(Ted Goodman, The Daily Caller News Foundation) – U.S.-based legacy airlines are accusing two Middle Eastern countries of violating bilateral aviation agreements and are asking the Trump administration to intervene.
Delta Air Lines, United Airlines, American Airlines and its unions sent an open letter March 16 to Trump asking him to enforce Open Skies agreements with the United Arab Emirates (U.A.E.) and Qatar.
The three largest U.S. airlines say that Emirates Air Lines, a long with Etihad Airways and Qatar Airways, operate with an unfair advantage that violates the spirit of Open Skies by receiving large government subsidies from the U.A.E. and Qatar. The United States has 120 Open Skies agreements with countries from around the world. The agreements are meant to expand international passenger and cargo flights to and from the United States.
The U.S. legacy carriers argue that while they must react to supply and demand when deciding its routes, the Middle Eastern carriers are not beholden to market forces and can simply dip into an unlimited pool of government subsidies when determining where to set up routes for its airlines.
The Partnership for Open and Fair Skies released a report in January 2015 that alleges that the governments of Qatar and the U.A.E. have granted close to $40 billion in subsidies and “other unfair benefits” to its state-owned carriers. Since then, they say, another $10 billion has been identified as government subsidies.
The Partnership asserts that the subsidies violates the Open Skies agreements and undermines the basic principles of fair and open competition behind the Open Skies policy.
“1.2 million American jobs are at risk because foreign subsidies are undermining the US aviation industry,” Andrea Newman, Senior Vice President at Delta Air Lines, told the Daily Caller News Foundation (TheDCNF). “We are asking President Trump to enforce the Open Skies agreements between the U.S. and the U.A.E. and the U.S. and Qatar in order to protect American jobs and stand up to trade cheating,” Newman said.
U.S. legacy airlines and the labor unions that represent employees within the industry believe that this issue is right in the president’s wheelhouse. Trump’s central campaign theme was “America First,” and he constantly blasted past trade deals that seemed to undermine American workers.
Asking the president to intervene in order to protect American jobs and competitiveness in the face of an unfair trade agreement seems like a shoe-in for Trump, but it isn’t that simple.
The U.S. Airlines for Open Skies coalition (not to be confused with the Partnership) is made up of four U.S.-based passenger and cargo airlines who disagree with the big three U.S. legacy carriers that the U.A.E. and Qatar are violating Open Skies.
The group wants to make it clear that this is not a fight between U.S. airlines and Middle Eastern airlines.
“Multiple passenger and cargo airlines, including Atlas Worldwide, FedEx, Hawaiian Airlines and JetBlue Airways disagree with the claims and demands of the legacy carriers,” the coalition explains on its website.
The legacy carriers assert that the U.S. Airlines for Open Skies coalition is nothing more than a front for Emirates and Etihad Airways. Atlas flies cargo for Etihad, and JetBlue is a codeshare to Emirates, meaning that the two airlines share the same routes, and market the flights under its own brand on a set number of international routes.
“When the U.S. government asked the legacy carriers to name a specific breach of Open Skies, they failed to identify a single provision,” the coalition asserts. “The only part of the Open Skies agreement that provides any remedy against subsidies is one that allows a government to intervene if a foreign airline is charging artificially low fares,” the coalition adds, saying that the Partnership for Fair and Open Skies ignores this in its appeal to the White House.
The legacy carriers assert that a specific breach exists, and point to article 11 of the Open Skies bilateral agreement between the U.S. and the U.A.E., which states that, “each Party shall allow a fair and equal opportunity to compete.”
“The pricing provision is not relevant,” according to an industry insider who spoke on the condition of anonymity, “The United States government has long recognized that a fair competition provision is relevant for subsidies.”
Emirates Airlines debuted a new flight March 13, from Newark to Athens to Dubai, which marks the first new flight added under the Trump administration. The new route, which U.S. carriers fervently opposed, was also the subject of a bipartisan letter from 25 members of Congress in New York and New Jersey.
The congressional delegation asked the Trump administration to cancel the route until the U.A.E. stops subsidizing its largest airline. Lawmakers recognized that a fight over Open Skies could complicate U.S. relations with a critical strategic counter-terrorism ally, but they assert that U.S. workers are under attack due to the subsidies, and they must be protected.
“Bi-partisan support is growing by the day,” Newman told TheDCNF about Capitol Hill’s response. “We are continuing to work with Congress and the administration,” she continued.
Some industry insiders view the new Emirates route as a test.
“We kind of see that as a poke in the eye at the Trump administration,” Chip Hancock, Governmental Affairs Chairman of the Southwest Airlines Pilots’ Association, told TheDCNF. “Just to see how they [Trump Admin] react. They want to see if he responds or if he is just going to let them keep on expanding.” Hancock surmised.
“Our position on Open Skies has remained consistent for years. Our president Sir Tim Clark has been very vocal on the subject,” an Emirates spokesperson said, before directing TheDCNF to its website.
Emirates asserts that it is contributing to the goals of Open Skies, which is greater competition, increased flight frequency, promotion of travel and tourism, improved service, customer-centric innovation and consumer choice. The airline would not respond to questions regarding government subsidies.
It is unclear how or if the president will take on this issue head on. The big three legacy carriers hope that the president’s message of “America First” and his commitment to renegotiating trade agreements that undermine American workers translates to action against the Gulf states and its flagship airlines.
Those who disagree with the big three airline’s assertions hope to convince the president that the Open Skies agreements with the U.A.E. and Qatar are operating as intended, and intervention is unnecessary.
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