Global Airlines: Is it a Fair Playing Field

It’s a bilateral air service agreement that the U.S. Government negotiates with other countries to provide rights for the airlines to offer international passenger and cargo services. It eliminates government interference in the commercial airline industry about routes, capacity, and pricing, so airlines can provide more affordable, convenient, and efficient air service to consumers. Emirates, Qatar Airways and Etihad Airways have routes to 11 US gateway cities and there are 260 flights now serve the US every week from Dubai and Abu Dhabi. Persian Gulf nations have spent about billions of dollars subsidizing their state-sponsored airlines, this is a violation of the Open Skies Agreement. Due to their governments’ help, they have been able to offer low fares to their customers and increasingly expanding their operations into the US it’s to benefit their own airlines, not the two that are originally stated in the US-UAE Open Skies Agreement. This only puts American jobs in jeopardy as they expand their operations in the US, it about 1500 U.S. jobs lost per route.

Delta, United and American Airlines, dubbed the US3 have been receiving government subsidies, but not just on the federal level but also on the state level. These US airline companies have been receiving subsidies and are not up in arms because non-US carriers are receiving government subsidies and it’s greater than what is being given to the US carriers.

The discrepancy that Emirates and many other carriers can borrow at low cost for aircraft financing from the U.S. Export-Import Bank and similar agencies in Europe, Canada, Brazil and Japan. However, such financing is unavailable to U.S. and major European carriers. The foreign airlines are spending billions to purchase wide-body aircraft so they can increase flights to and from the US and unfairly compete against US airlines in the global marketplace.

In December 2017, the US Department of Transportation finalized its decision to grant Norwegian Air International approval to operate flights into the US. The Air Line Pilots Association are outraged by this decision because it will create an unfair competition and will ultimately result in the loss of US jobs and, potentially, significant losses for the US international aviation industry. However, Norwegian Air International are opening extra crew bases and plan on hiring US pilots and crew for that. The airline currently operates 450 routes with 150 destinations around the world, they have also been named the best long-haul low-cost airline in the world. It depends from what angle you’re looking at this controversial arrival of Norwegian Air International, they are taking routes away from US carriers at an exceptionally low fare but then on the other hand, they will be hiring US pilots and crews. Also, they are purchasing Boeing aircrafts, if the Open Skies Agreement is eliminated that will also put many US jobs out of work.

The U.S. airlines such as: Delta, United, and American are in a dogfight over whether the Trump administration should crack down on the two addressing the billions of dollars they claim Abu Dhabi and Doha are funneling toward their own their own airlines, and as a result, undermining the US carrier’s ability to compete internationally.

I have mix feelings regarding the situation because the US airlines have received government benefits in their own startup. I found facts that between 1918 and 1998 the federal government spent $150 billion in support of aviation. Deregulation and reduction in corporate welfare lead the industry into a more competitive industry. As the US government directly allotted $928 million in loans to three major airlines – Delta, United and American from 1957 to 1984 and the Federal Aviation Administration (FAA) received about $55 billion to create and maintain air travel infrastructure. Once again, every major American airline companies had to be bailed out again by the government following the terrorist attacks on September 11, 2001. But now because there’s another carrier the US carriers are claiming unfair competition which unfairly spur their growth.

                                                                                        

Debusmann Jr., Bernd. (October 8, 2017). ‘Open Skies’ vital to American job creation, says UAE’s US ambassador. Retrieved March 15, 2018 from http://www.arabianbusiness.com/industries/transport/380579-open-skies-vital-to-american-job-creation-says-uaes-us-ambassador.

Stancy-Correll, Diana. (December 5, 2017). US airlines at odds over aviation agreements with Qatar and UAE. Retrieved on March 15, 2018 from https://www.washingtonexaminer.com/us-airlines-at-odds-over-aviation-agreements-with-qatar-and-uae.

Schaal, Dennis. (October 9, 2015). Wikileaks Disclosure Shows U.S. Airlines Received Billions in Subsidies. Retrieved March 15, 2018 from https://skift.com/2015/04/09/wikileaks-disclosure-shows-u-s-airlines-received-billions-in-subsidies/.