DAL Delta Air Lines Inc

United Continental Holdings Inc. said it plans to drop its Washington-Dubai route in January due to waning profitability as Persian Gulf carriers have ramped up their service to the U.S.

United also said the route closure comes after the U.S. government awarded a 2016 contract for carriage of U.S. government employees, military personnel and contractors bound for Dubai to JetBlue Airways Corp.

JetBlue, which offers no service to the Middle East, will be employing its Dubai-based code-share partner Emirates Airline to actually carry the U.S. personnel covered under the new contract awarded by the U.S. General Services Administration, United said.

JetBlue on Wednesday said the GSA awards contracts that deliver the best value to the U.S. taxpayer. The discount carrier said it is "honored" to have this traffic with Emirates, its code-share partner. In correspondence with the GSA, JetBlue has said code-sharing with foreign partners is permitted under the Fly America Act.

Emirates and the GSA weren't immediately available for comment.

United, which has operated the service for seven years, said the route has encountered a supply and demand imbalance due to the buildup of service from Emirates and Etihad Airways, two state-owned carriers based in the United Arab Emirates.

United, American Airlines Group Inc. and Delta Air Lines Inc. are seeking U.S. government intervention into alleged massive subsidies they claim the two U.A.E. carriers—and a third, Qatar Airways—receive. The three U.S. airlines say they can't compete with airlines that don't need to worry about profitability, and want the liberal "open skies" air treaties between the U.S. and the U.A.E. amended to level the playing field.

JetBlue, which opposes the position of the big three U.S. carriers, has relationships with all three Gulf carriers.

United said it formally protested the GSA's decision because JetBlue "will rely entirely on a subsidized foreign carrier" to transport an estimated 15,000 U.S. government employees, contractors and military personnel. "We believe this decision violates the intent of the Fly America Act, which expressly limits the U.S. government from procuring commercial airline service directly from a non-U.S. carrier," United said. "JetBlue (will) merely serve as a booking agent for Emirates."

Write to Susan Carey at susan.carey@wsj.com

(END) Dow Jones Newswires

December 09, 2015 14:15 ET (19:15 GMT)

Delta Air Lines (NYSE:DAL)
Historical Stock Chart
From Jun 2024 to Jul 2024

Delta Air Lines (NYSE:DAL)
Historical Stock Chart
From Jul 2023 to Jul 2024