There's more at stake here than could possibly fit a short Skift take. We'll keep watching and updating readers as this critical battle Open Skies battle progresses.
Pointing out that existing Open Skies agreements are critical to protect a $19 billion annual United States trade surplus with the United Arab Emirates, the Washington, D.C.-based trade organization US-UAE Business Council tells US airlines to “stop complaining and start competing.”
As the Open Skies debate heats up with the recent publication of the long-awaited detailed report in support of American Airlines, Delta, and United’s claims that the growth of the Gulf carriers is attributable to over $42 billion in subsidies, the three carriers have seen little support thus far from U.S. tourism and trade organizations, nor even from some industry peers, but some have clearly marked their side on this debate.
The Air Line Pilots Association (ALPA) has issued strong statements prompting the U.S. government to take action and defend national carriers, updated issued under the hash-tag #FairSkies on social media.
House Transportation ranking member Peter DeFazio has also been vocal in his support. As Politico reports, DeFazio says in a statement: “It appears the ME3 carriers, buoyed by massive state subsidies, special favors, and a general disregard for fair labor practices, have a competitive advantage over U.S. carriers.”
DeFazio vows to send a letter to Secretary Foxx and Secretary John Kerry, “urging them to protect U.S. jobs and immediately act to restore a fair, competitive balance between U.S. air carriers and Gulf state-subsidized airlines.” The U.S. Department of Transportation has thus far made no decision on its stance, though it has been “carefully reviewing the claims” and “closely coordinating” with the State and Commerce departments.”
The air transport industry and transportation unions are the top two contributors to DeFazio’s campaign committee, contributing $79,750 and $79,000 respectively.
For its part, the US-UAE Business Council takes side with others who question the wisdom of the US government reneging on established Open Skies agreements.
In a Council Update letter issued on March 5, US-UAE Business Council President, Danny Sebright states: “With a $19 billion trade surplus at stake, U.S. officials should stand with virtually every single stakeholder in US commercial aviation, such as U.S. airports, travel and hospitality companies, business travelers and cargo airlines, and resist any efforts to limit free trade or restrict Open Skies agreements with the UAE.”
The letter highlights a 2014 Council report on the US-UAE commercial aviation relationship, which details the $130 billion in sales of Boeing aircraft at the 2013 Dubai Air Show by UAE carriers and to a 2013 White Paper in which the organization identified more than $16 billion in annual benefits to the US from these aviation ties. Gulf carriers, the organization argues, support “more than 100,000 jobs … generating over $1.6 billion in tax revenue.” Both reports reflect that the UAE has been the largest export destination for the U.S. in the broader Middle East for the last six years, the Council asserts.
“UAE airlines are the biggest international buyers of U.S.-manufactured commercial aircrafts and engines,with over 400 airplane deliveries and orders in the last 15 years,” says Sebright. “And with 252 non-stop flights a week to the US, UAE airlines are bringing millions of visitors a year to cities across America, filling local airports, hotels, attractions, and restaurants. Emirates and Etihad also feed hundreds of thousands of connecting passengers a year to US airlines.
“Before claiming government support for international competitors, the Big 3 may first want to check their own balance sheets. Since 2006, the Big 3 transferred billions of dollars of pension liabilities directly to Uncle Sam while leaving creditors holding the bag for billions more through multiple bankruptcies.”
“They received billions in cash payments and guaranteed loans in a direct government bailout while enjoying the advantages of antitrust immunity to fix transatlantic fares with their European partners. If that weren’t enough, as a result of Fly America, the Big 3 also benefit from the exclusion of any international competition in the US government market—the world’s largest.”
Sebright concludes: “The Big 3 missed the biggest shift in global travel trends with the rapid growth of travel to, in, and between emerging markets in Asia, Africa, and the Middle East, and now, on account of mistakes of their own doing, the Big 3 are looking to blame Gulf carriers.”
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Photo credit: The three largest carriers in the U.S. claim that Gulf carrier rivals are getting unfair state aid. Skift