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