Open Skies clouded by subsidies

Since their inception in the early 1990s, Open Skies agreements have expanded international air travel and increased consumer choice. That was the intent when they were created, and that remains their goal today. As a result of their success, the United States has entered into over 100 of these agreements with countries around the world.

These are the facts those arguing in favor of the Gulf airlines keep presenting. And they are absolutely true. These, however, aren’t the only facts that need to be shared. Nor are they the facts that are in dispute. So, to present the challenges surrounding the subsidization of the Gulf airlines and their subsequent expansion into international markets as a black and white argument about being for or against Open Skies as a whole is not only reductive, its entirely inaccurate.

Yes, Open Skies have been a boon for the U.S. economy. Neither the legitimacy nor the benefit of these policies is in dispute. What is in dispute however, is the unnatural expansion and artificial market distortion that is happening within the Open Skies agreements the U.S. shares with the United Arab Emirates and Qatar.
A critical element of these Open Skies agreements is that they come with an expectation of fairness through competition in a private, open marketplace- one free of government subsidies. Yet, since 2004, the United Arab Emirates and Qatar have violated the agreements established in Open Skies through over $40 billion in subsides of their national carriers. The result has been a systematic devastation of airlines across the globe through an artificial lowering of seat price and a resulting distortion of the market.

The irony is that the UAE and Qatar and their respective airlines, Etihad, Emirates, and Qatar Airways, have blustered loudly about consumer choice and competition whenever countries or the aviation industry have tried to stand up to such practices. When that didn’t work, they have switched to threats and scare tactics, such as forcing Canada out of Camp Mirage as a result of bilateral trade restrictions stemming from this subsidization. Now, the U.S., which presents the largest potential payoff for these airlines from a market share perspective, and the largest challenge to their expansion efforts as a result of the size of their national aviation infrastructure, is saying “enough.” And what is the response of these airlines? To threaten legal action. To threaten to cancel aircraft orders from Boeing, putting even more U.S. jobs at risk, if the U.S. takes action in response to their subsidies. To present themselves and their nations as great military allies of the U.S., which is a completely unrelated matter, mixing geopolitics with business.

This isn’t how allies, or true businesses, are expected to treat each other. But then again, these airlines are not true companies; they are in fact arms of their states.

For years, these airlines have explicitly, and on the record, stated that they were not subsidized. When these subsidies came to light, they argued that the world didn’t understand the difference between equity and subsidy (we do, by the way, as it is defined by the World Trade Organization), and finally, when they saw the evidence of subsidization in black and white, they again switched their argument to, “so what if we subsidize? U.S. airlines are just whining because they can’t compete.” Which of course, isn’t remotely the point of the argument. It’s impossible for a private entity to compete with the resources and access of an entire nation. This is why only private entities are allowed to compete in the marketplace established by Open Skies, not countries.

Americans for Fair Skies is asking the U.S. government to take action to restore fairness to our Open Skies policy by taking on the largest trade violation in history undertaken by the UAE and Qatar. We must restore Open Skies, reject the Gulf protectionism, and stand up for American workers.

Moak is a former Delta Boeing 767 pilot and former president of the Air Line Pilots Association, International., who is currently president of Americans for Fair Skies.

Originally published on TheHill.Com: Open Skies clouded by subsidies