FedEx Flip Flop: Why the Cargo Carrier Changed its Stance on Trade Enforcement

Friends,

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.

With the latest misleading rhetoric Mr. Mitchell has chosen to use to frame his distorted view on Open Skies, it seems that he would have you imagine that the U.S. air cargo industry will come under threat if the U.S. government properly enforces our Open Skies agreements. He makes the incorrect assumption that if the U.S. government stops allowing subsidized airlines, specifically those from the UAE, Emirates and Etihad, to distort the U.S. aviation market, the UAE government might threaten FedEx’s cargo hub in Dubai. It’s an argument that is deeply flawed and defies simple logic, so we are here, yet again, to set the record straight.

Passengers, Not Cargo

First and foremost – our request of the U.S. government to take action to enforce our Open Skies agreements with the UAE’s and State of Qatar’s passenger carriers (Qatar Airways, Etihad, and Emirates) – does not impact cargo carriers. Period. Full stop. Our Open Skies agreements with Qatar and the UAE approach cargo services separately from passenger carriers and enjoy freedoms that passenger carriers do not. We are not asking that the U.S. government address the cargo aspects of these agreements, but rather the exploitation of Open Skies by the State of Qatar and the United Arab Emirates through their state-owned passenger carriers.

Dubai Needs FedEx for U.S. Market Access

FedEx, and other carriers including UPS, DHL, and Middle Eastern cargo companies, utilize a cargo hub in Dubai to bring in and sort cargo and then distribute it to Africa, Asia, and the rest of the Middle East. The reason this cargo hub is used by so many carriers is due to its geographic position, which allows long-haul cargo aircraft to reach nearly two-thirds of the world’s population from Dubai with a direct flight. As Dubai continues to expand its reach as a global trade center, it is illogical to believe that the UAE would undermine its own hub and harm its economic aspiration. It is also illogical for the UAE to harm FedEx’s market share in their hub; they need FedEx in Dubai for western imports and for their own cargo operations’ access to the U.S. marketplace. Mitchell’s arguments run counter to the UAE’s own self-interest. And if there is anything we know about the UAE, it is that they act first in their own self-interest.

FedEx’s Hypocrisy

It’s also important to point out that historically FedEx has supported government action against state-subsidized competition; at least when the company felt unfair competition impacted its business. During negotiations for the Trans-Pacific Partnership, FedEx’s position was firmly anti-subsidy. A senior vice president of FedEx at one point stated, “We are very happy to compete on a level playing field, but we don’t want subsidies to the postal units to come into express businesses and then compete with us in an unfair advantage.” Does that sound familiar? It should, because that is the crux of Americans for Fair Skies’ argument for action to enforce Open Skies. Subsidies should not provide an unfair advantage.

FedEx cannot support fair trade only when it is convenient. It’s impossible to claim to support fair trade and Open Skies while simultaneously attempting to ignore/undermine the elements of Open Skies policies that make them effective.

FedEx needs to put American workers first and realize that, by supporting the Gulf carriers’ continued abuse of our Open Skies agreements, FedEx is hurting itself in the long run. While the passenger and cargo industries are significantly different, both have benefitted from a healthy Open Skies framework, and both will feel the effects of its degradation.

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

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