We Need Honesty in the Gulf Airline Subsidy Debate

By Rob Britton

I’ve worked in and around the airline business for 31 years. I have witnessed firsthand how fair competition drives down prices and makes airlines nimble and more efficient. On a personal level, I’m proud to have helped foster the democratization of air transportation which was once available only to the rich, and to have played a small part in the industry’s difficult but necessary restructuring. Thus, I am offended by recent remarks made by Danny Sebright, President of the U.S.-UAE Business Council, and Roger Dow, President of the U.S. Travel Association (USTA).

During the past several months, both men have repeatedly made inflammatory and knowingly false statements to justify the huge subsidies that the three Gulf mega-airlines – Emirates, Etihad, and Qatar Airways – receive from their governments that grossly distort international competition. These three airlines all enjoy significant access to the U.S. market through “Open Skies” aviation agreements between the U.S. and both the United Arab Emirates (UAE) and Qatar, which permit Emirates, Etihad, and Qatar the ability to fly to and from any U.S. city, with no limits on flights or prices. Under U.S. government policy, however, countries that agree to the Open Skies arrangement must not distort the marketplace by subsidizing their airlines. However, the UAE and Qatar have provided more than $42 billion in subsidies and other unfair benefits in the past decade alone that tilt the competitive playing field and contradict Open Skies policy.

Mr. Sebright said in May that U.S. airlines were “making a mountain out of a molehill,” in raising the subsidy issue with the U.S. Government. $42 billion in subsidies and other unfair benefits is hardly a molehill. But more problematic was his suggestion that if U.S. airlines spent money “on improving the service, making their seats better, making their flight attendants more polite, nice and friendly, we believe they could compete head-to-head with UAE airlines.” In fact, after emerging from an extremely challenging decade-plus of losses, U.S. airlines are now investing enormous sums in service improvements, including better seats. But the “polite, nice and friendly” is simply offensive. Every one of my friends and colleagues who are flight attendants for American, Delta, and United are all those things and more. Their employers treat them fairly and humanely, and unlike their counterparts in the UAE and Qatar they enjoy the legal right to organize themselves into a union.

The Gulf carriers’ labor strategy is straightforward and cynical: hire young, attractive women from poor countries, give them a short, fixed-term contract, treat them badly, dismiss them easily, and then hire more.

In the case of Qatar Airways, this pattern has led to what the International Transport Workers’ Federation found to be “flagrant abuses of aviation workers’ labour rights.” Qatar’s policies are especially egregious. Until recently, their contracts with cabin crewmembers allowed the airline to fire women who became pregnant (and crewmembers who hid their pregnancy were also liable to be terminated), and required company permission to marry. Female employees cannot be dropped off or picked up from company property by anyone other than their father, brother, or spouse. What if the man is back in the Philippines or India? They can be fired if they a) get tattoos, even if they are not visible beneath a uniform; b) use too much hair gel or position their hats incorrectly; or c) post something to Facebook that Qatar Airways finds objectionable.

The USTA View

It’s not surprising that USTA President Roger Dow echoes the same misinformation as the Gulf carriers on the issue of subsidies: his member hotels are expanding massive in the Gulf and are increasingly dependent (like the Gulf carriers) on the largesse of the state treasuries of the UAE and Qatar. But Mr. Dow is wrong on at least four points. Worse, his errors appear to be willful, but he and Mr. Sebright believe that repeating the falsehoods will make them true.

First, Mr. Dow claims that the Gulf carriers are stimulating traffic, when the data shows that they are actually stimulating virtually no traffic and instead using subsidies to divert traffic from others. Second, he claims U.S. airlines are against Open Skies. But American, Delta, and United have said unequivocally and repeatedly that they support Open Skies and have acknowledged that they have benefited from Open Skies. What the U.S. airlines don’t support are massive subsidies that distort the marketplace and undermine fair competition, in violation of the Open Skies policy I supported and worked towards in my many years at American Airlines. The U.S. airlines are the ones defending Open Skies while Mr. Dow, Mr. Sebright and others assail it trying to justify the Gulf carriers’ subsidies. Third, USTA suggests that the U.S. airlines’ arguments are undermined because they went through Chapter 11 restructuring. But the U.S. bankruptcy process is not a subsidy; among other reasons, there is no financial contribution by the U.S. government through the provision of taxpayers’ money, or otherwise.

Finally, Mr. Dow claims that Gulf carriers are promoting growth in small- and medium-sized cities like Portland, Oregon, Lubbock, Texas, and Dayton, Ohio. But Emirates, Etihad, and Qatar will ultimately damage air service to these and dozens of other comparable markets because the diversion of traffic from U.S. carriers’ international flights weakens their domestic networks. This assertion by Mr. Dow is especially troubling because USTA should represent the whole of this country and not ignore the vulnerability of non-gateway cities and its members in those cities that rely on the U.S. airlines’ continued ability to maintain their domestic hub-and-spoke networks.

Mr. Sebright and Mr. Dow owe it to their respective organizations, their members, and the U.S. government officials charged with addressing subsidies and unfair competition to keep their willful mischaracterizations and insults out of this debate.

Originally published on the Huffington Post: http://www.huffingtonpost.com/rob-britton/post_9717_b_7735244.html

americans4fairskies2015We Need Honesty in the Gulf Airline Subsidy Debate
read more

American Airlines officials: We need a level playing field

Just when U.S. airlines are beginning to operate like real businesses — investing in products and services, offering competitive wages, with a viable, long-term business plan — foreign governments are propping up the competition with subsidies, undermining our hard-won progress and threatening service to smaller communities and thousands of jobs right here in North Texas.

Over the past decade, the governments of Qatar and the United Arab Emirates have provided more than $42 billion in subsidies and other market-distorting benefits to three airlines based in the Persian Gulf — Qatar Airways, Etihad Airways and Emirates.

These benefits take a wide variety of forms, including interest-free loans with no repayment obligations, capital infusions, free land, airport fee exemptions and government assumption of fuel-hedging losses. The magnitude of these subsidies is unprecedented and has enabled the three state-owned Gulf airlines to expand rapidly, buy hundreds of new jumbo jets and fly those jets without regard for industry economics or profits.

In fact, these subsidies have enabled Emirates to become the world’s largest airline as measured by international passengers and capacity, and, given their current subsidized order books of more than 600 aircraft, the three Gulf carriers will soon have a combined widebody capacity greater than the entire U.S. commercial widebody fleet.

It’s hard to understand how two countries with a combined citizenship roughly equal to the state of Rhode Island could have the need to create such a massive fleet. The fact is these airlines aren’t creating new passenger traffic — they are using their subsidized advantage to pull passengers away from U.S. carriers, threatening thousands of Texas jobs.

We’ll compete with any airline — no matter how successful or well-run — and indeed American is already competing vigorously by hiring and training thousands of new employees and investing more than $2 billion to give customers a superior travel experience around the world. But we can’t be expected to compete against the treasuries of governments that write blank checks to their state-owned airlines.

We aren’t saying there is anything wrong with airlines being owned by their governments, and there’s nothing wrong with buying big new airplanes and opening new routes. The problem lies in the extensive government assistance provided to the Gulf carriers by the governments of Qatar and the UAE. That assistance is prohibited under Open Skies policy, which is outlined in the commercial aviation trade agreements the U.S. maintains with these two Gulf nations and 114 other countries around the world. In short: Open Skies agreements allow airlines and market demand to dictate service levels without government interference.

If this subsidized expansion continues, U.S. carriers will be forced off more international routes. As U.S. airlines move out of international skies, service to smaller communities will be impacted as well thousands of jobs. International flights drive significant demand for connecting service, and each long-haul, international flight operated by a U.S. carrier generates more than 800 jobs.

Texas has already answered the call in defense of American jobs. More than 75 elected officials and business leaders throughout the state have asked the federal government to take action, including 23 members of the U.S. House of Representatives from Texas, Fort Worth Mayor Betsy Price, North Texas Commission President and CEO Mabrie Jackson, and Dallas County Judge Clay Jenkins.

These subsidies must stop, so we are asking our government to enter into consultations with Qatar and the UAE to discuss the Gulf carriers’ finances and to request a freeze on new service during consultations. This consultation process is permitted and outlined within the Open Skies framework.

When we are allowed to compete fairly, businesses across North Texas benefit. Flights connect more sellers with more buyers, more products with more markets, and more consumers with more choices. Flights also connect more grandparents with their families, more friends with one another, and more dreamers and thinkers with the chance to bring their ideas to life.

But as long as the marketplace is manipulated by foreign governments the way it currently is, our ability to create jobs and facilitate those connections is threatened.

Doug Parker is chairman and CEO of American Airlines Group. Reach him at [email protected]. Laura Glading is the president of the Association of Professional Flight Attendants, which represents American’s 25,000 flight attendants. Reach her through www.apfa.org. Capt. Keith Wilson is the president of the Allied Pilots Association, which represents American’s 15,000 pilots. Reach him through www.alliedpilots.org.

Originally published on The Dallas Morning News: http://www.dallasnews.com/opinion/latest-columns/20150706-american-airlines-officials-we-need-a-level-playing-field.ece

americans4fairskies2015American Airlines officials: We need a level playing field
read more

Unbuckled seat belts and violent turbulence: ‘Open skies’ and trade

By Martin Edwin Andersen

Portrayed in advertising as akin to a chic airborne Bedouin-and-breakfast oasis, three Middle Eastern airlines are wielding power more like 19th century robber barons — exploiting their workers at home while shifting valuable U.S. aviation jobs overseas.

The story behind these state-owned carriers — Qatar Airways, Etihad Airways and Emirates — shimmers like an illusion in the desert, luring world-weary travelers to the inn of supposedly “Open Skies” refuge. Incredibly, during a decade in which this trio is estimated to have received more than $42 billion in illegal subsides from the United Arab Emirates and Qatari governments, official U.S. policy has been to embrace the illusion, casting aside our ethical and economic interests in the process.

The issue is disturbingly similar to the all-but-signed Trans-Pacific Partnership, the massive trade agreement riddled with concerns about enforceable labor standards, subsidization, non-discrimination and other international norms. While the Middle Eastern Open Skies saga deserves attention in its own right, the lessons it teaches on the dangers of rushed and insufficiently transparent trade deals are needed now more than ever. After all, at the heart of the TPP debate has been the question of fast-track authority. By prioritizing speed over deliberation, once more the United States risks reliance on misconceptions, both skillful and willful. Let us instead actively revisit the errors of Open Skies in the hope that by righting one wrong, far greater harms might be averted.Currently, U.S. legacy airlines — American, Delta and United — face competitors with unfettered access to the world’s oldest democracy, a phenomenon fueled by ill conceived and rapidly negotiated bilateral agreements. All this “generosity,” however, has served only to displace U.S. airline market share. While Delta and United each offer only a single daily flight to Dubai and none to Abu Dhabi, Emirates alone flies to nine U.S. cities from its Dubai hub, now the world’s busiest travel nexus.Open Skies was meant to limit government interference in airlines’ commercial decisions. Implemented fairly, everyone prospers. But with the Gulf States’s near-monopoly, Open Skies has become open season—on U.S. jobs, U.S. values and basic common sense.

Just this month, the United Nations’s International Labor Office found Qatar Airlines violated international law by flagrantly disrespecting women’s rights. CEO Akbar Al Baker responded: “I don’t give a damn about the ILO.” Perhaps this arrogance shouldn’t come as a surprise. Human Rights Watch has been pointing out for years that Qatari law codifies discrimination against women. Even marital rape is permitted.

Other labor abuses in the UAE and Qatar border on slavery; free speech is a profile left to the truly courageous; and ethnic, social and religious prejudices evoke the worst of the Confederate-flag-waving Jim Crow South. TheWall Street Journal recently noted that Emirates Airlines faces its most difficult labor challenges to date due to expanded shifts, restrictions on dress and mistreatment by supervisors — plus the fact that unions are illegal. While in the region, Secretary of State John Kerry correctly stated that such gross inequity “rips and tears at the fabric of the rule of law.”

In both Qatar and the UAE, the LGBT community faces state terror: In the former, gay relationships are punishable by death, while in Qatar—now mired in the FIFA scandal—2022 World Cup fans were told they might be screened to “detect homosexuality.”

With one of the world’s smallest native populations — slightly more than a quarter-million — Qatar has the largest percentage, 88 percent, of non-nationals. Counting only native citizens, it is the world’s wealthiest nation. This begs the question: Aside from subsidizing airlines and constructing artificial island playgrounds, where does all that money go? David Harris, executive director of the American Jewish Committee, recently described Qatar as “the ATM for jihadist groups.”

Beyond doubt, the United States is stunningly disposed to signing free trade accords that shock the conscience and are anything but free. That’s exactly why TPP should be receiving unprecedented scrutiny. The pact would affect roughly 40 percent of global GDP, including countries routinely condemned for violating human rights — e.g., Brunei, Malaysia and Vietnam. Some experts predict it is likely to decrease wages for 90 percent of America’s workers. Has Open Skies taught us nothing?

Senate Minority Whip Dick Durbin (D-Ill.) sounded that alarm two months ago in an official letter: “The three largest airlines of the Gulf states … are receiving substantial government subsidies … [giving] these airlines an unfair advantage over U.S. carriers. As such, I urge you to carefully review this situation and consider appropriate action to uphold the legacy of our Open Skies agreements.”

The Hadith (the sayings of Muhammad) points to the manumission of slaves as one of the most meritorious deeds available for the expiation of sins. Let us help ourselves, as well as the peoples of Qatar and the UAE, to do just that, opening the sky only for those who repent.


Andersen served as senior adviser for policy planning at the Criminal Division of the Department of Justice, where he received the U.S. Office of Special Counsel’s Public Servant Award, one of the highest awards for protecting national security information. He is also a former assistant professor of national security affairs at the National Defense University in Washington, D.C., the author of three books on international affairs and served as senior professional staff at the U.S. Senate Foreign Relations Committee.

Originally published on The Hill: http://thehill.com/blogs/congress-blog/246656-unbuckled-seat-belts-and-violent-turbulence-open-skies-and-trade

americans4fairskies2015Unbuckled seat belts and violent turbulence: ‘Open skies’ and trade
read more