November 2017 - Americans for Fair Skies

Myth Busting: Isakson Tax Fairness Provision

November 30, 2017 News No comments

Opponents of fair competition in international aviation are actively lobbying against a provision in the Senate’s tax overhaul that would end tax giveaways to foreign airlines from nations that block U.S. airlines from fair competition. The language drafted by Senator Isakson ensures that the U.S. tax code does not offer preferential tax treatment to foreign airlines from nations that are violating U.S. trade laws and killing U.S. jobs. Americans for Fair Skies strongly supports the Isakson provision and is here to bust the myths being perpetuated about this provision by opponents of fair competition.

The International Air Transport Association (IATA) has, misguidedly, come out against the Isakson tax fairness provision. This is noteworthy, as the CEO of Qatar Airways, the largest subsidy recipient of the three-state owned airlines, and a clear violator of U.S. trade policy, is the Chairman of IATA. Qatar Airways would be insolvent if it was not for the billions it has recieved in government subsidies. Support for principles of fairness in international aviation is a key mission of IATA. This begs the question: is IATA really looking out for the best interests of international aviation fairness, or is the organization being led down a path of support for unfair skies to protect the narrow interests of its Chairman? This is deeply disturbing behavior by IATA and demands investigation.

Kevin Mitchell, the leader of the for-profit Business Travel Coalition, also (predictably) opposes the Isakson language, as does a coalition representing airlines that profit off the UAE and Qatari subsidies. We are not sure who is paying Kevin Mitchell for his opposition to this provision and his continued support for the UAE and Qatar over the United States. But his arguments, and those of the airlines that are aligned with foreign interests over U.S. interests, are another weak attempt to distort the facts of this issue.

The attempt to muddy the narrative by Mitchell and IATA does not change the reality that U.S. airlines and their employees are harmed by the UAE and Qatar’s predatory expansion. The subsidized growth of the state-owned and state-subsidized carriers, Emirates, Etihad and Qatar Airways, has distorted the international aviation marketplace, thereby depriving U.S. air carriers the ability to compete equally and fairly, as Open Skies agreements intended.

When the United Arab Emirates and State of Qatar made their respective decisions to begin violating international trade law by subsidizing their airlines, they upended decades of international precedent. Kevin Mitchell and others may claim that nothing stops a U.S. airline from flying to the Middle East, but those who live in the real world of business understand that government subsidies and capacity dumping undermine all principles of fair competition. As a result of the UAE and Qatari predatory expansion and distortion of the international aviation marketplace, U.S. air carriers have been deprived of their ability to compete on a level playing field.

Senator Isakson’s language recognizes the new reality of global aviation these foreign carriers have created with their violations of U.S. Open Skies policy and adjusts U.S. tax law accordingly. Isakson’s language removes a tax benefit from competitors that are in violation of their international agreements and have no regard for market demand and the financial norms of profit and loss, including Emirates, Etihad and Qatar Airways.

Senator Isakson’s provision also clearly articulates that it only impacts passenger operations. FedEx and other cargo operations are not impacted by this provision. Any suggestion by Kevin Mitchell and others otherwise is a myth, and an attempt to muddy the narrative with falsehoods.

Another myth is the speculation about “retaliatory action” by the UAE and Qatar if the U.S. restores tax fairness. This is also false. There are no U.S. passenger carriers serving the UAE or State of Qatar to retaliate against, because the U.S. passenger air carriers already cannot compete on the un-level playing field created by the two nations with their subsidized airlines. U.S. airlines and their employees can compete with any company in the world, and win, but in these instances, they are competing against the treasuries of nations.

Any suggestion by Mitchell or others that the UAE or State of Qatar would take action against other U.S. companies with operations in their nations is also a hypothetical falsehood and does not recognize the economic reality that the UAE and State of Qatar need the U.S. companies in their nations for their own self-interest given the benefits they provide.

It is clear that IATA, Mitchell, and others who oppose the tax fairness provision are grasping at straws with their opposition and are doing so not on the basis of facts, but in the interest of their foreign benefactors. Facts matter. And once again, Mr. Mitchell and other opponents of fair competition are looking to hide the truth.

Tax reform is currently being debated by the U.S. Senate. There is still time to make your voice heard. Call your Senators now and tell them you want them to stand up for American aviation and its workers by keeping Senator Isakson’s tax fairness provision in the final tax reform legislation.

Senator Isakson’s Tax Fairness Provision

November 29, 2017 News No comments

Friends,

A tax fairness provision in the Senate’s tax reform legislation, offered by Senator Johnny Isakson, has been attracting a lot of attention lately. Americans for Fair Skies proudly supports this provision, and for those who may not be familiar with what it would accomplish, if enacted, we are here, as always to share the facts with you.

Senator Isakson’s provision is simple and straightforward – it ensures that the U.S. tax code does not offer preferential tax treatment to foreign airlines from nations that are violating U.S. trade laws and killing U.S. jobs. In Senator Isakson’s own words, “Foreign airlines should not receive preferential tax treatment if their countries choose not to open their market to U.S. companies.”

SENATE VOTES TODAY: Tax Fairness Provision is CRITICAL for American aviation & its workers

November 29, 2017 News No comments

The U.S. Senate is scheduled to take up its tax overhaul legislation today. Included in the bill is a provision by Senator Isakson that would establish fairness in the U.S. tax code with respect to international aviation. Already, those who benefit from this preferential treatment are seeking to distort the truth regarding this provision and what it will do. As such, Americans for Fair Skies would like to set the record straight about what this language does and does not do. For even more information, see our post about the Isakson tax fairness provision from yesterday.

Senator Isakson’s provision ensures that the U.S. tax code does not offer preferential tax treatment to foreign airlines from nations that are violating U.S. trade laws. When foreign nations and their airlines cheat our aviation trade policies, known as Open Skies agreements, they distort the international aviation marketplace, thereby depriving U.S. air carriers the ability to compete equally and fairly, as Open Skies agreements intended. This hurts American jobs and should not be rewarded with favorable tax treatment.

Two nations in particular would be impacted by the Isakson provision. Both of these nations are in violation of U.S. Open Skies due to the massive subsidies they have provided to their three respective state-owned airlines, which distort the marketplace and harm competition. The United Arab Emirates, and its airlines Etihad and Emirates, and the State of Qatar, and Qatar Airways, combined have injected more than $50 billion into their airlines in the last decade alone (and this number is still growing). These airlines, in turn, have engaged in predatory expansion and unprecedented capacity dumping, undermining the basic principles of fair competition and violating the trade agreements they hold with the U.S. The Isakson tax fairness provision would ensure that these airlines pay their fair share of U.S. taxes, rather than being allowed preferential tax treatment at the expense of U.S. taxpayers.

The Senate language ends a tax exemption that applies ONLY to passenger airlines that have income derived from the U.S. and are from nations that deny fair market access for U.S. passenger airlines. Its aim is very hard to argue with: Play by the rules, or, pay your fair-share of U.S. taxes.
U.S. passenger airlines are blocked from flying to the UAE and State of Qatar due to the market distorting subsidies the nations are offering to their state-owned airlines. It is impossible for U.S. airlines and their employees to compete against the treasuries of nations and their ability to dump seat capacity into markets without regard to basic economic principles and no expectation of a return on investment.
Senator Isakson’s language recognizes the new reality of global aviation these foreign carriers have created with their violations of U.S. Open Skies policy and adjusts U.S. tax law accordingly, removing a tax benefit from competitors that are in violation of their international agreements and have no regard for market demand and the financial norms of profit and loss.
The Senate language does not limit these airlines from flying to the U.S., it simply taxes the foreign airlines on their U.S. revenue when there is no reciprocity of competition.
In addition to their government subsidies, Emirates, Etihad, and Qatar Airways do not pay income taxes in their home nations. And they do not release their financial statements.
Senator Isakson’s provision would ensure that these airlines would have to file tax returns in the United States, which would help to shed additional light on their finances, adding greater transparency to their subsidies and Open Skies violations.
Senator Isakson’s provision only impacts passenger operations. FedEx and other cargo operators are not impacted by this provision.
IATA and others have falsely listed which nations would be impacted by this provision. For example, IATA lists the British Virgin Islands as being impacted, but American Airlines has direct flights to BVI from Puerto Rico so BVI is not impacted. IATA lists Malaysia, but they have no direct flights to the U.S. And IATA lists French Polynesia, however, as a territory of France, they are covered by France’s tax treaty. Facts matter.
The non-partisan Congressional Budget Office estimates that the tax fairness provision would generate $200 million to the U.S. Treasury. That’s $200 million back to the U.S. taxpayers and away from those who are hurting U.S. jobs.

In Senator Isakson’s own words, “Foreign airlines should not receive preferential tax treatment if their countries choose not to open their market to U.S. companies.”We could not agree more, and we applaud Senator Isakson for his efforts on behalf of American workers and urge the United States Senate to act in support of the Isakson provision.The Senate is already debating their tax reform plan. It’s critical that your voice is heard NOW. Call your Senator and let them know that you want Senator Isakson’s Tax Fairness provision be included in the Senate’s Tax Reform Plan.Don’t know how to reach your Senator? You can find their phone number here:
U.S. Senate: Senators of the 115th Congress

Fedex: A Fair-Weather Friend of Fair Competition

November 21, 2017 News No comments

Friends,
We pulled the following quote from a petition sent to the U.S. Department of Transportation:
“The Department is required to ensure that U.S. air carriers compete on equal footing with foreign air carriers.”

We agree with this phrase, but we didn’t write it. Who filed it? It wasn’t a U.S. passenger carrier or interest group, but rather, it was fair competition’s most fair-weather fan: FedEx.

The petition, filed jointly by FedEx and UPS in 2002, was against DHL Aviation, and the case made against the German shipping service was one of unfair competition and the potentially disastrous effects to American companies that could result from it. Sound familiar? It should.

Just look at this quote pulled directly from the petition:

“FedEx Express has long been a staunch supporter of the Department’s open skies policies and of fair competition. It also believes that the United States must work to support the pre-eminence of the U.S. flag in civil aviation by insisting on the effective removal of all competitive obstacles imposed by foreign governments.”

FedEx was effectively making the same arguments against DHL that Americans for Fair Skies and other supporters of fair competition are currently making against Emirates, Etihad Airways, and Qatar Airways, the state-owned and state-subsidized carriers of the United Arab Emirates and State of Qatar. (It’s also a similar argument to the one FedEx made against Asian shipping companies during negotiations for the Trans Pacific Partnership.) In both instances, FedEx argues against the U.S. government allowing foreign operators taking advantage of looser regulatory environments and U.S. government policies to the detriment of American companies. It’s a serious and time-sensitive issue, and we applaud FedEx for speaking up against such practices.

However, we denounce FedEx’s blatant and destructive hypocrisy. FedEx decries government intervention on fair competition only when it serves their corporate interests. One could change the names and a few details in their petition and use it to make strong a case against Gulf carrier subsidization, and yet FedEx has proactively argued in support of these Middle Eastern carriers, and directly against enforcing U.S. aviation trade laws. We have written about the company’s obvious flip-flop on this issue before, and their petition against DHL is just another example of how FedEx’s position on fair competition stems from its own self-interest, not protecting American workers or companies.

If FedEx truly wants to insist on removing “all competitive obstacles imposed by foreign governments,” a great start would be to help its fellow American carriers fight unfair, anti-competitive, and job-killing Gulf subsidization practices. No carrier can compete with the resources of an entire government, and the predatory expansion practices that those subsidies fuel is the very definition of a competitive obstacle.

FedEx has been a supporter of Open Skies, but only when it serves their own corporate interests. We suggest that the company reconsider its support for Gulf trade abuses and help A4FS do what is best for American workers and the American economy: stop illegal subsidies and enforce Open Skies.

To learn more and get involved by taking action, visit us at fairskies.wpengine.com.

We also encourage you to follow us on Twitter or like us on Facebook for the most up-to-date information.

CEO Of The Year? Why Are A Failing Airline & Its Vulgar CEO Receiving Awards?

November 16, 2017 News No comments

Dear Friend,

Qatar Airways’ CEO, Akbar Al Baker, was recently named “CEO of the Year” by CAPA. This is a remarkable achievement for the CEO of an airline that has doubled its operating loss under his leadership and, according to Al Baker himself, is poised to post another annual loss.

Furthermore, in the past year alone Al Baker has made repellent comments unbecoming of anyone, especially someone in a leadership position. Al Baker was filmed bragging this past July stating, “the average age of my cabin crew is only 26 years,” and disgustingly asserting that “you know you will always be served by grandmothers on American carriers.”

FEDEX FLIP FLOP: Why the Cargo Carrier Changed its Stance on Trade Enforcement

November 3, 2017 News No comments

Dear Friend,

As we know, opponents of fair competition love false equivalencies. And when they run out of those, they turn to absolute falsehoods. One of their for-hire anti-Open Skies mouthpieces, the for-profit Business Travel Coalition’s Kevin Mitchell, has tried to spell doom and gloom for the U.S. air cargo industry as an attempt to justify the illegal subsidization practices of the the State of Qatar and the United Arab Emirates with regard to their airlines. As we’ve pointed out before, these illegal subsidies distort the international aviation marketplace, depriving U.S. airlines of the ability to compete equally and fairly, as the Open Skies agreements were intended.