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Major airlines urge Trump to take action against Gulf carriers accused of Open Skies violations

Three of the United States largest airlines along with several members of Congress are making noise again in order to sway the federal government into taking action against Middle Eastern countries who are allegedly subsidizing their state-run airlines.

Delta, United, and American Airlines have accused the United Arab Emirates and Qatar of breaching international aviation pacts, known as Open Skies agreements, which permit airlines to operate internationally without government interference.

The major domestic carriers tried their luck with the Obama administration but to no avail. Now, with the Trump administration demonstrating a more restrictionist trade philosophy, they are hoping that things would be different this time around.

“From President Trump’s very first day in office, he made it clear he would ensure trade deals are fair and enforced and benefit the American worker,” said Scott Reed, Campaign Manager for the Partnership for Open and Fair Skies, a coalition led by Delta, American, United, and several unions representing airline workers.

“This is something the Trump administration can take action on to deliver the president’s campaign promises. It’s right in his wheelhouse.”

The U.S. has finalized more than 100 Open Skies agreements since the early 1990s, and until recently, they drew little notice and were even recognized for its role in encouraging greater competition, lowering airfares, and providing more routes to foreign destinations.

But as Persian Gulf airlines Etihad Airways, Emirates, and Qatar Airways have extended their reach past U.S. shores in recent years, some of the major American carriers are now paying attention.

The Partnership for Open and Fair Skies spent $6.1 million in 2015 to lobby the Obama administration to enforce, or renegotiate, the Open Skies agreements with UAE and Qatar.

The coalition main argument is that by allegedly subsidizing their state-owned airlines, UAE and Qatar can maintain their low prices, thereby discouraging U.S. domestic carriers from contending for the same routes.

This notion is supported by many members of Congress. In 2015, a bipartisan group of 262 House lawmakers penned a letter to the Obama administration, requesting it to investigate Qatar and UAE for “using these subsidies and other unfair practices to distort the market in favor of their state-owned airlines.”

This month, the House Appropriations Committee gave the green light to its annual Transportation, Housing, and Urban Development funding bill that pressed the Trump administration to impose the terms of the Open Skies agreements with UAE and Qatar.

In the upper chamber, Sen. Ted Cruz, R-Texas, also sent a letter this month to Secretary of State Rex Tillerson, Commerce Secretary Wilbur Ross, and Transportation Secretary Elaine Chao, and accused the Gulf nations of “blatant disregard” of Open Skies agreements, and also asked the Trump administration to conduct an investigation into the matter.

Rep. Dan Lipinski, D-Ill., who signed the 2015 letter, says he imagines Trump may act where Obama didn’t.

“President Trump certainly has suggested he will stand up for American business and workers, so that leads me to be hopeful he would take a more forceful position on this issue,” Lipinski said.

“I am hopeful the Trump administration will step up and do whatever it takes to prevent these Gulf carriers that are subsidized by their governments from coming in and giving an unfair competitive advantage against America’s airlines.”

However, the possibility of rethinking Open Skies agreements has divided opinion in the industry.

JetBlue, Atlas Air Worldwide, FedEx, and Hawaiian Airlines are among the backers of an alternative coalition – the U.S. Airlines for Open Skies – that opposes taking action against Qatar and UAE.

The U.S. Travel Association, which is a nonprofit organization representing the travel industry, also threw its support to maintaining Open Skies agreements with the Gulf nations.

Opponents of renegotiating the Open Skies pacts argued that American action against UAE and Qatar could encourage other countries to retaliate against the U.S.

“The legacy carriers are very interested in protecting their market share and not interested in competition,” said Andrea Christianson, Spokeswoman for U.S. Airlines for Open Skies. “Asking the Trump administration to break these Open Skies agreements jeopardizes the entire network of agreements we have.”

Rui Neiva, an Aviation Policy Analyst at the nonpartisan Enos Center for Transportation, asserted that Delta, United, and American are pinning a target on the backs of the Gulf carriers because of their success. He says the airlines of UAE and Qatar have produced new markets that domestic airlines were not serving, such as offering flights for Americans to Asia via Dubai, and contributed billions to the U.S. economy.

He noted that U.S. carriers have been given government support, albeit through different means. For example, Delta, United, and American have been provided with antitrust immunity to form joint relationships with rival carriers on some routes to Europe and Asia.

“When we talk about airlines receiving government subsidies, this is quite common,” Neiva said. “This is not exclusive to the UAE and Qatar. It’s select, carefully chosen enemies [the major U.S. carriers] complain about.”

Clifford Winston, a senior fellow in economic studies at the Brookings Institution, said the major airlines are overstating the losses they take from subsidized foreign competition. He pointed out that foreign carriers under U.S. law cannot compete directly with domestic airlines for travel within America, meaning they cannot fly a route from New York to Los Angeles, for example.

The coalition sponsored by Delta, United, and American claimed it has already stopped servicing routes to certain international locales, and that on every route it cuts, 1,500 Americans lose their jobs.

“These are not big ticket routes,” Winston said. “United and Delta’s livelihood does not change depending on how much traffic they get flying to Dubai. It’s one thing to talk about Europe, where there is more traffic. But c’mon, who cares, this is not big ticket stuff.”

Winston made a 2015 study that established that Americans save $4 billion annually from the entire network of Open Skies agreements. He claimed that carriers supporting renegotiating or canceling these pacts with UAE and Qatar are preoccupied with their own profits at the expense of the U.S. traveler.

“There are enormous benefits the public has got from these agreements,” Winston argued. “Who is representing travelers in all of this? Travelers will be worse off if we close markets.”

http://www.washingtonexaminer.com/airlines-press-trump-to-act-against-gulf-countries-accused-of-violating-open-skies/article/2629131

 

 

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