How Foreign Airlines Thrive as U.S. Flounders

The world's largest passenger aircraft has arrived in the United States.

United isn't flying it. Neither is Delta, American, Continental or any other domestic airline.

No, the first Airbus A380 to land in the United States is flown by Dubai-based Emirates Airlines.

While U.S. airlines -- desperate to stay afloat -- are cutting flights and charging customers to check bags, several foreign airlines are aggressively expanding their routes and making money in the process.

Emirates, which prides itself on its high-end luxury service, is just one example. Singapore Airlines, Cathay Pacific, Etihad and Qatar are all thriving in a period when U.S. airlines are teetering on the brink of bankruptcy.

And that gap might be growing wider.

Emirates premiered its first A380 flight on Friday: a 14-hour journey from Dubai to New York. It was launched in grand style, with grand talk about expansion into a global airline.

The plane is just the first of 58 the Middle Eastern airline plans to fly within the next three to five years. Company president Tim Clark said Dubai's rapid growth and its proximity to Asia, Africa and Europe makes it the ideal spot to base the government-owned airline.

"Its geo-centricality drives our growth, creating new travel patterns," he said. "We truly will be a global brand, a global carrier."

Emirates already flies to New York and Houston and will start Los Angeles service in October and San Francisco in December. This comes as U.S. airlines are slashing large chunks of their schedules in an effort to stay afloat.

(The only U.S. exception: Southwest, which has a loyal -- almost cult-like -- following, runs an extremely efficient fleet and smartly purchased fuel at much lower prices than today's market price.)

So why are some successful and the others on life support?

The Long Haul

The biggest difference between U.S. and overseas airlines is where they fly.

Tickets for long overseas international flights are substantially more expensive than they are for short-haul domestic flights, giving airlines larger profit margins.

Roughly two-thirds of the flights operated by U.S. airlines stay within the country.

"Our route network is completely different from say American Airlines, or United or Delta," said Nigel Page, Emirates' senior vice president of commercial operations for the Americas.

For instance, Emirates flies from Dubai nonstop to places like Moscow, Vienna, Paris and Houston.

The big U.S. airlines also have such long-haul routes -- American, for instance, flies nonstop between New York and Buenos Aires -- but they also fly many shorter routes that are not nearly as profitable. For instance, Delta offers 14 nonstop flights on weekdays between Atlanta and Orlando.

Richard Aboulafia, an airline analyst with the Teal Group, said such international routes carry a higher price and higher profit. American airlines have such routes, but only as a small portion of their overall networks; not enough to offset losses on domestic flights.

Additionally, he said, the business and first class seats of these planes command especially high ticket prices. The rest of the seats could-- and often do -- lose money, Aboulafia said, but the front cabin makes up the difference.

"The best thing you can do is get backpackers off your plane," Aboulafia said.

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