlines.  The end of the Bloomberg article comments on the growth and profits (finally) that the U.S. based airlines are reporting.  Airlines in the U.S. took a beating during the recession like everyone.  They had to hunker down, downsize, and merge in order to survive and even that didn’t prevent bankruptcy in some cases.  However, now that things are turning around for them, it makes sense that they want to protect the recent growth.

As a consumer, it is easy to worry about the short term.  For example, this afternoon I am flying to Phoenix for the Cleveland Indians spring training.  My flight was about $450.  The last thing I want to do is see my costs increase.  I find myself getting worked up when I read articles like this thinking about that same flight possibly costing more in the future because of the feuding between the different airlines, but I have to remember that everyone is always trying to get ahead.  There will always be some companies that are trying to prevent a competitor from getting more market share and taking away business.  It is the way of the world so it’s best not to get too upset over stuff like this.

That being said, it would be cool to get to travel in that $32K luxury suite maybe just once.  In reality, if I had $32,000 to spend I’d probably find a better way to splurge than a 13 hour flight…


$32,000 well spent

Link to Forbes Article

Link to Bloomberg Article