Emirates CEO: “This is a government issue”

Washington, DC – Today, Emirates Airline released their response to the white paper released in January that outlined the over $42 billion in government subsides that Emirates, Etihad Airways, and Qatar Airways have received over the past 10 years.

At a press conference in Washington, DC to present Emirates’ response, their CEO Tim Clark stated, in respect to the ongoing debate over Gulf government subsidy violations of Open Skies agreements: “After all, this is a government issue.” Mr. Clark, Americans for Fair Skies could not agree more.

In January, evidence was presented to the U.S. government documenting more than $42 billion in subsidies by the United Arab Emirates government to its airlines Emirates and Etihad and the government of Qatar to its airline Qatar Airways. These subsidies are in direct violation of the Open Skies Agreements Qatar and the United Arab Emirates signed with the United States. Airlines in Europe, including Air France-KLM and Lufthansa, have submitted responses to the U.S. government supporting U.S. airline workers and airlines, and presenting their case on how the Gulf subsidies are harming workers in Europe as well as the United States.

As Mr. Clark noted, Open Skies Agreements are negotiated between governments. And the Open Skies agreements contain clear mechanisms for dispute resolutions in the form of government consultations. Americans for Fair Skies is asking for 2 of the 115 existing Open Skies Agreements to be reviewed. The time for the U.S. to formally engage those two violators – the UAE and Qatar – is now. At least Mr. Clark got that right.

americans4fairskies2015Emirates CEO: “This is a government issue”
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A Commitment to America is a Commitment to Open Skies

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.


americans4fairskies2015A Commitment to America is a Commitment to Open Skies
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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


americans4fairskies2015Delta CEO Says Detroit Knows the Pain of Unfair Competition
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Qatar Airways’ claims are another reason to open their books

Qatar Airways’ CEO Al Baker has repeatedly stated that he was going to open Qatar Airways’ books and “disprove” the overwhelming subsidy evidence showing its owner, the government of Qatar, has undermined its Open Skies Agreement with the United States by providing more than $17 billion in subsidies to Qatar Airways over the past 10 years. That has not happened. Al Baker went back on his promise to open the books. And now, without any transparency and despite ample evidence to the contrary, he is claiming that his airline is somehow actually earning a profit. You can’t make this stuff up.

When Al Baker claimed to want to take the company public a few years back, he went back on that promise too. Potential private shareholders “didn’t have the stomach” for the government investment (i.e. subsidies) to keep the company running, he said. The over $17 billion infused into the airline by the government of Qatar scared private investors off. And the government subsidies have allowed a company, considered a liability by private market standards, to expand at an unprecedented rate into new markets, with no regard to consumer demand and in direct violation of its international trade agreements.

These subsides harm the U.S. aviation industry and threaten the jobs of U.S. aviation workers. If the subsidies are indeed non-existent, as Mr. Al Baker so unbelievably claims, Qatar Airways needs to open their books and disprove the substantial evidence to the contrary.

In the meantime, the U.S. government must act in support of the U.S. economy and its workers. Consultations need to be opened with Qatar and the other country violating its Open Skies Agreement through subsidization of its state-owned airlines, the United Arab Emirates. It is only through consultations that a pragmatic, equitable resolution following the intended spirit of our Open Skies Agreements can be found.

americans4fairskies2015Qatar Airways’ claims are another reason to open their books
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Americans for Fair Skies response to U.S. Travel Association’s letter date June 11, 2015:

The people who work in the U.S. aviation industry have a simple request of the U.S. government: enforce existing aviation trade agreements, known as Open Skies.

The letter from U.S. Travel Association to the U.S. government suggests instead that the U.S. government should ignore our own laws and instead set the dangerous precedent of allowing foreign countries to violate our trade agreements. This is terrible public policy, and worse, it jeopardizes U.S. jobs to benefit foreign interests.

With more than $42 billion in subsidies from their home nations, three Gulf airlines have distorted the international aviation marketplace and put U.S. jobs and our economy at risk. Americans are pushing back; saying “no,” enforce Open Skies agreements as they were intended. The U.S. Travel Association, which is clearly benefiting financially from the Gulf subsidies, is disingenuous in its letter opposing Open Skies enforcement. We must demand better. American workers deserve better. American worker deserve fair competition and fair skies.

americans4fairskies2015Americans for Fair Skies response to U.S. Travel Association’s letter date June 11, 2015:
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Emirates’ Subsidies Remain Uncontested

U.S. aviation workers have a simple request of the U.S. government: to open formal consultations with the two nations that are violating their aviation trade agreements with the United States.

To hear Tim Clark, CEO of Emirates Airline, at today’s Wings Club lunch in New York City, however, you might think that the aim of U.S. airline workers was to shut Emirates down. Indeed, this week, first at the International Aviation Transportation Association (IATA) meeting in Miami, and again this afternoon, Clark, has engaged in a spin campaign that would make Lance Armstrong blush. Name calling, likening the trade dispute to a natural disaster, and engaging in behavior that is all around unbecoming of a Chief Executive Officer, Clark once again failed to actually offer a rebuttal to the trade violation evidence. He has repeatedly said, “it is coming soon,” but in absence of a substantive response, Clark instead slings mud and garnishes headlines with outrageous statements that detract from the core issue: that Emirates Airline has received billions in unfair prohibited subsidies from its home government.

U.S. airline workers are deeply troubled by the rapid growth of the subsidized (subsidies are a violation of Open Skies) airline traffic into the U.S. that is putting their jobs at great risk as international markets are distorted by said subsidies. Our request, which follows the process set forth in the trade agreements, known as Open Skies, calls on the U.S. government to engage the United Arab Emirates and Qatar, two nations in the Middle East, in formal talks about how to remedy their respective violations of Open Skies. Violations that have been demonstrably proven. Over $42 billion has been given in the last 10 years by Qatar and the United Arab Emirates to Qatar Airways, Etihad Airways, and Emirates Airline.

In trade disputes, and in all matters geopolitical, allies have disagreements. To resolve these disagreements, conversations, or consultations, occur between governments. That is what U.S. aviation workers are asking for. That is what U.S. trade policy calls for. And that is what we expect will happen. Everything else is just a distraction.

americans4fairskies2015Emirates’ Subsidies Remain Uncontested
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Americans for Fair Skies responds to Qatar Airways’ “Retaliatory Protectionism” Threats

“Retaliatory protectionism” was the expression Qatar Airways’ CEO Al Baker used at the IATA annual meeting today to explain how Qatar will handle any potential changes of U.S. Open Skies policy to mitigate the damage being wrought on the U.S. aviation industry as a result of the massive subsidies being provided by the United Arab Emirates and Qatar to their three state-owned airlines in direct violation of their Open Skies Agreements with the United States.

Al Baker, who is the CEO of Qatar Airways, an entity he has argued many times acts separately from its owner, Qatar, highlighted again that they are one in the same as he spoke of potential Qatari government action in retaliation to any attempt to address or reduce harmful Gulf subsidies.

Qatar and the United Arab Emirates have made it clear that any attempt to stymie the subsidized growth of their airlines will result in massive retaliatory actions reverberating far outside of international aviation trade policy, as was seen in 2010 when Canada limited landing rights at the Toronto Airport and were kicked out of Camp Mirage and actively lobbied against by the UAE for a UN Security Council seat as a result. Emirates CEO Tim Clark has made it clear that Emirates will increase flights into the US, not as a result of market demand moving forward, but as a direct response to any potential US action to limit subsidy distortions.

Americans for Fair Skies is committed to the continuation of Open Skies policies, as they were intended, free from subsidy distortions and supporting a private, open marketplace where service and price dictates customer choice and growth. Fair competition is impossible when that process is turned on its head by over $40 billion in subsidies. We cannot allow threats to stop us from acting to save U.S. jobs and support a critical portion of the U.S. GDP. Let’s restore competition and fair skies. The time for U.S. government action is now.

americans4fairskies2015Americans for Fair Skies responds to Qatar Airways’ “Retaliatory Protectionism” Threats
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