Was Delta Air Lines Really Petty Over Ending Its Sponsorship of the Fox Theater in Atlanta?
“A few weeks ago when we became aware of the Qatar event at the Fox we reached out to share our concerns. When the Fox shared its decision to continue doing business with Qatar, an airline proven to engage in business practices that harm U.S. aviation jobs and violate basic human rights, we let them know we wouldn’t be renewing our sponsorship.”
That is the official statement sent to me by a source I contacted at Delta Air Lines pertaining to the ending of its sponsorship of the historic Fox Theater in Atlanta after it hosted an opulent private party for Qatar Airways on Tuesday, May 17, 2016 in celebration of its inaugural flight from Atlanta to Doha starting on Wednesday, June 1, 2016.
Qatar Airways in particular has been a thorn in the side of Delta Air Lines ever since the genesis of the Open Skies debate, where the three legacy airlines of the United States allege through this report that the three airlines of the Persian Gulf — Qatar Airways, Emirates Airline and Etihad Airways — have committed what some call the “single greatest trade violation in history” after having already purportedly received greater than $42 billion in supposedly illegal subsidies from their respective governments in order to grow their airlines…
…and one of the results was a rather childish public exchange of words between the chief executive officers of both Delta Air Lines and Qatar Airways. Richard Anderson has since resigned from his role as chief executive officer of Delta Air Lines.
Unfortunately, the Fox Theater in Atlanta became a casualty of this “airline war” — but was Delta Air Lines really petty over ending its sponsorship of the famed institution, as has been alleged in many articles of mainstream media and of “bloggers”?
Was Delta Air Lines Really Petty Over Ending Its Sponsorship of the Fox Theater in Atlanta?
On the outset, it is easy to assume that this is the story of yet another behemoth corporation bullying a small entity into doing what it wants to do — what some have called a “lack of maturity” on the part of the company — but there is always at least two sides to every story.
Delta Air Lines has been a sponsor of the Fox Theater for greater than two decades, funding it with millions of dollars over that period of time.
“When the CEO of Qatar first told the world that they would be flying to Atlanta, what he told the world was that he was going to start a flight from Doha to Atlanta… to rub salt in the wounds of Delta,” said Peter Carter — who is the executive vice president and chief legal officer and corporate secretary of Delta Air Lines — according to this article written by Kelly Yamanouchi of The Atlanta Journal-Constitution. “So we were very surprised and disappointed when we learned that the Fox Theatre — an organization that we’ve supported for years, an organization that has called us its official airline — we were shocked and surprised when we learned that they were hosting the coming out party for Qatar.”
Carter continued with the following statement: “We felt that, you know, a real friend would have contacted us and had a conversation with us, and so we thought it was time for us to re-evaluate that relationship. And so we won’t be supporting the Fox going forward. We were disappointed that we didn’t get a phone call, because I think a phone call would have probably prevented the whole thing.”
According to this article written by Aaron Diamant of WSB-TV Channel 2 Action News in Atlanta, Carter also said that “For us, we did think that the Fox should have picked up the phone and called us, and had a conversation with us. The fact that they chose to host Qatar for that coming-out party was, for us, just not appropriate and not something we would ever expect a partner to do.”
Statements released from the Fox Theater included such verbiage as “As we are not in tune with the industry politics of our sponsors, we are disheartened to learn that Delta has chosen to penalize the Fox Theatre for our decision to rent the venue to another airline” and that private events are “distinctly independent of any corporate sponsorship program” as hosting a private event for Qatar Airways “was in no way a violation of our contractual agreement with Delta.”
Overcapacity a Major Issue
Delta Air Lines no longer operates flights between Atlanta and Dubai effective as of Thursday, February 11, 2016. According to this article written by Kate Modolo of Delta News Hub for Delta Air Lines, “The announcement comes amid overcapacity on U.S. routes to the Middle East operated by government-owned and heavily subsidized airlines, and less than a month after Delta reduced service between the world’s busiest airport and the Middle East’s largest hub.”
You might be thinking to yourself but wait a minute — now there are no nonstop flights operated by any airline between Atlanta and Dubai. That is supposedly due to overcapacity between the Middle East and the United States because of numerous flights operated by Emirates Airline, Etihad Airways and Qatar Airways.
India is supposedly a casualty of this overcapacity. With a flight between Newark and Mumbai, United Airlines is the only airline based in the United States which currently operates nonstop flights between India and the United States, as other airlines based in the United States no longer operate flights to India due to overcapacity.
Perhaps this is a poor analogy; but I find that the overcapacity issue is similar to irregular operations due to weather. For example, we have all heard passengers complain how there could be a delay due to weather when both the origination and destination airports both have excellent weather; but a trip to the Operations Control Center at Delta Air Lines demonstrated how weather elsewhere that is nowhere near the flight path of the delayed flight can impact that flight. Similarly, Delta Air Lines canceled its flights between Atlanta and Dubai — despite there being no other options or competition on that route — due to overcapacity when there are plenty of flights to Dubai and other cities in the Middle East which are in large part covered by numerous flights operated by Emirates Airline, Etihad Airways and Qatar Airways.
Atlanta is Delta’s (and indeed the world’s) busiest hub, and is heavily reliant on connecting traffic to support its international service. Customers traveling from the U.S. to Dubai today have a choice of 16 daily departures from 12 U.S. cities – 14 of which are operated by Emirates. That airline’s extensive interline and code sharing agreements with U.S. carriers means most passengers traveling to Dubai can easily book one-stop service on Emirates through the gateway of their choice. Delta is competing with every one of those flights, all of which are heavily subsidized by the United Arab Emirates.
Unlike Delta, the Gulf carriers don’t have to worry about being profitable or operating under the normal constraints of a free market, making fair competition impossible. Indeed, Delta’s Atlanta-Dubai route lost money for two years before we made the difficult decision to cancel the service.
Carter also addressed India as the casualty of overcapacity where none of the carriers based in the United States have a sub-Indian continent network primarily because the carriers based in the Gulf region have been increasing service between the United States and India in part to connect American passengers to the Indian subcontinent through their hub airports in the Middle East:
In the past Delta had flown nonstop to Mumbai from both New York and Atlanta. Today the U.S. airlines operate almost no service to India because they have been driven out of the market by the subsidized Gulf airlines. The same phenomenon has occurred with European airlines, which have been driven out of the market by Gulf subsidies. It is shocking to realize that U.S. airlines have just two flights to the second most populous country in the world.
Human Rights are Another Issue
On the same day as the private party by Qatar Airways at the Fox Theater, I had just finished the day shooting a role for the latest film in which I have acted south of Atlanta and was on my way north to drive through the city when I spotted a billboard on the side of the highway which accused Qatar Airways of being “anti-women” and “anti-worker”, calling on a boycott of the airline by the Alliance for Workers Against Repression Everywhere — also known by its acronym AWARE.
“It’s been widely reported by international media that every week approximately 29 migrant workers will die — total deaths are estimated to be 4,000 — building the 2022 FIFA World Cup soccer facilities in Doha because of deplorable working conditions”, according to this article by the organization which claims itself to be a champion of human rights and is working to build global awareness around human rights abusers as well as those who are taking action to end these abuses. “Thousands more will suffer other horrifying abuses as workers across business sectors, including Qatar Airways employees, have little to no protections, and some can be legally held in indentured servitude.”
Is the Strategy Working for Qatar Airways?
I currently receive e-mail messages from Qatar Airways — even before the Open Skies controversy came to light…
…and I have of course received the announcement that Qatar Airways was launching nonstop service between Atlanta and Doha; and special airfares were being offered to commemorate the new flights which had to be purchased by Saturday, April 30, 2016. The expiration date of this sale was extended several times, including deadlines of Thursday, May 12, 2016 and Sunday, May 22, 2016. The promotion may now finally be officially closed; but the airfares still continue to be offered at the promotional rates — such as a round-trip flight between Atlanta and Tehran for a total airfare of $722.31.
Are the flights not selling out as much as Qatar Airways would have liked?
Perhaps I am naïve; but whatever “subsidies” Qatar Airways, Emirates Airline and Etihad Airways might be receiving will not last forever; as no entity has an unlimited amount of funds. Basic economics suggests that even if those airlines succeeded in causing a major dent in the businesses of airlines based in the United States, they would not be able to offer better products and services at lower airfares perpetually. After all, overcapacity was one of the significant reasons why airlines in the United States were losing billions of dollars per year for a number of years — right?!?
Even frequent fliers knew that overcapacity and low airfares — combined with elite level status practically thrown at them and the benefits that come with it — could not be sustained forever. As capacity was significantly reduced primarily due to consolidation within the airline industry in the United States — combined with the advent of charging ancillary fees for “unbundled” products and services — the three legacy carriers have been enjoying record profits in consecutive financial quarters in recent years.
In the end, the airline which consistently offers the best product and service at a good price will be the one which wins over the customer — and wins the “war” in the long term, in my opinion.
I realize that I am rather late with this story; but I usually do not like to post an article until I have conducted some research.
In essence, no notice was given to Delta Air Lines until approximately three weeks before the event for Qatar Airways; and that notice was from an unidentified third party. This issue pertains to partnership courtesy in general; and how it works both ways.
“I would stop paying and end the partnership as well if I were Delta Air Lines” was the response I received after asking the opinion of one person pertaining to this incident.
I am no airline expert by any stretch of the imagination; but I believe that Delta Air Lines and the Fox Theater are both complicit and share the responsibility for this rift, which I would think could be easily repaired with a discussion towards a simple understanding that could guide the damaged partnership moving ahead in the future — especially as the sponsorship is still in effect until May of 2017.
Source: Fox Theater.