A top Delta Air Lines executive says the U.S. airline industry is seeing gains in its effort to restrict the U.S. growth of three subsidized Middle East carriers, thanks largely to President Trump’s administration.
“We applaud the Trump administration,” said Peter Carter, Delta’s chief legal officer and executive vice president, in an interview. “It has moved mountains in understanding that these subsidies are contrary to Open Skies agreements and need to be addressed.”
Two weeks ago, the Qatari government agreed to annually provide audited financial information for Qatar Airways, a step that could lead to diminished state subsidies. Qatar also said the carrier has no current plans to begin “Fifth Freedom” flights between third countries and the U.S.
Carter called the agreement “a major milestone from our perspective.”
“If [the Qataris] live up to what they said they will do, that will solve the issues,” he said. “If they are not using subsidies and have transparent financials, [Qatar Airways] becomes a full-fledged member of the international airline community, playing on a level playing field.”
U.S. government negotiators have moved on to talks with the government of the United Arab Emirates, seeking similar goals in what would appear to be a tougher setting. Dubai-based Emirates airline already serves New York from Athens and Milan, while Abu Dhabi-based Etihad Airways, struggling financially, depends heavily on subsidies.
In the case of Emirates, Carter said, U.S. airlines do not envision halting the two fifth freedom flights serving Athens and Milan.
“We don’t anticipate anybody dropping anything,” he said. “Our government is not asking any other government to restrict what already exists. This is much more about the future, and in making sure that [Emirates’] huge order [aircraft] book isn’t used to expand fifth freedom flights, whether from Europe or Asia.”
As for Etihad, “I am not sure whether or not the nation of the UAE can justify two carriers of that size and scope,” Carter said. “It looks like Etihad has really existed solely as a result of the largesse of the UAE. Whether it could retool without those subsidies and try to only fly routes that have appropriate demand, I don’t know.
“When European airlines said no to state aid, a number flourished and a number had to shut down.” he said.
Carter spoke in behalf of the Partnership for Open & Fair Skies, a coalition that includes American, Delta, United and seven major airline labor unions and that lobbies for the U.S. to enforce Open Skies agreements with UAE and Qatar.
‘There’s a buzz out there that’s growing,” Carter said. “People understand that if these carriers are allowed to grow unfettered, it will have a major impact on U.S. airlines.”
The U.S. airline industry offers 19 daily departures to China, but only two daily United departures to India, a similarly sized country, partially because the Middle East carriers have built sizable market shares between the U.S. and India.
For its part, rather than compete with subsidized carriers, Delta ended Amsterdam-Mumbai service in March 2015 and Atlanta-Dubai service in February 2016, eliminating hundreds of employment opportunities in each case. Amsterdam is a hub for Delta joint venture partner KLM.
Carter said Trump “ran on the idea that we must enforce trade agreements to protect U.S. jobs, and this is a shovel ready violation of trade agreements that are being violated, hurting U.S. jobs.”
The Obama administration “did acknowledge that the subsidies were real, but for whatever reason, they were moving very slowly,” perhaps because the administration “was winding down and it is harder to get things done at the end of an administration,” he said.
Published on Forbes.
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