Planned Milan To LAX And SFO Flights Mean Qatar Airways Violates Deal, U.S. Airlines Say

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The big three U.S. airlines and most of their labor unions say that planned new flights from Milan to California’s two key airports violate a deal they made with Qatar Airways just ten months ago.

Qatar owns 49% of Air Italy, which said Wednesday that it will begin service from Milan to Los Angeles and San Francisco in April. Both flights will operate four times weekly aboard an Airbus A330-200 seating 252 passengers in two classes, according to press reports.

The long dispute over whether the subsidized big three Mideast carriers’ aggressive U.S. expansion violates Open Skies agreements had seemed to have ended this year in settlements, first with the government of Qatar in late January and then with the governments of the United Arab Emirates in May. Emirates and Etihad operate hubs in Dubai and Abu Dhabi, respectively.

The dispute has focused on two areas, opaque accounting that seems to hide the subsidies to the carriers and flights operated under the airline industry’s fifth freedom rights, which enable carriers to fly between two foreign countries.

On Monday, eleven Republican U.S. senators led by Ted Cruz (R-Texas) raised the fifth freedom issue in a letter to three cabinet members. The letter noted after Qatar Airways acquired 49% of Air Italy’s parent company last year, Air Italy began service from Milan to New York and to Miami. Also, the letter said, Qatar Airways is providing aircraft to Air Italy.

It appears that either the senators had learned of the planned California service or Qatar is responding to the letter.

“With today’s news of new routes from Air Italy to the U.S., fueled by money from Qatar Airways, the government of Qatar has demonstrated a stunning lack of respect for President Trump and Secretary of State Pompeo,” Scott Reed, campaign manager for the Partnership for Open & Fair Skies, said Thursday in a prepared statement.

The partnership represents American, Delta, United and most of their labor unions, as well as the Southwest Airlines Pilots Association.

“When the Trump administration negotiated an agreement with Qatar earlier this year to protect American jobs and restore fair competition to international aviation, the Qatari government agreed that its state-owned airline would not launch future fifth freedom flights to the U.S,” Reed said.

“By exploiting its investment in Air Italy to create a loophole and dodge this pledge, Qatar has violated this agreement and the trust of the United States,” he said. “We expect the Trump administration will take strong action and stand up for American workers in response to these violations.”

Qatar Airways declined to comment. In a January letter to the U.S. government, Qatar said it had no plans to launch fifth freedom flights to the U.S.

Originally Published on Forbes.

americans4fairskies2015Planned Milan To LAX And SFO Flights Mean Qatar Airways Violates Deal, U.S. Airlines Say
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Hudson Institute Releases New Study on State Subsidies and Unfair Competition in Global Commercial Aviation

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Hudson Institute released a new study, “Subsidies and Unfair Competition in Global Commercial Aviation: How to Respond,” authored by Hudson senior fellow Thomas Duesterberg. The report assesses the commercial airline industry’s “Open Skies” framework and the impact of violations and distortions by state-subsidized international carriers. The findings demonstrate that Emirates Airline, Etihad Airways, Qatar Airways, and other airlines are leveraging major government subsidies to rapidly expand their share of the global passenger aviation market. To address the violation of bilateral air transport agreements and the loss of market share from U.S. carriers, the report advises that the U.S. should enforce the transparency requirements of the 2018 supplemental agreements with Qatar and the UAE. Additionally, the U.S. should work with allies on ways to check new subsidized services from Gulf carriers and growing subsidized competition from China.

“Fair competition underpins the success of commercial aviation as an economic driver in the U.S. and abroad,” said Ken Weinstein, President and CEO of Hudson Institute. “This new report highlights important steps toward ensuring that airlines relying on subsidies from foreign governments do not undermine this key American industry.”

Key takeaways from the report include:

    • $48 billion in total cash or in-kind subsidies by the Gulf states have allowed the Gulf airlines to achieve a ten-fold increase in daily passenger seats since 2001 and capture significant market share in international travel from U.S., European, and Australian airlines.
    • Qatar Airlines is violating the spirit of the supplemental agreements by purchasing the small Italian carrier Meridiana (rebranded as “Air Italy”), enlarging its fleet size by 500%, and establishing U.S. routes from third-country stopover destinations.
    • Gulf airlines have exploited government subsidized service and government-funded upgrades to their hubs to grow their market share for U.S.-India passenger travel from 8 percent in 2008 to 46 percent in 2016.
    • China’s growing air transport market is benefitting from state subsidies, including tight capacity limits and direct subsidies from local Chinese government agencies. While operating largely outside the Open Skies framework, China should be considered a possible future partner in trade agreements covering commercial airline services.

The report was authored by Thomas Duesterberg, a senior fellow at Hudson Institute. He has previously served as the assistance secretary for international economic policy at the U.S. Department of Commerce. More recently, he was the President and CEO of the Manufacturers Alliance. He also served in senior staff positions in the U.S. Senate and U.S. House of Representatives. He is the co-author of “U.S. Manufacturing: The Engine of Growth in a Global Economy,” a comprehensive analysis of the U.S. manufacturing sector’s impact on the economy.

Please contact Hudson Institute Press Secretary Carolyn Stewart, [email protected] and (202) 974-6456 for media inquiries. The full report, “Subsidies and Unfair Competition in Global Commercial Aviation: How to Respond” can be accessed here: https://www.hudson.org/research/14641-subsidies-and-unfair-competition-in-global-commercial-aviation-how-to-respond.

Originally Published on Hudson Institute.

americans4fairskies2015Hudson Institute Releases New Study on State Subsidies and Unfair Competition in Global Commercial Aviation
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Does The End Of Etihad Spell Doom For Money-Losing National Airlines?

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Emirates this week discussed a long-rumored merger with Etihad Airlines. If it occurs, the ‘merger’ (really a takeover) will create one of the largest airlines in the world, with Emirates adding Etihad’s 18.6 million passengers to the 59 million carried by Emirates last year. The combined airlines will boast an impressive fleet of more than 110 Airbus A380s, the largest passenger aircraft in the world, plus an array of additional Airbus and Boeing aircraft.

Yet the acquisition may also represent another nail in the coffin of national airlines, also known as flag carriers. While the finances of the Gulf carriers can be opaque, it’s clear that Etihad, flag carrier of Abu Dhabi, lost $1.52 billion in 2017. While Emirates (also a national airline) reported a 2017 profit of $762 million, Etihad’s 2017 losses came on top of another $1.87 billion loss in 2016.

Such red ink is all too common to national carriers, claims Brian Sumers, a reporter at Skift. And if a wealthy oil-rich sheikdom like Abu Dhabi has tired of the financial bleeding and is willing to merge its airline with Emirates, what will be the fate of national carriers in impoverished countries around the globe?

Even successful airlines face difficulties today. Where does that leave often-inefficient national airlines, operated for national pride rather than profit? They must still meet the same challenges as any other airline, such as costly aircraft, a pilot shortage, higher fuel prices, competition, a looming trade war that may affect travel demand and the possibility of a recession.

In this environment, national airlines may face an economic reckoning, as Etihad apparently already has. “Governments may need to ask if there’s still value to having a national carrier, other than patriotism or pride,” writes Sumers. “And they may wonder whether it still makes sense to prop up airlines as more countries open their skies to new entrants and foreign carriers.”

Originally Published on Forbes.

americans4fairskies2015Does The End Of Etihad Spell Doom For Money-Losing National Airlines?
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OPINION: WE NEED A REVOLUTION IN TRADE ENFORCEMENT

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By: Newt Gingrich, Former Speaker of the United States House of Representatives

Since he was a candidate, President Trump has said free trade must also be fair. He has consistently challenged anti-competitive and unfair practices by our trading partners while working to forge new agreements.

The most recent example of this is the announced deal with Mexico — which his critics had claimed would never happen — and the potential deal with Canada, which has been spurred and shaped by Trump’s toughness.

President Trump’s success in international trade is happening because he understands every trade partner is self-interested and, if allowed, will take actions to benefit their own population and economy. Since the United States is the largest market in the world this gives us enormous leverage in negotiating trade deals.

While the tough negotiating approach has been working, there is a key piece missing. For Trump’s trade revolution to work, there must be a revolution in trade enforcement. It doesn’t matter how fair and equitable new trade agreements are written if other countries are happy to sign them and then cheat.

So, as a part of his revolution in trade, President Trump must build a new, dramatically more effective enforcement system that constantly monitors all trade agreements and quickly acts when parties bend, break or ignore the rules.

The current multinational, globalist system simply moves too slow to be effective. Countries that disregard the rules have years to make money and dominate markets by cheating the system before they face any consequences. Meanwhile, for those countries who are keeping their words, justice delayed is justice denied. The current, slow system only benefits the cheaters.

An important example of something this revolutionized trade enforcement system should monitor and check are unfair state subsidies.

State subsidies are devious because they unfairly eliminate financial pressure on foreign competition, which, in turn, allows the companies in subsidizing countries to lower prices, expand distribution, or upgrade products without concern on how to pay for it — or whether the market even wants it.

One example of this system of cheating through state subsidies is the more than $50 billion in state subsidies that have gone to airlines in Qatar and the United Arab Emirates (UAE) since 2004. With state subsidies, these airlines have been able to ignore market considerations and dump excess capacity all over the world in order to push out competition and gain market share — destroying market-based U.S. aviation jobs in the process.

Earlier this year, President Trump’s administration signed historic agreements with Qatar and the UAE to create transparency and accountability frameworks to expose the full levels of state subsidies flowing to these airlines. This leadership by President Trump has led to statements and understandings by the European Union and Japan to address state subsidies in aviation.

The United States’ seriousness about these state subsidies, however, is being tested. Prior to commitments to the Trump administration, the Qatari government-backed Qatar Airways cleverly invested in Meridiana, a small privately owned airline that formerly operated out of Sardinia. Before Qatar intervened, Meridiana had lost more than $50 million in both 2015 and 2016, had reduced the number of flights to just 54 per day, and had only 15 aircraft with no new orders in sight.

Enter Qatar Airways.  While the investment from Qatar Airways is capped at 49 percent, it is the Qatar CEO who has made the announcements about Meridiana’s future. A future that rebrands the airline as Air Italy, relocates the airline from Sardinia’s small market to the financial and industrial center of Italy in Milan, expands the fleet with more than 50 new planes from Qatar’s existing fleet and order books, and expands service by nearly 350 percent.

Certain facts about this are incontrovertible. First, Qatar Airways, in both action and word, is in full control of Meridiana/Air Italy.

Second, Qatar Airways will report losses over the last two year in excess of $1 billion, so the investment in Meridiana/Air Italy is unquestionably a state subsidy from the Qatari government.

Third, Qatar Airways’ expansion of Meridiana/Air Italy flights to the U.S. is directly counter to the assurances provided by the Qatari government to the Trump administration at the beginning of the year. This final point is what the Trump administration must address.

Once again, President Trump’s intuition has proven right. Despite assurances of fairness, our international trading partners are seeking to gain an unfair advantage. This is why Trump’s trade revolution also needs a revolution in trade enforcement.

Originally Published on The Daily Caller.

americans4fairskies2015OPINION: WE NEED A REVOLUTION IN TRADE ENFORCEMENT
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American CEO on Gulf Carrier Pact: ‘Someone Is Cheating Already’

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One of the three largest Gulf carriers is again not fighting fairly on transatlantic routes, American Airlines CEO Doug Parker said Wednesday at an industry event.

Parker made the allegation just four months after the Trump administration brokered a compromise with governments of Qatar and the United Arab Emirates over concerns airlines in those countries receive unfair subsides and undercut U.S. carriers.

“Someone is cheating already,” Parker said at Airlines for America’s Commericial Aviation Industry Summit in Washington, D.C.

In May, as part of negotiations with American diplomats, Qatar Airways, Emirates and Etihad Airways vowed to open their books to make it more clear whether or not they received government subsidies, as the largest U.S. carriers have alleged. In addition, under side letters, Parker said the three Gulf airlines had signaled they did not intend to launch new routes between the United States and Europe.

Technically, they have kept that promise. None of the three has added new Fifth-Freedom flying, or routes that begin in the Gulf but stop in Europe to pick up passengers. Delta Air Lines, United Airlines and American make major profits on transatlantic routes, particularly in business class, and they don’t want Gulf carriers to encroach on the market, even though aviation treaties permit it.

Today, there are two such routes, both flown by Emirates — Athens to Newark and Milan to New York JFK. But Parker said one of the three major Gulf airlines is circumventing the administration-negotiated agreement by helping an airline it invests in fly to the United States.

THREAT FROM AIR ITALY

Parker didn’t name the airline. However, about a year ago, Qatar Airways bought a 49 percent stake in what was then a little-known regional airline called Meridiana. The airline changed its name to Air Italy, a move executives figured would improve brand awareness abroad.

Ostensibly, Air Italy operates separately from Qatar Airways. But earlier this year, Qatar Airways leased Air Italy five Airbus A330s, allowing the airline to fly nonstop from Milan to two of American’s hubs — Miami and New York JFK. Air Italy plans more expansion soon, and by next year should have Boeing 787s.

Because Air Italy is a European-registered airline, the U.S.-Qatar Open Skies agreement should not be a factor. But Parker said airlines like Air Italy that receive support from Gulf airlines still may be competing unfairly. In a way, he suggested, routes like Air Italy’s are just as disruptive to U.S. carriers as Emirates’ two U.S-Europe routes.

“We have side letters that talk about they don’t intend to fly nonstop flights from outside the Gulf to the United States,” Parker said. “We have one of them now using a carrier they made an investment in to fly to the United States.”

What’s interesting is that American is close transatlantic partner of at least two other airlines in which Qatar Airways invests. Qatar Airways owns 20 percent of International Airlines Group, owner of British Airways and Iberia, both of which have antitrust immunity with American.

But the threat posed by airlines like Air Italy is still serious, Parker said.

“This is about American jobs,” he said. “It needs to be addressed.”

DISAGREEMENT OVER TERMS

Executives from American, Delta and United repeatedly say the Gulf carriers said they would not add new U.S.-European routes as part of the recent compromise. But even that is an subject of contention, with Emirates CEO Tim Clark saying last week his carrier made no promise.

“In no way was there any commitment, verbally or otherwise,” he said in an interview. “What we said was, that was never the thrust of our business model.”

Clark said Emirates continues to look opportunities to fly between Europe and United States, particularly in underserved markets. Often, he said, airports approach Emirates because they want service to a U.S. city and no other airline will do it.

But on Wednesday Parker again said it is unfair for American and other U.S. carriers to compete government-subsidized carriers on U.S.-European routes. Between New York and Milan, American flies a Boeing 777 in a standard configuration, with business, economy, while Emirates flies an Airbus A380 with showers in first class.

It is not surprising many premium customers prefer Emirates.

“The Middle Eastern carriers are subsidized to a level that makes them impossible to talk about as a fair competitor,” Parker said. “Give us $40 billion from the U.S. government and we’ll put showers in first class as well.”

Originally Published on Skift.

americans4fairskies2015American CEO on Gulf Carrier Pact: ‘Someone Is Cheating Already’
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Airlines face perfect storm

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U.S. airlines are facing a pivotal moment as higher fuel prices combine with government policy proposals that threaten to undermine the industry’s profitability after years of struggle.

The rising fuel costs are forcing executives to consider raising fares to compensate, a move that may spark consumer backlash, even as Congress debates restrictions to extra fees for services such as checking baggage. Casting a shadow over both is the challenge of navigating divides within the industry and the traveling public over President Trump’s controversial policies, from charging heavy tariffs on imported products to separating parents and children at the southern U.S. border.

Several carriers rapidly distanced themselves from the separations, urging the government not to use their services for related activities.

“We have no desire to be associated with separating families, or worse, to profit from it,” Forth Worth, Texas-based American Airlines said in a statement. The Department of Homeland Security called the decision unfortunate and lambasted the companies for refusing to protect the traveling public and help the government.

The administration’s import duties, meanwhile, won support from Delta Air Lines Chief Executive Officer Ed Bastian, despite opposition from the broader business community and even the typically GOP-friendly U.S. Chamber of Commerce.

“We’ve been victimized by unfair trade practices,” Bastian said at a recent event at the National Press Club. “With respect to the administration’s policy of giving U.S. workers the best chance at success to create that level playing field, we are 100 percent in agreement.”

Bastian’s Atlanta-based carrier is among those working to mitigate the effect of what the International Air Transport Association said was a 51 percent increase in jet-fuel prices, which reached $95.50 per barrel at the start of July.

“We have seen early success in addressing the fuel cost increase and offset two-thirds of the impact in the June quarter,” Bastian said in a statement this month. “With strong revenue momentum, an improving cost trajectory” and by trimming less-lucrative seating capacity from the fall schedule, “we have positioned Delta to return to margin expansion by year end,” he said.

While the industry has been largely free of price controls since 1978, the fare increases that higher fuel prices are likely to cause raises the risk of government scrutiny as travelers rebel. That would compound the challenge from restrictions on a fee-based price model increasingly popular in the industry in recent years.

The rise of low-cost carriers like Southwest Airlines forced larger airlines like Delta and American to begin offering cheaper seats and charging extra fees for upgrading them or checking baggage. Some lawmakers are seeking to insert in a Federal Aviation Administration-funding measure a provision to cap the charges, while the industry says they’re necessary to keep flying affordable for a wide range of passengers.

“It is one of the biggest challenges that we’re facing in Washington right now, as it threatens to roll back 40 years of progress, innovation and affordability for consumers,” Sean Kennedy, senior vice president of global government affairs for Airlines for America, said in a recent interview. “It would completely upend and upset the work that’s allowed us to finally be sustainably profitable.”

Companies fear that further intrusion from the federal government may nudge the industry closer to the days when all prices were heavily regulated. The Trump administration, which has touted its accomplishments in reducing regulation it deems unnecessary, appears to agree.

The Department of Transportation earlier this year urged the Senate to address that provision as it crafts its counterpart bill to the House-passed measure to reauthorize funding for the FAA.

“Simply put, this provision marks a return to the pre-1978 era when the federal Civil Aeronautics Board controlled domestic airline fares and other rates charged to the public,” James Owens, the transportation department’s deputy general counsel, wrote in a letter to Senate Commerce Chairman John Thune of South Dakota.

Current FAA funding expires at the end of September. Thune and Sen. Bill Nelson of Florida, the top Democrat on the commerce panel, are working to negotiate an agreement to bring the reauthorization bill to the chamber floor, according to Senate Majority Whip John Cornyn of Texas.

Despite the challenges, carriers have won some significant victories under the Trump administration. Most notable was a deal the State Department reached with United Arab Emirates to require Gulf carriers to publish annual financial statements. Delta Air Lines, American Airlines and others have long charged that Etihad Airways and others are unfairly subsidized by the UAE.

Original Found on: WashingtonExaminer.Com

americans4fairskies2015Airlines face perfect storm
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Not giving everyone an even break is abjectly unpatriotic: Letter to the Editor

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It is important to recognize our country’s victories when they happen. The renegotiation of the Open Skies Agreement with the UAE is great achievement for both our country and the Trump administration. It is one more step in further developing the US economy at home and abroad.

For years, the US has faced an issue with a handful of countries not abiding by the agreement. With 125 countries included in the agreement, it is not only unfair to the US but to the other nations who have lived up to their end of the bargain. Offenders have included the Middle Eastern nations of Qatar and the UAE. These trade cheaters have spent upwards of $53 billion in subsidizing their own airlines making for an unlevel playing field and disrupting international air travel.

The previous administration tried to many times to negotiate with Qatar and UAE unsuccessfully. The new administration has found better success. In January, the Trump Administration, was able to bring Qatar back to the table to recommit to the agreement and just this past week, the UAE has also agreed to following the guidelines of the agreement.

Brian Wollet,

Gates Mills

Published on The Cleveland Plain Dealer.

americans4fairskies2015Not giving everyone an even break is abjectly unpatriotic: Letter to the Editor
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The Fight for Fair Skies is not yet Over

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Friends,

What a week. So much is happening it can be hard to keep current events straight. We’re usually right there with you. But last week, something happened that is cemented into our minds, and it’s such a big deal we couldn’t wait to share it with you.

PRESIDENT TRUMP TOOK ACTION TO END THE UAE’S ILLEGAL AVIATION TRADE VIOLATIONS.

This is a big win in the fight for fair competition. Don’t get us wrong- there’s more fighting yet to do, and we’ll get to that in a minute, but first, let us break down this historic agreement for American workers.

This agreement includes the UAE’s acknowledgment of subsidy harm, a commitment to financial transparency, and a freeze of fifth freedom rights for illegally subsidized UAE carriers.

As Peter Navarro, director of the National Trade Council at the White House put it, “the Trump Administration will rigorously ensure that our Open Skies Agreements and these new understandings continue to work in the best interests of Americans. As our president continues to demonstrate, he will never back down when American jobs are at stake and American companies are at risk.”

This agreement comes on the heels of a similar one signed with the State of Qatar in January 2018 – back to back trade wins for the President, the American public, and U.S. national security.

Yesterday, speaking at an event at the Hudson Institute on the Open Skies issue, Former Speaker of the House, Newt Gingrich made it clear – President Trump has been remarkably consistent on issues that are in the best interest of the American people and U.S. national security. Speaker Gingrich went on to say, “Anybody who thinks that Trump will forget the agreement and that they can back track, this administration is going to be very aggressive if they find out either of these two airlines [Emirates & Etihad] are not keeping to the agreement.”

We are deeply grateful for the President’s leadership on this issue. We’ve made tremendous progress towards leveling the playing field and ending the market distorting subsidies of the Gulf nations. But as we said before, the fight is not yet over.

Already, Qatar’s state-owned airline, Qatar Airways, is looking to subvert their 5th freedoms freeze by using their substantial ownership stake in Air Italy to drive expansion into the U.S. under the Air Italy flag. This is yet another example of these Gulf countries seeking to exploit their trade agreements with the U.S. for their own economic advantage. As recently pointed out in an op-ed in The Daily Caller, former Navy SEAL Robert Mitchell stated with respect to the Air Italy flight, “This route may be in violation of the agreement freezing any new 5th Freedom flights, and the Trump administration must look into this with great interest and ensure that if it is in violation, that the agreement is enforced and this flight is prohibited.”

At that same Hudson Institute event, former Secretary of Transportation, Jim Burnley, said, “like Mr. Reagan, Mr. Trump has positioned himself as a strong defender of American workers. For that, he deserves our high praise.” But we must once again, ask our President and his administration to go to bat once again for American workers and ensuring that all the progress that has been made through these agreements is sustained through their enforcement.

americans4fairskies2015The Fight for Fair Skies is not yet Over
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How Qatar Airways is (subtly) expanding U.S. presence

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Qatar Airways — a Middle East-based carrier with deep pockets and several United States gateways — has for several years been a thorn in the side of U.S.-based carriers such as United Airlines (NYSE: UAL), Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL), all of which worry that Qatar could siphon off passengers and jobs in the U.S. if left unchecked.

And the three U.S. carriers have been working with U.S. aviation officials to try and ensure Qatar is indeed held in check.

Now, however, it appears Qatar has found a new, more subtle way to expand its presence in the United States and around the world via its 49 percent stake in upstart Air Italy.

Air Italy is seeking to become Italy’s dominant carrier as Alitalia — long Italy’s flagship airline — struggles.

Air Italy took delivery of its first Boeing 737 MAX aircraft in a distinctive livery last week — the first of 20 MAXs that Air Italy will receive over the next three years.

Those Boeing 737s and five additional widebody Airbus A-330-200 aircraft that formerly were part of the Qatar Airways fleet will become the backbone of the Air Italy fleet. Those widebody Airbus planes eventually will be replaced by Boeing 787-8 Dreamliners.

Air Italy’s parent company is AQA Holding. But make no mistake, Qatar Airways’ controversial CEO, Akbar Al Baker (he called U.S. flight attendants “grandmas”), has exerted a hand in orchestrating Air Italy’s game plan.

Al Baker said of the Boeing 737 MAX delivery in Seattle: “To see the aircraft here for the first time, it truly brings to life the next exciting chapter for Italy’s future carrier of choice, providing the people of Italy with the sophisticated travel experience they deserve.”

All of the new aircraft in Air Italy’s fleet will be used to grow the carrier’s route network, which will include flights from Milan, Italy to New York City and Miami.

Those are the only U.S. destinations Air Italy has announced plans to serve so far. But with Air Italy’s fleet set to continue to grow over the next several years, the carrier’s presence in the United States could grow too. Which, no doubt, would make Qatar Airways’ Al Baker quite happy indeed.
americans4fairskies2015How Qatar Airways is (subtly) expanding U.S. presence
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The UAE Finally Owns Up: Their State Subsidies to Airlines Distort Competition

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After years of denial and obfuscation, the UAE has finally acknowledged what U.S. network airlines and their employees have long contended and clearly proven: their government subsidies harm competition.

With Secretary of State Mike Pompeo announcing today that the United States has negotiated a deal with the UAE to enforce our Open Skies agreement, the Trump administration has sent a strong signal that foreign government subsidies that violate our international agreements and threaten American jobs will not be tolerated.

The agreement addresses the distorting effect of UAE government subsidies to their two state-owned carriers, Emirates and Etihad Airways. This breakthrough follows a similar agreement reached in January between the U.S. and Qatar over that country’s massive subsidies to its own state-owned airline, Qatar Airways. Aviation economists have documented clear evidence of more than $50 billion government in cash and other unfair benefits these Gulf airlines have received from their government owners, violating trade agreements and harming competition among investor-owned U.S. (and European) airlines. About 1.2 million U.S. jobs depend on a strong U.S. passenger-airline industry, jobs that the Gulf carrier trade cheating put at risk.

The biggest news here may well be that after years of claiming that they don’t give subsidies to their airlines, the UAE was forced to agree to unwind those very subsidies. The UAE and its paid U.S. apologists consistently and willfully mischaracterized the position of American Airlines, Delta Air Lines, and United Airlines as seeking “protection,” special favors, and an end to Open Skies aviation agreements. In truth the U.S. carriers and seven labor unions only sought a level, competitive playing field, as prescribed by Open Skies policy. Since 2015, the UAE and Qatar resisted high-level meetings, justified trade cheating by citing their massive purchases of made-in-America Boeing aircraft, and tried other distractions without offering any substantive information to disprove the clear evidence of their rule-breaking subsidies.

Under the newly announced agreement, the UAE has agreed to the following:

> A freeze on additional “Fifth Freedom” passenger flights to the United States, where the Gulf airlines would launch a service between the U.S. and a third country in Europe or Asia.

> Emirates and Etihad are committed to transactions based on commercial terms and to financial transparency. Much of this dispute has revolved around opaque accounting and “all-in-the-family” dealings with interconnected companies. Specifically, the UAE has promised that Emirates and Etihad will embrace market-consistent conditions in obtaining debt and equity financing, and operating each airline with transparency, including the use of international accounting and auditing standards (called IFRS).

> Adherence to new and vigorous standards for financial disclosure, including reporting significant new transactions, to show that the UAE government is ending subsidies to its state-owned airlines.

> Ensuring that transactions between Emirates or Etihad Airways and other state-owned companies take place on a commercial basis and that the terms are equivalent to those that prevail in arm’s-length transactions.

> Requiring Emirates and Etihad to pay the full and fair share of the all costs of operating out of their international airports in Dubai and Abu Dhabi, which have previously been subsidized by their governments.

> A meeting with the U.S. government in one year to review progress on terms of the agreement.

This agreement comes after a groundswell of support from elected officials. More than 310 members of Congress, ten governors, and scores of local business and political leaders stepped forward and took a stand in favor of U.S. workers, recognizing the massive harm that the Gulf carrier trade cheating could have on American jobs, and on vital air service to small and medium communities. That support propelled President Trump, the Department of State, and the Department of Transportation to act decisively.

These sorts of disputes do not just end, like time running out on a basketball game. Going forward, American, Delta, and United, and their stakeholders must remain vigilant to ensure that the Gulf governments follow the rules and abide by their commitments. And the European Union, which expressed concern about fair competition early on, must also finalize an agreement with the Gulf nations.

As a longtime airline hand — working in and near the business and teaching airline management for almost 35 years — I’ve had an “aisle seat” on many large, often painful, changes in the industry following the 1978 Airline Deregulation Act. In that law, Congress reversed 50 years of intrusive federal economic regulation and micromanagement of the airline business. Since then. American, Delta, United, and others have made huge adjustments and they have learned to compete in a global marketplace — as long as conditions are fair. These two agreements with the UAE and Qatar will help restore balance in many overseas markets. To the Trump administration, I say thank you.

Published on Medium.

americans4fairskies2015The UAE Finally Owns Up: Their State Subsidies to Airlines Distort Competition
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Why Trump should enforce the Open Skies agreement

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On the heels of the successful passage of President Trump’s tax reform that lowers taxes for tens of millions of America’s working families, the president is making the surprising move of pushing for a tax increase in the form of tariffs.

The president is proposing a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports – which may very well protect the 140,000 or so American jobs in those industries, but will also simultaneously damage up to 5 million American jobs that depend on steel and aluminum imports. Myopic protectionist schemes rarely help the overall workforce, and they almost always create price hikes for U.S. consumers.

Where tariffs are concerned, the economic costs far outweigh any potential benefit.

President Trump’s instinct here to protect American jobs is unassailable. But his proposed method of implementing protectionist tariffs will (if history is any guide here) backfire and lead to economic disruptions in U.S. manufacturing.

However, as long as the president has started the much-needed conversation about trade deals and protecting American workers, how about an agenda item that would enforce trade agreements in the United States’ favor and protect American workers? The Open Skies trade agreements provide exactly that opportunity.

The enforcement of our Open Skies agreements with the United Arab Emirates would accomplish everything President Trump is seeking to do with the steel tariff proposal, but without the negatives that necessarily result from protectionism.

President Trump has already scored a major victory in this area this year, and should be applauded for the steps he has taken to enforce our Open Skies agreements with other countries. The Open Skies agreements, which are bilateral trade agreements, govern international air travel and stipulate the conditions for fair and free trade in international air travel. The agreements specifically forbid governments from significantly subsidizing airlines because of the market distortions that result from government interference.Two of the most flagrant abusers of that particular provision of the Open Skies agreements have been Qatar and the United Arab Emirates, which have both pumped billions of dollars (upwards of $52 billion since 2004, in fact) into their state-owned airlines in an elaborate scheme to undercut international competition.

In the short term, this type of government-orchestrated market interference tilts the playing field in favor of the grossly subsidized airlines, making it difficult for other international airlines to fly certain routes. In the long term, however, the consequences are much more serious. U.S. airlines, unable to compete with oil-rich governments’ subsidized airlines, will be forced out of major international routes and could even be forced out of business.

The good news is that the Trump administration has been listening to Americans’ opposition to these violations of the Open Skies agreements. And, even more importantly, the Trump administration has taken swift action to enforce the Open Skies agreement.

Back in January, the Trump administration landed a big victory during the U.S.-Qatar Strategic Dialogue, when Qatar agreed to provide detailed and transparent financial records. Those financial records will enable the State Department and other U.S. agencies to evaluate possible violations of the Open Skies agreements.

Moving forward, the Trump administration should insist that the United Arab Emirates submit to the same transparency standards that Qatar recently agreed to implement. That would mean, at a minimum, the full release of its financial records, in accordance with internationally recognized accounting standards.

Fully 10 million U.S. jobs and $1.5 trillion in nationwide economic activity depend on our nation’s airline industry. The enforcement of all of the Open Skies agreements provides a platform for President Trump to protect American workers and consumers, all while creating new economic opportunities.

Ensuring that other nations abide by the both the spirit and the letter of the agreements is critically important for protecting those millions of American jobs. President Trump’s success in January is the model his administration should replicate in its negotiations with the United Arab Emirates.

On the campaign trail, Donald Trump frequently promised to protect the U.S. economy by putting American workers first in policy-making decisions. His campaign message was refreshing for American workers who, all too often, are often overlooked in Washington, D.C.

By enforcing the Open Skies agreements, President Trump is putting into action his America-first campaign promise.

Orignally Posted on the Washington Times.

americans4fairskies2015Why Trump should enforce the Open Skies agreement
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Enforcing Trade Agreements to Keep America Safe

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By Robert Mitchell

The United States military is the most powerful fighting force the world has ever seen. During my decades of service as a Navy SEAL and later as a CIA Paramilitary Operations Officer, the strength, intelligence, and determination of our service members was always on display. Whether on the front lines or stationed at a base overseas, our men and women in uniform routinely made tremendous sacrifices to protect and defend both our homeland and our allies.

Even institutions as vast and powerful as the U.S. armed forces do not operate in a vacuum. Our military often relies on the resources of private industry for vital support in contingency operations, and the U.S. civil aviation industry is a crucial partner in that respect.  American air carriers voluntarily make available hundreds of additional aircraft in the event that additional airlift capacity is necessary to move our troops around the globe.  This capability is a cornerstone of our military readiness when undertaking both warfighting and peacekeeping missions

However, American air carriers have been undermined for years by illegal and anti-competitive trade practices by the State of Qatar and the United Arab Emirates.  Their systematic efforts to circumvent and defy existing fair trade practices threaten the crucial role that a healthy aviation industry plays in our national security.

Any interference with military readiness puts the lives of American service members at risk, and we must demand that foreign powers are not allowed to do so with impunity.

After years of inaction from the Obama administration, President Trump finally initiated a mission to stand up both for our troops and for American aviation workers by holding Qatar and the UAE accountable for their behavior. After forcing Qatar to come to the table, he successfully negotiated an agreement that will provide greater transparency to Qatar Airways’ business transactions and stop them from establishing any potential “fifth-freedom” routes. This agreement goes a long way to protect American workers and stop foreign interference in our military readiness.  I thank the President for his effort and his success.

President Trump’s leadership on this crucial issue has been in keeping with his commitment to promote fair trade and strengthen national security, but more work remains to be done.  I have a request for the President: complete the mission.

The United Arab Emirates continues to inject massive subsidies into its two international airlines, Emirates and Etihad Airways. In fact, Emirates recently used that subsidy to purchase 16 billion dollars’ worth of Airbus A380s.  They will use these aircraft to continue artificially expanding capacity and distorting aviation markets around the world. By flying these massive planes on routes that do not necessitate the additional capacity and pricing the seats at unprofitably low rates, carriers that play by the rules, like U.S. airlines, will be forced to abandon once-profitable routes. This flagrant abuse of our trade agreements costs American jobs, and if they are allowed to continue these illegal and anti-competitive trade practices, U.S. military preparedness will continue to be threatened.

This is not acceptable. Although both the United Arab Emirates and Qatar are vital allies in the Middle East, allies can have disagreements. When conflicts arise between friends, it is crucial to resolving them quickly and equitably in the interest of stability. Right now, the UAE and Qatar are embroiled in a diplomatic dispute, and the UAE is unlikely to follow Qatar’s lead and negotiate in good faith with the United States of their own accord. Therefore, action must be taken soon to bring them to the table. Thankfully, President Trump has already shown that he is the man for the job.

President Trump, your action against Qatar was an important first step in keeping America safe and our trade fair. But until the UAE comes to the table and takes significant steps to end the harm they have caused to the American aviation industry and its workers, and to U.S. military readiness, the mission is not yet complete.

Robert Mitchell is a cybersecurity entrepreneur, former Navy SEAL and CIA Paramilitary Operations Officer. 

Published on RealClearDefense.Com

americans4fairskies2015Enforcing Trade Agreements to Keep America Safe
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The Irony of Emirates’ Smear Campaigns

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It was not that long ago that Emirates Airways was making international headlines for their splashy television commercials featuring Hollywood A-list actress, Jennifer Aniston. It was not only big news that the airline was shelling out millions of dollars to Hollywood elites for endorsements, but also the content of the commercials was controversial to say the least.

In the ads, Emirates mocked U.S. airline workers – hard working Americans – as lazy, old, and unpleasant. The ads were disgusting and an insult to the hundreds of thousands of American workers who strive every day to deliver safe, reliable, and comfortable travel to millions of travelers, in the U.S. and internationally.It is therefore ironic that the CEO of Emirates, Tim Clark, is calling on U.S. airlines and their employees to “grow up” and comparing them to a “three-year old at the playground.” Seriously?

The U.S. airlines and their employees have put forth a fact-based campaign based on forensic accounting of Emirates, Etihad, and Qatar Airways financials, which are not yet otherwise publicly available in any meaningful way. For Clark to suggest otherwise is yet another weak attempt to distort the truth and distract for the real issue at hand: that Emirates and the other UAE-owned airline, Etihad, as well as Qatar Airways, are taking billions of dollars from their respective governments and using that money to predatorily expand and dump seat capacity into markets that otherwise would not sustain such growth. This subsidized expansion is driving U.S. airlines off routes, costing U.S. jobs and the loss of expansion opportunities for Americans. These are the facts.

 

 

americans4fairskies2015The Irony of Emirates’ Smear Campaigns
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The UAE’s Bizarre Open Skies Confession And Threat

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That was Emirates Airways CEO Tim Clark’s response to a question about what would happen if the United States government negotiates an Open Skies enforcement agreement with the United Arab Emirates as the U.S. has recently done with the State of Qatar.

Mr. Clark’s response was based on his false narrative that enforcing Open Skies agreements means ending them or changing them. We have addressed this favorite anti-fair competition talking point before, but make no mistake; Mr. Clarke’s words were chosen very carefully.

There are two ways to look at Mr. Clark’s comments.

First, by claiming that if the U.S. were to enforce its Open Skies agreement, Emirates would no longer need the 150 Boeing wide-body passenger aircraft it has on order, he is admitting that his airline intends to fly those aircraft into the United States, ensuring the playing field remains stacked against the U.S. and substantially increasing the harm to U.S. airlines and their employees. This admission shows that Emirates has plans to further distort the international and U.S. aviation market by dumping unwarranted capacity, also known as seat dumping, into routes U.S. airlines fly, forcing them to abandon international routes and thereby cut U.S. jobs. After all, U.S. airlines have to make a profit, whereas Tim Clark and his state-subsidized airline are operating at the largess of the government and have never been concerned about profit. U.S. airlines and their employees can compete and win against any airline when the playing field is level, but Mr. Clark has tried very hard to ensure that the deck is and remains stacked against the United States.

Second, it was a threat. By making that statement, Clark, apparently speaking on behalf of the government, is clearly stating for all to hear that unless the United States government bends to the will of the United Arab Emirates, he will cancel a massive Boeing order. Does that sound like the attitude of a healthy and productive trade partnership? No. Instead, it appears that Clark, and by extension the UAE, are more interested in threats and deceit than negotiating in good faith and abiding by U.S. and international standards.

This second explanation is in keeping with the fact that the United Arab Emirates is showing itself to be a worse trade partner and ally than its main Gulf rival: the State of Qatar. When the Trump administration approached Qatar in an attempt to finally address the long-running aviation subsidization dispute, Qatar agreed to negotiate, and President Trump scored the first big win on this issue in years. President Trump accomplished what President Obama could not do with Qatar, and now has the opportunity to complete the mission with the UAE.

The State of Qatar, a country not dissimilar to the United Arab Emirates in terms of its relationship to the United States, also has billions of dollars worth of aircraft on order from Boeing for its national carrier. However, unlike the UAE and Mr. Clark, Qatar Airways and its national owner, the State of Qatar, did not publicly hold that order hostage to defend their unfair and anti-competitive trade practices. Instead, they came to the negotiating table in good faith, and the resulting agreement is a positive step forward for U.S. workers, the global aviation community and towards ending Qatar’s subsidies of its airline and violations of its Open Skies trade agreement with the U.S.

While Qatar acts like an ally and trade partner, the UAE is digging in its heels and leading with mistruths and lies. The Gulf nation’s bad attitude may be contributing to the recent reports that President Trump is souring on the UAE and its partners’ diplomatic spat with Qatar.

Further, the UAE’s “threat” is hollow. If indeed Emirates were to follow through and cancel their airplane order, there would be no harm to the United States. U.S. airlines and U.S. workers are more than happy to operate the Boeing aircraft that the UAE cancels. With a level playing field, U.S. airlines would have incredible growth and expansion opportunities, requiring additional aircraft and lots of new American jobs. Recently, after the Trump Administration announced the deal with Qatar, Delta Airlines CEO Ed Bastian began talking about the expansion opportunities available to Delta and its employees if the playing field is leveled. Bastian told CNBC: “We need to have a presence in the Middle East. We need to have a presence in India and other parts of Southeast Asia, which we have been run out.” He continued, “By shining a light on the scope of the subsidies and providing transparency, it is going to allow us all to make long-term investment decisions to go into markets knowing that our government is standing behind us.”

America has strategic and economic interests with both Qatar and the UAE, however, those relationships are only valuable so long as they are mutually beneficial. Qatar came to the table and acted the way one expects from a partner, while the UAE seems intent on acting more like an adversary. Hopefully, Mr. Clark does not truly speak for the UAE government, and instead, the UAE negotiators will work with President Trump and his Administration to resolve the Open Skies violations in a manner that will end the UAE’s cheating and level the playing field for American aviation workers.
americans4fairskies2015The UAE’s Bizarre Open Skies Confession And Threat
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Enforcing Open Skies Helps Protect America’s National Security

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By: John G. Cotton, Vice Admiral, U.S. Navy, Retired

With increasing global instability, our nation’s ability to respond and adapt to evolving scenarios is more critical than ever.

The ability to effectively and efficiently meet our regional combatant commander’s requirements to deploy troops and supplies without interruption is a fundamental component of our nation’s national security, military readiness, and ability to project both humanitarian assistance and power.

A unique and significant part of our nation’s air mobility resources, especially when rapidly deploying troops and supplies, is the Department of Defense’s partnership with U.S. commercial airlines through the Civil Reserve Air Fleet program (CRAF).

U.S. civil air carriers contract with the CRAF program to provide select aircraft for the deployment of personnel and resources when emergency airlift requirements exceed the capability of military aircraft.

These carriers volunteer their aircraft to the CRAF program, which today comprises more than 450 aircraft that are ready for deployment less than 48 hours after they are called into service.

Participating U.S. commercial airlines maintain a minimum commitment of 30 percent of their CRAF-capable passenger fleet and 15 percent of their CRAF-capable cargo fleet in support of CRAF-related activity.  These planes are maintained by the airline and flown by airline employees when called into service.

As a naval aviator and commercial airline pilot, I have developed a profound appreciation for the important role that the U.S. civil air transport industry plays in our nation’s military preparedness.

From the Berlin Airlift to Operation Desert Shield and Operation Iraqi Freedom, U.S. commercial airlines have deployed their airplanes and resources on CRAF missions for decades.

The CRAF program represents a remarkable public-private partnership that has helped to advance American values, protect American national security interests, and support American aid and military efforts across the globe.

However, this crucial partnership is threatened by subsidies undermining U.S. aviation transport trade agreements with the United Arab Emirates (UAE) and State of Qatar. These subsidies are not only an exploitation of American trade policy that threatens an industry vital to the American economy, but they present a threat to U.S. national security and military readiness as well.

These subsidies are being used to finance rapid global expansion by the state-owned airlines of Qatar and the UAE with the aim of driving competitors, including U.S. airlines, out of international markets and off global long-haul routes.

It is these routes requiring long haul aircraft that allow for the support of our military readiness through the CRAF program. We cannot allow unfair trade practices by foreign governments to weaken our military readiness.

The negative impact of these foreign carrier subsidies and their impact on our national security is compounded with the reality that approximately 1,500 aviation jobs are lost for every route ceded or surrendered due to this subsidized competition.

These lost jobs represent not only the aircrew that fly these aircraft in times of crisis with CRAF, but also the maintenance workers and technicians, plus the ramp supervisors and dispatchers who ensure safe global operations.

President Donald Trump has clearly stated that free and fair reciprocal trade is an administration priority, as is ensuring our national security and military readiness. Our Department of State’s recent announcement that the State of Qatar has agreed to match American levels of financial transparency demonstrates the Trump Administration’s commitment to these priorities.

By enforcing our trade agreements, Trump is working to re-establish America’s economic power and improve our military readiness.

The president and his team brought Qatar to the table and reached a deal that, if adhered to, would put an end to Qatar’s trade cheating and level the playing field for American air carriers and their workers.

This would ensure the American companies can fairly compete in the international marketplace, and therefore protects the integrity of the CRAF program. By enforcing our trade agreements, Trump is working to re-establish America’s economic power and improve our military readiness.

The agreement with Qatar is an important first step in the right direction, but the full implications of this development will be more fully realized once the U.S. takes action in regard to the state-owned and state-subsidized airlines of the UAE, which continues to be less transparent and exhibit the same unfair trade practices.

The UAE has two massive state-subsidized airlines that, like Qatar Airways, undercut U.S. airlines in the international marketplace and threaten our military readiness.  The recent success of negotiations with Qatar will hopefully influence ongoing discussions with UAE to ensure that Trump can keep America safe and to keep our global trade fair.

Vice Adm. John G. Cotton is a 35-year Navy veteran and last served as chief of Navy Reserve and commander of the Navy Reserve Force in the Pentagon. He is currently a defense and security consultant and a senior fellow at the Joint Forces Staff College.

Published on Lifezette.

americans4fairskies2015Enforcing Open Skies Helps Protect America’s National Security
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Give Trump Credit As U.S. Airlines Gain In Trade Dispute With Mideast Airlines, Delta Exec Says

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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.

“I would hope our government has the same kind of relationship with the UAE that it has with Qatar [and] and can do a deal that would require government-owned airlines to operate without benefit of a subsidy,” Carter said.

 

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.

On Thursday, the partnership is scheduled to release a letter calling for an end to the Open Skies violation and signed by governors from 10 states, including four – Georgia, Michigan, Minnesota and Utah – that have Delta hubs. The letter, sent to Secretary of State Rex Tillerson and Secretary of Transportation Elaine Chao, notes that the Emirates, Etihad and Qatar have received more than $50 billion in government subsidies, in violation of the Open Skies agreements.

‘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.

americans4fairskies2015Give Trump Credit As U.S. Airlines Gain In Trade Dispute With Mideast Airlines, Delta Exec Says
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U.S. Trade Enforcement Mechanisms

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By: Douglas Hultz-Eakin, Jacqueline Varas

Executive Summary

  • Trade and other international economic agreements provide broad benefits to the United States and its international trade partners. However, these agreements must be enforced effectively to engender the trust needed to maintain and expand international commerce.
  • The primary enforcement mechanisms are dispute settlement provisions under specific trade laws and the World Trade Organization, as well as anti-dumping and countervailing duties to counter harm from specific countries and products.
  • “Safeguard actions” provide import restrictions to protect harmed domestic industries. An interesting test of safeguards are the recently imposed import restrictions on washing machines after Samsung and LG were perceived to have evaded U.S. antidumping duties by moving production from South Korea to China, Vietnam, and Thailand.
  • Enforcement is also important in other forms of international agreements such as treaties. For example, a test of the future of the Open Skies treaties with Qatar and the United Arab Emirates is the ability to negotiate resolution of the damage to U.S. carriers from government-subsidized international routes by three airlines headquartered in those countries.

Introduction

International economic agreements contribute to the ability of the United States and its allies to build stronger relationships, accomplish shared goals, and reap the economic benefits. A key tool for preserving confidence in these agreements is enforcement mechanisms. Absent these features, agreements would not permit nations to fully experience the advantages of international commerce.

International trade creates significant benefits for the United States. It expands the consumer base and increases demand for U.S. businesses, exposes Americans to lower-priced or higher-quality consumer goods from around the globe, and generates significant productivity gains resulting from international competition and specialization. Trade agreements increase these benefits by reducing trade barriers. They also foster global trust, cooperation, and stabilization.

For trade agreements to be effective, all partners must have confidence that the terms will be upheld. Nations must be assured that their exports to partner countries will not be taxed at higher rates than previously agreed, that they will not face unfair competition from government-subsidized goods in other nations, and that no trade agreement partner will discriminate against them in favor of its own domestic producers. With this confidence intact, producers and consumers can trade freely and experience the economic growth that is spurred by open markets.

In cases where the United States (or another trade agreement partner) believes it is being treated unjustly, there must be a path to adjudicating the complaint. This is also true for other types of agreements in which nations are held accountable. The United States has established several such mechanisms for resolving these types of disputes.

Dispute Settlement

In the realm of trade agreements, there are two main types of dispute resolution mechanisms. The first is Investor-State Dispute Settlement (ISDS), a procedure in which investors can pursue arbitration with governments that discriminate against foreign suppliers. ISDS can also be triggered if governments deny foreign investors their right to due process, seize property without just compensation, or restrict the movement of capital within their borders. Approximately 3,000 agreements worldwide contain some type of ISDS provisions, and the United States is party to 50.

When an ISDS case is brought against a nation’s government, it is not resolved through either nation’s court system. Instead, the parties enter an arbitration process in which the case is decided by a three-member panel of legal experts. While some have criticized this process, it is designed this way to protect investors from potential bias within a country’s courts and from weak legal institutions in developing nations. Furthermore, in the over 20 years in which the United States has been party to ISDS agreements, it has been sued by foreign investors only 16 times. Of those, 10 were decided in favor of the United States and the remaining cases were either settled or dropped. By contrast, U.S. investors have utilized ISDS to challenge foreign governments over 150 times.

ISDS gives companies at home and abroad the security to invest internationally. Without it, foreign and domestic businesses may not have the confidence to expand, participate in trade, or invest in the United States.

The second type of dispute resolution is State-to-State Dispute Settlement (SSDS). If nations have a dispute concerning the interpretation or application of an agreement, they can seek arbitration through SSDS. Like ISDS, trade partners can request the formation of a three-member arbitration panel of representatives from each nation to rule on disputes. The United States has only been involved in eight SSDS cases: five under the U.S.-Canada Free Trade Agreement and three under the North American Free Trade Agreement (NAFTA).

In addition to dispute settlement processes laid out in U.S. trade agreements, the World Trade Organization (WTO) also functions as a mechanism to enforce the rules of global trade. It was formed in 1995 to oversee the global trading system and promote the liberalization of trade barriers, and now has over 160 member nations. Members of the WTO face lower tariffs when exporting to other WTO nations and are afforded protections against unjust trade barriers and discrimination.

For nations that do not wish to utilize dispute settlement mechanisms within individual trade agreements, or for nations that do not have trade agreements with one another, the WTO offers its own dispute settlement procedure. The WTO dispute settlement process resembles that of an international tribunal: Countries engage in initial consultations, hearings, and the creation of a panel to aid in making rulings and recommendations, which are subject to appeal. Final decisions are adopted by the Dispute Settlement Body; a council consisting of representatives of all member governments. While the primary goal of this process is to settle disputes privately through initial consultations, the WTO has an average of 30 dispute settlement panels active each month. Decisions are usually made in a little over one year.

Anti-Dumping and Countervailing Duties

The United States can also try to unilaterally enforce trade rules by imposing anti-dumping and countervailing (AD/CV) duties. These are duties placed on imports that injure U.S. industry, either due to government subsidies or sales at below cost prices. U.S. businesses can petition the Department of Commerce and the U.S. International Trade Commission (USITC) to perform AD/CV investigations if they believe competing products from specific countries are injuring them. If the Department of Commerce finds dumping or subsidization and USITC finds material injury to U.S. industry, duties are applied to specific imports from that country to offset the subsidies or dumping.

It is not always necessary for domestic industry to petition for an investigation to take place. While it is rare, the Department of Commerce may self-initiate AD/CV investigations. This practice has occurred under the Trump Administration, which self-initiated an investigation against Chinese aluminum late last year. However, AD/CV duties may be met with backlash. Canada recently launched a WTO case against the United States for placing AD/CV duties on imports of softwood lumber, and initiated an SSDS process under NAFTA.

Additional Trade Enforcement Mechanisms

Legislation has empowered the United States to seek other enforcement options as well. For instance, the Trade Act of 1974 offers multiple avenues for the United States to challenge trade actions taken by other nations. One example is Section 201 – a statute that authorizes USITC to perform “safeguard investigations.” If USITC finds that a recent surge of imports has seriously injured domestic producers (or there is a threat of serious injury), it can recommend temporary import restrictions. Unlike AD/CV duties, these restrictions would apply to all imports of a specific product, regardless of the country of origin. Furthermore, for USITC to recommend import restrictions following a safeguard investigation, it does not need to find that exporters were engaging in potentially illegal or uncompetitive activity (e.g. receiving government subsidies). It only needs to confirm that the import surge is causing serious injury (or a threat of serious injury) to domestic industry.

Under the Trump Administration, USITC has launched two safeguard investigations. One investigated imports of solar cells and modules , and the second concerned imports of large residential washing machines.

USITC first started investigating washing machine imports after Samsung and LG (both based in South Korea) evaded U.S. antidumping duties resulting from previous AD/CV investigations. Whirlpool alleges the companies moved production from South Korea to China, Vietnam, and Thailand after tariffs were enacted. USITC agreed with Whirlpool that these imports threaten domestic suppliers, and the president responded by enacting tariffs of 20 percent on the first 1.2 million units of washing machine imports. Tariffs on imports above this level will start at 50 percent, but both tariff rates will decline over time.

The other safeguard investigation was in response to increasing competition from solar imports. A U.S.-based manufacturer claimed that increasing solar imports from China, where solar companies are subsidized by the government, causes serious injury to domestic manufacturing. In this case, USITC also concluded that solar imports threaten domestic industry and the president imposed tariffs starting at 30 percent and declining over time.

Section 301 of the Trade Act of 1974 is another example. This statute empowers the U.S. Trade Representative (USTR) to investigate unfair trade practices, which can include trade agreement violations, market access restrictions, legal violations, or discriminatory practices. USTR recently initiated a Section 301 investigation into China for intellectual property theft and improper technology transfer, a practice that U.S. companies have been protesting for years. If USTR confirms these unfair trade practices, it has the authority to impose tariffs or other import restrictions on China. Or, if China agrees, they may also enter into a binding agreement to phase out the practice of intellectual property theft.

These tools enable the United States to enforce the rules of international trade while also protecting the U.S. from discrimination and trade cheating. However, it is important to balance any trade enforcement action pursued by the United States with the possibility of retaliation by other countries, effects on other domestic industries, and potential economic harm to consumers.

Some argue that legislation like the Trade Act of 1974 has become obsolete with the establishment of a multilateral trading regime and the creation of the WTO. They further argue that any action taken against our trade partners should only be pursued through the WTO, and that there is a credible threat of retaliation if the United States acts unilaterally. This is a serious risk: If our enforcement actions are met with trade restrictions from other countries, U.S. exporters could lose market access abroad and U.S. consumers will be faced with higher prices. Furthermore, it would be foolish to believe that trade restrictions imposed by the United States can revive uncompetitive industries or counteract natural shifts in production. However, it is necessary to enforce the rules of trade agreements after they are negotiated and agreed to. If rules are not enforced, unfair trade practices will go unchallenged and it will be difficult to maintain domestic support for trade agreements.

Enforcement in Other International Agreements

Effective enforcement is also important for instilling confidence in other types of international agreements. For instance, the State Department recently opened talks with Qatar (and plan to so with the United Arab Emirates ) about an international agreement called Open Skies. This is one of over 120 U.S. bilateral agreements designed to prevent government intervention in commercial airline travel. Under Open Skies, private airlines in all partner nations have the freedom to make their own decisions about airline routes, the number of flights, the types of aircrafts, and pricing.

Before Open Skies, governments regulated all aspects of airline travel. The Airline Deregulation Act of 1978 deregulated the airline industry in the United States, making way for market forces to spur competition, innovation, and lower prices for consumers. The United States continued this trend in 1992 by establishing the first Open Skies agreement with the Netherlands. We have since entered into Open Skies agreements with partners around the globe in Europe, Africa, the Middle East, the Asia Pacific, and Latin America and the Caribbean.

Open Skies has produced significant benefits for both airline industries and consumers. According to the International Trade Administration (ITA), the U.S.-EU Open Skies Agreement was projected to increase the total number of airline passengers by up to 39 million and increase cargo by up to 170,000 tons. ITA argues that Open Skies also enabled a growth in international trade by improving supply chain efficiency and reducing the distance between manufacturers, suppliers, and customers. Another study found that liberalizing the air services of 320 countries without a current Open Skies agreement would create 24.1 million full time jobs and boost the global economy by $490 billion.

The United States opened diplomatic channels with Qatar (and plans to do so with the United Arab Emirates ) after American, Delta, and United Airlines alleged that government subsidies to state-owned Gulf airlines are forcing competitors out of the market. Specifically, they claim that these subsidies are in violation of Open Skies’ Fair Competition Clause, in which all airlines are allowed a “fair and equal” opportunity to compete. According to the airlines, the governments of Qatar and the United Arab Emirates (UAE) have given over $52 billion in subsidies to Qatar Airways, Etihad Airways, and Emirates.

The current Open Skies dispute is a pertinent example of how enforcement is integral to the success of international agreements. Due to foreign subsidies, U.S. airlines have been forced to terminate their competing routes to Gulf nations.. Without enforcement, airlines in Qatar and the UAE would continue benefitting from these subsidies and driving U.S. competitors out of the market. This is evidenced by the fact that over 80 percent of Gulf Carrier flights to the United States in 2014 were found to be unprofitable. These carriers are willing to operate at a loss in order to capture market share.

The addition of “fifth freedom” flights – flights by an airline between two foreign countries – appears to be another byproduct of Gulf subsidies. In the case of the UAE, Emirates has started offering fifth freedom flights in the U.S.-EU market targeted to consumers not flying to the Gulf. For example, they offer nonstop flights between New York City and Milan as well as between Athens and Newark. By leveraging government subsidies and continuing to add fifth freedom routes, Gulf airlines could conceivably overtake the United States as the global leader in aviation, significantly diminishing the economic prospects of U.S. carriers.

As a result of diplomatic talks, Qatar airways has agreed to commit to greater financial transparency and to halt any fifth freedom flights to the United States. This is an important first step toward ensuring that entities which use government subsidies are held accountable and that competition between the United States and Qatar remains open.

Conclusion

International commerce and cooperation have immense benefits for the United States. Entering into international agreements with other nations is one of the best ways we can build relationships with our allies. However, effective enforcement of these agreements is a key component of their success. To fully benefit from the economic growth that follows open markets or international deregulation, nations must have confidence in the agreements themselves.

Published on American Action Forum.

americans4fairskies2015U.S. Trade Enforcement Mechanisms
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Strong enforcement of Open Skies agreement with Qatar is good for the U.S.

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A few weeks ago, President Trump announced an agreement with Qatar that would protect 1.2 million American aviation industry jobs. This announcement shows that the new administration is serious about enforcing our Open Skies agreements and protecting Americans from unfair competition with nations like Qatar.

Transport Daily News has the story:

As part of the recent agreement between the U.S. and Qatar, the partnership said Qatar has committed to operate in a transparent manner by using internationally agreed upon accounting and auditing standards and applying commercial terms to all transactions.

“Qatar and the UAE have both engaged in dishonest accounting methods to distort and conceal the truth about the extent to which the governments have kept the three state-owned airlines afloat,” according to Jenny Beth Martin, president and co-founder of the Tea Party Patriots and the chairman of the Tea Party Patriots Citizens Fund, in an opinion piece published Feb. 9 in The Washington Times. “Thanks to President Trump’s persistence, Qatar is now committing for the first time to provide more transparency in its record-keeping.”

Martin also thinks the U.S.-Qatar agreement will benefit American workers, who have seen “their slipping importance and relevance in Washington as politicians have routinely prioritized Silicon Valley, Wall Street and other crony capitalist interests” over them, she wrote.

And in general, the agreement with Qatar is a win for free market supporters who think “winners and losers in the market should be determined through fair competition — not through heavy-handed government programs or massive government subsidies,” Martin wrote.

We are thrilled that President Trump has taken the initiative to enforce our trade agreement with Qatar to put America first and overturn trade deals that prioritize foreign trade cheaters over 1.2 million American jobs.

Published on Tea Party Patriots.
americans4fairskies2015Strong enforcement of Open Skies agreement with Qatar is good for the U.S.
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US Open Skies Qatar Agreement Helps Make America Great Again

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From signing tax reform into law, to enforcing our immigration policies to, most recently, enforcing a key international trade agreement, President Trump has already made significant strides with his campaign pledge to “Make America Great Again.”

The slogan “Make America Great Again” was always much more than a catchy phrase for bumper stickers; it was the unifying theme that knit together all of Trump’s policy objectives. And, while making America great again benefits all Americans, there was one primary demographic group with whom the message especially resonated – American workers. American workers have witnessed their slipping importance and relevance in Washington as politicians have routinely prioritized Silicon Valley, Wall Street and other crony capitalist interests over the needs of America’s working families.

But all of that is changing with Mr. Trump in the White House.

Just last week, the president again demonstrated his commitment to America’s workers – this time with the announcement that the White House is requiring Qatar to live up to the terms of the Open Skies agreement.

During the U.S.-Qatar Strategic Dialogue in January, the Trump administration announced that Qatar has agreed to disclose its financials in a more detailed and transparent way than it has previously. Why does this matter? For years, the government of Qatar funneled billions of dollars in the form of subsidies to Qatar Airways in direct violation of the Open Skies agreement with the United States. The Open Skies agreement with Qatar – a bilateral trade deal allowing travel between the two countries – stipulated that neither government could distort the marketplace by providing mass subsidies. But that is exactly what Qatar did for more than a decade, pumping a shocking $25 billion into its state-owned airline.

Qatar has not been alone in its flagrant violation of the Open Skies agreement. The United Arab Emirates has also thumbed its nose at the agreements, choosing to subsidize its two state-owned airlines, Emirates and Etihad Airways.

The effects of this type of government subsidizing are catastrophic. In the short-term, these governments’ interference in the marketplace undercuts U.S. airlines and forces our airlines to compete not with other airlines, but with oil-rich governments – an unequal playing field, if ever there were one. In the long-run, this type of tampering with the marketplace would drive U.S. airlines out of business. American workers were right to be concerned about these violations of the trade agreements, which directly threaten the 1.2 million U.S. jobs that rely on a healthy aviation industry.

Qatar and the UAE have both engaged in dishonest accounting methods to distort and conceal the truth about the extent to which the governments have kept the three state-owned airlines afloat. Thanks to President Trump’s persistence, Qatar is now committing for the first time to provide more transparency in its record-keeping.

The Trump administration’s win with Qatar is a win for everyone who supports the free market and believes winners and losers in the market should be determined through fair competition – not through heavy-handed government programs or massive government subsidies.

The Trump administration’s agreement with Qatar means that one of the most heavily subsidized airline carriers in the world, Qatar Airways, will be forced to play by the rules – a welcome change, indeed.

Perhaps the best part of the new agreement with Qatar is the ripple effect it is likely to have with other countries – most notably the UAE. As Secretary of State Rex Tillerson said in announcing the agreement with Qatar: “The president has made this matter a priority, and the outcome we achieved will ensure a level playing field in the global aviation market.” The UAE should view this announcement as a new era in treaty enforcement – one in which the United States takes seriously trade violations that disrupt the market and unfairly disadvantage U.S. workers.

Previous administrations, especially the Obama administration, treated U.S. workers as mere afterthoughts in policy-making. It is encouraging that the Trump administration has put American workers’ needs front and center in policy decisions. Americans should take note of how Mr. Trump’s Make America Great Again agenda has already transformed U.S. policy-making.

And, for that matter, the United Arab Emirates might want to pay attention to that, too.

Originally found at: The Washington Times

americans4fairskies2015US Open Skies Qatar Agreement Helps Make America Great Again
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Jobs AND Borders: This Is How The Trump Effect Is Strengthening America

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The US military’s ability to deploy troops, strategic assets, and supplies effectively, efficiently, and without interruption around the globe is critical to our national security. Military readiness and the projection of power abroad are key pillars of our nation’s strength. As a former Navy SEAL and CIA paramilitary operations officer, I know firsthand how important reliable airlift is to our ability to meet global mission requirements. We cannot stand for any weakening of our readiness, especially by foreign nations who circumvent our trade laws.

This week, President Donald Trump again demonstrated his commitment to keeping America safe by upholding the importance of military readiness, and took action to ensure that his promise is kept to the American military and American workers. As he said in his first State of the Union address, “The era of economic surrender is totally over.”

During his recent State of the Union address, President Trump stated: “From now on, we expect trading relationships to be fair and very importantly to be reciprocal.” Trump and his administration took action to keep America safe and to keep our trade fair. Using his skills as a negotiator and a dealmaker, the president and his team brought the nation of Qatar, a strategic military ally in the Gulf, to the negotiating table and secured a deal that protects American aviation jobs now and in the future. Qatar and its state-owned airline have been accused of cheating their aviation trade agreements with the United States by distorting the marketplace with subsidies and seat dumping.

This is not only unfair to American workers who must compete against these subsidies; it also puts U.S. national security at risk. President Trump said “no more,” and ensured that a framework was put in place to prevent further harm to America’s economy. Qatar now must abide by international accounting rules, and will no longer fly indirect routes (known as 5th Freedoms flights) to the United States. This will ensure that their marketplace distortion will end or they will face penalties and is critical not only to safeguarding U.S. jobs, but also for ensuring our military is prepared to meet challenges around the globe.

When I served the Navy, our Special Operations Forces regularly deployed around the world — to dozens of countries — and we often relied on our nation’s commercial aviation industry for transportation. I therefore have a profound appreciation for the role the U.S. civil air transport industry plays in our nation’s military preparedness, supplementing the resources of our Defense Department. When Qatar was cheating our trade agreement, they were undercutting our civil air transport partners upon whom our military relies. That put U.S. workers at a disadvantage and put the U.S. companies and workers the military relies on at unacceptable risk. The actions taken by the Trump Administration this week will help to level the playing field for U.S. workers, and safeguard the readiness of our civil air transport partners when the military needs them.

As President Trump said on Tuesday evening: “America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs and our nation’s wealth.” President Trump is a man of strong words, followed up with robust action. His work this week to keep America safe and to keep our trade fair is proof of that.

Robert Mitchell is a cybersecurity entrepreneur, former Navy SEAL and CIA Paramilitary Operations Officer. 

Originally found at: The Daily Caller
americans4fairskies2015Jobs AND Borders: This Is How The Trump Effect Is Strengthening America
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Progress with Qatar Sets Stage for UAE Negotiations 

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Americans for Fair Skies, and the tens of thousands of aviation workers who have spoken up in support of our effort, sends its sincere appreciation to President Trump and his Administration for taking meaningful action to end the illegal and anti-competitive subsidies provided by the State of Qatar to its state-owned airline, Qatar Airways.

Without government subsidization, Qatar Airways would have been insolvent a long time ago. No private investor would invest in a company with so much red ink on its books. In 2017 alone, Qatar Airways received nearly $500 million in illegal government subsidies from the State of Qatar. This is on top of the more than $26 billion (that’s “billion” with a “b”) in government subsidies that Qatar Airways has received since 2004. These massive subsidies are in direct violation of Qatar’s Open Skies aviation trade agreement with the United States. They allow the airline to engage in predatory seat dumping, distorting the international marketplace and force U.S. airlines that play by the rules to abandon once-profitable routes, costing Americans jobs.

Thankfully, President Trump has stepped up and said no more. As the President said in his State of the Union speech last night, “The era of economic surrender is totally over.”


As we wrote about earlier this week, the Trump Administration announced that it has entered into an agreement with the State of Qatar that cracks down on their aviation trade cheating. The agreement forces Qatar Airways to use internationally agreed upon accounting and auditing standards and apply commercial terms to all transactions. Additionally, the agreement will make sure Qatar Airways pays its share of what it costs to operate out of its international airport instead of allowing that tab to be picked up by its government owners.

This transparency will allow the U.S. government to ensure that Qatar Airways operates free from state-subsidization going forward, or, if they continue to cheat, be held accountable for their distortion of the marketplace. The successful negotiation by the Administration brings us one step closer to the level playing field that must exist in the international aviation industry. The U.S. must now hold Qatar accountable and enforce the terms of this agreement. A4FS will remain vigilant on behalf of American aviation workers and expose any foul play on Qatar’s end.

The Trump Administration has also received an important commitment that Qatar Airways will not introduce any 5th freedom passenger flights to the United States. This tactic, employed by other carriers around the world that are not subsidized, allows airlines to carry passengers between two nations without stopping in the airline’s home country. By ensuring that Qatar Airways will not operate 5th freedom routes into the United States, the Administration precludes the carrier from undercutting U.S. airlines and their employees in the competitive transatlantic market by artificially increasing seat capacity. These same guarantees must also be obtained from the United Arab Emirates.

The UAE’s two largest international carriers, Emirates and Etihad Airways, are also massively subsidized by their state owners. This illegal and unfair reality should be likewise exposed and brought to a close. Emirates, an airline fueled by subsidies from the Dubai government, currently flies subsidized 5th Freedom routes from Europe to the U.S., distorting the marketplace and depriving U.S. airlines and their workers of the right to compete on fair and equal terms. Future negotiations by the Trump Administration should bring transparency to the UAE subsidies and address related party transactions between the airlines and other government owned entities. We anticipate the same leadership that the Trump Administration showed in its negotiations with Qatar to be exercised in its dealings with the UAE.

The UAE’s two largest international carriers, Emirates and Etihad Airways, are also massively subsidized by their state owners. This illegal and unfair reality should be likewise exposed and brought to a close. Emirates, an airline fueled by subsidies from the Dubai government, currently flies subsidized 5th Freedom routes from Europe to the U.S., distorting the marketplace and depriving U.S. airlines and their workers of the right to compete on fair and equal terms. Future negotiations by the Trump Administration should bring transparency to the UAE subsidies and address related party transactions between the airlines and other government owned entities. We anticipate the same leadership that the Trump Administration showed in its negotiations with Qatar to be exercised in its dealings with the UAE.​

Join us in thanking President Trump for his leadership on trade enforcement and for standing up for U.S. workers by putting an end to Qatar’s illegal aviation subsidies.

americans4fairskies2015Progress with Qatar Sets Stage for UAE Negotiations 
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Under pressure from US airlines, Qatar Airways agrees to open its books

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State-controlled Qatar Airways has agreed to disclose financial information within a year, a victory for big U.S. airlines that have complained over the last three years that some Persian Gulf-based carriers benefit from unfair government subsidies.

Under the memorandum of understanding between the Qatari and U.S. governments, Qatar Airways “should issue public annual reports with financial statements audited externally in accordance with internationally-recognized accounting standards, to the extent they are not already doing so,” the State Department said on Tuesday.

Delta Air Lines, United Airlines and American Airlines have lobbied for a harder line against certain Persian Gulf airlines, including Qatar, for more than three years.

In a January 2015 paper, the Partnership for Open and Fair Skies, a lobbying group representing the three U.S. airlines, said three Middle Eastern carriers — Qatar Airways, Dubai-based Emirates and Abu Dhabi-based Etihad — have received more than $40 billion in government subsidies and other “unfair advantages in the last decade alone.”

Delta, which has been vocal against its Middle East rivals, indicated the fight won’t end with the agreement with Qatar.

“Today’s agreement by the State of Qatar is a strong first step in a process for commercial transparency and accountability, and we remain committed to working with the administration to address the harmful trade violations by the United Arab Emirates as well,” Delta’s CEO Ed Bastian said in a statement.

The State Department said Qatar Airways should disclose that new financial transactions are “based on commercial terms.”

The Partnership for Open and Fair Skies said under the agreement Qatar Airways would refrain from introducing any “fifth-freedom” flights, routes to the U.S. from cities other than its base in Qatar. Emirates operates such flights from the New York area to Milan and Athens.

Qatar Airways declined to comment.

Some U.S. carriers don’t agree with their domestic rivals on the issue. U.S. Airlines for Open Skies, a group that represents JetBlue and FedEx and others, had called rivals’ claims a “political ploy to protect themselves from competition and limit choice for U.S. travelers” last month when the State Department met with U.S. airlines about the issue.

It applauded the Trump administration on Tuesday for maintaining so-called Open Skies agreements that give airlines access to the U.S. market.

Originally found at: CNBC

americans4fairskies2015Under pressure from US airlines, Qatar Airways agrees to open its books
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Qatar Airways agrees to financial disclosures in row with U.S. carriers

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State-owned Qatar Airways has agreed to release detailed financial statements, the U.S. government said on Tuesday, as part of a response to accusations by U.S. airlines that the carrier had been illegally subsidized by its government.

U.S. Secretary of State Rex Tillerson said that Qatar and the United States had opened a “strategic dialogue” to address domestic airlines’ concerns that the three major Gulf carriers had been unfairly propped up by their governments, putting U.S. carriers at a competitive disadvantage.

“The outcome we achieve will ensure a level playing field in the global aviation market,” Tillerson said at a briefing in Washington, alongside Qatari officials.

Qatar is expected to begin publishing its annual financial statements, audited by an outside party, with the first one due over the next year. Within two years, the U.S. State Department said Qatar is expected to also disclose significant new transactions with other state-owned enterprises.

Qatar Airways was not immediately available for comment.

The largest U.S. carriers – American Airlines Group Inc , Delta Air Lines Inc and United Continental Holdings Inc – hailed the move as a victory for the domestic industry, following years of lobbying the federal government to take a tougher stance against the three Gulf carriers for what they say have been illegal state subsidies.

The three Middle Eastern carriers – Qatar Airways, plus United Arab Emirates-based Etihad Airways and Emirates – have denied those accusations.

“Today’s agreement by the State of Qatar is a strong first step in a process for commercial transparency and accountability, and we remain committed to working with the administration to address the harmful trade violations by the United Arab Emirates as well,” Delta Chief Executive Officer Ed Bastian said in a statement.

The U.S. carriers have been pushing the administration of President Donald Trump to take the significant step of challenging the three Gulf carriers’ conduct under its bilateral “Open Skies” agreements, but the administration has said its goal is to maintain the framework of the flight pacts.

The U.S. Airlines for Open Skies Coalition, which includes smaller airlines that campaign against protectionist policies in the industry and has sided with the Gulf carriers in the dispute, also claimed Tuesday’s announcement as a success.

“We appreciate the administration’s strong support for maintaining the global framework of U.S. Open Skies Agreements, which will continue American aviation leadership and economic growth,” said the coalition, which includes FedEx , Atlas Air, JetBlue Airways, and Hawaiian Airlines, in a statement.

Originally found at: Reuters

americans4fairskies2015Qatar Airways agrees to financial disclosures in row with U.S. carriers
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U.S., Qatar reach agreement in long-running dispute involving Qatar Airways

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U.S. and Qatar officials have reached an agreement in the three-year dispute about airline subsidies that left factions on both sides claiming victory.

Under the agreement unveiled Tuesday, state-owned Qatar Airways will issue financial statements in the coming year that are audited in accordance with internationally recognized accounting standards. Within two years, Qatar agreed to publicly disclose significant new transactions with other state-owned enterprises such as fuel producers.

“These exchanges address concerns important to U.S. aviation industry stakeholders and strengthen our economic cooperation,” Secretary of State Rex Tillerson said in announcing the deal with Qatar Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani.

“The president has made this matter a priority and the outcome we achieved will ensure a level playing field in the global aviation market.”

A side letter to the agreement states that Qatar’s civilian aviation authority is unaware of any plans to fly to the U.S. from other countries such as in Europe, according to The Associated Press. Emirates’ flights to the U.S. from Milan and Athens have upset U.S. carriers.

But the side letter doesn’t prohibit European flights and doesn’t say whether more flights will arrive directly from Qatar, AP said.

Factions on both sides of the debate found something to like.

American Airlines CEO Doug Parker said the administration thoughtfully addressed concerns of U.S. carriers about foreign rivals getting illegal subsidies.

“Today’s landmark action will help create a level and fair playing field for American Airlines and other U.S. carriers,” Parker said in a statement. “We are extremely appreciative of the president and his administration for their dogged determination to enforce U.S. trade agreements and stand up for American jobs.”

But other airlines and travel groups had criticized the three largest U.S. airlines for lobbying against more flights between Qatar and U.A.E. as merely trying to reduce competition on lucrative European routes.

“It is only fitting that a political campaign based from the start on a legal fiction supported by blatantly false facts would end with ridiculous claims of victory even when, by the ‘victors’ own definition of success, it was a colossal failure,” Kevin Mitchell, founder of the Business Travel Coalition, said in a statement.

Originally found at: USA Today

americans4fairskies2015U.S., Qatar reach agreement in long-running dispute involving Qatar Airways
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State Department Wins Key Victory In Qatar Airline Fight

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The State Department announced a partial victory in a long-running trade fight with Qatar over alleged violations of the Open Skies treaty.

Qatar agreed to operate with more financial transparency regarding its state-owned airline company Qatari Airways, and has agreed not to run indirect international flights that touch down in another country before continuing on to the U.S.

The decision signals a win in one of the largest ongoing trade battles. The Partnership for Open and Fair Skies, a coalition of American aviation companies including Delta Air Lines, United Airlines and American Airlines, have argued for years that Qatar violated the Open Skies agreement by pumping more than $25 billion into its flagship airline.

Qatar Airways “should issue public annual reports with financial statements audited externally,” the State Department said in a statement announcing the memorandum of understanding Secretary of State Rex Tillerson reached with Qatari delegates. Airlines in Qatar “should publicly disclose significant new transactions with state-owned enterprises and take steps to ensure that such transactions are based on commercial terms,” the memo said.

“The president has made this matter a priority, and the outcome we achieved will ensure a level playing field in the global aviation market,” Tillerson said Tuesday.

Airlines and unions representing pilots and flight attendants praised the agreement as a good sign for transparency, and thanked President Donald Trump and the administration for reaching a deal.

“Today’s agreement by the State of Qatar is a strong first step in a process for commercial transparency and accountability, and we remain committed to working with the administration to address the harmful trade violations by the United Arab Emirates as well,” Ed Bastian, CEO of Delta, said in a statement.

“We are extremely appreciative of the president and his administration for their dogged determination to enforce U.S. trade agreements and stand up for American jobs,” American Airlines CEO Doug Parker said. “The administration’s actions today thoughtfully address the illegal subsidies received by Qatar Airways, and most importantly, support American workers and closer to home, American Airlines’ 120,000 team members.”

The Partnership for Open and Fair Skies said it will continue to work with the administration to ensure that Qatar lives up to its agreements.

Fair Skies also alleges that the United Arab Emirates have subsidized Emirates and Etihad Airways to the tune of $25 billion, but those airlines are not part of the current deal.

Originally found at: The Daily Caller

americans4fairskies2015State Department Wins Key Victory In Qatar Airline Fight
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Airline executives praise US agreement with Qatar over subsidies

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Airline executives and labor unions on Tuesday praised the agreement reached between the Trump administration and Qatar aimed at settling a feud over airline subsidies.

Delta CEO Ed Bastian called the agreement “a strong first step in a process for commercial transparency and accountability” while saying the airline will continuing working with the Trump administration “to address the harmful trade violations by the United Arab Emirates.”

“We are grateful to the Trump administration for working to restore a level playing field for the U.S. aviation industry and to the tens of thousands of Delta people who have made their voices heard in an effort to protect millions of American jobs and put an end to unfair competition,” he said.

The CEOs of both American Airlines and United also applauded the agreement, arguing it will protect both U.S. workers and jobs.

Airlines voiced support for the deal after the State Department announced Tuesday that it had reached an agreement with Qatar to address an ongoing dispute about airline subsidies.

Under the arrangement, Qatar will publicly disclose its financial transactions and participate in an external audit in an effort to promote transparency, according to the State Department.

The U.S. aviation industry has for years argued that Qatar’s subsidies to the state-owned Qatar Airways undercuts the international Open Skies Agreement and creates unfair competition.

“Billions of dollars’ worth of subsidies later, it’s nice to know that at least one of the ME3 airlines is maneuvering toward a level playing field,” Captain Dan Care, the president of the Allied Pilots Association, said in a statement Tuesday.

The administration announced the agreement during the U.S.-Qatar Strategic Dialogue meeting between Defense Secretary James Mattis, Secretary of State Rex Tillerson and their Qatari counterparts.

“Qatar is a strong partner and a longtime friend of the United States,” Tillerson said. “We value the U.S.-Qatar relationship and hope the talks today deepen our strategic ties.”

The Trump administration late last year resisted calls to crack down on the subsidies, including from lawmakers who urged the administration to alter aviation agreements with Gulf nations that subsidize their state-owned airlines.

The Partnership for Open & Fair Skies, a coalition that represents American, United and Delta, said it would work with the administration to address subsidies that the United Arab Emirates (UAE) provides to its two state-owned airlines.

Originally found at: The Hill

americans4fairskies2015Airline executives praise US agreement with Qatar over subsidies
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USA, Qatar Agree Enforcement of Open Skies Agreement

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Today, American and Qatari administrations have agreed on the enforcement of the American Open Skies Agreement.

This agreement will benefit American carriers through a level playing field on the competitive front on any services between the mainland United States and Qatar.

American Airlines believes that once the world widely knew the knowledge of state subsidies, the request by the United States government was simple. It was to work with carriers in the Middle Eastern Three (ME3) to enforce a spectrum-wide agreement of the treaty.

Within the agreements between the two administrations, Qatar Airways must adopt “transparent and internationally consistent standards for disclosure and auditing” meaning they have to show all of their ingoings and outgoings. On top of this, they have also agreed not to have any fifth freedom flights (for instance, stopping in Europe to pick up passengers and carry on) going into the United States.

These Fifth Freedom flights are a practice that Emirates has been adopting throughout several destinations. The Dubai-based carrier flies from Dubai to New York, via Milan; or to Newark, via Athens.

This new agreement states that any of Qatar’s flights into the United States must be direct and cannot have any stopping points whatsoever.

American Airlines have praised the move saying that this will helps sustain the 120,000 strong work-force that is based all around the globe.

“Today is an important day, and we commend the Administration for appreciating the urgency of this situation and for its determination to enforce our country’s trade agreements and stand up for American jobs. This effort would not have been possible without the partnerships of our union leaders and partners and so many of our team members. Thank you for joining together making sure your voices were heard. You were an important influencing factor in this positive outcome,” said the airline via an internal memo.

The US State Department is also working with the United Arab Emirates to feasibly reach a far similar agreement with the likes of Emirates and Etihad, looking to establish fairer competition across the two continents.

It will be interesting to see whether Emirates will budge like how Qatar have done. Emirates is a far larger carrier and could require more influencing and more incentivization compared to the likes of Qatar. Emirates will want to capitalize on the stopovers as there is only so much revenue to be made from direct flights.

It could also be an issue for carriers in the Middle East who want to use the stopover points for US Preclearance, as this could now put that at risk.

With President Trump taking a more stricter stance on immigration as well, this could very well coincide with the deals made by the State Department and Qatari officials in maintaining a high level of immigration also.

But for now, this is considered as quite a victory for US carriers as jobs are protected, more “anti-competitive practices” are being removed, which gives those airlines the opportunity to thrive in other destinations, say across Europe, where the stopover points won’t be happening anymore.

Originally found at: Airways Magazine

americans4fairskies2015USA, Qatar Agree Enforcement of Open Skies Agreement
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Qatar to agree to new financial disclosures for state owned-airline: U.S. officials

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Qatar is expected to agree on Tuesday to release detailed financial information about its state-owned Qatar Airways, U.S. State Department officials said late on Sunday, a move that follows pressure from U.S. airlines for it to disclose any potential subsidies it has received.

Under an understanding to be announced Tuesday, Qatar Airways will issue audited financial reports within a year and within two years must disclose significant new transactions with state-owned enterprises, U.S. officials said.

Qatar Airways and the Qatari government could not immediately be reached late Sunday.

The largest U.S. carriers – American Airlines Group Inc (AAL.O), United Continental Holdings Inc (UAL.N) and Delta Air Lines Inc (DAL.N) – since 2015 have urged the U.S. government to challenge the conduct of three major Middle Eastern carriers under “Open Skies” agreements. The U.S. airlines contend the Gulf carriers are being unfairly subsidized by their governments with more than $50 billion in subsidies over the last decade.

Qatar, Etihad Airways and Emirates, have denied those accusations. The Gulf airlines operate around 200 flights per week to 12 U.S. cities.

Qatar and the United States are expected to disclose details of the understanding on aviation issues at a U.S.-Qatar strategic dialogue in Washington on Tuesday that will include U.S. Secretary of State Rex Tillerson and Defense Secretary James Mattis, along with senior Qatari officials, U.S. State Department officials said. They spoke on the condition of anonymity because the agreement has not been made public.

The voluntary agreement follows extensive negotiations with senior U.S. and Qatari officials in recent weeks. Qatar’s Civil Aviation authority told the U.S. government that Qatar Airways has no current plans to offer so-called “fifth freedom flights” that allow an airline to fly between foreign countries as a part of services to and from its home country.

Qatar must take steps to ensure that the transactions are conducted on commercial terms. The disclosures could help U.S. carriers make the case that the airline is getting unfair government subsidies.

The voluntary agreement does not to apply to Etihad or Emirates, both based in the United Arab Emirates. The State Department plans new talks with UAE as early as next week, U.S. officials said.

In a Sept. 14 White House memo disclosed by Reuters and other outlets in December, Trump administration officials agreed the U.S. government “should take action to address the unfair behavior of Gulf carriers.”

U.S. smaller airlines grouped under the U.S. Airlines for Open Skies Coalition said in December it was “confident further investigation by the Trump administration will show the claims for what they are: a political ploy to protect themselves from competition and limit choice for U.S. travelers.”

The coalition represents Atlas Air Worldwide Holdings Inc (AAWW.O), FedEx Corp (FDX.N), Hawaiian Airlines, and JetBlue Airways Corp (JBLU.O).

Originally found at: Reuters

americans4fairskies2015Qatar to agree to new financial disclosures for state owned-airline: U.S. officials
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Qatar Agrees to Transparency to Resolve U.S. Airline Dispute

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Qatar Airways will commit to greater financial transparency and will not run any indirect flights to the U.S. through other countries as part of an agreement with the Trump administration addressing U.S. carriers’ accusations that their Gulf competitors get unfair government help.

Airlines are hailing the agreement as a victory, if not a complete one, in one of the biggest trade disputes in U.S. history. They’ve estimated that Qatar gave $17 billion or more to Qatar Airways over a 10-year period.

“This would be a landmark milestone for the American airline industry that will protect our workers and ensure that our foreign competitors play by the rules and do not undermine our international agreements,” said Peter Carter, chief legal officer of Delta Air Lines. “We all support the administration as it holds their feet to the fire to ensure they live up to their commitments.”

Senior State Department officials said that within a year, Qatar Airways will adopt internationally recognized accounting standards, and issue annual reports and audited results, to the extent they’re not already doing so. Secretary of State Rex Tillerson will announce the arrangement on Jan. 30, following weeks of negotiation among the State Department, White House and Qatar.

No ‘Fifth Freedom’

Within two years, the airline will disclose any major financial transactions with state enterprises to ensure those are being done on commercial terms, said the officials, who declined to be identified ahead of the official announcement.

Qatar Airways also informed the U.S. that it has no intention, for now, of conducting “Fifth Freedom” flights to the U.S. Under commercial aviation protocols, those flights are ones which start in an airline’s home country and touch down in a different nation before continuing on to a third country — in this case, the U.S.

Tillerson will announce the voluntary agreement when he meets his Qatari counterpart during a U.S.-Qatar Strategic Dialogue, said a senior State Department official who asked not to be identified discussing a deal that hasn’t been publicly announced.

Emirates, Etihad

A white paper issued by U.S. airlines in 2015 said Qatar had given more than $17 billion in subsidies to Qatar Airways, although airlines have since revised upward the estimates for the Gulf carriers — possibly as high as $25 billion.

Emirates and Etihad Airways PJSC, which U.S. airlines claim may have gotten an additional $25 billion in unfair subsidies, aren’t part of the arrangement for now.

Any such cooperation between the United Arab Emirates and Qatar has been made far more unlikely after the UAE joined three other nations in a diplomatic and economic blockade of Qatar starting over the summer over accusations that it’s funding terrorist groups.

Qatar’s move on open skies may reflect an effort to curry favor with the Trump administration in the dispute with its Gulf neighbors.

While President Donald Trump initially embraced the assertion by the coalition led by Saudi Arabia that Qatar supported terrorists, Tillerson has steered the administration toward a more even-handed mediation of the dispute. Tillerson had dealings with Qatar when he headed Exxon Mobil Corp.

The administration rejected the chief demand of the U.S. airlines, that any expansion of flights by airlines flagged in Qatar and the UAE be frozen and that the U.S. hold consultations with those countries to discuss possible violations of open-skies agreements.

The government-to-government talks marked a renewed U.S. focus on the airline trade spat, which has been raging for years. Last year, Trump said the Persian Gulf carriers received major government subsidies, without specifying what action he might consider.

President Barack Obama’s administration had been unable to make any progress on the dispute, the officials said.

The Partnership for Open and Fair Skies, which represents Delta Air Lines Inc., United Continental Holdings Inc., American Airlines Group Inc. and airline unions, had earlier said the Gulf carriers are “harming American jobs and the U.S. aviation industry.”

Originally found at: Bloomberg

americans4fairskies2015Qatar Agrees to Transparency to Resolve U.S. Airline Dispute
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Breaking News: President Trump and his Administration are Taking Action Against Open Skies Violations

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Breaking news out of Washington:

An official announcement is coming Tuesday that as a result of the President’s leadership on trade enforcement to safeguard U.S. jobs, the State of Qatar has agreed to end its market distorting subsidies. According to Reuters, “Qatar must take steps to ensure that the transactions are conducted on commercial terms.” This is a major victory for U.S. airlines & their employees who can compete with any airline in the world when the playing field is level.News reports are confirming that the State of Qatar and its state-owned airline, Qatar Airways, will “commit to greater financial transparency and to not run any indirect flights to the U.S. through other countries as part of an agreement with the Trump administration addressing U.S. carriers’ accusations that their Gulf competitors get unfair government help.” (source: Bloomberg Government, Nick Wadhams & Mike Sasso)


Americans for Fair Skies (A4FS) applauds President Trump and his Administration for their steadfast commitment to trade enforcement. The Administration’s decision to set up a framework for accountability shows leadership and vision to create a sustainable path for resolving trade enforcement issues within Open Skies agreements into the future.

According to Peter Carter, the chief legal officer of Delta Air Lines: “This would be a landmark milestone for the American airline industry that will protect our workers and ensure that our foreign competitors play by the rules and do not undermine our international agreements.” (source: Bloomberg Government, Nick Wadhams & Mike Sasso)

As President Trump said last week, “Just like we expect the leaders of other countries to protect their interests, as president of the United States, I will always protect the interests of our country, our companies, and our workers. We will enforce our trade laws and restore integrity to our trading system. Only by insisting on fair and reciprocal trade can we create a system that works not just for the U.S., but for all nations.”

Americans for Fair Skies and the many tens of thousands of aviation workers who have spoken up in support of our effort and have been the backbone of our campaign for fairness, sends its sincere appreciation to President Trump and his Administration for taking meaningful action to end the aviation subsidies by the State of Qatar to its state-owned airline, Qatar Airways.

Expect to hear more from Americans for Fair Skies as additional news about this tremendous progress towards a level playing field in international aviation is released at the official U.S.-Qatari meeting on Tuesday.​

americans4fairskies2015Breaking News: President Trump and his Administration are Taking Action Against Open Skies Violations
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Open Skies Roundup

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This week, Emirates, an airline owned by the government of Dubai in the United Arab Emirates (UAE), announced that it was purchasing 20 more Airbus A380 super jumbo-jets, with the option of purchasing an additional 16. Emirates is already the largest operator of Airbus A380s in the world, by far, with more than 100 of these jets currently in operation. According to one article, “If Emirates signs off on the full deal it will have committed to a total of 178 A380s, or more than half of all orders for the plane worldwide.”

This aircraft order, and the continued expansion that will accompany these new aircraft, defies economics and is further evidence that Emirates is simply a subsidized tool of the UAE government, not a real airline operating with regard to commercial demand.

Recently, Delta CEO Ed Bastian stated about Emirates, “At some point, the economics just don’t make sense and they’ll need to evaluate for themselves how much growth they can add through Dubai to build the world’s super-connector airport.”

The most recent “Air Passenger Market Analysis” from the International Air Transportation Association confirmed the disturbing predatory behavior of the Middle Eastern airlines, particularly Emirates, who are continuing to add capacity (more planes and more seats into markets), while at the same time flying airplanes with more empty seats (30% unsold – which without subsidies is not possible) than anywhere else in the world. With no regard for actually earning a profit and continuing to expand without market demand, the Middle Eastern airlines like Emirates are engaged in unfair competition, distorting the marketplace, and depriving U.S. airlines and their employees of the right to fair competition set forth in the Open Skies agreements held with the UAE and Qatar.

We’ve spent a lot of time fact-checking and myth-busting opponents of Open Skies enforcement. This includes the organization known as US Travel Association, which does not actually represent any U.S. airlines. The ironically named 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.

Recently, others have been fact-checking US Travel too, as they continue their aggressive campaign against American workers. Read one example for yourself in the recent Breitbart story titled: “NeverTrumpers Pushing Trump Administration to Ignore ‘Open Skies’ Trade Violations by Foreign Nations.”


Delta CEO Ed Bastian recently stated, “We’ve had 300 members of Congress who have written in and asked for this matter to be formally investigated on a bipartisan basis. To get 300 members of Congress to agree to anything tells you the importance of this matter to our people.” Bastian added. “I think a resolution will come at some point.” Americans for Fair Skies agrees.

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. We are confident that further progress on Open Skies enforcement will be made soon, which will help restore market balance, safeguard U.S. jobs, and protect the integrity of the 120+ Open Skies agreements with other nations that are not being violated.

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

americans4fairskies2015Open Skies Roundup
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BUSINESS INSIDER: Delta’s CEO says the nastiest rivalry in the airline industry is more complex than people think

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The on-going feud between America’s three major legacy airlines and their three Middle Eastern rivals has been one of biggest stories in aviation over the past few years.

From the beginning, American, Delta, and United (US3) have accused Emirates, Etihad, and Qatar Airways (ME3) of using $50 billion worth of unfair subsidies to squeeze competition out of markets by lowering prices to unsustainably low levels.

The US3 believes these alleged subsidies are in violation of the OpenSkies agreement that governs air travel between the US and the United Arab Emirates and Qatar.

The Middle Eastern carriers have denied these allegations.

But, in recent months, political instability; failed investments; and a depressed oil economy have forced the Middle Eastern carriers to show more discipline when it comes to spending money.

For instance, Emirates cut the number of flights to the US in the face of reduced demand while Etihad has been forced to shake up its entire senior management team after losing billions of dollars due to poor performing investments.

In other words, these Middle Eastern carriers are making moves characteristic of profit-minded businesses.

But that’s not enough to convince one of their toughest critics, Delta Air Lines CEO Ed Bastian.

Even though Bastian said he doesn’t believe they are profit-minded enterprises, the Delta CEO is quick to note that the Emirates, Etihad, and Qatar Airways are anything but a monolith.

“I’m not sure they’re all the same,” Bastian told Business Insider in a recent interview. “I think there are three different business models between the three. We have to be careful we don’t to group them together.”

That’s certainly the case. Even though the ME3 are often presented as a unified front, they are anything but. Emirates and Etihad are neighbors separated by less than an hour’s drive, but they are rivals fighting to be the main airline in the United Arab Emirates. And while both seem to get along with the Qatar Airways, political strife between the UAE and Qatar prevent Emirates and Etihad from having a closer relationship with the airline.

Etihad’s investments have failed

“Etihad is in a very difficult spot,” Bastian said. “Their investments in Air Berlin, Alitalia, and a few others have turned out to be dismal failures.”

Alitalia declared bankruptcy in May after years of financial losses but is expected to survive in some form. Air Berlin followed Alitalia into bankruptcy in August with its assets sold to off to Lufthansa and others.

In mid-2017, Etihad announced losses totaling $1.87 billion in 2016. Much of which was attributed to its investments in two ailing European carriers.

According to Bastian, of the 75 largest airlines in the world, Air Berlin and Alitalia are the two worst performers financially.

“I think they are regrouping and reassessing,” Bastian added.

This month, Tony Douglas joined Etihad Aviation Group as its CEO after the company’s previous chief executive, James Hogan, left last May.

Emirates expansion doesn’t make economic sense

“Emirates just purchased and acquired their 100th Airbus A380 and they are building an airport in Dubai that’s four-time or five times the size of Chicago O’Hare,” Bastian said incredulously.

“At some point, the economics just don’t make sense and they’ll need to evaluate for themselves how much growth they can add through Dubai to build the world’s super-connector airport.”

In addition, Bastian questioned the economic viability of Emirates’ massive fleet of Airbus superjumbos.

“The A380 has, I’ll be honest with you, not been a wildly successful airplane given that (Emirates) is the only operator,” the Delta CEO said. “Most operators I’ve talked to about the A380 are not thrilled with the performance given the cost.”

Qatar Airways is just a government agency

“And Qatar Airways is just a government agency that bleeds money,” Bastian told us. “If you look at their financial results, they weren’t the worst performing airline in the world, Alitalia and Air Berlin were worse than them. Qatar was third.”

According to Bastian, the only reason Qatar Airways avoided finding themselves at atop the list of the worst financial performers was due to subsidies like cost-free ownership of duty-free licenses and the hotel franchises in Qatar.

“It’s a ruse,” he added.

Bastian also pointed out that Qatar Airways is going around buying up equity stakes in foreign airlines while suffering through a costly blockade put in place by its neighbors in the Persian Gulf.

“Now Qatar is buying Cathay Pacific, but where is that money coming from?” Bastian questioned. “It’s coming from their government.”

Delta believes there is a resolution to the conflict coming

“I can tell you everyone we’ve talked to in Washington is concerned,” Bastin said. “We’ve had 300 members of Congress who have written in and asked for this matter to be formally investigated on a bipartisan basis.”

“To get 300 members of Congress to agree to anything tells you the importance of this matter to our people,” he added. “I think a resolution will come at some point.”

However, Bastian noted that Delta can’t simply depend on the US Government to take on the ME3.

“We can’t put our competition solely in the hands of Washington, we have to compete in the marketplace,” the Delta CEO said. “That’s why we are continuing to invest in our international fleet with the new Airbus A350s while working hard with our partners to invest and to improve the quality of service together.”

In addition, Bastian noted his airline’s joint ventures with Air France-KLM in Europe and Korean Air in Asia as major pieces in Delta’s strategy to compete on the global stage.

“There are many components to this strategy far and above this battle in Washington,” Bastian told us.

Originally found at: businessinsider.com

americans4fairskies2015BUSINESS INSIDER: Delta’s CEO says the nastiest rivalry in the airline industry is more complex than people think
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Trade cheating in the Middle East

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Last month, President Trump laid out his foreign policy doctrine in a speech that emphasized economic security as a key piece of America’s national security policy. He called for “trade based on the principles of fairness and reciprocity” and “firm action against unfair trade practices.”

The administration has already correctly identified one of the most rampant trade abuses our country faces: relentless trade-cheating by Middle Eastern countries that violate their Open Skies agreements. Now, it must ensure that more than a million American jobs are not threatened due to the actions of these countries.

The United Arab Emirates (UAE) and Qatar blatantly violated their agreements with the U.S. by providing their state-owned airlines — Emirates, Etihad Airways and Qatar Airways — with over $50 billion in government subsidies. Open Skies agreements are bilateral treaties that the U.S. enters into with other countries to allow airlines from both countries to fly back and forth without restrictions.

The United States has these agreements with over 120 countries around the world, nearly all of which are being followed and enforced as written. There are only two countries that are violating them and threatening American jobs: the UAE and Qatar.

When I served as secretary of Transportation during the Reagan administration, the president understood that the United States’ economic and national security were inextricably linked, and his policies reflected that. Mr. Trump’s vision for America’s foreign policy in 2017 is similar to what President Reagan’s was in 1987: one that promotes free markets and American businesses abroad, while preserving fair and open trade that protects American workers.

The Gulf airlines’ billions in unfair government subsidies infringe upon these principles. They massively skew the international aviation market, making it harder for U.S. airlines to compete on a level playing field.

By not facing the same market pressures as their global competitors, the Gulf carriers have been able to expand the number of routes they fly and the frequency with which they fly them without any regard for consumer demand. U.S. airlines have struggled to compete with the artificially low prices and have been forced out of markets as a result. For example, U.S. airlines have cut back on non-stop flights to India because they do not have the massive subsidies propping them up that the Gulf airlines do.

The U.S. aviation industry supports over 1.2 million American jobs that are threatened by every trade-cheating action taken by the Gulf carriers and their government sponsors. When a U.S. airline has to end a route because a Gulf airline takes it over, 1,500 American jobs are lost. Not only does this hurt airline workers and their families, but also the communities where they live and the local businesses they support.

The subsidies pose a far bigger threat to the U.S. economy than just a few additional foreign airline routes here and there. Our government must enforce our Open Skies agreements and end these practices at once.

U.S. airline employees have received broad support for this cause. Over 310 current members of Congress have written letters to Secretary of State Rex Tillerson, Secretary of Commerce Wilbur Ross and Secretary of Transportation Elaine Chao calling on the administration to enforce our Open Skies agreements with the UAE and Qatar. This is in addition to numerous state and local business leaders who have done the same with the recognition that continued Gulf airline subsidies will lead to harmful effects for their local economies.

In his first year alone, Mr. Trump has taken on the UAE, Qatar and their subsidized airlines in order to protect American workers and their jobs. This act of leadership was sorely needed after years of delay, fumbling and inaction by the Obama administration. The Trump administration’s work to address these trade violations against the United States is consistent with Mr. Reagan’s policies promoting free, but fair, trade.

James H. Burnley IV was the U.S. secretary of Transportation under President Ronald Reagan. He is a partner at Venable LLP and an adviser to American Airlines.

Originally Published on The Washington Times.

americans4fairskies2015Trade cheating in the Middle East
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A Need to Protect Against Unfair Competition in Open Skies Was Envisioned and Enforcement Was Intended

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In most U.S. trade agreements, it is understood that language is required to protect against unfair competition. As such, language is included in these agreements that establishes expectations around competition practices and provides avenues of recourse if these expectations are not met by the parties to the agreement. This is the case for the trade agreements used to govern international aviation with the United States, called Open Skies agreements. Within the Open Skies agreement framework, specific language exists outlining expectations around fair competition and providing avenues for enforcement action should the agreement be violated by either party.

These provisions exist in every Open Skies agreement the U.S. holds with a foreign country.

Historically, Open Skies agreements have worked well for the U.S. and its trade partners. For the first time, however, a need to utilize the methods of redress set forth in the Open Skies agreements needs to be applied and acted upon to correct gross violations by two nations who are deliberately exploiting the benefits of the Open Skies agreements they enjoy with the United States to undermine competition and unfairly position the market in favor of their state-owned airlines.

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

The case for further enforcement action by President Trump is clear:

Two Gulf nations, the United Arab Emirates and State of Qatar, have been illegally subsidizing their three state-owned airlines, Emirates, Etihad and Qatar Airways (ME3), for more than a decade. With more than $52 billion combined in subsidies from their governments, the three airlines have engaged in predatory expansion, unchecked by market demands. Their subsidized growth has upended the international aviation marketplace, depriving U.S. airlines and their employees of their right to “fair and equal opportunity” as demanded by the U.S. Open Skies trade agreements with both the UAE and Qatar.

The “Fair Competition” clause was included in the Open Skies agreements with all nations who enjoy their benefits, including the UAE and Qatar, with the understanding that one day, if the framework stopped working because competition might be found to be unfair by one party or the other, there was a clear path towards finding a resolution. Specifically, this “Fair Competition” clause (Article 11) demands that frequency and capacity be determined “based upon commercial considerations in the marketplace.” As noted, airlines are to be allowed “fair and equal opportunity” to compete. This is no longer the case for U.S. airlines, which are being forced off of international routes, or are forgoing expansion opportunities, due to the seat dumping by the ME3. With each daily international route lost or forgone by a U.S. carrier as a result of these predatory practices, there is a net loss of 1,500 U.S. jobs.

The most recent “Air Passenger Market Analysis” from the International Air Transportation Association confirms the disturbing predatory behavior of the Middle Eastern airlines continuing to add capacity (more planes and more seats into markets), while at the same time flying airplanes with more empty seats (30% unsold – which without subsidies is not possible) than anywhere else in the world. With no regard for actually earning a profit, the ME3 are engaged in unfair competition, distorting the marketplace, and depriving U.S. airlines and their employees of their right to fair competition set forth in the Open Skies agreements held with the UAE and Qatar. The case for enforcement action by President Trump is therefore simple: Fair competition is no longer possible; therefore Article 11 of the Open Skies agreements is being violated by both the UAE and Qatar.

Furthermore, Article 12 of both Open Skies agreements contains a provision allowing parties to intervene in the Open Skies agreements to allow for “protection of airlines from prices that are artificially low due to direct or indirect government subsidy or support.” As demonstrated by the facts of the case, it is clear that these three Gulf airlines – Emirates, Etihad and Qatar Airways – continue to artificially lower their prices and dump seats into markets without regard to demand or earning a profit. The billions in subsidies all three airlines have each received allows this predatory behavior to occur in violation of Open Skies. This unfair competition – possible only “due to direct or indirect government subsidy or support” is a violation of Article 12 of the Open Skies agreements by both the UAE and Qatar. This too is another clear reason President Trump can and will take enforcement action with the UAE and Qatar.


The language on unfair competition and subsidies in the Open Skies agreements for both the United Arab Emirates and State of Qatar is clear. The violations by the UAE and Qatar are obvious. President Trump has made trade enforcement a priority and the American aviation workers are counting on him to take further action to safeguard U.S. jobs and restore market fairness in international aviation by enforcing the Open Skies agreements with the UAE and Qatar.

americans4fairskies2015A Need to Protect Against Unfair Competition in Open Skies Was Envisioned and Enforcement Was Intended
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As Trump Moves Towards Open Skies Enforcement, ME3 Attacks Airline Employees

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As we’ve explained before, those who are against enforcing Open Skies trade agreements know that they are on the wrong side of the facts. Theharm resulting from the seat dumping by Emirates, Etihad and Qatar Airways (ME3), fueled by more than $52 billion in subsidies from their government owners, is real. The subsidies are proven. And because of the strength of our case, opponents of Open Skies enforcement are desperate to change the story, misdirect, and muddy the narrative around what is really happening as a result of the subsidies undermining Open Skies.

One such desperate tactic has been to attack U.S. airlines and their employees. This approach is not only undignified, it is dishonest. It’s become the go-to approach for  a number of groups opposing Open Skies enforcement on behalf of the ME3, including the ironically named U.S. Travel Association, which represents the United Arab Emirates’ state-owned Emirates and Etihad, but no U.S. airlines, and the so-called Business Travel Coalition, a for-profit entity with a history of misrepresenting its membership and seemingly run by a sole individual.

U.S. international airlines and their employees are investing in improving customer service and customers are seeing the results. Further, U.S. airlines are partnering with President Trump to keep U.S. aviation at the forefront of global aviation. This partnership will result in more American jobs, world-class U.S. airports, and unparalleled global connectivity that will support the economic growth of the United States.

It was recently announced by Flight Global, an aviation technology and data service company, that Delta Airlines was the “world’s most on-time airline.” Remarkably, Delta’s on-time arrival rate was nearly 86%. Impressive by any standard, but particularly for a global airline of Delta’s size. The announcement is a testament to the hard work of Delta’s more than 80,000 employees, who are putting customers and safety first.

American Airlines and United Airlines are similarly disproving the rhetoric of opponents of Open Skies enforcement with continued customer-service investments and enhancements. United has recently launched a number of new domestic routes connecting smaller airports with its larger hubs. These domestic routes are dependent on feed traffic from international routes that flow through the hub airports. Without international traffic, domestic traffic, especially to smaller airports typically in rural areas, falls off. American Airlines recently gave each of its non-executive employees a bonus as a result of the federal tax code overhaul, an investment in its employees that will result in improved customer service.

All three airlines are actively working to improve the entire customer experience through investments in technology, onboard services, food, and amenities, and airport infrastructure.

In another example of Delta’s employee’s superior customer service, in November of last year, over the demanding Thanksgiving travel period, Delta flew the entire month with no mainline cancellations, setting a company record. Gil West, Delta’s Chief Operating Officer stated, “Our employees are steadfastly committed to delivering on Delta’s promise to be a safe and reliable airline and we’re proud of the progress we’ve made to offer our customers an industry-leading global operation.”

Despite the efforts of Open Skies opponents to build a false narrative aimed at distorting the facts to the contrary, U.S. airline employees are delivering for customers like never before, and customers are benefiting from safe and reliable service. As U.S. airlines continue to invest in their customers through innovation and employees investments, raising the standards for air travel, it is a win-win for travelers and airline employees.

All of these gains, however, are at risk by the predatory practices of the UAE and State of Qatar and their government airlines. If we are going to ensure that U.S. and global travelers can continue to count on a reliable air transportation network, it is imperative the rules governing international aviation are enforced.

The Trump Administration has taken initial steps towards  enforcing the Open Skies agreements with the UAE and State of Qatar, and is to be commended for leadership on trade enforcement. 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.

americans4fairskies2015As Trump Moves Towards Open Skies Enforcement, ME3 Attacks Airline Employees
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Newt Gingrich: Trump should enforce our free trade agreement on air travel

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Experience shows that letting markets, rather than politics, dictate economic activity creates more value for consumers and frees up capital that ultimately leads to more jobs.

This is why I have actively supported free trade and other agreements that remove government barriers and entanglements to international commerce throughout my career.

For open markets to work as intended, however, all parties need to be operating on the same, level playing field. One of the biggest challenges advocates of free trade must confront in the 21st century is the growing number of countries using nation-state resources – often in violation of trade deals – to give their state-owned companies huge advantages.

In these cases, international competition does not create the greater efficiencies, innovation, and new demand for services that leads to a growing economy for all. Instead, since the unsubsidized competition cannot possibly compete, it leads to a hemorrhaging of jobs and wealth in the countries that do not cheat, as well as fewer options for consumers.

The emergence of this highly aggressive form of state-sponsored capitalism provides a test for the United States and for advocates of unencumbered international economic activity: Are we willing to stand up for American workers? Are we willing to enforce our trade deals?

The United States faces a perfect test case when it comes to our Open Skies agreements with the United Arab Emirates and Qatar.

Open Skies agreements allow airlines, rather than governments, to make decisions about international routes, pricing, and capacity. The goal is to allow market demand rather than politics to drive these decisions, which saves customers money.

The United States has more than 100 of these agreements, and they have been a huge success. Estimates show that Open Skies agreements save passengers approximately $4 billion per year on U.S.-international routes.

However, for these agreements to be mutually beneficial, the airlines in all participating countries must be operating under the same rules. In the case of the United Arab Emirates and Qatar, this is clearly not the case.

A report submitted to the U.S. government by a coalition of the three major U.S. airlines and several airline worker unions shows that between 2004 and 2014, the governments of the UAE and Qatar have provided over $40 billion in subsidies and benefits to their state-owned airlines: Emirates, Etihad Airways, and Qatar Airways. Updated analysis by the coalition shows that since 2014, the total subsidy has passed $50 billion.

U.S. airlines have competed against state-owned airlines for decades, but these massive subsidies are unprecedented. The Gulf carriers are using this almost limitless government funding to open new routes without considering consumer demand, and thanks to the subsidies they receive, can afford to hemorrhage money until their unsubsidized competitors have no choice but to end their service. The coalition’s analysis shows that every route closure leads to a net loss of 1,500 U.S. jobs.

Why would the Gulf governments do this? Because the two nations’ larger economic development strategies depend on making themselves major airline hubs. Therefore, they are willing to let their state-owned airlines lose money to serve their broader, long-term goals.

This is a direct violation of our Open Skies agreements, which require parties to ensure “fair and equal” opportunities to compete. As the report shows, the Gulf carriers are operating hundreds of millions of dollars in the red every year, while at the same time rapidly expanding routes and capacity. They are not creating new demand for routes. They are only driving out the competition who cannot afford to operate at a loss. The Gulf carriers couldn’t do this without the more than $50 billion in subsidies they have received over the past decade. This is the opposite of fair competition.

One might be tempted to dismiss the findings of this study because it was funded by the United States’ three major legacy carriers, but other developed nations such as Canada, Japan, and China – as well as the EU – have come to the same conclusion and have already taken steps to equalize the economic playing field with the Gulf carriers. It is clearly time for the United States to follow suit.

Our Open Skies agreements allow the State Department to request immediate consultations with partner countries to address grievances. We should do so immediately. If we are refused, the Trump administration should announce it is freezing the addition of new routes from the Gulf carriers to the United States until UAE and Qatar come to the table.

Those opposed to enforcing our Open Skies agreements with Qatar and UAE argue that doing so would invite scrutiny of alleged subsidies that U.S. carriers receive, and undermine Open Skies agreements with other countries.

This is a smokescreen. There is no comparison between the tens of billions of dollars in subsidies that the Gulf carriers receive with the small advantages U.S. carriers have, such as relatively liberal bankruptcy laws and the partial reimbursements they received from the government after it decided to ground flights in response to the 9/11 attacks.

If free and fair trade is to continue to expand in the 21st century, those of us who advocate robust international commerce free of government interference must be willing to stand up for U.S. workers when other countries are not playing by the rules.

In short, supporting free trade requires enforcing free trade agreements. All Americans should demand that the U.S. government acts to enforce its Open Skies agreement with UAE and Qatar.

Newt Gingrich is former Republican speaker of the U.S. House and a former candidate for president.

americans4fairskies2015Newt Gingrich: Trump should enforce our free trade agreement on air travel
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