Just do the math: That was essentially the message Tillerson heard from U.S. Travel, JetBlue, Fedex and Atlas Air on the job creation inherent in Open Skies agreements with Gulf carriers. It's really tough to predict what action the Trump administration might take on this issue.
The major U.S. airlines that allege unfair competition by Persian Gulf rivals can’t show that new flight routes are costing U.S. jobs, allies of the Middle Eastern carriers told Secretary of State Rex Tillerson.
Opening discussions with the governments of the United Arab Emirates and Qatar over trade claims could hurt travel and tourism and encourage other countries to take actions against the U.S. “with some significant unintended consequences,” Bill Flynn, chief executive officer of freight company Atlas Air Worldwide Holdings Inc., said in an interview.
Flynn was among several corporate executives who met with Tillerson in Washington for about a half hour Tuesday in support of maintaining the existing aviation agreements with the Gulf nations. He was joined by FedEx Corp. President David Bronczek and JetBlue Airways Corp. Chief Executive Officer Robin Hayes, which are are part of the U.S. Airlines for Open Skies, a coalition that has lobbied to preserve the U.A.E. and Qatar deals.
The meeting stoked a two-year-old fight over the U.S. expansion of Emirates, Etihad Airways PJSC and Qatar Airways Ltd. The U.A.E. and Qatari governments enabled the carriers’ growth by providing them with $50 billion in subsidies to buy new jets and cover money-losing routes, according to Delta Air Lines Inc., United Continental Holdings Inc. and American Airlines Group Inc.
The three biggest U.S. carriers are lobbying the Trump administration to consult with the Gulf nations over alleged violations of the “Open Skies” agreements that govern flights among the countries.
Also attending the State Department meeting were U.S. Travel Association CEO Roger Dow and Airports Council International – North America CEO Kevin Burke. The executives told Tillerson that flights by Emirates, Etihad and Qatar create jobs in the U.S, instead of threatening them, according to a statement from the U.S. Travel Association. They also brought up Boeing Co.’s sale of jets to the Gulf airlines and new opportunities for tourism,
Rather than lobbying the Trump administration and Congress to rework aviation agreements, Delta, United and American should file a complaint under the International Air Transportation Fair Competitive Practices Act, a law allowing the Department of Transportation to investigate unfair competition by airlines, U.S. Travel said.
A spokeswoman for a group representing Delta, United and American said the airlines have an “unqualified right” to ask the government to enter into discussions over Open Skies disputes. Nothing requires them to file a formal complaint under the IATFCPA, said Jill Zuckman of the Partnership for Open & Fair Skies.
“The idea to the contrary is a fiction that the Gulf carriers and their allies have invented because it suits their objective of throwing a wrench in the process and avoiding the U.S. government taking action,” Zuckman said.
The Gulf carriers are seeking to “take over international flying” by undercutting U.S. aviation, she said.
“Our jobs are on the chopping block, which is why we are asking the administration to enforce our international agreements with the UAE and Qatar and stop the harm from escalating any further,” Zuckman said.
The secretary of state didn’t indicate when the Trump administration might take action on the dispute, and “we didn’t expect him to,” Flynn said. Tillerson expects to meet with representatives of the legacy U.S. airlines as soon as their schedules permit, and the agency is considering its next steps, a State Department official said.
–With assistance from Nafeesa Syeed
©2017 Bloomberg L.P.
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Photo credit: Emirates is among the Gulf carriers that would likely see access to U.S. routes restricted if legacy U.S. airlines can convince the Trump administration to roll back Open Skies agreements. Bloomberg