Domestic Airlines Accuse Middle Eastern Rivals Of Cheating To Undermine Their Business
U.S. airlines want to prevent government-subsidized Middle Eastern carriers from operating routes into the country, but some consumer advocates are crying foul.
The issue revolves around Open Skies Agreements, which the Department of State says are designed to “expand international passenger and cargo flights by eliminating government interference in commercial airline decisions about routes, capacity, and pricing.”
After decades of lobbying by airlines to reduce aviation regulations, the first Open Skies Agreement was signed with the Netherlands in 1992, and since then the U.S. has signed Open Skies Agreements with over 100 countries. (RELATED: Rather Than Deter Russia, Obama Administration Gives it Cover)
Recently, though, the “big three” U.S. carriers — Delta, United and American — have begun calling for reforms to the Open Skies Agreements that the U.S. signed with the governments of the United Arab Emirates (UAE) and Qatar in 1999 and 2001, respectively.
According to the group Americans for Fair Skies, which supports the effort, state-subsidized Gulf airlines “are engaged in predatory practices to distort the marketplace in favor of their state-owned airlines, which runs counter to Open Skies.”
The agreements were signed based upon “the belief that Open Skies would usher in an era of market-based competition,” but the group says U.S. officials did not anticipate “that emirs and sheiks and their authoritarian governments would use this as an opportunity … to undertake a sustained effort to steal our passengers and threaten the entire viability of our airline industry.”
Skift, a travel industry publication, reports that both the chairman and the president of Emirates Air have recently “made statements suggesting that U.S. carriers wouldn’t have problems if customers enjoyed flying their planes,” and claiming it is hypocritical for U.S. airlines to complain about subsidies, since many of them used bankruptcy protections to restructure after 9/11.
Delta CEO Richard Anderson responded to the charge in a recent interview with CNN by saying, “it’s a great irony to have the UAE from the Arabian Peninsula talk about that, given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula.”
The Persian Gulf carriers, Americans for Fair Skies asserts, “operate not as businesses, as U.S. airlines do, but as arms of their well-heeled predatory governments.” (RELATED: Bangladeshi Airline Set to Receive Loan Guaranteed by US Government)
Rather than pursuing profits, they explain, the “big three” Middle Eastern airlines (Emirates, Etihad and Qatar) “are simply using government subsidies to offer below-market fares and steal traffic that once belonged to U.S. airlines and their alliance partners.”
The U.S. Travel Association (USTA), on the other hand, argues in a recent press release that, “any move to abrogate Open Skies would fly in the face of competition and consumer choice, and ultimately harm demand for travel to the U.S.”
Roger Dow, president and CEO of the USTA, told The Daily Caller News Foundation that, “We’ve looked at the Open Skies issue very carefully, and there’s nothing that convinces us that tampering with those agreements holds any public or economic advantage.”
“Travelers have unquestionably benefited from the choices and competition that Open Skies has helped bring to the marketplace,” Dow explained, while “airlines have posted quarter after quarter of record profits under the existing framework.”
“Inbound travel is the country’s second-largest industry export,” the press release adds, but “the fact that airfares are declining [in] literally every country except ours bodes poorly for our ability to keep pace with the rest of the world.” (RELATED: Group Releases List of Unfair Government Competition)
“Historically, shifts toward protectionism have ended up hurting markets and choking off growth and job creation,” the USTA claims, adding that, “backing away from Open Skies would be an especially damaging one.”
“Frankly, this is an easy call,” Dow told The Daily Caller News Foundation, “and we hope and expect the Obama administration will see it that way.”
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