Rise of airlines from the Persian Gulf represents stiff competition for American carriers....

CBS NewsMay 19, 2014, 12:39 PM
I WOULD VENTURE TO SAY, IRAQ ISN'T GOING TO BE FAR BEHIND IN THE NEXT YEAR OR TWO.
Rise of airlines from the Persian Gulf represents stiff competition for American carriersThe airline business is looking up for those surrounding the Persian Gulf.
Economists believe this could be a record year for profits, earning nearly $20 billion, with the highest returns likely made by commercial carriers based in the Gulf states. The region's three biggest carriers, Etihad Airways, Qatar Airways and Emirates Airlines, have set ambitious goals to become dominant players not only in their region but the world, reports CBS News' travel editor Peter Greenberg.
Qatar Airways CEO Akbar Al Baker led Greenberg through the new international airport in Doha set to officially open this month, where every building material matters and the effort of every builder is held to the highest standard.
With a cost of $16 billion, such attention to detail is expected from the country's royal family, which is footing the bill.
"I need to achieve the mandate that I have from my ruler as soon as possible," Al Baker said. "We want to have the airline and the airport to have a major hub and serve the economic interest of my country."
This new airport is also an economic necessity in the rapidly growing Persian Gulf airline industry.
It's a game of numbers -- huge numbers and space. Qatar Airways has ordered so many airplanes that they have literally run out of places to park them.
Last year, Qatar, along with Gulf carriers Flydubai, Emirates and Etihad combined to place the largest airplane order in aviation history at more than $162 billion.
"It's one of those regions that is growing at significant double-digit growth. They have enormous plans for the future," said Tim Clark, president of Emirates Airlines.
Emirates is based in Dubai, a city that has experienced annual economic growth of 11 percent or better since the late 1980s. Clark sees Emirates' expansion as another part of the plan to develop the region into both a business and leisure destination.
"The notion of even expanding with large number of aircraft, adding new routes is kind of anathema to the current state of thinking," Clark said.
While everyone is shrinking, they are booming.
"That's just our business model," Clark said.
It's a business model based on geography, setting the Persian Gulf as the new crossroad for international travel.
"Our growth plan has been taking the advantage of this crossroad," said James Hogan, CEO of Etihad Airways.
The 10-year-old Abu Dhabi-based carrier is the fastest growing commercial airline in the world. Hogan said being new to the market has enabled Etihad to take off.
"We've had a clean sheet of paper. We're not a legacy carrier, so we've been able to develop a brand, a service and build a business from scratch," Hogan said.
The big three Gulf carriers are now a familiar site at most major American airports where they are now competing for highly coveted first- and business-class passengers.
"We are head and shoulders above any carrier that you are flying in [the U.S.], with the standards of service, with the amenities we provide to our passengers, with the comfort we provide our passengers," Al Baker said.
Some of those services include personal chefs and showers. Etihad Airways just upped the ante with their new first-class section called "the apartment." There is also a three-room penthouse suite called "the residence" which costs $20,000 each way.
"We're competing, but we want to compete on a level playing field," said Nicholas Calio, president of Airlines for America.
He lobbies for the American airline industry and argues that since Gulf airlines are state-owned, they are given an unfair advantage over American carriers.
"Those airlines that we're competing with have a much better tax, regulatory, labor and infrastructure environment than we do," Calio said. "Our government often treats us, as you know, as a cash cow."
This is because airlines and their passengers pay higher taxes than any other industry right now, Calio said -- about 21 percent of the cost of the ticket.
Clark argues profit above all else is what keeps his company flying and claims it's the U.S. carriers who receive the most government assistance.
"We have never had protection. We've never had Chapter 11. We've certainly not had any more money from the government," Clark said.
With a year over year record profits, they haven't needed it.
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