Three Points On Open Skies

Another week is coming to an end, which means it’s been another week of mistruths and false equvalencies from those benefiting from the illegal trade practices of the State of Qatar and the United Arab Emirates and their three state-owned airlines, Emirates, Etihad, and Qatar Airways.

As always, A4FS is here to set the record straight. So let’s get to it:

1. Dismal Load Factors But Above Average Growth?

IATA’s recent “Air Passenger Market Analysis” for October 2017 shed an interesting light on the continued capacity dumping of Middle Eastern airlines, particularly Etihad, Emirates, and Qatar Airways, which are by far the largest of the Middle Eastern air carriers. For October, the airlines’ capacity increased by another 1%, again outpacing worldwide capacity trends. This has been the norm for these state-subsidized airlines, which have grown without regard for market demand or economics.

What is even more illuminating, however, is the dismal load factor (the percentage of seats filled on flights) for the Middle Eastern airlines in October: 69.6%. This means that for every flight, more than 30% of the seats are unsold. This load factor is 10% lower than the average in October for all international airlines (79.4%) and is further evidence of the Middle Eastern airlines’ capacity dumping. They are unconcerned about making a profit – a sub-70% load factor is not competitive or profitable – and instead are engaged in predatory expansion, resulting in a distortion of the international marketplace. This has, in turn, deprived U.S. passenger air carriers of their ability to compete equally and fairly, which is a violation of Open Skies.

2. Market Place Distortions Violate Open Skies

In a story published this week in The National, the head of the US-UAE Business Council attempted to muddy our push for Open Skies enforcement by suggesting that the subsidies (more than $52 billion) to Emirates, Etihad, and Qatar Airways are not relevant to fair trade. This is important because he did not dispute the facts regarding the subsidies, instead arguing: “The bottom line is that Open Skies doesn’t have anything to do with subsidies. There is no provision in Open Skies anywhere that deals with subsidies.” What Mr. Sebright (deliberately) misses, however, is that subsidies distort the international marketplace, allowing capacity dumping from Emirates, Etihad and Qatar Airways (see point 1 above), which deprives U.S. passenger air carriers of their ability to compete equally and fairly. And that, Mr. Sebright, is a violation of Open Skies.

3. Pro-Subsidies Is Anti-Fair Competition

Politico Influence reported that a coalition of airlines that profit from the subsidization of Emirates, Etihad and Qatar Airways, calling themselves “U.S. Airlines for Open Skies,” launched an ad campaign this week stating that because American Airlines, Delta and United are seeking enforcement of Open Skies trade agreements, they are “on the naughty list.” Setting aside clichéd messaging that seems to be targeted to elementary school children, the coalition has the message backwards. United, American, and Delta and their employees are pro-Open Skies. They have made this abundantly clear. Those who seek to protect the narrow interests of three Middle Eastern airlines – Emirates, Etihad, and Qatar Airways – that have grown unsustainably (see point 1 again) and have therefore distorted the marketplace in violation of Open Skies (see point 2), are the true protectionists.

Every day the size of the subsidies being used to distort competition through predatory practices grows- the number is so big now (more than $52 billion in 10 years) that it’s difficult for many people to fully comprehend. What is easy for people to understand? The direct threat these practices pose to American aviation workers. This cannot continue.

To learn how you can get involved by donating or taking action, visit us online at fairskies.wpengine.com, on Facebook or on Twitter.

Thanks for your support of fair competition.