By Lee Moak
There is no doubt in my mind, nor in the minds of many airline workers here in the United States, that tens of thousands of their American aviation jobs are at risk due to the gross distortion of the international aviation marketplace as a result of more that $42 billion in subsidy violations being perpetuated by two nations in the Middle East. Yet, while walking in downtown Washington, D.C. yesterday afternoon, I was inundated with advertisements for Etihad Airways- advertisements extolling its commitment to the United States and specifically, to the people of Washington, D.C. This is ironic of course, because Etihad’s commitment is not at all to America, or its citizens, but to its single shareholder, the government of Abu Dhabi, ruled by a monarchy in the Middle East nation of the United Arab Emirates. Abu Dhabi has provided Etihad with over 17 billion dollars in the past 10 years. These actions violate their trade agreement with the United States and put U.S. jobs at tremendous risk.
Despite Abu Dhabi’s $17 billion dollar subsidization of Etihad Airways, its state-owned airline has not recorded a profit since its founding. When you combine that with the knowledge that such subsidization is a direct violation of the aviation trade agreement that allows Etihad to fly into the US in the first place and that such subsidies also directly and adversely affect the U.S. aviation industry and those it employs- all of the sudden the “commitment” Abu Dhabi holds to the U.S. and to the people of Washington D.C. seems much flimsier.
Earlier this year, the three major U.S. airlines released a white paper, the culmination of more than 2 years of diligent forensic accounting, that outlined a total of more than $42 billion in subsidies to three Gulf airlines – Etihad, Emirates, and Qatar Airways – have received since 2010 from their respective governments, Abu Dhabi and Dubai in the United Arab Emirates and Qatar. Out of context, the question has been asked, well what is wrong with subsidies? There are U.S. industries that currently receive subsidies (note: The U.S. airline industry is not one of them) and subsidies aren’t illegal in some cases. This is all true. Except that the aviation trade agreement the U.S. holds with the United Arab Emirates and Qatar (and 113 other nations around the world), known as Open Skies, which grants them nearly unrestricted landing rights within the United States, specifically forbids unfair competition. It says that growth should be a result of competition and market demand- and given that Etihad has grown at unprecedented levels in the past 10 years, far beyond the market’s rather steady 5% annual growth and far outpacing global GDP, it is clear before the subsidies are even broken down that there is no correlation between Etihad’s growth and marketplace demand.
The point of Open Skies was to promote travel and access, and to create a private, open marketplace where airlines could compete for customers on the basis of price and service. That is Open Skies as it was intended. But when governments subsidize their state-owned airlines with the specific aim to enter into a market and drive out the competition by deliberately taking advantage of the fundamental parameters governing the relationship they are exploiting, Open Skies ceases to work effectively. Open skies, fair skies, fair competition- call it what you will, the subsidy violations affect it the same. Unfortunately this issue is not as shiny or sexy as Etihad’s recent ad campaigns. Instead, it’s a grimy economic issue affecting an industry that provides a significant percentage of the US GDP and is responsible for hundreds of thousands of American jobs. As the Gulf airlines unnaturally expand through trade agreement violations with the specific aim of driving their competition out of business, they also directly threaten the workers who support the U.S. aviation industry by decreasing U.S. jobs and shipping them overseas to countries that lack the worker protections benefitting U.S. workers. A true “commitment” to the U.S. and Washington happens when our trade partners hold up their end of the bargain, allow for fair competition, and don’t use predatory practices to undermine a valuable and vital aspect of U.S. international trade policy.
Moak is president of Americans for Fair Skies, a veteran U.S. Marine Corps and Navy fighter pilot, former United States Commercial Airline pilot, and the former president of Air Line Pilots Association, International.