Emirates Airline Enters Transatlantic Market

       By Doug Cameron 

    Dubai's Emirates Airline opened a new front in the rapid expansion of Persian Gulf-based carriers by announcing plans Monday to launch a daily flight between New York and Milan, its first transatlantic service.

    The service is due to start in October and will expand on its existing three daily flights to Milan from its Dubai hub, tapping into what Emirates views as underserved premium and cargo markets between Italy and North America.

    Emirates said it currently had no plans to launch similar transatlantic flights from other European cities, but the plan highlights how the carrier and Gulf-based rivals Qatar Airways and Etihad Airways could expand away from just operating through their respective hubs.

    The Gulf trio are expanding flights to the Americas, having grown rapidly by linking European cities with Asia and Africa through their hubs, winning market share from carriers such as Air France-KLM SA (AF.FR, AFLYY) and Deutsche Lufthansa AG (DLAKY, LHA.XE).

    Transatlantic routes are among the most profitable for the European flag carriers, and Emirates's move could raise concerns this market could become vulnerable to competition from Gulf rivals.

    Emirates said it estimated that half the passengers between Milan and North America travel via another European hub, and the carrier aims to capture extra traffic by connecting with airline partners at both ends of the service.

    The airline already has an alliance with JetBlue Airways Group Inc. (JBLU), the largest carrier at New York's John F. Kennedy International Airport. The new Milan service, operated with a Boeing Co. (BA) 777-300ER, will link with domestic Italian flights operated by Easyjet PLC (ESYJY, EZJ.LN), the U.K.-based low-cost specialist.

    The New York-Milan flight is being launched with a special authorization from Italian regulators under the open-skies aviation treaty between the U.S. and the European Union. The United Arab Emirates also has an open skies deal with the U.S..

    Some European airlines have urged the region's regulators to withhold any expansion of traffic rights to the Gulf carriers, alleging they receive unfair government support, charges that they all deny.

    --Rory Jones contributed to this article.

    Write to Doug Cameron at doug.cameron@dowjones.com