May 6 - Falsehoods Often Repeated Remain Falsehoods


INDUSTRY ANALYSIS

By Kevin Mitchell 

 

Delta’s longstanding disingenuous India blame game

Believing the aviation community is gullible and lacks a memory, Delta Air Lines again has rolled out its cynical lobbying tactic of lies told often enough can transform fiction into truth.

Announcing its intention to launch new non-stop New York-Mumbai service in December, Delta credited last year’s UAE and Qatar Open Skies-preserving understandings for that decision. There is only one problem. There is not a shred of truth to it.

Delta claims it was “forced” out of the US-Mumbai non-stop market in 2009 by alleged unfair Gulf Carrier competition. However, that’s just the latest iteration of its blame game to mask its commercial preference to outsource its US-India passengers to foreign alliance and joint venture partner airlines forcing them to inconveniently connect in Europe for the final leg of their journey.

What about Delta’s prior claim that it was forced out of the US-India non-stop market by Air India and US Export-Import Bank (EXIM) lending to it?

In 2012, then Delta SVP and General Counsel Ben Hirst blamed Air India and the EXIM for its exit from the US-Mumbai market. Specifically, Delta claimed EXIM’s lending to Air India for Boeing 787s - purchases that created thousands of US manufacturing jobs - was responsible for that decision. Hirst wrote:

“In 2006, Delta initiated nonstop service between New York and Mumbai, competing with Air India’s one-stop service. But between 2006 and 2009, Ex-Im provided Air India $3.3 billion in loan guarantees, which the airline used to finance long-range aircraft at below-market rates. Air India then used its new subsidized capacity to flood the U.S.-India market, dropping ticket prices by more than 30 percent, a level at which Delta could not compete.”

In Mr. Hirst’s op-ed (https://btcnews.co/2sCssfB) he also blamed EXIM lending to Air India for American Airlines’ termination of its short-lived Chicago-Delhi non-stop flight. 

However, Vasu Raja, American’s Vice President for Planning, flatly rejected Mr. Hirst’s claim. In fact, American’s Mr. Raja confirmed both Delta Spin 1.0 - it was Air India and EXIM’s fault - and Delta Spin 2.0 - Delta’s current narrative that it is the Gulf Carriers’ fault - is blatantly false. In a recent interview, Mr. Raja candidly explained American’s decision to terminate its Chicago-Delhi non-stop flight had nothing whatsoever to do with Air India, EXIM or Gulf Carrier competition:

“The route, Raja said, did not work for several reasons. First, American used a Boeing 777-200, with too many seats. Second, American lacked a competitive onboard product. Third, the airline operated at poor times, with customers unable to make connections in Delhi.”

Like American, Delta’s absence from the US-India non-stop market has nothing whatsoever to do with Air India, EXIM or Gulf Carrier competition. In a July 9, 2009 article, the publication Global Atlanta attributed the termination of Delta’s non-stop Atlanta-Mumbai service to the then global economic downturn, which also prompted Delta to suspend non-stop Atlanta service to Shanghai and Seoul.    

Why have United and Air India been able to operate commercially successful US-India non-stops but Delta has not?

In its press release, and from every rooftop in Washington, DC, Delta loudly claims that prior to last year’s understanding a commercially viable US-India non-stop market did not exist due to Gulf Carrier competition. A total commercial wasteland according to Delta. However, as always is the case with Delta, fact-checking is essential, and depressing for anyone who expects and values truth in advocacy.

In fact, prior to last year’s US-UAE and US-Qatar Open Skies-preserving understandings, a robust and growing US-India non-stop market existed. Delta conveniently fails to mention United’s daily non-stop flights from Newark to both Mumbai and Delhi that have successfully operated for years. The non-stop US-India market has been so successful for United, it announced plans to launch new non-stop San Francisco-Delhi flights later this year. How is it that United figured out how to operate commercially successful US-India non-stop flights but Delta did not?

At the same, time Delta has been trying to mislead policymakers to believe US-India non-stop flying is not commercially viable, Air India has rapidly expanded its non-stop flying to the US. Between October 2017 and September 2018 alone, Air India flew nearly 1,000,000 passengers non-stop between India and New York JFK, Newark, Chicago, San Francisco and Washington Dulles. That’s a lot of passengers for a market Delta claims was not commercially viable and did not exist.

The truth is Delta made a commercial decision to inconveniently outsource its US-India passengers to alliance and joint venture partners airlines via connecting hubs in Europe. Who cares about passenger preference for a non-stop option and the resulting convenience. Delta forces them to connect via Paris, Amsterdam and London. So what about off-shoring US crew jobs to foreign partners airlines whose aircraft, and non-US crew, operate the Europe-India leg. The Delta way.

Exactly which provisions in the US-UAE and US-Qatar Open Skies-preserving understandings transformed the commercial viability of the US-India non-stop market? 

It is obvious Delta leadership needs to spin and mislead that its failed $50 million protectionist campaign against much needed competitive choice offered by Gulf Carriers has succeeded. If you were a corporate fiduciary that had wasted tens of millions of dollars of shareholder money, wouldn’t you? However, there is no basis in fact for Delta’s claim these understandings paved the way for its new New York-Mumbai flight. 

In addition to fully preserving the US-UAE and US-Qatar Open Skies agreements, last year’s understandings ensure greater financial transparency. Prior to those understandings, only Emirates Airline made publicly available annual audited financials consistent with international accounting standards. In the US-UAE Record of Discussion last year, the US Government expressly acknowledged Emirates has done so on a longstanding basis equivalent to Delta, American and United. As a result of those understandings,, both Qatar Airways and Etihad Airways have committed to do so at some point in the future.

Today, that remains the status quo. For more than a decade prior to Delta first entering the New York-Mumbai market in 2006 Emirates publicly released annual audited financials according to international accounting standards. Both Qatar and Etihad continue to indicate they will similarly do so at some point. So, what exactly has materially changed, and how exactly did last year’s understandings completely transform the commercial viability of the US-India non-stop market?

The stubborn fact is that nothing has changed and Delta crediting last year’s understandings for its tardy commercial decision to finally offer passengers a non-stop US-India service option is just hollow and desperate political rhetoric.

You can put lipstick on a pig but it remains a pig. In Delta’s case, it continues to peddle a parallel, blame-ridden and fictitious universe to explain away its voluntary commercial decision to not offer its US-India passengers non-stop service and to advance its protectionist anti-Gulf Carrier agenda. Unfortunately for it, facts are stubborn things. Falsehoods often repeated remain falsehoods.  Delta’s India narrative is a glaring example.

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