It has been more than two years since the UAE and State of Qatar were exposed with overwhelming evidence as two of the greatest international trade violators in history. By illegally injecting billions of dollars of subsidies into Emirates, Qatar, and Etihad Airways, the two nations allowed their national airlines to artificially and predatorily expand across the world, disrupting markets and eliminating local jobs wherever they went.
In the following two years, the three Middle Eastern airlines, their national sponsors, and their army of PR teams and US-based pay-for-play “advocates,” such as the Business Travel Coalition and the US Travel Association, have made a wide variety of arguments in defense of their illegal and predatory behavior. Their arguments seem inspired by the subtle art of throwing mud at a wall to see what will stick. They range from simply misleading to downright ridiculous.
Their latest attempt to misrepresent the facts has been to compare and equivocate the illegal trade practices of the UAE and State of Qatar with other nations operating under Open Skies Agreements and bilateral air service agreements. This attempt at a “but look what they are doing!” argument is devoid of fact or sense, so once again, we are here to set the record straight.
It is critical to understand that not all countries with airlines that fly into the U.S. have equal landing rights and privileges. The United States has two types of agreements that manage our international aviation agreements with other nations.
The first is known as a ‘bilateral air service agreement.’ The exact terms of these agreements can look different from one agreement to another, but one of the primary aims of each is to stipulate what landing rights and privileges have been agreed to by the participating countries. If one country wants a change in the terms of the agreement, both countries have to come to a mutually acceptable resolution. Because of this, the governments on both sides play a rather large role in this relationship, which can make the process, and change, slow and politicized.
In an effort to reduce this government interference and to create an open market where service is based solely on fair competition (key phrase), the U.S. introduced a new aviation agreement trade model in the 1990s known as the “Open Skies” framework. Included in this framework is a set of guiding rules, such as safety standards and fair competition principles, that are agreed to by all parties and manage every Open Skies relationship.
The Open Skies model removes much of the government oversight that fosters inefficiency in bilateral air service agreements and allows the companies operating under the agreements to make service decisions based on good business practices and economically feasible opportunities for expansion. As we’ve noted, it is these exact economic principles that the UAE and State of Qatar are undermining, but we’ll come back to that.
Americans for Fair Skies has been asked repeatedly, “Why is the focus of this dispute the carriers of the UAE and Qatar? Why not take issue with airlines like those from China and Ethiopia that also receive subsidies from their governments?” The answer to this question is very simple. We don’t take issue with those governments (at this time) because, unlike the UAE and State of Qatar, they are not using subsidies to undermine their trade agreements or to artificially distort the markets in which they operate. Their business goals are not to harm the American aviation industry or American workers.
China’s aviation trade relationship with the United States is overseen by abilateral air service agreement, not an Open Skies Agreement. As such, the U.S. government has specifically stipulated what routes and frequencies Chinese airlines may fly into the United States, just as the Chinese government has stipulated landing rights and frequencies for American carriers into Chinese airports.
Chinese airlines, many of which are indeed subsidized by their government at some level, are limited in their ability to expand into the United States. If a Chinese airline attempts to distort capacity or set artificially high or low prices, there is a process in place to address and rectify the conflict. Even if Chinese carriers received the level of subsidization that the Gulf carriers do, or wanted to mimic their illegal tactics, our bilateral agreement prevents them from doing so, as their frequencies into the U.S. have already been stipulated and any increase in those landing rights would be subject to approval by the U.S. government. There is no rational comparison between Chinese carriers and their impact on American workers to the illegal and predatory actions of the three Gulf carriers.
Ethiopia does have an Open Skies Agreement with the United States, and it has been in place since 2005. This agreement has allowed both American carriers and Ethiopian carriers to establish profitable routes between the two countries, increasing access between the US and the previously-underserved central/southern African market.
Ethiopian Airlines, like several other international carriers that operate under Open Skies Agreements, is state-owned and state-subsidized. While subsidized, however, the airline is not using subsidies as a method in which to predatorily expand into the U.S. market. We have seen no evidence of Ethiopian dumping seat capacity into U.S. cities or setting artificially low prices in an attempt to reduce competition. Ethiopian’s subsidization or business practices have not forced rival airlines to abandon once-profitable routes, or threatened thousands of hard-working Americans’ well-paid aviation jobs. There is simply no comparison between Ethiopian Airlines and the harm caused by the overwhelming predatory subsidies of Etihad, Emirates and Qatar Airways.
If, at any point in the future, Chinese or Ethiopian carriers begin harming American workers, Americans for Fair Skies will be the first to shine a harsh spotlight on them and seek U.S. government action. Our pro-worker and pro-competition mission is not limited by region. If any airline, foreign or domestic, robs opportunity from the American people, A4FS will be there to stop them.
Open Skies Agreements work wonders for the aviation industry, American consumers, and the U.S. economy, but only when they are adequately enforced. U.S. airlines including United, American Airlines and Delta have benefited from liberalized Open Skies policies with countries that follow the straightforward rules and do not cheat their trade agreements.
Emirates, Qatar, and Etihad, aided by billions in subsidies from their governments, continue to violate our Open Skies Agreements at the expense of thousands of middle class hard-working Americans. The Gulf carriers use illegal monetary benefits to weaponize their Open Skies Agreements and corrupt the original intent of the framework. Those actions have consequences, and Americans are forced to suffer them. We simply cannot accept the loss of well-paid American job opportunities as collateral damage in defense of unbridled liberalization. As President Trump often argues, a trade agreement is only worth having if it benefits the American people. Our Open Skies Agreements with the State of Qatar and the United Arab Emirates do not meet that requirement anymore and action is required by the U.S. government to preserve and defend our aviation trade agreements.