Delta CEO Says Detroit Knows the Pain of Unfair Competition

NEW YORK ( TheStreet) — Speaking in Detroit, Delta’s(DALGet Report) second-biggest hub, CEO Richard Anderson lauded Detroit Metropolitan Airport while blasting Mideast airlines, which benefit disproportionately from trade agreements in the same way that Japanese automakers once did.

Anderson told the Detroit Economic Club on Tuesday that Detroit Metro is “the best airport facility in the world,” noting that “year in and year out” it is ranked by J.D. Power as the top U.S. airport.

“I am biased,” Anderson confessed. As a vice president at Northwest, Anderson represented the carrier during construction of the McNamara terminal and the fourth runway in the mid-1980s. Delta merged with Northwest in 2008.

Under its summer schedule, Delta operates more than 500 daily Detroit departures to 175 destinations. Anderson called Detroit “the eastern gateway to Asia” because it has five daily flights to Asia, as well as four to Amsterdam and two each to London and Paris.

In 1992, the U.S. signed the first Open Skies treaty with Holland, enabling a joint venture between Northwest and KLM that became a model for U.S. airlines and their international partners and also made Detroit the key U.S. hub for Amsterdam service.

Since 1992, Anderson said, “We’ve signed 115 of those Open Skies agreements over 23 years. All but two worked really well — like many trade relationships, there are outliers.”

Open Skies treaties with United Arab Emirates and Qatar are outliers because their airlines — Emirates, Etihad and Qatar —  “really are not airlines. They are governments,” Delta’s CEO said.

A report prepared for American(AAL), Delta and United(UAL) documents how the governments of Qatar, UAE, and Abu Dhabi and Dubai, the two largest emirates, have provided about $39 billion in subsidies to the three carriers.

The subsidies allow for all sorts of spending, including purchases of new aircraft. Now, Anderson said, countries with a population equivalent to North Dakota’s have orders for 600 widebody aircraft, while China with a population of 1.5 billion and a growing aviation industry has 60 widebodies on order.

Anderson compared the situation to one that threatened Detroit in the 1970s and 1980s, when Japanese automakers flooded the U.S. market with imports. Today, Mideast carriers Emirates, Etihad and Qatar take advantage of Open Skies to flood the U.S. with airline seats.

“Detroit understands the dangers of not enforcing trade agreements,” Anderson said, citing Japanese auto exporting as a case where “our country {was} faced with trade agreements where parties on other side are not private industry. They are governments that cause real trade imbalance.”

Detroit has clearly seen the impact of job losses related to imbalances enabled by trade agreements that somehow work out to the disadvantage of U.S. employers and their workers.

Today, the U.S. airline industry employs more than 300,000 people. “The jobs are like auto industry jobs,” Anderson said. “Our jobs on average pay double what the average job in the U.S. does; these are the jobs we need in this country. It’s how we turn this economy around.”

 

Originally published on TheStreet.Com: Delta CEO Says Detroit Knows the Pain of Unfair Competition