Open Skies 2018

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A few observations:

President Trump has made trade enforcement a priority, and his team is taking initial steps to address the market-distorting subsidies by the UAE and State of Qatar to their three airlines. In 2018, we are confident that further progress on Open Skies enforcement will be made, which will help restore market balance, safeguard U.S. jobs, and protect the integrity of the 100+ Open Skies agreements with other nations that are not being violated.

 

300 Members of Congress have written the White House supporting action to end the subsidy violation by the UAE and Qatar. That demonstrates overwhelming support and is a clear sign that the Trump Administration has broad support from Congress to take further action.

 

The following quote from Delta CEO Ed Bastian gets to the heart of this issue for the United States:

“The issue with the Gulf carriers is that they’ve been massively subsidized by their governments. They’re dumping seats into the market, we can’t compete, they’re running us out of our markets. They’re doing it by taking our jobs, taking our routes, they’ve done it in Europe, they’ve done it in Asia, they’ve done it in Australia, and the next stop for them is to do it in the U.S.”

Fueled by more than $52 billion in subsidies, the ME3 – Emirates, Etihad, and Qatar Airways – have expanded at unprecedented rates, without market demand and with no regard to earning a profit. As we recently noted, the Gulf airlines have dismal load factors (i.e. lots of empty airplane seats, which is seat dumping) but are maintaining above-average growth (i.e. predatory expansion). As Mr. Bastian notes, they’ve expanded massively into Europe, Asia, and Australia and harmed those markets, resulting in massive job losses. Now they are turning their attention to the United States, the largest aviation market in the world. With each daily international route lost or forgone, there is a net loss of 1,500 U.S. jobs. This cannot be allowed to stand.

 

We’ve written about this before, but as we enter 2018, it is important to highlight a few key points on those who support Open Skies violations. Each is profiting in its own way from the Gulf subsidies and therefore is motivated to protect the status quo, even if it means going against the interest of American workers.
  • US Travel Association: Ironic name, given that they are violently opposing U.S. interests in support of the Middle East. US Travel is taking money from the United Arab Emirates – state-owned Emirates Airline and Etihad Airways are members of US Travel – to oppose Open Skies enforcement. That is a flagrant foul for an association that claims to represent the interests of the United States, and some have alleged that it may even be a violation of federal law.
  • FedEx: FedEx doesn’t fly passengers, as it is a cargo airline. Enforcing Open Skies for passenger airlines would not impact their business. And as strong supporters of Open Skies enforcement in the past, their opposition now is hypocritical. It is painful to watch a company that has been so supportive of Open Skies enforcement in the past now flip and oppose enforcement for U.S. passenger carriers.
  • Atlas Airlines: Atlas also does not fly passengers; it flies ACMI contracts for Emirates. Atlas Airlines is taking money from Emirates Airline, profiting off of the illegal subsidies Emirates receives from its government owners.
  • JetBlue: JetBlue does not fly long haul international routes – i.e. the routes impacted by Open Skies Agreements with countries like Qatar and the UAE. You know what it does do? Sells U.S. government (GSA) tickets on Emirates planes. JetBlue is profiting from Emirates Airline predatory expansion.
  • Alaska Airlines: Similar to JetBlue, Alaska also does not fly long haul international routes and is not directly impacted. JetBlue and Alaska both profit from an increased Gulf carrier presence in America through their codeshare agreements. But they are in essence trading their own opportunity for international expansion – thereby employing more Americans – for outsourcing to the Middle East carriers. JetBlue and Alaska’s profiting off of the Middle East airlines’ subsides does nothing for thousands of hard-working Americans impacted by massively subsidized international competition and ultimately harms their own employees growth potential.
  • Business Travel Coalition (BTC, aka Kevin Mitchell): Fake News. And some have suggested in violation of federal law.

2018 is the year for action on Open Skies enforcement. The Trump Administration is strong on trade enforcement. Congress supports taking action. The opposition is dishonest and can’t be trusted. The time for enforcement is now. American aviation workers are depending on it.

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

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