Editorial: Raising an alarm about unfair airline competition

Free markets aren’t so free when one side has its thumb on the scale.

That’s the gist of Delta Air Lines’ argument as it makes its case about a competitive threat.

The situation pits Delta and the nation’s other top airlines against aggressive, state-owned — and subsidized — carriers from certain Middle East countries. There is concern that aggressive, subsidized expansion by airlines from Qatar and the United Arab Emirates will undermine U.S. carriers, ultimately jeopardizing airline connections, service and jobs.

The risk and the remedy — enforcing “Open Skies” agreements between the United States and other nations that govern industry competition — are receiving due notice, including attention across the political divide from all eight Minnesota members of the U.S. House.

The carriers — Emirates, Etihad Airways and Qatar Airways — are using subsidies to launch international service that would not be possible without government backing, explains a letter from Reps. Keith Ellison, Tom Emmer, Jason Lewis, Betty McCollum, Rick Nolan, Erik Paulsen, Collin Peterson and Tim Walz.

Their letter in April to Secretary of State Rex Tillerson and Transportation Secretary Elaine Chao says that the Mideast carriers’ subsidies — amounting to more than $50 billion — foster new routes that come “at the expense of U.S. airlines’ international networks, American jobs and ultimately will harm consumers.”

It notes that Emirates, for example, now offers round-trip flights from New York City to Milan, Italy, and Athens, Greece, that “would not be viable without subsidies.”

The lawmakers contend that subsidized flights will “shift passengers away from U.S. carriers and hurt service to U.S. hubs, as well as the small- and medium-sized communities they serve.” Their letter also expresses concern that “as subsidized capacity continues to grow, U.S. international and domestic connecting flights may be discontinued, leading to a loss of good-paying aviation jobs in our state.”

Sen. Amy Klobuchar was among a bipartisan group of her colleagues signing a similar letter to the Trump administration earlier in the year. It notes repeated statements from the president that strong enforcement of international agreements will be central to administration policy.

The Middle East carriers shouldn’t have access to our market if they violate the trade agreement, Delta’s Chief Legal Officer Peter Carter told the editorial board.

Delta’s work on the issue in the Partnership for Open & Fair Skies brings it together with two other so-called “legacy” carriers, American and United, as well as labor unions representing airline workers.

That combination of fierce competitors and bargaining-table adversaries should “tell you something’s going on,” said Carter, a former partner at the Minneapolis-based Dorsey and Whitney law firm.

If left unchecked, the Mideast carriers will continue to expand in the United States, pushing out U.S. airlines and harming hard-working Americans, according to the partnership. It has engaged airline employees in the effort, including lobbying their representatives in Washington.

Carter, who also made a presentation at a recent meeting of the Metropolitan Airports Commission, cites disruption in airline markets in Europe and Australia, for example, that has displaced such once-dominant carriers as Lufthansa and Qantas.

We should note that not everyone agrees. A lengthy rebuttal on the Emirates website disputes the claim that it benefits from subsidies and says the carriers misstate the Open Skies agreement. Meanwhile, a coalition of four passenger and cargo carriers says the major airlines don’t speak for the industry.

But Delta’s concern resonates here, where the Northwest Airlines legacy runs deep, even after their merger in 2008.

We don’t underestimate the importance of Delta’s hub at Minneapolis-St. Paul International Airport and the competitive advantage it provides for Minnesota businesses — and the state’s economy.

Fast, efficient connections for businesses and entrepreneurs — and leisure travelers, too — are a key to the region’s economic well-being. That’s something to protect.

Article original found: TwinCities.Com