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.

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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.

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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.
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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

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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
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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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Delta eyes return to Persian Gulf region after US strikes deal with Qatar

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Almost two years after ending flights between Atlanta and Dubai, the CEO of Delta Air Lines says it may be time to return to the Persian Gulf countries.

Ed Bastian told CNBC it’s too soon to predict when resuming flights to parts of the region might happen, but he says it’s a possibility now that the U.S. has negotiated an agreement with the government Qatar that should limit subsidies for Qatar Airways.

“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,” Bastian told CNBC. “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.”

Delta, along with American Airlines and United Airlines, have complained for years about the expansion of Qatar Airways, Abu Dhabi-based Etihad Airways and Dubai-based Emirates. The U.S. carriers have said the Persian Gulf airlines are able to undercut competitors and offer flights to the Middle East and elsewhere thanks to an estimated $52 billion in government subsidies. It’s an allegation the Gulf airlines vehemently deny.

So what’s changed?

In February of last year, the U.S. airline CEOs met with President Donald Trump at the White House and asked him to push Middle Eastern carriers to comply with Open Skies agreements designed to ensure all airlines compete on a level playing field. Since that meeting, the State Department, which negotiates Open Skies agreements, has been talking with Qatar government leaders.

“The President has made this matter a priority,” said Rex Tillerson, U.S. Secretary of State. “The outcome we achieved will ensure a level playing field in the global aviation market.”

Next up for Tillerson are talks with Etihad Airways and Emirates. If the State Department can reach a similar agreement, Delta may be ready to once again fly to the region. (Delta already offers service to Israel.)

“While we appreciate the work done with the Qataris, there is another big area that needs focus, which is the UAE and specifically Emirates and Etihad,” said Bastian. “I know those negotiations are starting and we hope the consultations reach a similar conclusion.”

Originally found at: CNBC

americans4fairskies2015Delta eyes return to Persian Gulf region after US strikes deal with Qatar
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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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Open Skies 2018

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As we enter into a new year, it is important to reflect on where we stand in the ongoing fight for Open Skies enforcement.

americans4fairskies2015Open Skies 2018
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A4FS Statement on Trump Administration & Open Skies

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American for Fair Skies thanks the Trump Administration for their courageous action that puts U.S. airline workers first and takes on the bad actors that are violating our trade agreements and depriving Americans for equal and fair competition.

americans4fairskies2015A4FS Statement on Trump Administration & Open Skies
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Three Points On Open Skies

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

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

1. Dismal Load Factors But Above Average Growth?

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

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

2. Market Place Distortions Violate Open Skies

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

3. Pro-Subsidies Is Anti-Fair Competition

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

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

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

Thanks for your support of fair competition.

americans4fairskies2015Three Points On Open Skies
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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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Myth Busting: Isakson Tax Fairness Provision

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Opponents of fair competition in international aviation are actively lobbying against a provision in the Senate’s tax overhaul that would end tax giveaways to foreign airlines from nations that block U.S. airlines from fair competition. The language drafted by Senator Isakson ensures that the U.S. tax code does not offer preferential tax treatment to foreign airlines from nations that are violating U.S. trade laws and killing U.S. jobs. Americans for Fair Skies strongly supports the Isakson provision and is here to bust the myths being perpetuated about this provision by opponents of fair competition.

The International Air Transport Association (IATA) has, misguidedly, come out against the Isakson tax fairness provision. This is noteworthy, as the CEO of Qatar Airways, the largest subsidy recipient of the three-state owned airlines, and a clear violator of U.S. trade policy, is the Chairman of IATA. Qatar Airways would be insolvent if it was not for the billions it has recieved in government subsidies. Support for principles of fairness in international aviation is a key mission of IATA. This begs the question: is IATA really looking out for the best interests of international aviation fairness, or is the organization being led down a path of support for unfair skies to protect the narrow interests of its Chairman? This is deeply disturbing behavior by IATA and demands investigation.

Kevin Mitchell, the leader of the for-profit Business Travel Coalition, also (predictably) opposes the Isakson language, as does a coalition representing airlines that profit off the UAE and Qatari subsidies. We are not sure who is paying Kevin Mitchell for his opposition to this provision and his continued support for the UAE and Qatar over the United States. But his arguments, and those of the airlines that are aligned with foreign interests over U.S. interests, are another weak attempt to distort the facts of this issue.

The attempt to muddy the narrative by Mitchell and IATA does not change the reality that U.S. airlines and their employees are harmed by the UAE and Qatar’s predatory expansion. The subsidized growth of the state-owned and state-subsidized carriers, Emirates, Etihad and Qatar Airways, has distorted the international aviation marketplace, thereby depriving U.S. air carriers the ability to compete equally and fairly, as Open Skies agreements intended.

When the United Arab Emirates and State of Qatar made their respective decisions to begin violating international trade law by subsidizing their airlines, they upended decades of international precedent. Kevin Mitchell and others may claim that nothing stops a U.S. airline from flying to the Middle East, but those who live in the real world of business understand that government subsidies and capacity dumping undermine all principles of fair competition. As a result of the UAE and Qatari predatory expansion and distortion of the international aviation marketplace, U.S. air carriers have been deprived of their ability to compete on a level playing field.

Senator Isakson’s language recognizes the new reality of global aviation these foreign carriers have created with their violations of U.S. Open Skies policy and adjusts U.S. tax law accordingly. Isakson’s language removes a tax benefit from competitors that are in violation of their international agreements and have no regard for market demand and the financial norms of profit and loss, including Emirates, Etihad and Qatar Airways.

Senator Isakson’s provision also clearly articulates that it only impacts passenger operations. FedEx and other cargo operations are not impacted by this provision. Any suggestion by Kevin Mitchell and others otherwise is a myth, and an attempt to muddy the narrative with falsehoods.

Another myth is the speculation about “retaliatory action” by the UAE and Qatar if the U.S. restores tax fairness. This is also false. There are no U.S. passenger carriers serving the UAE or State of Qatar to retaliate against, because the U.S. passenger air carriers already cannot compete on the un-level playing field created by the two nations with their subsidized airlines. U.S. airlines and their employees can compete with any company in the world, and win, but in these instances, they are competing against the treasuries of nations.

Any suggestion by Mitchell or others that the UAE or State of Qatar would take action against other U.S. companies with operations in their nations is also a hypothetical falsehood and does not recognize the economic reality that the UAE and State of Qatar need the U.S. companies in their nations for their own self-interest given the benefits they provide.

It is clear that IATA, Mitchell, and others who oppose the tax fairness provision are grasping at straws with their opposition and are doing so not on the basis of facts, but in the interest of their foreign benefactors. Facts matter. And once again, Mr. Mitchell and other opponents of fair competition are looking to hide the truth.

Tax reform is currently being debated by the U.S. Senate. There is still time to make your voice heard. Call your Senators now and tell them you want them to stand up for American aviation and its workers by keeping Senator Isakson’s tax fairness provision in the final tax reform legislation.

americans4fairskies2015Myth Busting: Isakson Tax Fairness Provision
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Senator Isakson’s Tax Fairness Provision

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Friends,

A tax fairness provision in the Senate’s tax reform legislation, offered by Senator Johnny Isakson, has been attracting a lot of attention lately. Americans for Fair Skies proudly supports this provision, and for those who may not be familiar with what it would accomplish, if enacted, we are here, as always to share the facts with you.

Senator Isakson’s provision is simple and straightforward – it ensures that the U.S. tax code does not offer preferential tax treatment to foreign airlines from nations that are violating U.S. trade laws and killing U.S. jobs. In Senator Isakson’s own words, “Foreign airlines should not receive preferential tax treatment if their countries choose not to open their market to U.S. companies.”

americans4fairskies2015Senator Isakson’s Tax Fairness Provision
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SENATE VOTES TODAY: Tax Fairness Provision is CRITICAL for American aviation & its workers

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The U.S. Senate is scheduled to take up its tax overhaul legislation today. Included in the bill is a provision by Senator Isakson that would establish fairness in the U.S. tax code with respect to international aviation. Already, those who benefit from this preferential treatment are seeking to distort the truth regarding this provision and what it will do. As such, Americans for Fair Skies would like to set the record straight about what this language does and does not do. For even more information, see our post about the Isakson tax fairness provision from yesterday.

Senator Isakson’s provision ensures that the U.S. tax code does not offer preferential tax treatment to foreign airlines from nations that are violating U.S. trade laws. When foreign nations and their airlines cheat our aviation trade policies, known as Open Skies agreements, they distort the international aviation marketplace, thereby depriving U.S. air carriers the ability to compete equally and fairly, as Open Skies agreements intended. This hurts American jobs and should not be rewarded with favorable tax treatment.

Two nations in particular would be impacted by the Isakson provision. Both of these nations are in violation of U.S. Open Skies due to the massive subsidies they have provided to their three respective state-owned airlines, which distort the marketplace and harm competition. The United Arab Emirates, and its airlines Etihad and Emirates, and the State of Qatar, and Qatar Airways, combined have injected more than $50 billion into their airlines in the last decade alone (and this number is still growing). These airlines, in turn, have engaged in predatory expansion and unprecedented capacity dumping, undermining the basic principles of fair competition and violating the trade agreements they hold with the U.S. The Isakson tax fairness provision would ensure that these airlines pay their fair share of U.S. taxes, rather than being allowed preferential tax treatment at the expense of U.S. taxpayers.


  • The Senate language ends a tax exemption that applies ONLY to passenger airlines that have income derived from the U.S. and are from nations that deny fair market access for U.S. passenger airlines. Its aim is very hard to argue with: Play by the rules, or, pay your fair-share of U.S. taxes.
  • U.S. passenger airlines are blocked from flying to the UAE and State of Qatar due to the market distorting subsidies the nations are offering to their state-owned airlines. It is impossible for U.S. airlines and their employees to compete against the treasuries of nations and their ability to dump seat capacity into markets without regard to basic economic principles and no expectation of a return on investment.
  • Senator Isakson’s language recognizes the new reality of global aviation these foreign carriers have created with their violations of U.S. Open Skies policy and adjusts U.S. tax law accordingly, removing a tax benefit from competitors that are in violation of their international agreements and have no regard for market demand and the financial norms of profit and loss.
  • The Senate language does not limit these airlines from flying to the U.S., it simply taxes the foreign airlines on their U.S. revenue when there is no reciprocity of competition.
  • In addition to their government subsidies, Emirates, Etihad, and Qatar Airways do not pay income taxes in their home nations. And they do not release their financial statements.
  • Senator Isakson’s provision would ensure that these airlines would have to file tax returns in the United States, which would help to shed additional light on their finances, adding greater transparency to their subsidies and Open Skies violations.
  • Senator Isakson’s provision only impacts passenger operations. FedEx and other cargo operators are not impacted by this provision.
  • IATA and others have falsely listed which nations would be impacted by this provision. For example, IATA lists the British Virgin Islands as being impacted, but American Airlines has direct flights to BVI from Puerto Rico so BVI is not impacted. IATA lists Malaysia, but they have no direct flights to the U.S. And IATA lists French Polynesia, however, as a territory of France, they are covered by France’s tax treaty. Facts matter.
  • The non-partisan Congressional Budget Office estimates that the tax fairness provision would generate $200 million to the U.S. Treasury. That’s $200 million back to the U.S. taxpayers and away from those who are hurting U.S. jobs.

In Senator Isakson’s own words, “Foreign airlines should not receive preferential tax treatment if their countries choose not to open their market to U.S. companies.”We could not agree more, and we applaud Senator Isakson for his efforts on behalf of American workers and urge the United States Senate to act in support of the Isakson provision.The Senate is already debating their tax reform plan. It’s critical that your voice is heard NOW. Call your Senator and let them know that you want Senator Isakson’s Tax Fairness provision be included in the Senate’s Tax Reform Plan.Don’t know how to reach your Senator?  You can find their phone number here:
U.S. Senate: Senators of the 115th Congress

americans4fairskies2015SENATE VOTES TODAY: Tax Fairness Provision is CRITICAL for American aviation & its workers
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Fedex: A Fair-Weather Friend of Fair Competition

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Friends,
We pulled the following quote from a petition sent to the U.S. Department of Transportation:
“The Department is required to ensure that U.S. air carriers compete on equal footing with foreign air carriers.”

We agree with this phrase, but we didn’t write it. Who filed it? It wasn’t a U.S. passenger carrier or interest group, but rather, it was fair competition’s most fair-weather fan: FedEx.

The petition, filed jointly by FedEx and UPS in 2002, was against DHL Aviation, and the case made against the German shipping service was one of unfair competition and the potentially disastrous effects to American companies that could result from it. Sound familiar? It should.

Just look at this quote pulled directly from the petition:

“FedEx Express has long been a staunch supporter of the Department’s open skies policies and of fair competition. It also believes that the United States must work to support the pre-eminence of the U.S. flag in civil aviation by insisting on the effective removal of all competitive obstacles imposed by foreign governments.”

FedEx was effectively making the same arguments against DHL that Americans for Fair Skies and other supporters of fair competition are currently making against Emirates, Etihad Airways, and Qatar Airways, the state-owned and state-subsidized carriers of the United Arab Emirates and State of Qatar. (It’s also a similar argument to the one FedEx made against Asian shipping companies during negotiations for the Trans Pacific Partnership.) In both instances, FedEx argues against the U.S. government allowing foreign operators taking advantage of looser regulatory environments and U.S. government policies to the detriment of American companies. It’s a serious and time-sensitive issue, and we applaud FedEx for speaking up against such practices.

However, we denounce FedEx’s blatant and destructive hypocrisy. FedEx decries government intervention on fair competition only when it serves their corporate interests. One could change the names and a few details in their petition and use it to make strong a case against Gulf carrier subsidization, and yet FedEx has proactively argued in support of these Middle Eastern carriers, and directly against enforcing U.S. aviation trade laws. We have written about the company’s obvious flip-flop on this issue before, and their petition against DHL is just another example of how FedEx’s position on fair competition stems from its own self-interest, not protecting American workers or companies.

If FedEx truly wants to insist on removing “all competitive obstacles imposed by foreign governments,” a great start would be to help its fellow American carriers fight unfair, anti-competitive, and job-killing Gulf subsidization practices. No carrier can compete with the resources of an entire government, and the predatory expansion practices that those subsidies fuel is the very definition of a competitive obstacle.

FedEx has been a supporter of Open Skies, but only when it serves their own corporate interests. We suggest that the company reconsider its support for Gulf trade abuses and help A4FS do what is best for American workers and the American economy: stop illegal subsidies and enforce Open Skies.

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

We also encourage you to follow us on Twitter or like us on Facebook for the most up-to-date information.

americans4fairskies2015Fedex: A Fair-Weather Friend of Fair Competition
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CEO Of The Year? Why Are A Failing Airline & Its Vulgar CEO Receiving Awards?

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Dear Friend,

Qatar Airways’ CEO, Akbar Al Baker, was recently named “CEO of the Year” by CAPA. This is a remarkable achievement for the CEO of an airline that has doubled its operating loss under his leadership and, according to Al Baker himself, is poised to post another annual loss.

Furthermore, in the past year alone Al Baker has made repellent comments unbecoming of anyone, especially someone in a leadership position.  Al Baker was filmed bragging this past July stating, “the average age of my cabin crew is only 26 years,” and disgustingly asserting that “you know you will always be served by grandmothers on American carriers.”

americans4fairskies2015CEO Of The Year? Why Are A Failing Airline & Its Vulgar CEO Receiving Awards?
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FEDEX FLIP FLOP: Why the Cargo Carrier Changed its Stance on Trade Enforcement

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Dear Friend,

As we know, opponents of fair competition love false equivalencies. And when they run out of those, they turn to absolute falsehoods. One of their for-hire anti-Open Skies mouthpieces, the for-profit Business Travel Coalition’s Kevin Mitchell, has tried to spell doom and gloom for the U.S. air cargo industry as an attempt to justify the illegal subsidization practices of the the State of Qatar and the United Arab Emirates with regard to their airlines. As we’ve pointed out before, these illegal subsidies distort the international aviation marketplace, depriving U.S. airlines of the ability to compete equally and fairly, as the Open Skies agreements were intended.
americans4fairskies2015FEDEX FLIP FLOP: Why the Cargo Carrier Changed its Stance on Trade Enforcement
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We Raise Our “Voices For Open Skies”

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Friends,

Voices for Open Skies, a new website by the U.S. Travel Association, does an incredible job of weaving a false narrative into the fabric of an otherwise great idea.

americans4fairskies2015We Raise Our “Voices For Open Skies”
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Try as They Might, JetBlue Can’t Discredit the Facts of Gulf Open Skies Violations

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Dear Friend,

Earlier this week, at an aviation industry luncheon in Washington, DC, JetBlue’s CEO, Robin Hayes, made headlines with some accusations that well, remaining polite, were dishonest.Mr. Hayes made the argument that those of us here in the U.S. fighting against the violations of Open Skies by the United Arab Emirates and State of Qatar had forged this campaign on emotions instead of evidence, because the evidence of these violations wasn’t there to support our argument.

americans4fairskies2015Try as They Might, JetBlue Can’t Discredit the Facts of Gulf Open Skies Violations
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Enforcement Will Make Open Skies Fair Again

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Dear Friend,

Fifty billion dollars is a remarkable amount of money. In fact, scientists believe humans lack the ability to distinguish numerical values that are “large” from those that are “very large.” So basically, fifty billion dollars is so much money, it’s actually impossible for some people to process.

americans4fairskies2015Enforcement Will Make Open Skies Fair Again
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UAE: Muddying, Misdirecting, and Misinforming again.

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Friend,

In Washington, if you want to make sure that something doesn’t get done, there’s an old strategy and it goes like this: muddy, misdirect, and misinform. This tactic is employed when the facts aren’t on your side and you want to ensure that our public servants do not make the right decision by distorting the larger narrative. We’ve seen this movie in Washington and we’ve seen all the sequels. And in the case of U.S. cargo carriers as they relate to the UAE and Qatar, it looks like we’re headed straight for the cutting room floor.

americans4fairskies2015UAE: Muddying, Misdirecting, and Misinforming again.
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AMERICANS FOR FAIR SKIES Fighting to save American aviation jobs

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It has been more than two years since the UAE and State of Qatar were exposed with overwhelming evidence as two of the greatest international trade violators in history. By illegally injecting billions of dollars of subsidies into Emirates, Qatar, and Etihad Airways, the two nations allowed their national airlines to artificially and predatorily expand across the world, disrupting markets and eliminating local jobs wherever they went.

americans4fairskies2015AMERICANS FOR FAIR SKIES Fighting to save American aviation jobs
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Why are some U.S. airlines fighting to continue exploiting Open Skies?

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Friend,

On Monday, nearly thirty groups signed a letter to members of Congress and the Trump administration extolling the virtues of our Open Skies Agreements. The letter does not mention the Gulf airlines by name once, but its support of Qatar, Emirates, and Etihad’s illegal and anti-competitive practices is evident throughout.

americans4fairskies2015Why are some U.S. airlines fighting to continue exploiting Open Skies?
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Another Day, Another Email From The Non-Business Travel, Business Travel Coalition

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We’ve written to you time and time again, explaining why the massive subsidy violations perpetuated by the UAE and Qatar that undermine their Open Skies Agreements with the United States are so dangerous. We’ve explained that it is critical for the American economy, American industry, and American workers that our government hold its trade partners accountable. See, this isn’t complicated. Rules should be enforced. Agreements should be enforced.

americans4fairskies2015Another Day, Another Email From The Non-Business Travel, Business Travel Coalition
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Let Your Voice Be Heard: End Gulf Subsidies

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Friend,

At a time when the policy and political battles are full of intensity and frenzy, it’s easy to get distracted by all that is coming at us. At Americans for Fair Skies, however, we aren’t taking our eye off the ball when it comes to Open Skies subsidy violations because we know what is at stake – the long-term viability of our international trade agreements, the future of the U.S. aviation industry, and the livelihoods of the millions of workers employed either directly, or indirectly, by this industry.

americans4fairskies2015Let Your Voice Be Heard: End Gulf Subsidies
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And… He’s at it again: Kevin Mitchell’s misinformation campaign on Open Skies continues

It appears that Kevin Mitchell, the Gulf carriers’ most vocal advocate/unregistered lobbyist, has once again deliberately misrepresented the facts surrounding the Open Skies subsidy fight to strengthen his fundamentally flawed argument against America’s three largest airlines. In a recent Aviation Week opinion piece, Mitchell pushes the same false and tired narrative he’s become known for, and adds in a new attack on the Canadian government’s proactive Blue Skies policy. The piece is intentionally misleading, and Americans for Fair Skies would like to set the record straight.

To start, Open Skies Agreements have created more jobs and opportunities for American workers and consumers than any other aviation agreement or innovation, and both the US3 and Americans for Fair Skies have made it clear that these agreements are wholeheartedly supported. Mitchell continues to peddle the alternative fact that American, Delta, and United are against Open Skies. They aren’t. Kevin Mitchell is lying.

Unlike Mr. Mitchell, however, we do not believe our Open Skies Agreements should be abused. Our trade partners operating under a liberalized air transport agreement should not be allowed to intentionally harm competition and threaten the livelihoods of American workers. The Gulf carriers Emirates, Etihad and Qatar Airways and their state-supporters – the UAE and State of Qatar – have weaponized an innovative idea, and it is not “anti-Open Skies” to want to see the spirit of that idea enforced against the predatory behavior of Mr. Mitchell’s clients. For every route lost to the illegally subsidized Gulf carriers, the futures of 1,500 American aviation workers are dimmed.

So we ask Mr. Mitchell- How can you possibly think that continuing to allow this exploitation can possibly be good for the U.S. economy, American aviation industry, the millions employed either directly or indirectly by that industry, or for the American consumers who face decreasing connectivity and higher long term fares?

Subsidized Gulf capacity growth does not lead to increased traffic nor does it stimulate growth, it only allows for artificially low prices to be offered that aim specifically to force U.S. carriers to abandon once-profitable routes.

Furthermore, Mr. Mitchell has once again tried to equate Gulf subsidization with Delta’s investment in a Chinese airline. Perhaps Mr. Mitchell is unaware that there is a significant difference between how Chinese carriers and Gulf carriers access U.S. airspace. Or more likely he is aware, he just once again sees an opportunity to skew the facts to support his false narrative. Gulf carriers are bound to operate under the terms and conditions, including a fair competition clause, of the Open Skies agreements their state-owners hold with the United States. These Open Skies Agreements mean they do not need U.S. government approval to establish new routes into the U.S. and therefore, despite lack of demand, they have dumped significant new capacity into the U.S., flooding markets with excess seats. China, on the other hand, has no such agreement with the United States. Why? Because their airlines are subsidized, China holds a bilateral agreement with United States- not an Open Skies Agreement, which means the U.S. government has the discretion to approve or deny any/all Chinese carrier expansion into the United States.

Finally, Mitchell’s newest tactic is to attack Canada’s “Blue Skies” policy. Mitchell references (but does not link) to a kiwi.com airfare analysis and claims that Canada’s aviation policies have hurt consumers. We found that study and, unsurprisingly, found that Mr. Mitchell misrepresented the data. Not only did he cherry pick Canada’s worst statistic, but that same analysis also ranks Qatar or the United Arab Emirates as the most expensive aviation markets in 3/4 categories, and 2nd in the last.

Kevin Mitchell and the for-profit Business Travel Coalition continue to spread false information about the Open Skies debate in an attempt to aid the illegally subsidized Gulf carriers.  It’s American workers and consumers will feel the impact of his dishonesty while he lines his pockets with the same money that is being used to perpetuate the largest trade violation in history.

Shame on you, Mr. Mitchell. And shame on whatever group (or groups) is out there funneling you money to keep up your façade to benefit their dishonest lobbying campaign.

americans4fairskies2015And… He’s at it again: Kevin Mitchell’s misinformation campaign on Open Skies continues
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He may love points, but Ben Schlappig doesn’t get the point of the Gulf carrier subsidy fight

We hope you’ve had a chance to see Delta Air Lines’ new short documentary film on the impact of the Gulf carrier subsidies on American aviation and its workers, “Our Future Our Flight.” It provides a clear picture of exactly how the subsidy violations of the state-owned airlines of Qatar and the United Arab Emirates are causing harm to the aviation industry and the hard-working Americans that it employs.

Some folks, however, have taken the opportunity to try and bend the narrative. Recently, a blog post was published on One Mile at a Time by Ben “Lucky” Schlappig taking aim at the new film and, in turn, at American workers. The author fails to understand the importance of the video and the underlying campaign against Gulf subsidies; this is about people’s livelihoods and ultimately the future of U.S. aviation.

First and foremost, the hit piece completely fails to recognize the specific harms that Gulf carrier subsidies are inflicting on American workers and the aviation industry as a whole. For every route lost to Gulf carriers, 1,500 good-paying American jobs are also lost. While it may seem easy to some to take cheap shots and label Delta’s video as propaganda, it does a disservice to the people whose lives depend on these jobs and depend on the success of U.S. airlines. These are peoples’ lives. These employees have invested a lot in this industry, and using these circumstances as an opportunity to take a cheap shot at Delta is particularly troubling. If we, as a nation, don’t take action to stop these subsidies, airline jobs will go the way of the maritime industry and rapidly disappear, (and let’s not forget that the aviation industry alone contributes over 5% of US GDP.)

Not only do these continued Gulf subsidies result in a loss of American job opportunities, but the consumer takes a hit as well. The flooding of existing aircraft routes creates a loss of expansion opportunity for U.S. carriers. It creates an environment where U.S. carriers begin to lose long-haul routes, and thereby puts vital short-haul routes in jeopardy (which are dependent on long-haul feed and revenue), leaving the consumer with far fewer options when buying tickets. The U.S. carriers want to provide more options, more routes, more access to countries like India, which Delta has had to forgo. It’s their job, it’s their passion, and this video displays Delta’s steadfast determination in the face of illegal trade violations. Once the playing field is level, as Delta CEO Ed Bastian said, “We’re going to go back to India…We’re going to be able to add jobs, lots of jobs. We are going to be able to add new longhaul airplanes to support that growth. And that’s just the start.”

So while this video from Delta intended to speak directly to employees about a pressing issue facing the industry has yielded some cheap shots, they’re being taken with no regard whatsoever as to what’s actually on the line here: American jobs and American consumers’ interests. U.S. airlines welcome competition, they want consumers to have a choice, and they want to continue creating good-paying American jobs that bolster our economy. This video addresses an issue that is deeply personal for employees. These massive subsidies that fuel the artificial growth of Emirates, Qatar, and Etihad continue to threaten and limit future opportunities in an industry that is vital to the American economy.

Those who wish to disparage a video detailing a core issue for a company’s employees should look deeper into an issue as complex as Open Skies violations, and have a care for those affected so deeply by the issue before jumping in and attempting to muddy the waters.

 

americans4fairskies2015He may love points, but Ben Schlappig doesn’t get the point of the Gulf carrier subsidy fight
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Let’s Not Throw A Wrench In An Economic Engine

It’s interesting how you can look at the same thing in different ways, just take airplanes: Many people will look at a commercial aircraft and focus on the jet engines. I look at airplanes and see economic engines. Together, American Airlines, Delta Airlines and United Airlines support over 1.2 million American jobs. Steady skilled work at airlines are the type of jobs that nearly every politician claims they want to support and promote—jobs that, at this very moment, are under attack.

For over a decade, two Gulf nations, the United Arab Emirates and Qatar, have funneled over $50 billion to their state-owned airlines, Emirates, Etihad Airways and Qatar Airways. These massive subsidies violate “Open Skies” agreements—the trade deals that allow international aviation to freely and fairly operate without red tape and government interference. But rule-breaking subsidies provided by these nations are the very definition of government interference in the marketplace. These subsidies are a thumb on the scale that unfairly shifts the balance of what should be fair competition. Allowing Gulf carriers to expand where they want, without any regard for the economic realities under which real American businesses must function, is a complete disregard for the impact on American workers and their families.

Aviation is a resilient industry, but it is not without risks. We’ve made it past hurdles including great economic downturns and the post-9/11 disastrous slump in travel, but it’s simply not possible for a fair-playing American business to compete when faced with this vast trade cheating, financed by foreign government subsidies. If it continues, American carriers will be unable to compete and will be forced to cut routes and reduce service. If this happens, it will be aviation workers and the communities where they live that will suffer.

Economists estimate that each daily round-trip international flight cut due to Gulf airline cheating costs 1,500 American jobs. And it’s not just international flights that are at risk. Our aviation industry operates in a hub-and-spoke system that gives passengers in small, medium and large communities across the country access to a multitude of destinations. This system relies on the passengers that fly to hub cities from smaller airports to take a longer flight outside of the country. If these international flights are lost to foreign carriers, U.S. airlines could be forced to cut services to their smaller local communities, resulting in further loss of jobs for American workers.

Aviation economics is a complicated topic, and there are scores of documents proving the Gulf carrier subsidies and outlining the threat of this kind of rule breaking. But at its heart, this issue is simple: Foreign businesses are breaking trade deals with the United States with violations that force out American businesses and threaten 1.2 million American jobs. That is unacceptable, and if elected leaders are truly committed to putting “America First,” valuing middle-class jobs and ensuring American businesses have the opportunity to compete and succeed, they will put a stop to it.

 President Trump has made clear that stopping trade cheaters and standing up for American workers and their families are his top priorities. Flight attendants and other American aviation workers look forward to seeing him keep his word.
Originally Published on Forbes.
americans4fairskies2015Let’s Not Throw A Wrench In An Economic Engine
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A4FS Responds to Mark Perry

Well, this is awkward.

This morning, a blog was published by Mark Perry, an Economics Scholar at the American Enterprise Institute, in which he used his platform to seemingly argue on behalf of the largest trade violation in U.S. history. Which seems a little odd, because the issue at hand is an economic one, and Mr. Perry, (an economist), doesn’t seem to understand what’s behind it, or what is at stake, at all.

Mr. Perry’s blog makes a rather lazy argument that fails to provide any context for his reader on the issue at hand, which would be the $50 billion in subsidies provided to three Middle Eastern airlines by their governments over the past 10 years in direct violation of the aviation trade agreements they hold with the United States. He ignores, or simply doesn’t bother to understand, the harm these trade violations are causing to U.S. workers and American companies that are playing by the rules.

One would think that as an economist, Mr. Perry would have a better grasp of this issue; but since he doesn’t seem to, we’re going to provide the context and facts that Mr. Perry did not.

Our nation currently has two types of international aviation trade agreements. One is called a bilateral agreement- this means the government plays a role in every new route established. And given that our nation has the world’s largest airspace, that’s a whole lot of government involved in industry. The second type of agreement is called an Open Skies agreement. The U.S. started signing these agreements with foreign nations 25 years ago with aim of reducing burdensome government oversight by creating an open market in which private companies could compete based on an agreed-to set of rules including language around fair competition. These rules include a ban on subsidies and a ban on artificial or predatory pricing practices. The idea was that open markets would stimulate growth, promote competition, and benefit not just the industry served, but also those served by the industry (the consumers).

And indeed, it worked. Now, 25 years later, the U.S. holds 117 active Open Skies agreements with countries around the globe. There’s just one problem- two of the countries who hold Open Skies agreements with the U.S. are in violation of their agreements and have decided to stack the deck in their favor. They have massively subsidized their airlines (the above mentioned $50 billion in subsidies to three failed Middle Eastern airlines: Emirates, Etihad, and Qatar Airways), which have, in turn, used the subsidies to predatorily expand into new markets with no regard to demand and no expectation for returning a profit. These airlines flood those routes with excess capacity and artificially lower prices of seats to drive competition out of markets. For every international route lost by U.S. carriers to this unfair competition, 1,500 American jobs are lost. This is illegal and it is harmful.

Mr. Perry claims to want to represent the consumer’s interest. He says that a lack of choice or a lack of competition is bad for the traveling public. On that front, he is actually correct. But unfair trade practices don’t benefit consumers in the long run. Predatory practices drive out competition, they don’t promote it. And it’s competition that drives down prices for consumers. Not to mention it’s what’s best for the millions of Americans employed either directly or indirectly by an industry that represents 5% of the U.S. economy and is playing by the rules.

We are happy to provide Mr. Perry this simple economics lesson. A lot more information can be found at our website, fairskies.wpengine.com.

americans4fairskies2015A4FS Responds to Mark Perry
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We Want to Fly to India, Mideast – Enforce Trade Deals and We Will, Delta CEO Says

Delta Air Lines (DAL) would resume flights to India and the Middle East if the U.S. were to successfully restrain the growth of the Middle East carriers, says CEO Ed Bastian.

“When we win this fight, we’re going to go back to India,” Bastian said during a 15-minute movie intended to explain Delta’s involvement in the conflict to employees and posted recently on its website.

“We’re going to go back to be able to fly back to the Middle East,” Bastian said. “We’re going to be able to add jobs, lots of jobs. We are going to be able to add new longhaul airplanes to support that growth. And that’s just the start.”

In February 2016, Delta ended its Atlanta-Dubai flight, saying it could not compete with subsidized service to multiple U.S. hubs by Mideast carriers. In May, Qatar Airways began Doha-Atlanta service.

As for India, Delta ended Amsterdam-Mumbai service in March 2015. Today, United is the only U.S. carrier serving India, with flights from Newark to Mumbai and New Delhi.

A study commissioned by Delta, American and United found that the governments of Qatar and the United Arab Emirates have provided more than $50 billion in subsidies to Emirates, Etihad Airways and Qatar Airways, violating the Open Skies agreements that enable flights between the two countries and the U.S.

In the movie, for the first time, a leader of the coalition opposing the Mideast three’s rapid expansion lays out the case that intrusions by the Mideast carriers have dramatically weakened Europe’s carriers.

“Fifteen years ago, the Europeans were some of the strongest airlines on the globe,” Bastian said. “AirFrance, KLM, Lufthansa – they’ve all been harmed massively.” Today the Gulf carriers fly more than 100 daily flights from their hubs into Europe.

Meanwhile, Australia’s Qantas has been turned into a “feeder” for Emirates, said an unidentified voice on the movie.

By contrast, some major countries including Canada have resisted the Middle East carriers’ intrusions

The Mideast carriers, based in countries that combined are the size of South Carolina, have more than 500 widebody orders, more than twice the combined orders from Chinese and U.S. airlines.

“Where are those wide bodies going to go?” Bastian asked. “There’s only three markets that can sustain them.

“I guarantee you that the Chinese are not going to let them in,” he said. “The Japanese will definitely not let them in. In our market, if we don’t wake up, we are going to wind up being overrun by them.”

Among the experts appearing in the movie are Charlene Barshefsky, former U.S. trade representative, who said, “the scope of the {trade} violation here simply takes one’s breath away:”

Jim Burnley, former U.S. transportation secretary, who said the U.S. has aviation “trade agreements with over 120 countries and we’ve got real problems with {just} two of them,” and Doug Parker, CEO of American Airlines Group (AAL) , said “This is about American jobs and our ability to keep American jobs if we don’t do something about this as a country.”

 Delta spokeswoman Elizabeth Wolf said the movie “is part of Delta’s ongoing efforts to urge government officials in Washington to level the playing field for U.S. airlines and enforce Open Skies agreements with the United Arab Emirates and Qatar.
 “Earlier this year, Delta launched an internal campaign to further raise awareness of this issue among Delta employees and encourage them to ask the U.S. government to take action,” Wolf said. “This movie is part of that campaign.”
 The movie was first shown to employees in Atlanta, then shared internally and then made available on Delta’s website last week, she said.
Delta’s shares were down 0.9% to $54.96 early Monday afternoon.

Original article found at: TheStreet.Com

americans4fairskies2015We Want to Fly to India, Mideast – Enforce Trade Deals and We Will, Delta CEO Says
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Qatar Airways Bid to Buy 10% of American Airlines ‘Must Be Stopped,’ American Pilots Say

Qatar Airways wants to buy 10% of American Airlines Group Inc.  (AAL) , the Fort Worth, Texas, based company said Thursday, June 22, but the airline said in a filing that it didn’t solicit the proposed investment.

American shares rose 2.6% on Thursday to $49.68.

The Allied Pilots Association, which represents American’s pilots, blasted the offer.

“This is an action of aggression by the Qatar government and we take strong offense to that,” said APA spokesman Dennis Tajer.

“They are flush with cash because the government is subsidizing them,” Tajer said. “Now they want to come into our house and start buying the furniture.”

“This has got to be stopped,” he said.

In a statement Thursday, Qatar Airways said it “believes in American Airlines’ fundamentals and intends to build a passive position in the company with no involvement in management, operations or governance.

“Qatar Airways has long considered American Airlines to be a good oneworld Alliance partner and looks forward to continuing this relationship,” the carrier said. Qatar Airways plans to make an initial investment of up to 4.75% {and} will not exceed 4.75% without prior consent of the American Airlines board.”

American, United Continental Holdings Inc. (UAL) and Delta Air Lines Inc. (DAL) are locked in a battle with Qatar, Emirates and Etihad over the Gulf carriers’ efforts to expand in the U.S. while being heavily subsidized by the governments of Qatar and the United Arab Emirates.

 In its filing with the Securities and Exchange Commission, American said the investment does not alter its “conviction on the need to enforce the Open Skies agreements with the two countries.”
 American said its certificate of incorporation prohibits anyone from acquiring 4.75% or more of its stock without advance approval from the board. American said that it has not received a request for approval and that foreign ownership laws would limit the percentage of foreign voting interest to 24.90%.

In mid-morning trading, Delta shares rose 0.75% while United gained 0.18%.

Article originally found: TheStreet.Com
americans4fairskies2015Qatar Airways Bid to Buy 10% of American Airlines ‘Must Be Stopped,’ American Pilots Say
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Europe to Toughen Airline Rules to Face Off Mideast Competition

The European Union will propose stricter rules on Thursday to allow the region’s airlines to challenge perceived unfair competition from overseas rivals.

The move comes after repeated complaints by European and U.S. airlines that major Middle Eastern carriers such as Emirates Airline, Qatar Airways and Etihad Airways have grabbed market share by using state subsidies to offer heavily discounted tickets.

Read the rest on: WSJ.Com

americans4fairskies2015Europe to Toughen Airline Rules to Face Off Mideast Competition
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U.S. should enforce Open Skies agreements

Competition from the global exchange of goods and services benefits consumers and countries, while unfair competition penalizes those who play by the rules and erodes confidence in the rules themselves. That’s why it’s essential that international agreements governing free trade are upheld.

Accordingly, Secretary of State Rex Tillerson and Secretary of Transportation Elaine Chao should read and heed the letter sent from the eight members of Minnesota’s delegation to the U.S. House — as well as a letter from Minnesota Sen. Amy Klobuchar and five Senate colleagues from both parties — urging the U.S. government to enforce the Open Skies agreement with Qatar and the United Arab Emirates.

 This bipartisan congressional consensus alleges that three airlines from those nations — Qatar Airways, Etihad Airways and Emirates — benefit from government subsidies worth more than $50 billion, which the congressional members and U.S.-based carriers such as Delta Air Lines believe give the airlines an unquestioned and unfair advantage that threatens the global aviation system and with it good-paying jobs here in the U.S.
In fact, according to an analysis from the Partnership for Open and Fair Skies, which includes Delta, American and United as well as several key airline-sector unions, every daily long-haul, round-trip flight lost to a Gulf carrier due to subsidized competition results in a net loss of 1,500 U.S. jobs.

The stakes are high here at home, according to the Minnesota representatives, who write: “If additional subsidized routes continue to be added it will negatively impact air service and employment in Minnesota. Subsidized flights into hubs like Minneapolis/St. Paul International Airport and other regional domestic hubs will shift passengers away from U.S. carriers and hurt service to U.S. hubs as well as the small and medium sized communities they serve.”

According to the partnership, from 2011-2016 the Gulf carriers grew capacity at a rate more than six times the global GDP growth rate, suggesting that the subsidies are taking passengers from airlines based in nations working within the Open Skies framework. And the danger of overreliance on these Gulf carriers was clear when Monday’s Mideast diplomatic spat between Qatar and five nations disrupted air travel.

Some U.S.-based carriers and air cargo lines that are not part of the partnership disagree with many of its claims, and the Gulf carriers deny the level of subsidies. And some consumers contend that the subsidies lower fares. But the best way to lower prices is global competition operating on a level playing field.

Support for free-trade pacts will decline even further if the public doesn’t have the confidence that they will be enforced. It’s critical for the airline sector and the economy at large for the U.S. to take the steps necessary to ensure a free — and fair — environment for airlines.

Originally found on: StarTribune.Com

americans4fairskies2015U.S. should enforce Open Skies agreements
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U.S. should enforce Open Skies agreements

Competition from the global exchange of goods and services benefits consumers and countries, while unfair competition penalizes those who play by the rules and erodes confidence in the rules themselves. That’s why it’s essential that international agreements governing free trade are upheld.

Accordingly, Secretary of State Rex Tillerson and Secretary of Transportation Elaine Chao should read and heed the letter sent from the eight members of Minnesota’s delegation to the U.S. House — as well as a letter from Minnesota Sen. Amy Klobuchar and five Senate colleagues from both parties — urging the U.S. government to enforce the Open Skies agreement with Qatar and the United Arab Emirates.

This bipartisan congressional consensus alleges that three airlines from those nations — Qatar Airways, Etihad Airways and Emirates — benefit from government subsidies worth more than $50 billion, which the congressional members and U.S.-based carriers such as Delta Air Lines believe give the airlines an unquestioned and unfair advantage that threatens the global aviation system and with it good-paying jobs here in the U.S.

In fact, according to an analysis from the Partnership for Open and Fair Skies, which includes Delta, American and United as well as several key airline-sector unions, every daily long-haul, round-trip flight lost to a Gulf carrier due to subsidized competition results in a net loss of 1,500 U.S. jobs.

The stakes are high here at home, according to the Minnesota representatives, who write: “If additional subsidized routes continue to be added it will negatively impact air service and employment in Minnesota. Subsidized flights into hubs like Minneapolis/St. Paul International Airport and other regional domestic hubs will shift passengers away from U.S. carriers and hurt service to U.S. hubs as well as the small and medium sized communities they serve.”

According to the partnership, from 2011-2016 the Gulf carriers grew capacity at a rate more than six times the global GDP growth rate, suggesting that the subsidies are taking passengers from airlines based in nations working within the Open Skies framework. And the danger of overreliance on these Gulf carriers was clear when Monday’s Mideast diplomatic spat between Qatar and five nations disrupted air travel.

Some U.S.-based carriers and air cargo lines that are not part of the partnership disagree with many of its claims, and the Gulf carriers deny the level of subsidies. And some consumers contend that the subsidies lower fares. But the best way to lower prices is global competition operating on a level playing field.

Support for free-trade pacts will decline even further if the public doesn’t have the confidence that they will be enforced. It’s critical for the airline sector and the economy at large for the U.S. to take the steps necessary to ensure a free — and fair — environment for airlines.

Originally Published on Star Tribune.

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Editorial: Raising an alarm about unfair airline competition

Free markets aren’t so free when one side has its thumb on the scale.

That’s the gist of Delta Air Lines’ argument as it makes its case about a competitive threat.

The situation pits Delta and the nation’s other top airlines against aggressive, state-owned — and subsidized — carriers from certain Middle East countries. There is concern that aggressive, subsidized expansion by airlines from Qatar and the United Arab Emirates will undermine U.S. carriers, ultimately jeopardizing airline connections, service and jobs.

The risk and the remedy — enforcing “Open Skies” agreements between the United States and other nations that govern industry competition — are receiving due notice, including attention across the political divide from all eight Minnesota members of the U.S. House.

The carriers — Emirates, Etihad Airways and Qatar Airways — are using subsidies to launch international service that would not be possible without government backing, explains a letter from Reps. Keith Ellison, Tom Emmer, Jason Lewis, Betty McCollum, Rick Nolan, Erik Paulsen, Collin Peterson and Tim Walz.

Their letter in April to Secretary of State Rex Tillerson and Transportation Secretary Elaine Chao says that the Mideast carriers’ subsidies — amounting to more than $50 billion — foster new routes that come “at the expense of U.S. airlines’ international networks, American jobs and ultimately will harm consumers.”

It notes that Emirates, for example, now offers round-trip flights from New York City to Milan, Italy, and Athens, Greece, that “would not be viable without subsidies.”

The lawmakers contend that subsidized flights will “shift passengers away from U.S. carriers and hurt service to U.S. hubs, as well as the small- and medium-sized communities they serve.” Their letter also expresses concern that “as subsidized capacity continues to grow, U.S. international and domestic connecting flights may be discontinued, leading to a loss of good-paying aviation jobs in our state.”

Sen. Amy Klobuchar was among a bipartisan group of her colleagues signing a similar letter to the Trump administration earlier in the year. It notes repeated statements from the president that strong enforcement of international agreements will be central to administration policy.

The Middle East carriers shouldn’t have access to our market if they violate the trade agreement, Delta’s Chief Legal Officer Peter Carter told the editorial board.

Delta’s work on the issue in the Partnership for Open & Fair Skies brings it together with two other so-called “legacy” carriers, American and United, as well as labor unions representing airline workers.

That combination of fierce competitors and bargaining-table adversaries should “tell you something’s going on,” said Carter, a former partner at the Minneapolis-based Dorsey and Whitney law firm.

If left unchecked, the Mideast carriers will continue to expand in the United States, pushing out U.S. airlines and harming hard-working Americans, according to the partnership. It has engaged airline employees in the effort, including lobbying their representatives in Washington.

Carter, who also made a presentation at a recent meeting of the Metropolitan Airports Commission, cites disruption in airline markets in Europe and Australia, for example, that has displaced such once-dominant carriers as Lufthansa and Qantas.

We should note that not everyone agrees. A lengthy rebuttal on the Emirates website disputes the claim that it benefits from subsidies and says the carriers misstate the Open Skies agreement. Meanwhile, a coalition of four passenger and cargo carriers says the major airlines don’t speak for the industry.

But Delta’s concern resonates here, where the Northwest Airlines legacy runs deep, even after their merger in 2008.

We don’t underestimate the importance of Delta’s hub at Minneapolis-St. Paul International Airport and the competitive advantage it provides for Minnesota businesses — and the state’s economy.

Fast, efficient connections for businesses and entrepreneurs — and leisure travelers, too — are a key to the region’s economic well-being. That’s something to protect.

Article original found: TwinCities.Com

americans4fairskies2015Editorial: Raising an alarm about unfair airline competition
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America’s national security is at risk from foreign airline trade violations

A key component of our nation’s military preparedness and national security preparation is being threatened due to gross trade violations being perpetrated by two of our trading partners in the Middle East.

U.S. airline companies have long documented that the United Arab Emirates (UAE) and State of Qatar have subsidized their three respective airlines — Emirates, Etihad, and Qatar Airways — with more than $40 billion and are putting the U.S. Civil Reserve Air Fleet (CRAF) program at risk.

This program allows the Department of Defense to augment military aircraft capability during a national defense related crisis with equipment volunteered by U.S. air carriers. Today, the Civil Reserve Air Fleet is comprised of more than 450 mostly wide-body aircraft that allow for the transportation of thousands of troops and tons of cargo to destinations near and far at a moment’s notice during times of crisis.

However, the massive subsidies flowing to Emirates, Etihad, and Qatar Airways threaten the fleet by making fair competition impossible and putting U.S. airlines and their employees at a significant competitive disadvantage in the international marketplace on long-haul routes. U.S. airlines and their employees can compete against any airline in the world, but they can’t compete against governments.

As the governments of the UAE and Qatar flood their airlines with subsidies — predatorily expanding and dumping seats into markets that their airlines would not be able to serve if the playing field was level — U.S. airlines lose and forgo international routes, and thereby downsize their CRAF mission-capable aircraft fleets. This undercuts the U.S. military’s ability to call upon U.S. airlines for support for military and humanitarian missions.

The aviation trade agreements the U.S. holds with the UAE and Qatar, known as Open Skies agreements, represent two of the 119 Open Skies agreements the U.S. currently holds with countries around the world. These agreements have bolstered choice and access for consumers, increased economic opportunities for our aviation industry, and supported hundreds of thousands of jobs in the industry. They have also supported our military presence around the globe and expanded U.S. airlines’ fleets.

Therefore, as Qatar and the UAE’s massive violations of these agreements continue to negatively impact our commercial aviation industry, they also threaten our national security. It is time for the U.S. government to take action. We are asking President Trump to say “no more” to trade partners who violate their trade agreements and threaten American workers. We must stand up for Open Skies trade agreements and our national security, and end the UAE and Qatari airline subsidies.

Dan Carey is president of the Allied Pilots Association, which serves as the certified collective bargaining agent for the 15,000 professional pilots who fly for American Airlines and is the largest independent pilots’ union in the world. American Airlines, Delta Airlines, and United Continental havedocumented the subsidies written about in this column.

Originally found on: TheHill.Com

americans4fairskies2015America’s national security is at risk from foreign airline trade violations
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Middle-Eastern Cheaters Leave US Airlines Flying Blind

President Trump is set to visit the Middle East next week, and if early indicators are any guide, this will be no Obama-style “apology tour.” If anything, it’s more likely to be a tour that demands apologies from most of the countries being visited.

Yet, surprisingly, one particular offense seems to have slipped through the White House’s fingers in figuring out what to address: namely, the unrepentant abuse of America’s airline sector by its Middle Eastern competitors through rampant violations of America’s Open Skies pacts.

If you don’t know what Open Skies pacts are, fear not, explanation follows. Open Skies agreements are decades old multinational agreements created to encourage much-needed competition in the airline marketplace. They do this by providing expanded access to airways across the globe, which in turn lower costs for consumers. In essence, they amount to a series of rules that multiple countries agree to in order to foster travel and fair competition for their respective airline industries. And in theory, that should be the end of the story.

But it isn’t. Because when it comes to transparency and an open market, the reality is that the current system is being exploited, and has been exploited for more than a decade in some cases. In fact, as far back as 2004, the Qatari government and monarchs of the UAE have been subsidizing state-owned Qatar Airways, Etihad Airways and Emirates to the tune of $50 billion, in direct violation with our trade agreements – and that’s just what we can trace.

From a competitive standpoint, this is like outfitting an Olympic runner with a steroid pumping hidden IV drip, and it needs to stop. We need a leveling of the playing field – and true free market competition, which was the whole point of U.S. Open Skies agreements to begin with. Why should domestic U.S. air carriers be expected to go up against corrupt Persian Gulf competition that’s been juiced with subsidies, removed from shareholder accountability, and armored with a barrage of anti-competitive tactics? Not only is such a state of affairs ludicrously unfair, but it also costs consumers, since both Delta and United were forced to cancel their U.S. flights to Dubai last year, partially cutting off air commerce with the UAE and likely ruining millions of peoples’ spring break in the process.

And it’s not just the US that is subject to this kind of predatory behavior from Gulf state airlines. They’re violating pacts with other nations as well. Arabian Business reported just this week that Emirates has been accused of violating their air services pact with India by flying more passengers than they should be able to accommodate. Many countries in Europe, and our northern neighbor Canada, have stood firm in enforcing their agreements and penalized Gulf airlines for violations by placing restrictions on the number of round-trip passenger flights each week. This isn’t protectionism, it’s free market self-preservation. And it’s just the kind of thing President Trump was elected to fight against.

Gulf airline expansion comes at the expense of U.S. and European carriers, who operate within the norms of a free market, and if the Trump administration doesn’t hold these countries to account on Open Skies, things are set to get a lot worse. Trade Arabia reports that currently, there is $57.4 billion worth of active aviation projects taking place in the Middle East, no doubt to flood our airways with more half-empty planes.

These Open Skies violations are crippling. For every long-haul route lost or foregone by our domestic carriers as a result of subsidized Gulf carrier competition, more than 1,500 good American jobs are lost, and exploitation of these agreements directly impact the 11 million jobs and $1.5 trillion in nationwide economic activity U.S. airlines support. This is hardly an “America First” style outcome.

President Trump, on his first trip overseas, would do well to remember the kind of economic carnage these kinds of practices can produce for hard-working Americans, and how the actions of these Gulf airlines literally threaten our airline industries’ ability to keep planes in the air. It’s time for President Trump to send a clear message that there is a new sheriff in town: these countries may fly fairly, or they may face the turbulence and headwinds of U.S. sanctions.

Originally Published on Townhall.com

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Ensuring ‘Open Skies’ still flies

ANALYSIS/OPINION:

As President Reagan’s former transportation secretary, it’s gratifying to see Washington is finally finding the gas pedal when it comes to infrastructure. We all have seen the cost of poor infrastructure, slowing down both us and U.S. businesses. But while we work ourselves out of a backlog of technology, concrete and steel problems, it’s also time for Congress and the administration to cast a critical eye toward the operational risks facing our infrastructure.

We cannot just rebuild America’s infrastructure and pat ourselves on the back — we have to strengthen how it operates and serves us for the future. I know there is no industry for which this rings truer than aviation. When President Trump met in February with America’s aviation industry leadership, everyone agreed that our aviation infrastructure needs to see upgrades, particularly with new technology. However, no matter how significant those investments could be in a new package, America’s airports may be left without sufficient operations if strategic industry risks are not addressed soon.

U.S. airlines are being sabotaged by unfair competition on global flights, putting at risk the hub-and-spoke system that supports their ability to connect small- and medium-sized airports to larger hubs and global destinations. What good is a shiny, new airport without planes to land at it?

America’s aviation market is experiencing what the steel industry went through — the dumping of cheap, subsidized goods meant to shut down the competition. The United Arab Emirates (UAE) and Qatar have poured more than $50 billion into their state-owned airlines, Emirates, Etihad Airways and Qatar Airways, which means they can expand anywhere and everywhere they like, regardless of profit or demand. Their seat capacity to the United States grew by 43 percent in just two years.

American, European, Asian and Australian airlines, which don’t have billions in government subsidies, don’t have a realistic chance to fight back. This has led to European carriers cutting routes and U.S. airlines foregoing even growing markets like India. When these airlines enter U.S. markets, they aren’t stimulating new demand, but are instead diverting existing customers from U.S. and other countries’ airlines to theirs. This has a very real, harmful impact on the United States — for every daily round-trip frequency lost or foregone to a subsidized Gulf carrier, 1,500 American jobs are lost.

So, while we’re upgrading America’s aviation infrastructure, we also need to protect the integrity of aviation operations by enforcing our Open Skies agreements. For decades, Open Skies have helped the American aviation industry flourish, letting U.S. airlines freely fly to 120 other countries without government interference and red tape. But these massive subsidies run completely counter to the core purpose of Open Skies — rather than remove government interference, the UAE and Qatar are heavily subsidizing their airlines. The point of having Open Skies is greater access, with a fair and equal opportunity to compete. Why should America accept heavy subsidies by our treaty partners that undermine competition?

President Trump is making it clear by his words and deeds that he expects American companies to be treated fairly under international trade agreements. He has also aggressively acted to protect U.S. jobs. No U.S. airline can be expected to compete with an entire nation’s oil-rich treasury. As we make sure our aviation infrastructure is able to support economic growth, we should also make sure our Open Skies agreements are working as intended.

Originally Published on WashingtonTimes.com

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The Big Three: U.S. Airlines Versus Persian Gulf Carriers

Less than a decade ago, there was only one flight a day from the United States to the UAE and Qatar—a New York to Dubai route operated by Emirates. Today, the three Gulf mega-carriers, Emirates, Etihad and Qatar Airways, operate 25 daily nonstop flights from the U.S. to the Gulf. These new routes are just one way these three heavily-subsidized companies have expanded rapidly in recent years. For example, the Gulf carriers have grown their combined seat capacity to the U.S. by over 1,500% since the U.S. negotiated Open Skies agreements with their governments. In just the past year, their daily departures have shot up 32%. Such rapid growth has raised eyebrows among aviation analysts. The Gulf airlines assert that their expansion is the result of burgeoning market demand, fueled by rising incomes in Asia and elsewhere. But evidence suggests that their expansion, made possible by their massive subsidization, is instead about flooding markets and crowding out U.S. competitors. The Gulf carriers are not growing the market—they are diverting traffic from U.S. airlines and their European allies by violating Open Skies policies.

(Disclaimer: Mr. Britton is an independent consultant to a number of clients, including American Airlines, Inc.)

Understanding the market

To make sense of what’s going on, it’s important to understand basic airline geography and what government experts and economists call “relevant markets.” Emirates, Etihad and Qatar Airways fly nonstop from 11 cities in the U.S. to their home hubs in Dubai, Abu Dhabi and Doha, respectively. But demand for these nonstop flights, called local markets, is relatively small because the respective populations of these places are only about 2.3 million, 2.1 million and 900,000. Further, a large portion of these populations consists of expatriates, including laborers who lack the means to fly, except when returning home.

With such small traveling populations, demand for flights to and from these local markets isn’t significant enough to prompt expansion. Rather, what the three Gulf mega-carriers have captured is the market for connecting traffic from the U.S., Europe, South America and many other regions via their three hubs to much of the other side of the world. Emirates alone links the U.S., via Dubai, with 17 cities in the Middle East; 21 in Africa; 36 in South, Southeast and East Asia; and 7 in Australia and New Zealand. These Gulf mega-airlines benefit from a completely fair—and strategic—geographic advantage of central location. As they frequently remind us, about 60% of the world’s population lives within six flying hours of the Gulf.

Many people looking at the issue get this basic geography wrong—for example, an academic paper soon to be published in Transportation Research Part A: Policy and Practice defines the relevant market as solely U.S.-Middle East. Although the paper is cited approvingly by the three Gulf carriers, the true market is far bigger than that.

From the U.S., for example, India is the largest “beyond” market for Emirates, Etihad and Qatar, and their shares of bookings through travel agents and other intermediaries more than quadrupled from 2008 to 2014, from 8.3% to 34.9%. The following table shows the impact of this growth on U.S. airlines and their European partners on typical routes from 2008 to 2014:

Data from MIDT, collected from ticket-distribution systems like Sabre and Amadeus

With this additional context, one can see a more accurate picture: Gulf airline expansion has clearly come at the expense of U.S. and European partners (as well as other carriers). The Gulf carriers tell us that they are simply offering a better product than their competitors to a growing market. As I have written, however, they are not competing on a level playing field. And virtue of the subsidies and other unfair benefits they receive, these three airlines have expanded far faster than market forces could possibly account for.

Phantom demand

Contrary to their assertions, Emirates, Etihad and Qatar Airways are expanding at rates that are clearly divorced from economic pressures. While their competitors are restrained by the demands of shareholders, these carriers are free to undercut the market through subsidized growth. Economic data makes it clear that Gulf carrier claims about market demand simply don’t add up.

Aviation analysts often use GDP growth as a proxy for overall growth in air transport demand. However, the Gulf carriers are growing their capacity at rates that far exceed global GDP growth:

table2

With world GDP growth at 3%, it is not surprising to see the U.S. carriers and the rest of the world within a percentage point of that level. In contrast, the three Gulf carriers are expanding at nearly four times the rate of global economic growth. They are adding massive amounts of seat capacity in markets that aren’t growing fast enough to support the influx. In manufacturing industries, this practice is called dumping. One veteran of several decades in the airline industry recently characterized Gulf market expansion as “Gee, Boeing (or Airbus) has delivered another new airplane. We have to find a place to put it.”

Commercial aviation is a textbook example of supply, demand and price

What does all this overcapacity do? In short, it drives down yields for all airlines, not just some. Commercial aviation is a textbook example of the relationship between supply, demand and price: grow capacity enormously in a slow-growing market and prices will fall. If you’re subsidized, losing pots of money doesn’t matter. If investors own the airline, it matters greatly.

In the short term, lower prices may appear to benefit consumers, but in the medium- and long-term the damage to U.S. carriers will hurt us all in at least two ways. First, U.S. airlines and their European allies will be forced to reduce long-haul flying. We are already seeing this effect. American Airlines and Delta both withdrew from the enormous India market because they could not operate profitably in the face of massively subsidized competition from the Gulf megacarriers. Second, this decline in international flying will affect the U.S. domestic network. More than half of passengers on a typical American, Delta or United overseas flight make a connection from or to a domestic flight. So as the international network is squeezed by unfair competition, the domestic network will shrink, too. And because network decline is exponential and not linear (simple example: shrinking from 10 flights to 7 drives an overall network decrease much greater than 30%), the impact will be large and damaging. Small and medium-sized U.S. cities, already worried about reduced service, should be even more concerned.

Governments of Abu Dhabi, Dubai and Qatar are simultaneously competing with each other

It gets worse going forward. For one thing, the governments of Abu Dhabi, Dubai and Qatar are simultaneously competing with each other, not just with their airlines, but with essentially identical economic development strategies aimed at diversifying their economies. This means Emirates, Etihad and Qatar must always match each other’s increases in capacity—chasing the same slow-growing pools of passengers. And they’re doing that with gusto: by 2020, their combined widebody (big planes with two aisles) capacity will exceed the entire U.S. fleet of widebody aircraft. As of 2014, Emirates had 217 aircraft in their fleet, with orders and options for 349 more, including 83 500-passenger A380s. Etihad has ordered and optioned 253 planes in addition to their existing 98. And Qatar will add 319 to its existing 134 planes.

After looking at the data that U.S. airlines gathered on these three airlines, an economist colleague said, “The revelation was how well the U.S. carriers have empirically established lack of stimulation. Contrary to the Gulf airlines’ contentions, they are not growing the market, but taking traffic from existing airlines.” And Emirates, Etihad, and Qatar are able to do that because they receive massive subsidies and other unfair benefits from their government owners, $42 billion in the last decade alone. We cannot expect U.S. airlines to compete against backers with such deep pockets.

Article Originally Published on Forbes.com

americans4fairskies2015The Big Three: U.S. Airlines Versus Persian Gulf Carriers
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Georgia officials push Trump administration to intervene on issue with Middle East air carriers

As Delta Air Lines and several other major U.S. carriers continue a years-long fight over what they call unfair competition from Middle East carriers, Gov. Nathan Deal and other Georgia officials are pushing for action on the issue by the Trump administration.

Deal sent a letter to Secretary of State Rex Tillerson and Transportation Secretary Elaine Chao dated April 28 urging them to “take action” to enforce Open Skies agreements that govern competition between airlines from different countries “and enforce a level playing field for our U.S. international carriers.”

Echoing an argument by Delta, American and United airlines, the governor wrote in his letter that Qatar and the United Arab Emirates give “massive subsidies” to their state-owned airlines that allow Qatar Airways, Etihad Airways and Emirates Airlines to “dramatically increase capacity and lower prices, forcing U.S. carriers to abandon international routes and putting U.S. aviation jobs at risk.”Others contend Delta, United and American are afraid of foreign competition. In 2015, Qatar Airways CEO Akbar Al Baker called the opposition by U.S. carriers to state-owned Gulf carriers’ growth “a real example of the bullying tactic that is being taken against us.” He also said then that U.S. carriers provide “crap service.”

Qatar Airways launched flights to Atlanta last year, sparking a row with Atlanta-based Delta that resulted in a dispute over gate space and a decision by Delta to pull its sponsorship of the Fox Theatre after the venue hosted a Qatar Airways launch party with a performance by singer Jennifer Lopez.

In his letter last month, Deal wrote: “If the Gulf carriers are allowed to continue their subsidy-fueled expansion unchecked, more hardworking Americans in Georgia could lose their jobs.”

Lt. Gov. Casey Cagle and members of the Georgia Legislature including House speaker David Ralston, R-Blue Ridge, and Senate majority leader Bill Cowsert, R-Athens, wrote similar letters.

Georgia’s Congressional representatives also signed a letter to TIllerson and Chao asking them to review potential violations of Open Skies agreements with Qatar and the United Arab Emirates. U.S. Sen. Johnny Isakson signed a similar letter earlier this year.

Georgia economic development commissioner Pat Wilson, who also wrote a letter, said “the Gulf carriers are not playing by the rules with their massive subsidies,” according to a written statement.
And Georgia Chamber CEO Chris Clark, Metro Atlanta Chamber CEO Hala Moddelmog and Georgia Transportation Alliance executive director Seth Millican also sent letters to Tillerson and Chao with a comparable message.

Atlanta-based Delta is highly influential in the state, and is a major contributor to Deal, Cagle, members of Congress and members of the Georgia Legislature. Delta is also on the board of the Metro Atlanta Chamber and the Georgia Chamber.

The letters are part of a broader, years-long campaign spearheaded by a group called the Partnership for Open & Fair Skies, a group formed by Delta, United, American and airline unions. Similar letters were sent two years ago by the Georgia Chamber, Isakson and others to the Obama administration on the issue.

The group’s aim is to push the U.S. government to start consultations under Open Skies agreements with Qatar and the United Arab Emirates on the competition issue and to push for a freeze on new passenger service in those markets during consultations.

Article Originally Published on AJC.com

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How Trump can put America first in the international airline industry

By Jon Weaks, President, SWAPA

President Trump’s recent executive action calling for a federal investigation into foreign steel arriving into the United States is the kind of decisive action needed to ensure that American jobs and our robust economy are not at risk or being taken advantage of by our trade partners. We need the same action from President Trump to address an analogous problem in international aviation.

America’s all-important airline industry faces tremendous risk. Airline seat dumping is currently being practiced by three Gulf airlines: Emirates and Etihad of the United Arab Emirates, and Qatar Airways of the State of Qatar. These airlines are able to pursue such predatory practices because they receive massive, illegal subsidies from their governments. Indeed, in the past decade alone, they have received more than $50 billion from their government owners in direct violation of the aviation trade agreements held between the United States and the UAE and Qatar.

President Trump campaigned on ending such harmful trade violations, and given the high level of concern about this situation, it is critical that he take action and stand up to these foreign governments and state-owned airlines who are artificially distorting the aviation market and hurting American jobs in the process.

For each daily international airline route lost or forgone by U.S. airlines to unfair competition, over 1,500 U.S. jobs are lost. These are good paying, middle class jobs that support hundreds of thousands of American families. Just as President Trump has taken action through executive order on steel dumping, we need that same strength to be shown in regards to aviation seat dumping.

There are, however, entities that are combatting our efforts for fair competition through pay-for-play special interests and dark money. The spread of fake news by entities such as the for-profit Business Travel Coalition (BTC), the misrepresentation of the facts by the U.S. Travel Association (which is financially supported by Emirates and Etihad), and incomplete information taken as fact has muddied the waters on this issue. If we are to do nothing to stand up to these bad actors, our economy, and even our national security remains under threat.

This issue has been debated in the public eye for over two years now, and while the Obama administration failed to act, the Trump administration has a golden opportunity to ensure that American workers and our Open Skies Agreements are not being used to undermine our vital aviation industry or its workers. U.S. aviation jobs are a critical piece of the American economy, so we must act steadfastly to safeguard against unfair competition from foreign carriers who seek to distort the market to their advantage.

There are a lot of forces working against us. From $50 billion in illegal subsidies, to fake media and pay-for-play advocacy, and the inaction of the past administration, U.S. airlines and their employees are operating on an unlevel playing field. That is why we are asking President Trump to rise to the occasion and hold the Gulf carriers accountable. It is time to put American jobs first.

Jon Weaks is president of the Southwest Airlines Pilots Association, the sole bargaining unit for the more than 8,500 pilots of Southwest Airlines.

Article originally published on TheHill.com

americans4fairskies2015How Trump can put America first in the international airline industry
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A4FS Commends Trump on Steel Dumping, Calls for Action on Aviation Seat Dumping by UAE and Qatar

Washington, DC – Americans for Fair Skies, a grassroots coalition of airline and business travelers, aviation employees, consumer groups, industry, and labor, commends President Trump for his action today calling for a federal investigation into foreign steel arriving into the United States. Correctly identifying the import of steel as an issue of national security, as well as its importance to the U.S. economy, President Trump took action today that will help to guide U.S. trade policy on the importation of steel. Americans for Fair Skies applauds this action by President Trump and calls on the Administration to take similar, decisive action on aviation trade.

When the President spoke today about steel dumping, he could have easily swapped the word “steel” with the word “aviation,” and the message would have been the same. As with the steel dumping that the President identified as a threat to U.S. national security and the U.S. economy, airline seat dumping, currently being practiced by two Gulf nations, the United Arab Emirates (UAE) and Qatar, is having a devastating impact on U.S. workers and their employers. And as with steel, the dumping of seat capacity into routes in the U.S. with the intention of undermining the U.S. economy also has massive national security implications that must be addressed.

The largest trade violation in history – over $50 billion in subsidies to three airlines by two nations – deserves the attention of President Trump. By fueling their airlines with state money, the UAE and Qatar have allowed their airlines to grow artificially outside market-based economics. As President Trump noted with foreign steel targeted to undercut and undermine U.S. industries, Emirati and Qatari airlines are undermining U.S. airlines and their employees. For each daily international airline route lost or forgone by U.S. airlines to unfair competition, over 1,500 U.S. jobs are lost.

The evidence of the $50 billion in aviation subsidies to their airlines by the UAE and Qatar has been public for over two years. The Obama Administration failed to take action, meanwhile groups that purport to represent U.S. consumers and travelers have waged a fake media campaign on behalf of the UAE and Qatari airlines. The campaign of disinformation by US Travel, the Business Traveler Coalition, and others has attempted to distract from the grave realities of this unprecedented protectionism and market manipulation by the UAE and Qatar. And now it is President Trump who can act to safeguard U.S. aviation jobs and national security.

As President Trump noted with with steel dumping, the UAE and Qatari aviation seat dumping has serious national security implications. By subsidizing their airlines with more than $50 billion, the UAE and Qatar are threatening the bedrock of programs like the Civil Reserve Air Fleet (CRAF) and Military Airlift Command (MAC) missions. U.S. airlines and their employees have been called upon in ten of thousands of CRAF and MAC missions supporting U.S. national defense and foreign policy, moving hundreds of thousands of U.S. troops, and millions of pounds of cargo across the globe. This is a cornerstone of the U.S. military’s capabilities, saving U.S. taxpayers billions of dollars annually, and it’s been a vital part of our national defense for over 60 years. If U.S. airlines continue to lose or have to forgo international routes, and thereby are unable to sustain the wide-body aircraft utilized to fly both international commercial routes and CRAF missions, it will undercut the U.S. military’s ability to call upon U.S. airlines for support for military and humanitarian missions. This can’t be allowed to happen.

Americans for Fair Skies commends President Trump’s action on steel dumping and calls on President Trump to take action on aviation seat dumping by the UAE and Qatar. Now more than ever, it is critical for President Trump to stand up to foreign governments who have chosen to take advantage of our aviation trade agreements and threaten the U.S. economy, American workers, and our national security interests.

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americans4fairskies2015A4FS Commends Trump on Steel Dumping, Calls for Action on Aviation Seat Dumping by UAE and Qatar
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Big Fibs and Flawed Logic from the U.S. Travel Association

Originally published on huffingtonpost.com.

americans4fairskies2015Big Fibs and Flawed Logic from the U.S. Travel Association
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Airline Employees Rally for Fair Competition

U.S. airline workers today rallied at Newark-Liberty International Airport to protest as Emirates Airlines’ first flight between Athens, Greece and Newark-Liberty International Airport was scheduled to land Sunday night in New Jersey.

United Airlines employees, labor leaders and elected officials rallied at Newark’s Terminal C.

The new route has been the latest issue between the big three U.S.-based airlines – American, Delta and United – and their counterparts in the Middle East Gulf of Emirates, Etihad and Qatar.

The big three U.S. carriers have alleged that the Gulf carriers have received more than $50 billion from their respective governments, altering the international travel marketplace.

This new route, they say, is a prime example of that, calling it a “gross violation” of the Open Skies agreement.

“It’s crystal clear that the U.S airlines and their employees are looking to President Trump to enforce our international agreements with the trade cheaters of the UAE and Qatar,” said Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies, the trade group for the big three U.S. airlines and dozens of aviation unions. “We have 1.2 million quality American jobs that are being threatened by foreign government subsidies and we need President Trump’s help to protect these jobs.”

The Partnership says that with the government subsidies, Gulf airlines are able to offer as many international routes to the U.S. as they want in a fare war with American carriers – even if the routes aren’t profitable.

According to the group, U.S. carriers have offered as many as three non-stop flights per day on the Newark-Athens route at times of the year when demand can support non-stop service. The market to Athens is highly seasonal and in the winter months only about 100 passengers per day on average fly between the two cities each way – far too few to make a nonstop flight viable for a market-based airline. This indicates that a flight year-round is not viable for a profit-driven airline.

When a Gulf carrier enters a new U.S. market, the Partnership said, passenger bookings for international itineraries on U.S. carriers and their joint venture partners declined an average of 21.4 percent in Seattle, 14.3 percent in Washington, D.C., 13.3 percent in Orlando, 13.1 percent in San Francisco, 8.8 percent in Chicago, 10.8 percent in Boston and 7.6 percent in Dallas-Fort Worth.

Originally Published on Travel Pulse.

americans4fairskies2015Airline Employees Rally for Fair Competition
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United Airlines President Says Emirates Tests U.S. With Money-Losing Athens-Newark Flight

United President Scott Kirby says Emirates will lose an estimated $25 million to $30 million annually on its Athens-Newark route, where service begins Sunday.

Nevertheless, Emirates opened the route “to see what the U.S  government will do,” Kirby said, in an interview. “It feels like a test of the political will of the United States.”

The route was announced on Jan. 23, three days after Donald Trump took office as president. Newark is a United hub.

While the big three U.S. carriers – American, Delta, and United – have battled rapid U.S. expansion by subsidized Middle East carriers Emirates, Etihad and Qatar, they are particularly troubled by Emirates’ two fifth freedom flights: Athens-Newark and Milan-Kennedy.

Under aviation law, fifth freedom flights serve two foreign countries.

Emirates. the United Arab Emirates airline owned by the government of Dubai, began Milan-JFK in 2012. “That one route was in place for a long time, then the election happened and Emirates started {Athens-Newark},” Kirby said.

 For United, he said, “This isn’t just about Newark-Athens, it’s about our entire international franchise. If Emirates can come in and lose significant amounts of money, and the {Dubai} government will make up their losses, it’s not fair competition. {And} if they’re allowed to fly this route, there will be more to come.

“We can compete on a level playing field with any airline in the world, but we can’t compete with subsidized airlines,” Kirby said. “It’s no different than dumping steel or dumping tires. You’re selling below costs.”

Such competition typically results in lost U.S. jobs. “You see what happens to jobs around the country, when { U.S.} companies compete with subsidized competition,” Kirby said. “We don’t want that to happen in the airline industry.”

United serves Newark-Athens seasonally, operating this year between May 24 and early October.

Kirby said United makes money on the route in the summer, but in the winter, demand is limited to about 100 passengers a day. Yet Emirates will operate a Boeing 777 seating 354 passengers.

“If they got 100% of the market, which of course they won’t, that’s less than a third of the seats on the airplane,” Kirby said. “That’s evidence that they are not focused on profitability. They are just focused on flying the airplane somewhere and having the government subsidize it.”

Emirates could fill the airplane if it lowers fares sufficiently, but “If you’re doing that, you are still losing money,” Kirby said.

A report by the Partnership for Fair and Open Skies, which represents the big three U.S. carriers and most of their unions, says government subsidies to the three Mideast carriers has totaled about $50 billion.

Subsidies violate the Open Skies treaties that allow foreign airlines to serve the United States.

As for Emirates, the most successful of the Gulf carriers, it has received at least $5 billion in subsidies since 2004, the report said. In 2015, Emirates President Tim Clark said the charge that subsidies support Emirates is “tosh.” Tosh is a British word for nonsense.

Kirby said it is laughable to say that Emirates is not subsidized – so laughable, he said, that “I cannot respond.”
Originally Published on Forbes.
americans4fairskies2015United Airlines President Says Emirates Tests U.S. With Money-Losing Athens-Newark Flight
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Delta CEO: Airlines Should All Fly Fair

Delta Air Lines’ CEO is hopeful the Trump administration will assist major U.S. airlines in their dispute with Gulf carriers over alleged government subsidies and unfair access to U.S. air routes.

U.S. airlines maintain that Emirates, Etihad Airways and Qatar Airways — which all fly out of Boston — have received billions in government subsidies from Qatar and the United Arab Emirates in violation of the U.S. Open Skies agreement governing airlines’ rights to offer international passenger and cargo services.

“We’re very hopeful,” Delta CEO Ed Bastian said at a Boston College Chief Executives Club lunch in Boston yesterday.

“We are up against governments that are flying against us, rather than airlines,” he said.

The Open Skies agreements are based on airlines playing by the same rules, Bastian said.

“They’re subsidized, we’re not,” he said, noting he’d like Gulf carriers to be more transparent and held accountable, and the U.S. to suspend their growth until new agreements are reached. Bastian’s optimism about the Trump administration follows a Feb. 9 White House meeting between Trump and U.S. airline executives.

“His opening comments … were on that topic, and he acknowledged the challenges that these foreign governments are (posing) and the lack of a level playing field,” Bastian said. “He ran on a platform of protecting American jobs and enforcing U.S. trade agreements. We think we’re one of the industries that’s been most impacted.”

In January, Delta reported its highest annual profit ever: $6.1 billion in adjusted pretax income that allowed for $1.1 billion in employee profit-sharing. But Bastian said the Open Skies issue also speaks to the future economic climate for U.S. airlines.

European carriers Lufthansa, Air France and KLM, and Asian carriers Singapore Airlines and Cathay Pacific, are struggling because the Gulf airlines have taken their traffic pools, Bastian said.

“Qantas is no longer the national airline of Australia, it’s Emirates,” he said. “Do we want that to be this country in 10 years from now?”

Bastian also spoke about Trump’s new travel ban that barring another legal setback, will take effect Thursday and temporarily prohibit refugees and others from certain Muslim-majority countries from entering the United States.

“We appreciate that this most recent executive order came out to give us some lead time in terms of how to implement it,” Bastian said.

Originally Published on Aviation Pros.

americans4fairskies2015Delta CEO: Airlines Should All Fly Fair
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Lawmakers urge Trump to ground Emirates flights

Lawmakers are urging President Trump to put the brakes on an Emirates flight route that will soon begin flying between the U.S. and Greece, raising concern about an air carrier that receives billions of dollars in state subsidies.

In a letter to the White House this week, bipartisan members representing New Jersey and New York said it’s unfair for U.S. airlines to compete with Emirates and other Gulf carriers that get massive foreign subsidies.

They accused state-owned airlines of undermining the international Open Skies agreement and called on Trump to delay the new roundtrip Emirates flight route between Newark, N.J., and Athens, Greece — which is scheduled to begin Sunday — in order to renegotiate a “meaningful resolution.”

“Foreign governments that violate their agreements with the United States need to be held accountable,” the letter said. “Like you, we believe that our trade agreements must be enforced so that foreign governments understand that they can’t break the rules.”

The U.S. aviation industry has long expressed frustration that state-owned airlines are posing a threat to U.S. jobs. United Airlines employees and unions are planning a rally at Newark Liberty International Airport on Sunday to shine a further spotlight on the issue.

Critics say that more than $50 billion in subsidies have been funneled to Emirates, Etihad Airways and Qatar Airways to rapidly expand their services and outpace their industry rivals.

During a meeting with airline executives at the White House last month, Trump acknowledged that U.S. airlines are “under pressure from foreign elements and foreign carriers.”

But “at the same time, we want to make life good for them also,” Trump said. “They come with big investments.”

americans4fairskies2015Lawmakers urge Trump to ground Emirates flights
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AfFS Responds to BTC’s Hypocrisy

Once again, the Business Travel Coalition (BTC) has shown that its hypocrisy knows no bounds.

Since Americans for Fair Skies and our allies began our effort to safeguard U.S. jobs and promote fair competition in international aviation, the Business Travel Coalition has tried to distract from the fundamental point by making arguments that have nothing to do with the issue at hand. More than $50 billion in subsidies have been provided to the state airlines of Qatar and the UAE over the past decade with the specific aim of undermining and driving out competition as these countries looked to establish new economies as the demand for fossil fuels declines. But the BTC would like you to ignore this evidence, because it is utterly inconvenient for their campaign promoting the subsidized state-owned Gulf carriers.

Generating American jobs is important, and is something that the aviation industry does by the millions. U.S. airlines create hundreds of thousands of American jobs to sustain travel across the world’s largest national airspace and abroad. When routes are lost or forgone, however, due to the dumping of capacity (seats) into the market by the subsidized UAE and Qatari carriers, jobs are lost, consumer choice is limited, and the marketplace is skewed. The seat dumping is a violation of U.S. trade laws. And when Qatar Airways, Emirates and Etihad partner with U.S. carriers like JetBlue and Alaskan Airlines, BTC cherry-picks employment data to divert from the fact that in context, the overall job loss in the U.S. is a significant net negative. When U.S. airlines are unable to compete on an even playing field in the international market, many more hard-working American aviation jobs are lost- up to 1,500 jobs per route exited or forgone to subsidized competition.

Fortunately for American trade policy, the U.S. aviation industry, and the millions of jobs the industry supports, the Business Travel Coalition is not responsible for holding our trade partners accountable. That is the role of the U.S. government and we expect them to act accordingly.

The problem is simple and so is the solution. Two of our trade partners – Qatar and the United Arab Emirates – are taking advantage of the aviation trade agreements they hold with the U.S. because America has never enforced these agreements. Their violations must stop. The time for enforcement and action by the U.S. is now. Americans for Fair Skies is heartened by President Trump’s focus and prioritization of creating and maintaining vital American jobs. Americans for Fair Skies calls on President Trump and his administration, including Secretaries Tillerson and Chao, to take action and enforce our Open Skies Agreements with Qatar and the UAE, restoring a level playing field for U.S. aviation workers.

americans4fairskies2015AfFS Responds to BTC’s Hypocrisy
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Crying the Blues at Emirates and Etihad

In recent weeks, we’ve seen Emirates Airline and Etihad Airways launch a clever PR ploy to persuade the media and public officials that they are real companies subject to the same financial constraints as other airlines.

But Emirates and Etihad assuredly are not. They are instruments of their governments, wholly owned by ruling families, with easy access to wheelbarrows of cash from their state treasuries. The Partnership for Open and Fair Skies, a coalition of American Airlines, Delta Air Lines, United Airlines, and aviation trade unions, has proven that since 2004 Emirates, Etihad, and Qatar Airways have received more than $50 billion in direct and indirect subsidies and other unfair benefits from their government owners. Even if their crying the blues is genuine, the remedy for financial stress is simply to grab the wheelbarrows and shovel the cash. These airlines are far more than status symbols of tiny, rich places. They are essential elements in economic development strategies that seek to diversify the UAE economy and reduce dependence on the energy industry. There’s a lot at stake in Dubai and Abu Dhabi, and to their leaders failure is not an option.

Some may simply dismiss this scheme as an ambitious business plan. But there’s an ever-present insidiousness in the Gulf airlines’ subsidized expansion strategy. First and foremost, the subsidies blatantly violate the Open Skies agreements the United States signed with their government owners. Second, they make it impossible for fair-playing businesses to compete, destabilizing the aviation industry as a whole – an industry that in the United States alone supports millions of jobs. And third, the UAE and Qatar strategy is all the more curious – and surely offensive to many – now that there is a new president who promised in his campaign to protect American workers and ensure that our trade deals are fair and enforced.

So there’s no doubt the blue skies are turning. A recent Bloomberg Businessweekfeature on Emirates noted a range of economic and other crosswinds. Profits for the first half of 2016 dropped 75 percent, and revenue actually declined. Emirates’ Chairman and Chief Executive, His Highness Sheikh Ahmed bin Saeed Al Maktoum, said “The bleak global economic outlook appears to be the new norm, with no immediate resolution in sight.” It’s handy to blame external factors. Truth is, Emirates’ hypergrowth and aggressive decisions have harmed it and destabilized the airline industry – not just in the Middle East, but worldwide. They have added tens of thousands of seats at a rate that far exceeds growth in actual passenger demand, even in fast-growing markets in Asia. And because the airline industry is a textbook example of the relationship between supply, demand, and price, pumping in too much supply has meant prices have fallen for all airlines, including the real ones. As a consumer, that might strike you as happy news, but in the medium and long term such an approach will damage every stakeholder, including passengers.

Skies are also graying at Etihad. Like Emirates, they have grown their airline far faster than has actual demand. Unlike Emirates, however, they have used huge chunks of state largesse to invest in other airlines: 49 percent of Alitalia, 49 percent of Air Serbia, 40 percent of Air Seychelles; 29 percent of Air Berlin, and others (nearly every country has laws preventing foreign owners from more than a 50 percent share). To airline experts, the investments in Alitalia and Air Berlin seem especially imprudent. Alitalia, once wholly state-owned, has lost money for decades; there was great optimism when in 2014 Etihad spent €560 million (about $602 million) for their stake, but the Italian airline has continued to lose lots of money, and last month announced discussions with Rome and institutional investors aimed at yet another restructuring. Air Berlin, a newer, private company, has lost millions in the past decade through giddy over-expansion, and has recently restructured and retrenched in an effort to survive. By any objective assessment, most of these Etihad investments have been failures, which was likely a factor in the recent announcement that longtime CEO James Hogan and CFO James Rigney will both depart in the second half of 2017.

And Mr. Hogan’s statement two weeks ago that Etihad would not add new destinations was disingenuous. Likely crafted – and interpreted in press reports – to appear to be a concession to the Trump administration, this observer read it more like an admission that they’ve now saturated the U.S. market with subsidized capacity, and need to take a hiatus. Furthermore, Mr. Hogan chose his words carefully: “We are not flying into any further points in the U.S.A.,” doesn’t mean they won’t continue to add more flights to the six U.S. gateways they already serve.

Curiously, Qatar Airways has not joined Emirates and Etihad in the bad-news chorus; indeed, just before New Year’s they published a cheerful recap of a successful 2016. Maybe their smiles are because they have the biggest subsidy wheelbarrow of all, accounting for more than half of the $50 billion in proven subsidies.

Sadly, this turmoil is not just something happening “over there.” The three Gulf mega-carriers’ subsidized massive expansion has real impact on U.S. airlines and their European joint-venture partners. The trio’s growth in the U.S. has and will continue to result in loss of U.S. jobs, harming airlines and communities across the nation. There’s a lot of rhetoric about protectionism, but U.S. airlines don’t need protection. Remember this: economic deregulation of a once state-controlled industry began here in the United States almost 40 years ago, and U.S. carriers have learned to compete, as long as the playing field is not tilted by subsidies and other unfair benefits. Last week, President Trump met with U.S. airline CEOs. He knew about the government subsidies, and, even better, he told the executives that he wanted to help U.S. carriers compete. That’s a step in the right direction.

Originally Published on Huffington Post.

americans4fairskies2015Crying the Blues at Emirates and Etihad
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Trump to meet with airline CEOs on Thursday: White House

U.S. President Donald Trump will meet with the chief executive officers of airlines on Thursday, the White House said, another in a series of meetings the new president has had with business leaders.

The White House statement on Friday did not say who would attend the breakfast and “listening session.” Last week, Trump met with the CEOs of the Big Three U.S. automakers and pressed them to bring more jobs to the United States. This week he met with pharmaceutical executives and called on them to make more drugs in the United States and cut prices.

Originally Published on Reuters.

americans4fairskies2015Trump to meet with airline CEOs on Thursday: White House
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Emirates blocked from third daily Nairobi flight

Emirates Airline’s plans to operate a third daily rotation between its Dubai base and the Kenyan capital Nairobi have been suspended after the Kenyan authorities declined to approve the additional service.

The airline described the move as “surprising.”

Emirates had been planning to use a Boeing 777-300ER on the route in a three-class, 354-seat layout. When announcing plans for the new service Jan. 19, the Dubai-based carrier said it “underscores Emirates’ commitment to Kenya and confidence in the route, which has grown to become one of the airline’s busiest routes in Africa since it first launched services to the country in October 1995.”

However, the latest service was blocked. According to Kenyan media reports, the East African country is seeking a review of the bilateral air service agreement between the two countries to better balance the share of services operated by Emirates and the national carrier, Kenya Airways.

Kenya Airways has been struggling financially in recent years; more widely, several African nations are expressing concern at the amount of Africa-originating traffic being siphoned off by the Gulf “Big Three” carriers to their respective hubs.

The tightening airline market has also seen profits at carriers such as Emirates shrink in recent months.

“Emirates can confirm that approval granted to operate a third daily flight between Dubai and Nairobi has been withdrawn by the Kenyan transport authorities,” the airline said in a statement.

“The withdrawal of the already-granted approval by the Kenyan transport authorities is surprising, given that the valid air services agreement between the two countries allows Emirates to operate flights to Nairobi without any restriction. We will engage with the Kenyan authorities to address any concerns so that our third daily flight can be launched as planned. This does not affect Emirates’ two other daily flights between Dubai and Nairobi, which are operating as scheduled,” Emirates said.

Originally Published on Air Transport World.

americans4fairskies2015Emirates blocked from third daily Nairobi flight
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Note to Trump: If You Back U.S. Labor, Then Block Emirates’ Athens-Newark Flight

As they battle rapid U.S. expansion by the subsidized Middle East airlines, the three U.S. global airlines have made it clear they have just one principal goal: They want Emirates, Etihad and Qatar to be kept from operating fifth freedom flights.

Fifth freedom flights allow airlines to fly between two foreign countries.

Emirates on Monday said it would begin Athens-Newark flights on March 12. Emirates already operates Milan to New York’s John F. Kennedy International Airport, the only other fifth freedom flight operated by a Middle East carrier.

United Airlines (UAL) already flies Newark-Athens as a seasonal flight with a Boeing 767-300ER scheduled to operate between May 24 and early October.

“By flagrantly violating its Open Skies agreement with the United States at the start of the Trump administration, Emirates is throwing down the gauntlet,” said Jill Zuckman, chief spokeswoman for the Partnership for Open & Fair Skies.

“We look forward to working with President Trump and his team to enforce these agreements and protect American jobs — something that the Obama administration failed to do,” Zuckman said.

Government subsidies to Emirates, Etihad and Qatar have exceeded $50 billion, the partnership said. U.S. carriers, operated for profit, said the subsidies make it tough to compete.

Donald Trump, U.S. president, met with labor leaders from the building trades on Monday night but not with any from the transportation trades. Backing U.S. workers and staunching the flow of U.S. jobs to offshore companies were key themes for the Trump campaign.

Twelve days ago, during the Delta (DAL) earnings call, CEO Ed Bastian was asked what changes he expects to see during the Trump administration.

“We are very excited about the opportunities to present our case relative to the Middle Eastern situation with all the growth that those carriers have brought to this country on a subsidized basis where we are competing against governments, not the other airlines and {about} the opportunity to let the Trump administration know how we can do, as an industry, a better job of protecting U.S. jobs and U.S. opportunities going forward,” Bastian said.

Delta also wants Trump to know how the airline industry can do better at “protecting trade deals and enforcing trade deals that are being violated in the present time,” Bastian said.

In July, after a year and a half of lobbying by the partnership, the State Department met for informal talks with UAE officials and separately with Qatar officials on July 25.

Those talks went nowhere.

The Middle East carriers serve the U.S. under Open Skies agreements.

Subsidies violate Open Skies policy. Additionally, Open Skies agreements were generally intended to assure that U.S. carriers could fly to foreign countries and the foreign countries’ airlines could serve the U.S. so that commercial air traffic could flow freely between two countries.

The agreements didn’t envision a subsidized airline flying a dozen daily U.S. flights, with the vast majority of passengers flying to a foreign airline’s hub simply to connect to a third country.

No U.S. carriers fly to Dubai or Abu Dhabi. Early in 2016, United dropped a Washington Dulles-Dubai flight and Delta dropped its Atlanta-Dubai flight. Rapid expansion by the subsidized Middle East carriers had diminished the likelihood that U.S. passengers would connect to Dubai flights.

“Enormous subsidies put U.S. airlines at a tremendous economic disadvantage and threaten U.S. airline workers’ jobs — and fly in the face of the Trump administration’s ‘America First’ governing philosophy,” the Air Line Pilots Association said Monday in a prepared statement. ALPA represents about 54,000 pilots at 31 airlines.

“We urge the Trump administration to do what the Obama administration failed to do and stand up for U.S. workers and demand that the United Arab Emirates government end these subsidies,” ALPA said.

Originally Published on The Street.

americans4fairskies2015Note to Trump: If You Back U.S. Labor, Then Block Emirates’ Athens-Newark Flight
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Emirates to Start Dubai-Athens-Newark Flights, Likely to Irk U.S. Carriers

DUBAI — Emirates plans to start flying to the United States with a stop for passengers in Greece, its second so-called fifth freedom flight and a move that could anger U.S. competitors who accuse it of competing unfairly through state subsidies.

The world’s largest long-haul airline said Monday it would start daily flights to New Jersey’s Newark Liberty International Airport via Athens on March 12.

Dubai-based Emirates already operates four daily flights to John F. Kennedy International Airport in New York, including one with a stop off in Milan.

Fifth freedom rights allow an airline to fly between foreign countries as a part of services to and from its home country.

Delta and other U.S. airlines have accused major Gulf carriers — Emirates, Abu Dhabi’s Etihad Airways and Qatar Airways – of receiving tens of billions of dollars in unfair subsidies, and urged the former Obama Administration to halt the Open Skies agreement. The Gulf carriers deny the allegations.

The Obama Administration ultimately declined to take action against the Gulf carriers who are owned by governments of Middle East allies Qatar and the United Arab Emirates.

U.S. airline lobby group Open & Fair Skies has said it is optimistic the new administration of President Donald Trump would “enforce our trade agreements and fight for American jobs”.

“We look forward to briefing President-elect Donald Trump and his new administration on the massive, unfair subsidies that the UAE and Qatar give to their state-owned Gulf carriers,” said Jill Zuckman, chief spokesperson for the Partnership for Open and Fair Skies, on Nov. 9.

The lobby group is likely to put pressure on authorities to stop the Dubai-Athens-Newark route before it starts, said Will Horton, senior analyst at CAPA – Centre for Aviation.

However, the U.S. carriers will have a hard time arguing that the Emirates flight is damaging given that U.S. carriers do not fly to Greece year-round, Horton said in emailed comments.

Emirates President Tim Clark said the Greek government approached the airline “some time ago” to start a flight between Athens and New York, according to an airline statement.

(This version of the story corrects to show only one New York flight stops at Milan, paragraph three)

Originally Published on The New York Times.

americans4fairskies2015Emirates to Start Dubai-Athens-Newark Flights, Likely to Irk U.S. Carriers
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Subsidized Gulf Airlines Continue To Dump Seats In The U.S.

Earlier this month, two of the three massively subsidized, state-owned Gulf airlines announced additional flights to and from the United States. Emirates said it will begin daily nonstops from Fort Lauderdale to Dubai on December 15, and Etihad said it will more than double nonstops between Dallas/Fort Worth and Abu Dhabi, from three per week to seven, beginning February 2017. In two years, Emirates, Etihad Airways and Qatar Airways will have increased seat capacity to and from the U.S. by 42 percent, a staggering number that is not the result of market growth, but the fairy-tale economics of state subsidy. According to the airline database Official Airline Guide (OAG), in Dallas/Fort Worth alone the three Gulf carriers will flood nearly 2,000 seats per day (in both directions) by early next year. In manufacturing industries, this practice is called dumping, and often results in legal action against offending nations at the World Trade Organization. But there’s no WTO for the airline industry.

For more than 18 months, American Airlines, Delta Air Lines, United Airlines and their union partners have been explaining to U.S. officials and others the clear evidence that the government owners of Emirates, Etihad Airways and Qatar Airways have long provided huge amounts of cash, in violation of the Open Skies agreements between the U.S. and both the United Arab Emirates (UAE) and Qatar. Open Skies agreements are the legal pacts that allow their airlines unlimited access to the U.S. market, the largest in the world.

Since 2004, proven subsidies to the Gulf trio have totaled almost $50 billion, and have enabled them to expand without the normal commercial realities by which U.S. airlines must abide. A longtime U.S. airline planner has characterized Gulf carriers’ route-planning decisions as “Whoa, next week, Airbus will deliver another new A380. We have to find a place to fly it.”

As I explained in a 2015 article in Forbes, to understand Gulf carrier expansion you need to understand basic airline geography. After beginning its Fort Lauderdale flights in December, Emirates, together with Etihad Airways and Qatar Airways, will fly nonstop from 13 U.S. cities to their megahubs in Dubai, Abu Dhabi and Doha. But local demand for these nonstop flights, such as Fort Lauderdale-Dubai, is relatively small because the respective populations of the Gulf airlines’ hubs are small – respectively, 2.3 million, 2.1 million and 900,000. Thus, local traffic does not drive this massive expansion. Instead, the three Gulf mega-carriers have used their subsidies to leverage their strategic geographical location in the Gulf to capture the market for connecting traffic from the U.S., Europe, South America and many other regions in the Middle East, Africa, Asia, and Australia and New Zealand. As these carriers often remind us, about 60 percent of the world’s population lives within six flying hours of the Gulf. Their strategy is all about connecting passengers.

What does subsidy-driven overcapacity do? It allows the airlines to operate without concerns over turning a profit. If investors own the airline, as is the case with U.S. airlines, losing pots of money matters greatly. If you’re subsidized, it doesn’t matter.

The result is a distorted playing field that gives the Gulf carriers a competitive advantage over U.S. carriers, and we are already seeing the damage that this is inflicting on the U.S. aviation industry as a whole. In the past year, both United and Delta have canceled their U.S.-Dubai flights. Prior to that, American Airlines and Delta both withdrew from the enormous India market because they could not operate profitably in the face of massively subsidized competition via the Gulf. Unfair Gulf competition also affects the alliances between U.S. airlines and their European partners. For example, an Indian engineer from Silicon Valley returning to visit her parents used to fly United from San Francisco to Frankfurt, then United’s Star Alliance partner Lufthansa to Bengaluru, but she now flies Emirates subsidized service San Francisco-Dubai-Bengaluru.

And there is follow-on impact: declines in international flying affect the U.S. domestic network. More than half of passengers on a typical American, Delta or United overseas flight make a connection from or to a domestic flight. So as the international network is squeezed by unfair competition, the domestic network will shrink, too. The impact will be large and damaging because network decline is exponential and not linear – if a U.S. carrier shrinks from 10 long-haul international flights to seven, the result is an overall network decrease much greater than 30%, Small and medium-sized U.S. cities, already worried about reduced service, should be even more concerned.

I’ve been tracking the Gulf subsidy issue for several years, and as a longtime U.S. airline employee I wince at the suggestion from self-styled “thought leaders” that American, Delta and United are being “protectionist.” U.S. airlines and their workers seek no protection, but a level playing field across the world. Right now the Open Skies agreements are solely benefiting the Gulf carriers, to the detriment of the U.S. airlines and their workers. It’s time for the U.S. government to enforce its agreements and stand up for the U.S. aviation industry.

americans4fairskies2015Subsidized Gulf Airlines Continue To Dump Seats In The U.S.
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American, Delta, United All Fly New York to Milan yet Emirates Gets Fed Route Contract

American Airlines (AAL) flies daily between New York and Milan. Delta (DAL) flies daily between New York and Milan. United (UAL) flies daily between New York and Milan, as do Alitalia and Emirates.

So guess which airline won the fiscal 2017 General Services Administration contract for official U.S. government travel?

The answer is JetBlue (JBLU) , which does not operate a single flight on the route, never has and likely never will.

However, JetBlue has a codeshare agreement with Emirates. In a codeshare agreement, airlines sell seats on one another’s flights and share revenue.

Because JetBlue is a U.S airline, it is apparently eligible to win a GSA contract, even though it doesn’t operate on the route in question and even though the 1981 Fly America Act stipulates that federal employees flying on business must fly on U.S. carriers.

The award means government employees will fly on Emirates at a time when the State Department is conducting informal negotiations with Qatar and the UAE regarding $50 billion in subsidies to the two countries’ three airlines — Emirates, Etihad and Qatar.

Under Open Skies treaties, the three airlines can offer unlimited numbers of flights to the U.S. But subsidies violate the spirit of the treaties, the U.S. carriers said.

“The award is for JetBlue in name only,” Peter Carter, Delta’s executive vice president and chief legal officer, wrote two weeks ago in a letter to GSA expressing disappointment that JetBlue/Emirates had won the contract.

Carter said the decision not only fails to benefit U.S airlines but also actively undermines them.

Emirates, he said, is “a state-owned Gulf carrier that exploits an improper advantage over U.S.-flag carriers by receiving massive subsidies from its home government.”

“In addition to the subsidies it receives from its own government, Emirates will benefit from a revenue stream of U.S. taxpayer dollars,” Carter said.

Jill Zuckman, spokeswoman for the Partnership for Fair and Open Skies, which represents the big three U.S. airlines and their labor unions in the battle with the three Middle East carriers, called the GSA decision “a violation of the Fly America act and a poke in the eye to Congress.

“The U.S. carriers use their own (aircraft and crews) to fly this route,” she said. “JetBlue couldn’t fly this route if it wanted to” because JetBlue lacks long-haul aircraft,

Previously, American held the GSA contract for JFK-Milan.

While the U.S. carriers have been concerned by the Mideast carriers’ explosive growth on U.S. routes, they have been uniquely troubled by the Milan-JFK route because it doesn’t even include a Mideast carrier hub in Abu Dhabi, Doha or Dubai. Rather, Emirates is exercising a fifth freedom right to operate a flight that does not involve its home country.

A GSA spokeswoman said the agency is simply seeking to save taxpayer money.

“GSA’s city pairs program awards routes to airlines that can deliver the best value to the federal government and that are in compliance with the Fly America Act,” the spokeswoman said.

Overall, the GSA fiscal year 2017 city pair program “leverages the purchasing power of the federal government” to secure a 51% discount to comparable commercial fares and to reduce federal employees’ airfare by $2.4 billion, she said.

JetBlue didn’t respond to emails.

The JFK-Milan contract award marks the second time in 13 months that the JetBlue/Emirates partnership has taken a government contract from a big three U.S. carrier that actually flies the route in question.

In August 2015, GSA awarded the fiscal 2016 contract for the Washington Dulles-Dubai route. In January 2016, United ended service on the route and formally protested the award as a violation of the Fly America Act.

It got nowhere.

Orginally Published on The Street.

americans4fairskies2015American, Delta, United All Fly New York to Milan yet Emirates Gets Fed Route Contract
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Etihad Tweaks US Airlines With New Global Sale

Still in the midst of its Open Skies Agreement battle with U.S.-based American, Delta and United airlines, Etihad Airways is about to further fan the flames.

Today, the Middle East carrier – one of the three that the U.S. airlines say accept government subsidies, thus skewing the cost of tickets in the international travel marketplace –  is launching a short-term global sale with major price reductions.

It’s all based on a survey of U.S. residents.

Dubbed the “Experience The World” sale, Etihad is offering up to 50 percent off selected routes until Sept. 5, as well as a prize draw to win one of 100 experiences at their chosen destination.

Economy- and business-class tickets were literally slashed in half – a trip from Los Angeles to Manila, for instance, is just $727 roundtrip, and New York to Perth is $1,178. There are 45 destinations in total.

For a full listing, click here.

“We have continued to expand our global network this year and add further aircraft to the fleet, ensuring we have a high-quality product throughout our aircraft available to the millions of guests who choose to fly with us each year,” Daniel Barranger, Senior Vice President of Global Sales at Etihad Airways, said in a statement. “By including our partner airlines in our new offer, we are providing access to a larger list of destinations and a combined fleet of over 700 aircraft, ensuring we can meet every guest’s personal requirements.”

In part, the sale was based on a survey of 1,400 U.S adults through YouGov to ask what they would spend their money on when travelling. The research has shown that just under two thirds (65 percent) of the people sampled said they prefer to explore their destination in ventures beyond their accommodation whilst abroad, and almost half (49 percent) said they would spend a competition windfall on cultural tours or dining out.

That the sale is U.S.-based is clearly a poke at the Big Three U.S. airlines, which has waged a two-year battle now to have the Obama Administration review the Open Skies Agreements with the United Arab Emirates, where Etihad is based, and Qatar.

The U.S. met with those respective governments in July, but no decision has been made nor has the administration moved to freeze routes being offered by the Gulf airlines.

Orginally Published on Travel Pulse.

americans4fairskies2015Etihad Tweaks US Airlines With New Global Sale
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Latest skirmish in war to control international travel: Has the Fly America Act been violated?

U.S. airlines, which already see themselves at war with subsidized Persian Gulf competition, now are aggrieved with their own government after a pair of choice routes to Europe and the Middle East were effectively awarded to the Emirates airline.

“We view it as a violation of the Fly America Act,” said Jill Zuckman, spokeswoman for a coalition of U.S. carriers. “It’s a ‘screw you’ to Congress.”

Congress decided in 1981 that federal employees, their families, and federal consultants and contractors had to travel aboard U.S. carriers when on official business paid for by the government. Selecting routes for approved federal travel was left to the General Services Administration, which manages the inner workings of government.

It’s all a ruse, Delta Air Lines said in a letter to the GSA’s general counsel this month, because JetBlue does not have any planes that can fly that far. Instead, Delta said, the passengers will fly on JetBlue’s partner airline, Emirates, the United Arab Emirates airline that bases its operations in Dubai.

The GSA counters that JetBlue was a legitimate bidder for the routes — regardless of its connection with Emirates — and got the nod because it offered cheaper fares than the three larger U.S. airlines.

JetBlue said in a statement that “GSA awards contracts that deliver the best value to the U.S. taxpayer and JetBlue is honored to have this traffic with our codeshare partner.” GSA said that opting for JetBlue was “in compliance with the Fly America Act.”

All of this would be inside-baseball intrigue — bickering over routes to Milan and Dubai — were not far larger stakes in play.

The big U.S. airlines that ply long international routes — Delta, United and American — are in the midst of a protracted fight to limit the rapid expansion of Persian Gulf carriers that appear determined to one day dominate global air travel.

Eager to diversify from an oil-only economy, the UAE and Qatar governments have given generous help to develop three muscular airlines: Emirates in Dubai, Etihad Airways in the UAE capital of Abu Dhabi, and Qatar Airways in Doha.

From a Western perspective, the clannish interlocking relationships and secrecy of their tribal culture are the antithesis of the corporate world. The U.S. airlines have asked federal officials to intercede on their behalf by renegotiating Open Skies agreements that govern international air travel.

 The U.S. Transportation Department has yet to show any serious inclination to wade into a sticky situation that could lead other nations revisit their pacts with the United States.

Open Skies agreements with more than 100 nations allow airlines from different countries equal access to one another’s airports without interference from the respective national governments. There have been informal talks with the two gulf nations, but they have not been kicked up to the level of formal renegotiations.

“We find it frustrating that while we’re trying to find a resolution and a path forward to level the playing field [with the gulf carriers], the GSA is awarding additional services on Emirates,” said American Airlines Vice President Howard Kass.

Airline observers say the U.S. carriers probably would be assuaged if the three gulf airlines unilaterally agreed to pull back their horns, particularly in the U.S. market for transatlantic and transpacific flights.

But the gulf airlines show no signs of backing off. By one of many measures — purchases of the Airbus 380, the world’s largest passenger jet — their global intentions are clear. Emirates is the single largest operator of the massive planes, with 76 on order. Qatar has six, and four more on the way. Etihad owns eight, with two on order and options to buy 15 more.

When United Airlines announced in December that it no longer could afford to compete with Emirates in flying to Dubai, the airline issued a statement that said: “It is unfortunate that the GSA awarded this route to an airline that . . . will rely entirely on a subsidized foreign carrier to transport U.S. government employees, military personnel and contractors. JetBlue merely serves as a booking agent for Emirates.”

Two weeks ago, Delta’s general counsel, Peter W. Carter, sent a letter of protest to the GSA after JetBlue was approved for the Milan flight.

“As you are well aware, this award is for JetBlue in name only, as 100 percent of the flights on the contracted route will be operated by Emirates Airline,” Carter wrote.

Orignally Published on The Washington Post.

americans4fairskies2015Latest skirmish in war to control international travel: Has the Fly America Act been violated?
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Emirates said to be in talks to sponsor NBA team jerseys

The Emirates Group is said to be in talks to sponsor jersey patches for a few National Basketball Association teams.

Emirates declined to comment on the Bloomberg report.

The National Basketball Association (NBA), which has 30 teams, is among the four major sports leagues in the United States, along with National Football League, Major League Baseball and National Hockey League.

Jersey sponsorships for NBA teams started in April when StubHub, an online ticket sales portal for sports and live entertainment, struck a deal with the Philadelphia 76ers.

The sponsorship is scheduled to start in the 2017-2018 season and is on trial for three years. It could fetch the NBA US$100 million a year.

The global sponsorship value for various sports events is expected to touch $46.5 billion this year, as it is an Olympic year, said Frank Saez, the managing director of SMG Insight, the sports arm of the research company YouGov.

Last year, the global sponsorship value for various sports events was $45.3bn, slightly down from $45.6bn in 2014, which was a Fifa World Cup year, according to SMG Insight.

Economic slowdown and low prices are not expected to have an impact “because the deals are long term”, he said. Moreover, “the total viewership is increasing and the broadcast landscape to reach viewers is changing and more competitive because of new entrants such as Facebook, Twitter and other digital platforms”, he said.

“The ability for sports to deliver in viewership terms continues and that is a key [driver].”

The reported talks between Emirates and the NBA come comes after the Arabian Gulf’s three big airlines – Emirates, Etihad Airways and Qatar Airways – were involved in a war of words with the US legacy carriers – American, United and Delta Air Lines – on whether the Gulf carriers were competing unfairly.

Emirates had reiterated that the dispute will not slow down its expansion in North America. It flies to 10 US cities, including to the theme park destination Orlando, to where it started services last September.

Dnata, the ground handling and travel services unit of Emirates, is now present at 20 airports in the US, up from one at the end of 2014-2015 financial year.

Emirates sponsors teams at the European club football level, including AC Milan, Real Madrid, SL Benfica, Paris Saint-Germain and Arsenal, besides lending its name to various rugby, cricket, tennis, motorsports, golf, horse racing and Australian rules football events and teams.

Originally Published on The National.

americans4fairskies2015Emirates said to be in talks to sponsor NBA team jerseys
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The Gulf Carrier Dispute: U.S. Carriers Notch A Nice Win

By Rob Britton
Adjunct Professor, McDonough School of Business at Georgetown University

News that the U.S. Department of State will hold talks next month with the United Arab Emirates and Qatar is, to this longtime observer of U.S. international aviation, a significant victory for American Airlines, Delta Air Lines, and United Airlines. For almost 18 months, these three airlines and their union partners have worked hard to spread the clear evidence that the three airlines from these small nations, Emirates, Etihad Airways, and Qatar Airways, have been — and continue to be — receiving billions of dollars of cash from their government owners, distorting competition worldwide.

Secretary of State John Kerry and senior officials at the State Department understand that the two Gulf nations are massively subsidizing their carriers with billions of dollars in cash, in violation of U.S. Open Skies agreements. And now State is trying to work out a remedy.

Not surprisingly, the media and many in Washington are mischaracterizing this milestone as a “loss” for the U.S. airlines. On the contrary, it is a serious setback for the Gulf carriers and their government owners.

The State Department could easily have declined to take any action at all. Instead, it confirmed the evidence collected by American, Delta, United and seven labor unions, proof gathered in a painstaking, multi-year investigation. Why was such a lengthy and painstaking investigation required? Because neither the UAE nor Qatar require the kind of honest and transparent reporting of financial data that we take for granted in the U.S. Furthermore, it has been reported that the U.S. delegation is headed by Undersecretary of State Catherine Novelli, who is highly experienced with trade issues from both private sector and government perspectives (she was formerly a senior executive with Apple and a former assistant U.S. Trade Representative). Indeed, Ms. Novelli’s bio notes that one of her duties is to “address global challenges in a transparent, rules-based, and sustainable system.” She is precisely the sort of person who has looked carefully at the evidence and will recommend appropriate action.

The fact is, this issue will take time and diplomacy to work out a solution. These nations are determined to use their significant financial resources to undermine the global aviation business, even if it requires taking massive losses on flights that make no rational, economic sense. Using $42 billion in subsidies and other unfair benefits, such as abusive labor practices, they are undermining American jobs.

The same thing is happening in Europe. In June, the EU transport commissioner called for renegotiation of the terms under which the subsidized Gulf carriers enjoy broad access to European markets. Within the last year, the governments of France, Germany and the Netherlands have all instituted freezes on new Gulf carrier flights to their countries because of the harm from the massive subsidies.

It’s great news that the U.S. government is finally recognizing the severe economic damage that the Gulf carriers are inflicting on our nation. And it’s even better news that our government officials have decided to vigorously enforce the rules and level the playing field for hundreds of thousands of American workers in the U.S. aviation industry.

americans4fairskies2015The Gulf Carrier Dispute: U.S. Carriers Notch A Nice Win
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Three Big U.S. Airlines Allege Additional State Subsidies to Qatar Airways

Days after the U.S. government said it intends to hold “informal” discussions with two Persian Gulf governments over a trade dispute brought by three big U.S. airlines, the U.S. carriers said they have uncovered evidence that the government of Qatar provided additional subsidies to Qatar Airways.

Qatar Airways has vehemently denied receiving subsidies and posted rebuttals on U.S. regulatory dockets. On Wednesday, Doha-based Qatar Airways wasn’t immediately available for comment, nor was the Qatar Embassy in Washington. Its U.A.E.-based rivals, Etihad Airways and Emirates Airline also have denied being subsidized.

American Airlines Group Inc., Delta Air Lines Inc. and United Continental Holdings Inc., 18 months ago said they had documented $42 million in subsidies and unfair benefits given to three big Gulf carriers since 2004 by their state owners. The three U.S. companies lodged a trade complaint with their government, asking it to modify liberal air treaties with Qatar and the U.A.E., and to freeze additional flights to the U.S. by the three fast-growing Gulf carriers.

Last week, the U.S. State Department told the U.S. carriers and their labor-union allies that it remains committed to its “open skies” aviation policy, under which liberal air treaties are struck to boost passenger choice and help the broader economy through increased travel, trade and job growth. But the government, saying it takes seriously the competition claims raised by some U.S. carriers, said it plans to hold “informal, technical discussions” in July with the U.A.E. and Qatar.

On Wednesday, the big U.S. airlines said their forensic investigators had found further evidence of trade-distorting state aid, based on financial statements Qatar Airways filed with a corporate registry office in Singapore. Those documents, the U.S. side alleges, indicated that Qatar Airways received more than $7 billion in aid in the fiscal year ended in March 2015, and has commitments from its government for a further $3.7 billion in subsidies.

Law firm Wilmer Cutler Pickering Hale and Dorr LLP, which is representing the big U.S. carriers, found the new evidence in the spring, according to Partnership for Open & Fair Skies, the lobby of the three U.S. carriers and their labor allies. The lawyers found that the Qatar government transferred 72 planes, cash and other assets with a value of $5 billion to the airline and injected $2.2 billion in cash. Furthermore, the government authorized an additional $3.7 billion, the Wilmer Hale report said.

Another group of U.S. airlines that opposes the position of American, Delta and United was invited to meet State Department officials on Wednesday about the trade dispute. The group, which includes FedEx Corp., Alaska Airlines Group Inc., JetBlue Airways Corp. and Hawaiian Holdings Inc., has expressed concern from the outset of this fight that rolling back liberal air treaties could cause economic damage and possible retaliation.

The State Department Wednesday confirmed that it met with representatives of the U.S. airlines, travel, tourism and cargo industries, as part of its regular contact with stakeholders interested in Middle Eastern aviation issues. As for the new allegations involving Qatar, the department said it is “carefully and thoroughly reviewing the claims by some U.S. carriers that the Gulf carriers are benefiting from government subsidies that are distorting the market.”

Originally Published on The Wall Street Journal.

americans4fairskies2015Three Big U.S. Airlines Allege Additional State Subsidies to Qatar Airways
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Why Are US Legacy Carriers So Worried About Air Serbia’s New York Flight?

Balkan airline Air Serbia made an historic flight last Thursday, flying from Belgrade to New York JFK. The reason this flight belongs in the history books is that it marked the first direct flight between the two cities on a local carrier in more than two decades.

Air Serbia and the Belgrade route are, in and of themselves, not cause for concern for U.S. legacy carriers. This is a small market and a small airline.

So why does this flight have American, Delta and United so worried?

The flight means that the powerful Gulf carriers have found another way to penetrate the U.S. market. One of Air Serbia’s main owners is Abu Dhabi-based Etihad, who, along with Emirates and Qatar, has its sights set on the American market.

Covering the world with proxy airlines

Etihad bought a 49 percent stake in former Serbian carrier JAT as it was teetering on the edge of bankruptcy. It then rebranded the airline as Air Serbia and has been growing it ever since. Most of Air Serbia’s routes are in Europe and to the Middle East, but the foray into the transatlantic market shows that Etihad is also willing to compete using what are basically proxy airlines to get a bigger share of the lucrative intercontinental market.

Etihad has minority ownership in several major airlines including Alitalia, Virgin Australia and Air Berlin. It has a financial stake in these carriers, but it is also heavily involved in their branding and operations. For example, Etihad provided staff and ground crews in the United States to service the Air Serbia flight. And the pilots for the flight trained with Alitalia, which also has a close relationship with Etihad. The Airbus A330 used for the intercontinental trip was leased from Indian carrier Jet Airways, which is also partially owned by Etihad.

Etihad is reportedly trying to create uniform technology and airplane layouts across all its partners so that all crews can receive the same training and airplanes can be shifted between partners depending on demand.

No grounds for complaint

U.S. carriers have long complained that Gulf airlines like Etihad get unfair subsidies from their oil-rich governments. They contend that this extra funding goes against current air travel agreements that call for fair competition.

It will be more difficult for them to complain about Air Serbia, which is essentially a flag carrier, flying to New York from its own capital city. Etihad is certainly exerting control over Air Serbia, but on paper it remains a minority partner.

A Serbian brand

And Serbia isn’t hesitating to take advantage of this new partnership to put itself on the map. The country’s Prime Minister, Aleksandar Vucic, said that the flight was a major step for his country.

“This is the first flight operated by a Serbian carrier to the United States since 1992, and it shows the huge steps we have taken to develop our economy and reposition our country and capital Belgrade on the world map. Re-establishing this air bridge will give an enormous push to the flow of tourism and trade between Serbia, the wider Balkans region and the United States…”

So one of Etihad’s closest partners has landed in the United States, further extending the Gulf carrier’s reach (by proxy), and there is really no way that U.S. carriers can complain without also criticizing Serbia.

Originally Published on Travel Pulse.

americans4fairskies2015Why Are US Legacy Carriers So Worried About Air Serbia’s New York Flight?
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New Delta boss says dispute with Gulf carriers is ‘a long-term battle’

The new CEO of Delta Air Lines has said the US trade department needs to engage with its UAE counterparts in order to resolve the ongoing subsidies row with Gulf carriers.

Ed Bastian, who succeeded Richard Anderson as CEO of the Atlanta-based airline last week, has vowed to continue the dispute first started by his predecessor.

America’s big three’ carriers, Delta, American Airlines and United, have complained that the Gulf carriers have been given a total of $42bn in government subsidies, which the US carriers say is against the current open skies agreement.

All three Gulf carriers have denied the claims, with Emirates chairman Sheikh Ahmed saying last week that it could open up new routes to the US if the airline wanted to.

Speaking with media in the US, Bastian has vowed to continue with the argument, insisting that the current policies and treaties are being violated.

“We face a lot of challenges on the international side. One of the things that we have been very vocal on is the Gulf carrier dispute around subsidies,” Bastian told Bloomberg.

“We need Washington to pay attention. In the political landscape there’s a lot of discussion on trade and whether the US is being taken advantage of, whether there’s international barriers that need to be erected. We don’t believe in any of that but what we do believe in any of that but what we do believe is that our existing policies and treaties should be enforced. There’s a clear violation that’s happening today and that’s one thing that I’ll be very vocal on going forward.”

Bastian said the dispute needs to be settled at government level.

“We need to keep the attention on this. This is going to be a long-term battle. There’s not an easy solution to this,” he said.

“We want the state department to enter into consultations with their colleagues. We want to make certain that everything that we build for the future is dedicated around an opportunity where you have got a healthy, vibrant, growing US industry, not just Delta industry, but a US airline industry that has all the opportunities for a fair a level playing field.

“We can compete with anybody when given the opportunity, but when we’re asked to fight with two arms tied behind your back, it’s not fair.”

Originally Published on Arabian Business.

americans4fairskies2015New Delta boss says dispute with Gulf carriers is ‘a long-term battle’
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One Simple Reason Not To Believe Etihad’s Claim Of Profitability

James Hogan, the chief executive of Etihad Airways, has reaffirmed his claim that the Gulf carrier is a “commercial organization” that benefits from “no subsidies or state support”.

In a speech to The Wings Club in New York last week, the boss of Abu Dhabi’s flag-carrier talked up the consumer benefits and the economic growth that have accompanied the rise of the Persian Gulf carriers. Responding to accusations of unfair competition by US lobbyists, he said that Etihad’s opponents are promulgating “myths about our business” – specifically that its shareholder does not expect “a clear return on its investment”.

It is true that both sides of the Gulf-US aviation dispute are spinning a narrative to suit their own biased agendas.

On the American side, claims of unfair advantages seem hypocritical given the decades of government support that US carriers enjoyed before deregulation in the 1970s. On the Gulf side, counter-claims of protectionism gloss over the fact that subsidies distort the competitive landscape, in turn harming consumer choice by pushing out competitors. Both groups have legitimate grievances, and I make no attempt to resolve their dispute in this article.

However, there is one aspect of the Gulf argument which deserves particular scrutiny. Though he avoided discussing profitability last week, Hogan routinely claims that the company has been in the black for several years. “We set a timetable to break even within a decade and we beat that target,” he said during another speech in Washington in 2015.

 That claim is important because genuine commercial profitability would nullify US allegations of state dependency. But it lacks credibility. Here’s why.

Unclear costs from equity alliance

In a May 2015 statement announcing its “fourth consecutive year of net profit”, Etihad claimed a positive result of $73 million for 2014 with total revenues of $7.6 billion. The latter figure included $1.1 billion of “partnership revenues” – a reference to bookings throughout codeshares, interlines and other commercial arrangements with its equity partners.

Etihad holds sizable stakes in seven foreign airlines – Air Berlin, Air Serbia, Air Seychelles, Alitalia, Darwin Airline, Jet Airways and Virgin Australia – each of which feeds traffic into its Gulf network.

However, while Etihad includes partnership revenues in its top line, the extent to which associated alliance costs bear down on its bottom line is not disclosed. Let’s be clear: the revenues that Etihad enjoys from its partners do not come for free. Its 49% stake in Alitalia came with a price-tag of €560 million ($750 million), for example. The funds for this acquisition came directly from Abu Dhabi’s government, according to The Wall Street Journal, which alleged overall capital injections of $2.5 billion by the state in 2014.

Such investments are not one-off expenses. Since Etihad upped its stake in Air Berlin in 2012, the German carrier has posted net losses of $916 million. It is logical to suppose that Etihad, as a significant shareholder, shoulders some of the pain. Indeed, the same WSJ report alleged that Etihad purchased perpetual bonds in Air Berlin to the tune of $399 million two years ago.

By talking up the positive returns from the alliance without acknowledging associated costs, Etihad is reaping the rewards of its government’s spending spree in a vacuum – ignoring all concomitant liabilities. That doesn’t sound like a commercial operation to me.

How Etihad can defend its claims

If Etihad is serious about demonstrating its claim to profitability as a commercial entity, the path forward is clear: it should release its financial statements in their entirety.

The airline makes much of the fact that its annual reports are audited by KPMG. Beyond serving as an impressive sound-bite, however, this assertion means very little. KPMG’s involvement will be limited to ensuring compliance with International Financial Reporting Standards (IFRS), and validating the claims made by management on behalf of the government shareholder and any lenders. KPMG has no higher responsibility to the media or general public vis-à-vis disproving subsidies and affirming self-sufficient profitability.

It is very likely that Etihad will become a profitable company in the future, given its proven operating strengths and ubiquitous brand. It may already be one today. But as long as the company refuses to publish financial reports, a cloud of suspicion will rightly hang over its claim to success.

Hogan would be better off defending Gulf subsidies as a legitimate response to historic US advantages, rather than making bold assertions bereft of any supporting evidence.

Originally Published on Forbes.

americans4fairskies2015One Simple Reason Not To Believe Etihad’s Claim Of Profitability
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Norwegian Air Poses No Threat To ‘Open And Fair’ Skies — Unlike Etihad And Qatar Airways

The Partnership for Open and Fair Skies, a lobby group representing three major U.S. airlines and other industry groups, chose its name well when it entered the scene last year.

By incorporating a variant of the term “open-skies” into its brand, the Partnership explicitly affirmed its support for aero-political deregulation – the removal of bilateral traffic rights and the expansion of cross-border competition between airlines.

To do anything less would be foolhardy given the overwhelming body of evidence that open-skies accords – of which America has signed more than 100 – create vast economic benefits.

Yet, interposing this widely-acclaimed term, the lobbyists snuck in the most subjective and malleable of conditions: “fair”.

What is “fair”? Defining the concept at an abstract level is easy enough – “equitable treatment,” let’s say – but how do we apply an abstract idea in the real world? To be truly “fair” to several parties, we have to understand, quantify and counter-balance the “benefits” and “opportunities” that each has been afforded. That is an impossible task with any degree of mathematical precision.

Regulators, in truth, are no more capable of being “fair” than journalists are capable of being “objective”. The best that any of us can do is muddle along with noble intentions and a sincere commitment to impartiality.

Which brings me, in a roundabout way, to the subject of Norwegian Air and its long overdue green-light for transatlantic expansion.

The Partnership for Open and Fair Skies, a lobby group representing three major U.S. airlines and other industry groups, chose its name well when it entered the scene last year.

By incorporating a variant of the term “open-skies” into its brand, the Partnership explicitly affirmed its support for aero-political deregulation – the removal of bilateral traffic rights and the expansion of cross-border competition between airlines.

To do anything less would be foolhardy given the overwhelming body of evidence that open-skies accords – of which America has signed more than 100 – create vast economic benefits.

Yet, interposing this widely-acclaimed term, the lobbyists snuck in the most subjective and malleable of conditions: “fair”.

What is “fair”? Defining the concept at an abstract level is easy enough – “equitable treatment,” let’s say – but how do we apply an abstract idea in the real world? To be truly “fair” to several parties, we have to understand, quantify and counter-balance the “benefits” and “opportunities” that each has been afforded. That is an impossible task with any degree of mathematical precision.

Regulators, in truth, are no more capable of being “fair” than journalists are capable of being “objective”. The best that any of us can do is muddle along with noble intentions and a sincere commitment to impartiality.

Which brings me, in a roundabout way, to the subject of Norwegian Air and its long overdue green-light for transatlantic expansion.

Norwegian’s flag of convenience

America’s Department of Transportation (DoT) announced on Friday that Norwegian, one of Europe’s largest low-cost carriers, has at long last received tentative approval for a foreign-air-carrier permit. Norwegian waited more than two years for this provisional nod, which will allow it to operate more transatlantic flights under the open-skies treaty between the European Union and the United States.

The promise of cheaper transatlantic fares will be music to the ears of the travelling public. But the DoT had to weigh up their lot with the competing interests of all involved parties.

Let’s follow in its footsteps, starting with Norwegian itself.

The airline currently provides less than 2% of scheduled transatlantic seats between Europe and America. That compares with 17% for Delta Air Lines DAL -2.00%; 16% for American Airlines; and 12% for United Airlines. Norwegian has long wanted to grow operations across the Atlantic, but has been hamstrung by Norway’s high labor costs and limited traffic rights (the country is a member of the European Economic Area, but not the E.U.). Its solution was to create an Irish subsidiary, Norwegian Air International.

In considering the airline’s Irish application, the DoT took stock of lobbying by the U.S. majors and their myriad related trade unions – all of which, understandably, would rather keep Norwegian out of the market.

“DoT is proposing to allow a foreign airline to compete directly with U.S. airlines on long-haul international routes with unfair economic advantages,” the Air Line Pilots Association (ALPA) complained after the ruling, describing the Irish license a “flag-of-convenience”. Unions had previously warned that Norwegian would hire Asian employees at a fraction of the cost of western staff, although the airline is promising not to do this.

While acknowledging that the case presents “novel and complex issues,” the DoT ultimately concluded that there is “no legal basis to deny” Norwegian’s application. It reached its decision after consulting with both the Department of Justice and the Department of State .

Though undeniably a victory for Norwegian, the ruling should not necessarily be considered a defeat for U.S. aviation interests.

To the contrary, it could spur the Partnership’s members to refocus their energies toward more justifiable lobbying efforts. Instead of haranguing a European competitor with an impressive cost-base and a transparent balance-sheet, Delta, American and United can now double-down their focus on two of the fast-expanding Persian Gulf carriers: Etihad and Qatar Airways.

Gulf-carrier state subsidies

The U.S. majors began lobbying against three Gulf carriers – Dubai’s Emirates Airline, Abu Dhabi’s Etihad, and Qatar Airways – last year, accusing them of receiving $42 billion of “unfair benefits” over the past decade.

Acting through the Partnership, the airlines and their related trade unions are urging Washington to curtail or revoke America’s open-skies treaties with the United Arab Emirates and Qatar. They contend that subsidies enable the Gulf carriers to operate loss-leading flights, in turn stealing market share from commercially-constrained U.S. competitors. “We are not competing against air carriers,” says United. “We are competing with governments.”

Proponents on both sides of the fence have been quick to rally around their cause, flinging accusations of protectionism and subsidization back and forth to no avail.

Dismiss the naïve notion that either side is really concerned with “fairness,” though, and the path forward is clear.

Emirates, the largest and oldest of the Gulf three, is a futile target. The bulk of the evidence against Emirates relates to lax labor laws, non-arms-length contracts, and benign governmental policies. These benefits – which even the Partnership avoids calling subsidies – occupy a grey area in the debate. Much like Norwegian’s employment practices, they are too abstract and subjective an advantage to compel Washington to act.

As Dubai’s flag-carrier correctly notes, bilateral agreements “do not attempt to harmonize company establishment laws, labor rules or other domestic legislation, since these are outside the competency of aeronautical authorities”.

Lobbying against Emirates – like lobbying against Norwegian – is doomed to fail because rectifying these kinds of ”unfair advantages” falls beyond the DoT’s remit.

When it comes to Etihad and Qatar Airways, however, the financial mandate for regulatory intervention is clear-cut. Filings unearthed by the Partnership show that Etihad has received $4.6 billion of interest-free loans – liabilities which the airline has “no contractual obligations to repay” – plus $6.3 billion of capital injections. Qatar Airways has received $7.8 billion in interest-free loans and $6.8 billion in government loan guarantees, with repayment “neither planned nor likely”.

These are cold hard figures – tacitly acknowledged by the airlines themselves – which contravene both the letter and the spirit of America’s open-skies treaties.

If the Partnership is serious about living up to its name, its members need to pick their fights carefully. Going after a commercially successful, state-owned airline like Emirates that happens to enjoy benign government policies is pointless. Going after an innovative, privately-owned airline like Norwegian is downright unjustified.

Etihad and Qatar Airways are the two airlines with a serious case to answer. It’s time to turn up the heat on them.

Originally Published on Forbes.

americans4fairskies2015Norwegian Air Poses No Threat To ‘Open And Fair’ Skies — Unlike Etihad And Qatar Airways
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Emirates just bought the jumbo jets that helped bankrupt another airline

Emirates has expanded its already massive fleet of Airbus A380 superjumbos with two additional aircraft.

Airline CEO Sir Tim Clark confirmed the order in a statement on Wednesday.

According to Bloomberg’s Andrea Rothman, the two additional A380s come from Skymark Airlines’ canceled six-aircraft order.

Airbus scrapped the Japanese budget carrier’s $1.7 billion order in July of 2014 after the airline fell behind on its financial obligations.

Later that year, the airplane maker sued Skymark in an attempt to recoup some of the delinquent payments.

In January of 2015, Skymark told Bloomberg that it could go out of business if it had to pay Airbus a breach-of-contract penalty.

Later that month, Skymark filed for bankruptcy protection, citing weak Japanese currency, fuel contracts and its dispute with Airbus.

At the time of the cancellation, Airbus had several of the Skymark superjumbos already near completion.

The Toulouse-based airplane maker has been looking to offload the airplanes ever since.

Although the order carries a list value of $865 million, it’s likely Airbus offered generous discounts to push the deal to completion. Industry sources told Reuters that Emirates likely paid no more than half price for the A380s.

According to Emirates, the two ex-Skymark jets will be delivered at the end of 2017 and will be equipped with the airline’s two-class interior that seats up to 615 passengers per plane.

The ex-Skymark planes push Emirates’ A380 order sheet to 142 aircraft. With 75 A380s in service, the Dubai-based airline is the aircraft’s biggest customer.

The Emirates order balanced out Air Austral’s cancellation on Tuesday of its two A380 orders.

Skymark emerged from bankruptcy last month with the help of private equity firm Integral Corp. and fellow Japanese airline ANA.

Originally Published on Business Insider.

americans4fairskies2015Emirates just bought the jumbo jets that helped bankrupt another airline
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February Demand Growth Stays Strong

Geneva – The International Air Transport Association (IATA) announced global passenger traffic results for February showing continuing strong demand growth for domestic and international travel. Total revenue passenger kilometers (RPKs) rose 8.6%, compared to the same month last year. Monthly capacity (available seat kilometers or ASKs) increased by 9.6%, and load factor declined 0.7 percentage points to 77.8%.

“In the first two months of 2016, demand for passenger connectivity is off to its strongest start in eight years. However, February was the first month since the middle of 2015 in which capacity growth exceeded demand, which caused the global load factor to decline. It is unclear whether this signals the start of a generalized downward trend in load factor, but it bears watching,” said Tony Tyler, IATA’s Director General and CEO.

FEBRUARY 2016 (% YEAR-ON-YEAR)WORLD SHARE1RPKASKPLF (%-PT)​2PLF (LEVEL)​3
Total Market100.0%8.6%9.6%​-0.7%77.8​%
Africa2.2%11.6%11.9%​-0.1%​65.7%
Asia Pacific31.5%9.8%9.6%​0.1%​79.0%
Europe26.7​%​7.5%7.3%​0.2%77.7​%
Latin America5.4%​7.2%7.3%​-0.1%​79.5%
Middle East​​9.4%11.0%16.7%​-3.8%​73.3%
North America24.7%7.1%​9.0%​-1.4%​79.1%
(1)% of industry RPKs in 2015  (2)Year-on-year change in load factor  (3)Load factor level

International Passenger Markets

February international passenger demand rose 9.1% compared to February 2015, which was an increase over the 7.3% yearly increase recorded in January. Airlines in all regions recorded growth. Total capacity climbed 9.9%, causing load factor to slip 0.6% percentage points to 76.6%.

  • European carriers saw February demand increase by 7.7% compared to a year ago. Traffic has recovered following disruptions in the 2015 fourth quarter related to airline strikes and the shutdown of Transaero in Russia. Capacity climbed 7.8% and load factor dipped 0.1 percentage points to 78.3%
  • Asia-Pacific airlines’ February traffic rose 11.2% compared to the year-ago period. Capacity increased 10.3% and load factor climbed 0.7 percentage points to 78.3%. Comparisons with 2015 are distorted by the timing of the Lunar New Year celebrations, which took place in February this year. Slower economic growth in many of the region’s economies has been at least partly offset by the 7.3% increase in the number of direct airport connections within the region, which has helped to stimulate passenger demand
  • North American airlines’ traffic climbed 3.6%, which was the slowest among the regions and was exceeded by a capacity expansion of 4.8%. In turn, this caused load factor to fall 0.9 percentage points to 75.9%. US airlines have been focusing on the larger and more robust domestic market, although that market is showing signs of slowing in recent months
  • Middle East carriers had an 11.3% demand increase in February compared to a year ago. This was exceeded, however, by a 16.9% rise in capacity that caused load factor to drop 3.7 percentage points to 73%. Traffic growth has now lagged capacity growth for six consecutive months
  • Latin American airlines saw February traffic jump 10.4% compared to February 2015. Capacity increased by 10.1%, boosting load factor 0.2 percentage points to 79.8%, highest among the regions. Domestic passenger demand remains under pressure from economic difficulties in the region’s biggest economies, but this seems not to be affecting business-related international travel
  • African airlines posted the strongest demand growth among the regions with February traffic up 12.7% compared to a year ago. The pick-up indicates that carriers here are regaining market share through efforts to rationalize networks and enhance revenue management systems, after several difficult years. It also aligns with a jump in exports from Africa. Capacity rose 13.4%, and load factor slipped 0.4 percentage points to 63.7%.

Domestic Passenger Markets

Domestic travel demand rose 7.9% in February compared to February 2015, which was an increase over growth of 6.9% in January. All markets except Brazil showed growth, with the strongest increases occurring in India, the US and China. Domestic capacity climbed 9.0%, and load factor fell back.0.8 percentage points to 79.7%.

FEBRUARY 2016 (% YEAR-ON-YEAR)WORLD SHARE1RPK​​ASKPLF (%-PT)​2PLF (LEVEL)​3
Domestic36.4%7.9%9.0%-0.8%79.7%
Australia 1.1%4.6%5.2%​-0.4%74.3%
Brazil 1.4%-3.1%-1.0%​-1.6%​78.5%
China P.R. 8.4​%8.2%9.5%​-1.0%82.0%
India 1.2%24.6%27.4%​-1.9%85.2%
Japan ​​1.2%1.4%-0.6%​1.3%​66.8%
Russian Federation1.3%3.4%-0.8%​2.9%​72.6%
​US​15.4%8.9%​11.5%​​-1.9%​80.7%
(1)% of industry RPKs in 2015  (2)Year-on-year change in load factor  (3)Load factor level
*Note: the seven domestic passenger markets for which broken-down data are available account for 30% of global total RPKs and approximately 82% of total domestic RPKs.
  • India led all domestic markets again with a 24.6% year-on-year growth, supported by the strong economic backdrop, as well as notable increases in services. This trend is expected to continue with flight frequencies in 2016 scheduled to increase by 11.5% year-on-year
  • Brazil’s domestic market decline may be starting to bottom out but the highly uncertain economic and political outlook could pose challenges for airlines in the near-term

The Bottom Line

“On March 22 we had a grim reminder that transportation—including aviation—remains a target for terrorism. The attacks in Brussels were an attack on humanity—a terrible tragedy—that was met with resilience. The subway is back in operation. And the airport is working hard to return to normal operations that will reconnect Europe’s capital with the world. Aviation is a force for good. And we are once again proving that terrorists will never succeed in destroying the fundamental urge of people to travel, explore and learn about the world,” said Tyler.

Originally Published on IATA.

americans4fairskies2015February Demand Growth Stays Strong
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Middle East carriers adding more seats than demand: IATA

Dubai: The Middle East airlines have been adding more capacity than there is demand for the past six months, the International Air Transport Association (IATA) said on Thursday, in its monthly traffic updates.

Demand for air travel among Middle East carriers rose 11.3 per cent in February but that was outstripped by a 16.9 per cent increase in the number of available seats offered by those airlines.

“Traffic growth has now lagged capacity growth for six consecutive months,” IATA said in a statement.

The Middle East, home to the world’s largest airline on international routes — Emirates, is one of the fastest growing aviation markets today. Emirates, along with hub airlines Etihad Airways and Qatar Airways, compete with other major global airlines for transcontinental passenger traffic.

Globally, demand for air travel rose 8.6 per cent in February while the total number of available seats rose by 9.6 per cent, as per IATA estimates.

“February was the first month since the middle of 2015 in which capacity growth exceeded demand, which caused the global load factor to decline. It is unclear whether this signals the start of a generalised downward trend in load factor, but it bears watching,” stated Tony Tyler, IATA’s Director General and Chief Executive Officer.

Originally Published on Gulf News.

americans4fairskies2015Middle East carriers adding more seats than demand: IATA
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American Airlines CEO calls alleged subsidies to Gulf carriers ‘biggest threat I’ve ever seen’

While the battle between three major U.S. airlines and their Middle Eastern competitors over alleged government subsidies has drifted out of the public eye after dominating headlines last year, the issue is still very much on the radar for American Airlines CEO Doug Parker.

“This is the biggest threat I’ve ever seen to commercial aviation in the United States,” Parker said during a speech at an aviation maintenance conference in Dallas on Wednesday. “I’m sure that sounds like hyperbole, but it’s not. What’s happening is those two countries are subsidizing those three airlines to a point where they don’t need to be profitable.”

The two countries Parker referenced are United Arab Emirates and Qatar; the three airlines are Emirates, Etihad Airways and Qatar Airways.

Officials at American as well as United Airlines and Delta Air Lines launched a public lobbying effort last year pushing the U.S. government to revisit Open Skies agreements with United Arab Emirates and Qatar over concerns that those countries were providing their airlines with billions in subsidies.

Officials from Emirates, Etihad Airways and Qatar Airways have fiercely denied the allegation, with Emirates’ CEO calling the accusations “repugnant” and “patently false” last June.

Despite the denials, Parker said some of the routes being flown by the three Middle Eastern carriers cannot possibly be profitable, pointing specifically to Emirates’ flight from New York’s JFK International Airport to Milan.

“I’ve been in this business long enough and know what the numbers are, and it can’t be done,” Parker said. “They add routes that cannot be profitable, but they don’t care because they’re subsidized.”

So far, the encroachment of Middle Eastern carriers into the U.S. has been limited, with the New York-to-Milan flight the only route involving U.S. destinations that doesn’t pass through one of the foreign carriers’ respective hubs in Dubai, Abu Dhabi or Doha.

But Parker said the allegedly uneven playing field limits U.S. airlines’ ability to compete in certain foreign markets, like India, and threatens to undermine the hub and spoke model that American, Delta and United all use.

“The entire hub and spoke network particularly, for us large global airlines, is based on our ability to have fair competition across international markets,” Parker said.

His comments came during a question-and-answer session following his speech at Aviation Week’s MRO Americas conference in Dallas.

The majority of the speech dealt with American’s need to adapt how it deals with employees and invests in its product to compete in a transformed airline industry, a pitch that Parker has made to American employees and Wall Street investors in recent months.

Originally Published on The Dallas Morning News.

americans4fairskies2015American Airlines CEO calls alleged subsidies to Gulf carriers ‘biggest threat I’ve ever seen’
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Working Together to Preserve U.S. Airline Jobs

When it comes to relations between management and labor, fights always make the news, while cases of collaboration are seldom mentioned. In the aviation industry, it’s rare that you hear about airline management and employees aligned on an issue. For the past year, a strong partnership has emerged in the U.S. airline industry, with American Airlines, Delta Air Lines, and United Airlines joining with seven aviation trade unions to urge the Obama Administration to uphold provisions of legal agreements between the U.S. and the United Arab Emirates and Qatar.

The three fast-growing state-owned airlines of these countries, Emirates, Etihad Airways, and Qatar Airways, received more than $42 billion in subsidies and unfair benefits just since 2004. The subsidies violate the provisions of the “Open Skies” agreements and give these airlines unlimited access to the largest market in the world. Importantly, these subsidies have allowed the Gulf carriers to grow without stimulating demand. In fact, just since January, the trio has added or announced plans to grow service into the U.S., expanding their daily seats to and from the U.S. by more than 35 percent. Their unfair advantage is harming U.S. airlines and their European joint-venture partners, and threatening good-paying U.S. jobs.

American Airlines, Delta Air Lines, and United Airlines employ tens of thousands of Americans in positions pay well above U.S. averages and deliver health care, paid-vacation, and other benefits that, sadly, are quickly disappearing from the American economy. These are precisely the kinds of jobs that elected officials love to talk about, and wish for more.

But unfortunately, these are the very jobs that are at risk as the Gulf carriers continue their campaign to dominate much of global aviation. In fact, for every U.S. route that a U.S. carrier is forced to cede to a Gulf carrier, more than 1,500 American jobs are lost — hardworking pilots, flight attendants, ground crew, and others.

Airline unions and management are also aligned on the fundamental issue of worker fairness at the Gulf airlines. In the UAE and Qatar, not only are trade unions illegal, but workers have almost no access to the due process that every employee in the United States takes for granted. Much of this inequity stems from the Gulf airlines’ human resources strategy of filling most jobs with workers from poor countries. Their approach is clever because places like India, Pakistan, Bangladesh, Indonesia, and the Philippines are filled with millions of people eager to work in the Gulf or elsewhere, and send money home to their families. The power that Emirates, Etihad and Qatar Airways managers hold over their workforce offends the sensibilities of fair-minded Americans and U.S. airline leadership alike.

There’s a disconnect here: the three Gulf airline brands exude quality, modernity, and luxury. But what is modern about a feudal employment model? And would you feel good about quality aloft knowing that the people delivering the service are so poorly treated?

Unfortunately, this trade dispute has become muddied with exaggerated rhetoric about “protectionism” and the like. In the nearly 40 years since the American airline industry was opened to genuine competition, U.S. airlines and their employees have learned to keep their edge. The adjustment was often painful, with wage reductions and the woes of bankruptcy reorganization, but in the end the business emerged stronger and better able to serve U.S. travelers now and into the future. No one is asking for protection nor special favors. The U.S. airlines and their workers are only asking for a level playing field.

In my 30+ years working for and near three large U.S. airlines, I sometimes disagreed with airline unions, but I always respected their right to organize workers and bargain with management. And I witnessed many occasions when the entire company – rank and file, union leadership, senior management, everyone – pulled together to get things done. This is another of those moments, and it’s time for our government to step forward and do what’s both legally and morally right to protect U.S. jobs.

Originally Published on The Huffington Post.

americans4fairskies2015Working Together to Preserve U.S. Airline Jobs
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Americans for Fair Skies Statement on Commissioner Bulc’s Arbitration Plans

When European Commissioner for Transport, Violeta Bulc, comes to Washington, DC later this month, she plans to call for consultations within the EU-US Open Skies in support of EU aviation workers over a EU-US route approval process.

This is significant, because it shows the consultation process set forth in Open Skies being used by one of the parties to the agreement. This is the very same process Americans for Fair Skies and our allies and partners have been asking the United States government to employ to ensure enforcement of our Open Skies agreements with the United Arab Emirates and the State of Qatar.

Our government currently has evidence that the State of Qatar and the United Arab Emirates are acting in deliberate violation of their Open Skies Agreements, but has yet to take action. More than $52 billion in subsidies has been documented, yet the government fails to take action to safeguard U.S. jobs and rectify this obvious trade violation.

The merits of Commissioner Bulc’s case with the U.S. can be debated, but she is to be applauded for having the courage to execute the EU’s right to open consultations within the Open Skies agreement.

As a nation, we fail our citizens when we do not stand up for American industries and our workers. It’s time for fair skies and fair competition. It’s time for the United States to show leadership for our aviation workers, and open consultations with the State of Qatar and the United Arab Emirates.

americans4fairskies2015Americans for Fair Skies Statement on Commissioner Bulc’s Arbitration Plans
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European Commission agrees to help end deadlock on Cork-US flights

The European Commission is stepping in to break the deadlock threatening the launch of the first transatlantic flights from Cork.

The commission has agreed to invoke an arbitration process between EU and US transport officials, as is provided for by the EU-US Open Skies Agreement.

European Affairs Minister Dara Murphy last night confirmed the development, which he said followed intensive lobbying by the Government.

He described the commission’s decision as “hugely significant”, amid mounting concerns that the proposed May launch of the service is at risk.

“I would hope that this decision would help move the discussions forward and that it would result in an urgent resolution,” said Mr Murphy.

However, the complex arbitration process could take up to four months, putting it two months beyond the May launch of the proposed Cork-to-Boston service.

A spokesperson for European Transport Commissioner, Violeta Bulc, declined last night to comment on the process, but said contacts with the US authorities are ongoing.

He said Ms Bulc will be in Washington DC this month for discussions with the US authorities on the decarbonisation of aviation and he said it is expected that the issue of the Cork-to-US flights will be addressed.

Cllr Alan Coleman, who was part of a county council delegation which lobbied key figures in Boston late last year on the matter, welcomed the arbitration, but said it is “far from a result”.

“This process will take time and the Cork region will likely miss out unnecessarily on a tourism season, due to a lack of cooperation from the US authorities,” he said.

“The Irish government are facilitating the US in other facets, including allowing US troops to land in Shannon Airport.

“Whether you agree with Shannon being used for this purpose or not is irrelevant. It is a diplomatic concession by the Irish government to the US government.

“In short, Taoiseach Enda Kenny needs to contact Barack Obama and request that his authorities cooperate. An open skies agreement is in place, it is not being honoured, and going through a long drawn-out legal process, in my opinion, is a smoke-screen before next week’s election. Our taoiseach needs to act now and call the White House.”

The move to arbitration follows increased diplomatic efforts in recent weeks, prompted by the unprecedented two-year delay by the US Department of Transportation (DoT) in making a decision on an application from Norwegian airline’s Irish subsidiary, Norwegian Air International (NAI), for a foreign carrier permit to launch Cork-to-Boston flights in May. The low-cost operator is also planning to launch a Cork-to-New York service next year. The airline says despite the delays, it is still committed to launching the services.

The proposed first transatlantic flights from Cork have been described by business, tourism, and political leaders in the south west as hugely important for the region.

Originally Published on Irish Examiner.

americans4fairskies2015European Commission agrees to help end deadlock on Cork-US flights
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Etihad strategy flies into difficulties

From the Seychelles to Serbia, Etihad Airways has been busy forging its own airline alliance by buying stakes in regional carriers.

But the Abu Dhabi-based company’s bold plan to fill its aircraft with partner airlines’ passengers is coming under threat in both Europe and the US, where rivals are complaining of unfair competition from fast-growing Gulf carriers.

The issue has become more acute as Etihad, Emirates Airline and Qatar Airways moved over the past decade from being fringe players in aviation to the most disruptive force in the industry, successfully wooing travellers who previously flew with longer established airlines based in Asia, Europe and the US.

Etihad, the youngest of the three Gulf carriers, has pursued a different strategy to its two larger peers, acquiring stakes in airlines and using code-sharing partnerships — in which companies sell seats on each other’s flights — to dramatically grow its network. Over the past four years, it had spent in excess of $1bn on stakes in seven airlines, including Air Seychelles, Air Serbia, India’s Jet Airways and Virgin Australia. But there are signs this strategy is running into significant problems. Some of the airlines that Etihad has invested in have required further cash injections and much management time. Etihad’s first deal — the purchase of a 29 per cent stake in Airberlin in 2011 — has developed into a legal battle with Germany’s transport ministry over the two airlines’ code-sharing agreement. “Their strategy of growth by acquisition buys numbers in terms of volumes,” says John Strickland, analyst at JLS Consulting. “But the kind of companies they have been investing in means they have also been acquiring complexity and the challenge of how much management time that takes.”

Last year, Etihad had to navigate through management upheaval at Alitalia, the lossmaking Italian flag carrier that it bought a 49 per cent stake in, and which has not reported a full-year profit since 2002.

But Etihad’s biggest headache in recent months has been Airberlin, the lossmaking German carrier. Hailed in 2011 as widening Etihad’s European network for less than the cost of a single long-range passenger jet, over four years later the investment has spiralled and caused more problems than the Gulf carrier ever anticipated.

The German transport ministry, having initially approved the code-sharing arrangement between Etihad and Airberlin, last year decided it was not allowed under an existing bilateral air services agreement with the United Arab Emirates.
The code-share is important to both companies. It provides Airberlin, which is undergoing a turnround, with important income, while Etihad supposedly gains more access to Germany’s top airports.

Etihad scored a victory in the legal battle last month, when a German appeals court supported its right jointly to sell tickets on 26 of the disputed 31 code-share routes with Airberlin until March 26. However, industry insiders believe the dispute is far from over.

A spokesman for the German transport ministry says it plans to “check the grounds for the court’s ruling and will then decide on our future actions”.

“In principle, the German government was and is open for talks with the UAE to find viable solutions for air traffic law issues,” he adds.

Any potential restriction to its code-share with Airberlin could have a big impact for Etihad. According to flight data from OAG, the aviation consultancy, as many as 92 per cent of Etihad’s worldwide flights this week will be operated on other airlines’ jets under a code-sharing agreement — compared with 74 per cent at Emirates and 65 per cent at Qatar. James Hogan, Etihad’s chief executive, has not been shy about pointing the finger at Lufthansa, Germany’s flag carrier, as the cause of its recent problems. “Our commitment continues to be undermined by the lobbying efforts and protectionist antics of Lufthansa,” he said in January. Over the past year, tensions between Gulf carriers and their counterparts in both Europe and the US have been growing. The big three US airlines — American Airlines, Delta and United — are urging Washington to review the Gulf carriers’ access to the US market. They claim that $42bn in subsidies the state-controlled carriers are alleged to have received over the past decade breach international open skies agreements. In Europe, there are signs the European Commission is listening to calls from certain airlines, notably Lufthansa, to take action. In December, the commission revealed plans to use aviation negotiations with Gulf countries as a way to address competition concerns.

However, some analysts question Lufthansa’s lobbying to restrict Etihad and Airberlin’s code-sharing in Germany, noting the possible negative knock-on effects if Airberlin collapsed.

“It’s in Lufthansa’s interest for Airberlin to exist, because if they didn’t it would attract stronger competitors like Ryanair and easyJet to expand even faster on short haul routes in Germany,” says Oliver Sleath, analyst at Barclays.

Etihad is confident regulators will recognise the benefits its equity alliance strategy offers to air travellers. “Unfortunately, we have seen an anti-competitive backlash from these mega-carriers, as they try to protect their dominant market positions against this new or improved competition,” said Mr Hogan.

Originally Posted on Financial Times

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Mid-East subsidies threaten the integrity of civil air transport

Every year, airlines transport passengers literally billions of miles around the globe safely, reliably and efficiently.  No other mode of transportation, and no other industry, comes close to matching the worldwide performance of the airline industry.  It is a remarkable achievement, but it did not happen by accident.

It started in 1944 when the administration of President Franklin D. Roosevelt invited the allied powers to a historic conference in Chicago to plan for a post-war world where civil aviation would become an important instrument of peace and commerce.  The initiative reflected remarkable vision.  In the years leading up to war, aviation had become an instrument of economic and political rivalry among nations that subsidized their own airlines and frustrated the opportunities of airlines of rival states.

The Chicago Conference was designed to stop those practices and to usher in a new era of cooperation among states to foster a civil air transport industry isolated from state sponsored rivalry.  The chairman of the U.S. delegation to the conference, also the president of the conference, addressed this subject in his opening remarks, stating unequivocally the position of the United States that “devices such as subsidies…designed to drive other planes out of the air” would not be U.S. policy and that the United States “would oppose any such policy if it were practiced by others.”  The chairman of the U.K. delegation spoke next, stating “we want to discourage and, when possible, to end subsidies whether they be opened or concealed.”

The conference produced the Chicago Convention, the successful multilateral treaty that forms the charter, the constitution if you will, of the air transport system today.  Over 190 countries are party to the convention, including virtually all of the members of the United Nations.  The convention established the highly respected International Civil Aviation Organization and empowered it to promote the goals of the convention, including investigating “subsidies paid to airlines from public funds.”  But it left the implementation of route rights to bilateral agreements between governments.

Since the 1990’s, the United States has pursued a policy to liberalize the operation of international air services by negotiating new bilateral agreements with each of its trading partners.  These Open Skies Agreements eliminate government interference with airline pricing, routes and capacity, all in a continuing effort to provide more affordable and convenient air services for the flying public.  They ensure carriers of both sides a “fair and equal” opportunity to compete in the market.

Unfortunately, these new bilateral agreements also have created opportunities for some Mid-East governments to reintroduce the state-sponsored rivalries that the parties to the Chicago Convention sought to eliminate, by providing billions of dollars of subsidies to state-owned airlines to promote their own national economic development strategies.  Specifically, the Partnership for Open and Fair Skies has documented over $42 billion in unfair government subsidies and benefits received by Emirates, Qatar Airways and Etihad Airways.

These practices deprive U.S. airlines of the “fair and equal” opportunity to compete that these agreements literally guarantee.  They threaten not only the goals of the Open Skies Agreements, but also the integrity of the air transport system established by the Chicago Convention.  Unfortunately, the U.S. government so far has been unable to take the steps necessary to nip the emergence of these subsidies in the bud.  The longer it waits, the more difficult it will be to address them.

Problems with bilateral aviation agreements are not new. The United States encountered a similar challenge in the 1980’s when it came to the realization that its agreements lacked adequate measures to address the threat of terrorism.  The United States rightly insisted that its aviation partners agree to those measures to protect the air transport system and the goals of the Chicago Convention; and ultimately they did.

The same kind of leadership and clarity is required of the U.S. government today.  The threat posed by public subsidies paid to airlines by wealthy states is serious. The international air transport system is far too important to allow states to ignore the rules established in 1944 and recreate the state-sponsored rivalries the founders of the aviation system wisely sought to avoid.

Originally Published on The Hill.

americans4fairskies2015Mid-East subsidies threaten the integrity of civil air transport
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Bullying in the Airline Business?

Earlier this month, at a press conference in Los Angeles, the CEO of Qatar Airways, His Excellency Mr. Akbar Al Baker, once again said he and his airline were being “bullied” by U.S. airlines, notably American and Delta. The notion that he and his lavishly subsidized, state-owned carrier from one of the richest countries on earth could be bullied is silly; worse, misusing the term “bully” trivializes a serious issue for children and adolescents worldwide. As someone who 1) understands the airline business and 2) got beat up fairly often as a kid, he’s not being bullied.

Reducing the rhetoric from nasty and hyperbolic to calm and factual, the issue is quite clear. U.S. airlines and seven unions, backed by scores of U.S. Senators and members of Congress, asked the Obama administration last year to consult with the governments of Qatar and the United Arab Emirates to address the massive subsidies provided to their state-owned airlines. For a year now, the U.S. carriers have proven that the massive government subsidies have enabled the Gulf carriers to expand rapidly in the U.S., Europe, and across the globe.

A painstaking global investigation revealed the $42 billion in cash and unfair benefits the three Gulf carriers have received over the last decade from their government sponsors. An investigation of this magnitude was the only way to unearth the truth because the three Gulf airlines do not publish financial statements that meet Western standards for transparency and completeness. The wheelbarrows of cash violate the “Open Skies” aviation agreements that the governments of the United Arab Emirates and Qatar signed with the U.S., pacts that prohibit subsidies and mandate a level competitive playing field. This unfair competition has damaged U.S. airlines (and their European partners) and threatened good-paying U.S. jobs.

Some airline observers believe that Mr. Al Baker lashes out precisely because he’s not credible. Three examples: first, at the Paris Air Show last June, he announced that Qatar Airways earned a profit of $103 million in its previous financial year. Just a soundbite, no details. Revenues? Total expenses? Return on equity? Mr. Al Baker didn’t offer those salient details.

Second, in response to the proof that Qatar Airways had received subsidies and other unfair benefits totaling more than $17 billion since 2004 (about 40% of the total for the three Gulf airlines), he has repeatedly denied the state support without offering a shred of independently-verifiable financial data. “Trust me” seems to be his modus operandi. If he’s got contrary evidence, why not produce it?

Third, he has repeatedly tried to convince the marketplace and the media that his employees are treated fairly. However, the UN’s International Labor Office and others have shown clear patterns of abuse and inequity in a workforce comprised of 90 percent migrants, mostly from poor countries. At Qatar Airways, a flight attendant can be fired for positioning her hat incorrectly, or applying too much hair gel. More broadly, the Gulf carriers’ labor strategy is suspiciously simple: hire lots of people (mostly attractive young women) from poor countries, give them a short, fixed-term contract, treat them badly, dismiss them easily (sometimes without a ticket home), and repeat. To Mr. Al Baker and his counterparts at Emirates and Etihad, the supply of job candidates is virtually unlimited. Now that looks more like bullying, and on a global scale.

Not only does Mr. Al Baker lack credibility, but his behavior is threatening and abrasive. Three more examples. First, on a 2015 trip to the Netherlands, he saidthat European companies would win Qatari state contracts only if their governments allowed Qatar Airways to expand. To their credit, the Dutch authorities promptly said “no thanks” to further Qatar growth at Amsterdam, one of the first times a nation has stood up to Mr. Al Baker. At a time when all three Gulf mega-carriers are attempting to convince us that they are not instruments of the state, Mr. Al Baker’s quid-pro-quo threat clearly suggested otherwise.

Second, his criticism of U.S. and European airlines is extreme and mean-spirited. At a recent Los Angeles press conference, he mocked Delta, noting that his airline doesn’t “fly old, crap, second-hand airplanes.” And this from a 2012 speech on the eve of new service from Montreal: “My crew, my cabin crew, is a maximum of 35 years old. Not 65 years old, you are used to in [sic] flying American carriers.”

Third, his continuing personal attacks on Delta Air Lines CEO Richard Anderson are totally unwarranted. Among other nastiness, Mr. Al Baker said: “He’s just a bully. And he’s a liar . . . He has no dignity, he has no ethics.”

Arm-waving and rhetorical fireworks won’t resolve this issue. Instead, the Obama administration should invite officials from the UAE and Qatar to discuss the matter and put American jobs ahead of endless government subsidies. U.S. airlines seek no special favors, no “protection” from a bully – only a competitive environment on a level playing field.

Originally Published on Huffington Post.

americans4fairskies2015Bullying in the Airline Business?
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Gulf Carriers Continue to Take Traffic from American, Delta and United

By Ted Reed

Not surprisingly, when Gulf carriers enter a U.S. market, they take passengers from U.S. airlines and their joint venture partners. A new report quantified the decline in Chicago, San Francisco and Orlando.

The report was prepared for the Partnership for Open and Fair Skies, which representsAmerican (AALGet Report), Delta (DALGet Report)  , United (UALGet Report) and their unions. It said that in the months following the entry of one of the three subsidized Gulf carriers into a market, U.S. and partner traffic to select destinations in the Middle East, Africa and Asia fell 8.8% in Chicago, 13.1% in San Francisco and 13.3% in Orlando.

“The numbers don’t lie.” said partnership spokeswoman Jill Zuckman. “It is undeniable that the billions of dollars in subsidies funneled to Emirates, Etihad Airways andQatar Airways are harming American businesses and jobs and it will only get worse the longer the U.S. government waits to act.”
The problem is that subsidies enable Gulf carriers to price below cost on U.S. routes. The result is that U.S. carriers either lose traffic or reduce flying, resulting in a loss of jobs to carriers that appears to violate provisions of the Open Skies treaties that enable their flying to multiple U.S. cities, in return for which U.S. carriers can fly to Dubai and Abu Dhabi.

United flew its final flight to Dubai on Jan. 23, from Washington Dulles, with the last Dubai departure on Jan. 25; Delta will end Atlanta-Dubai service next month; American does not fly to Dubai or Abu Dhabi.

The total number of lost passengers annually is in the tens of thousands in each city, according to study results provided to TheStreet.

The statistics include flights to Mideast destinations except for Israel; to Indian subcontinent countries India, Pakistan, Bangladesh, Nepal, Maldives and Sri Lanka; and ASEAN countries Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. In every case, these destinations are reached via connecting flights.

In Chicago, the report looked at the traffic decline after Qatar began service in April 2013 and Emirates began service in August 2014; it does not consider the impact of Etihad service that began in 2009, which also had a significant impact. Generally, Chicago passengers to Africa, the Mideast and Asia would begin their journeys with a trans-Atlantic flight.

Study results indicated that in Chicago, losers include hub carriers American and United, United partner Lufthansa, and Delta.

In San Francisco, the study measured the impact of an Etihad flight that began in November 2014, but doesn’t consider the significant impact of the start of Emirates service in 2008. Passengers to the select destinations could fly either across the Pacific, most likely connecting in Tokyo, or across the Atlantic, most likely connecting in Frankfurt or London.

In San Francisco, hub carrier United and American partner British Airways have lost the most traffic, the study indicated.

In Orlando, Emirates began service in September 2015. Delta and United lost the most traffic. British Airways, which flies non-stop to London, also lost traffic, but far less than Delta and United.

Results of an earlier report, released in July 2015, indicated that in four U.S. gateway cities — Boston, Dallas, Seattle and Washington, D.C. — the combined decline in the year after Emirates began service to its Dubai hub ranged between 8% and 21%.

Originally found on TheStreet.com

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United Airlines keeps turning up heat on three Middle East carriers

United Airlines is still in a fighting mood.

As will become clear in new data expected to be released tomorrow, Chicago-based United hasn’t back off of a heated battle with no fewer than three major international carriers based in the Middle East, including Emirates, Etihad Airways and Qatar Airways, all of which fly nonstop from Chicago’s O’Hare International Airport to various destinations in the Gulf region and via connections, to just about every major market in Europe, Africa and Asia.

United Airlines is one of three United States-based airlines battling lavishly-funded Gulf region airlines that are rapidly expanding.

United, along with American Airlines (NASDAQ: AAL), Delta Air Lines (NYSE: DAL) and a number of labor unions representing pilots, flight attendants and other workers in the airline industry, recently formed the Partnership for Open & Fair Skies, to collectively fight the Gulf region airlines as they rapidly become a major force on the international travel scene and siphon off business from U.S. airlines, thereby forcing the U.S.-based carriers to cut jobs.

The three major Gulf carriers are using lavishly-outfitted premium cabins on their fleets, luxurious airport lounges and rapidly-growing global route systems to entice more travelers on to their aircraft, while U.S.-based carriers such as United are, for the most part, just trying to play catch-up as they rebound from years of huge loses caused, in part at least, by a deep and prolonged recession and sky-high fuel prices.

The Partnership’s stated goal is to pressure the Barack Obama administration to open talks with government officials in Qatar and the United Arab Emirates about the competitive threat posed by the Gulf carriers operating from the region to Chicago and other markets in the United States. The U.S. airlines claim the Gulf region carriers are not honoring Open Skies agreements, while receiving billions in subsidies from their oil-rich governments — thereby making it impossible for carriers such as United Airlines to compete internationally on a level playing field.

So far the Obama administration has not signaled it is prepared to do the Partnership’s bidding. And it remains to be seen if the Partnership can make their case convincing enough to get Obama to bite.
Meanwhile, Emirates, Etihad and Qatar Airways, understandably, are loudly refuting the arguments made by United and the rest of the U.S. airlines and labor unions that are part of the Partnership for Open & Fair Skies. The Gulf carriers’ future success is at stake as well.

Only one thing appears certain at this point — the final shots in this war have not been fired.
United Airlines is a unit of United Continental Holdings (NYSE: UAL).

Originally Published on Chicago Business Journal.

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The Gulf Airline Trade Dispute: Action in Europe, Silence in the U.S.

By Rob Britton

As we enter a new year, massive subsidies to the Gulf airlines – Emirates, Etihad Airways, and Qatar Airways – continue, while carriers around the globe are facing unfair competition. We’ve seen in recent months that a stark contrast is building: Washington remains silent and other countries across the globe are stepping up and taking action.

One prominent example is Europe. Looking back on 2015, the EU first expressed concern about the more than $42 billion in unfair subsidies in March. They followed up in December with a new aviation strategy that included a commitment to creating a level competitive playing field for EU carriers, including a specific request to negotiate new agreements with the Gulf states that would end the subsidies. Acting on their own, the Netherlands froze Gulf airline expansion at Amsterdam in May.

The most recent example of European backbone was a decision of the German Federal Aviation Office, part of the national Transport Ministry, to prohibit Etihad from code sharing with Air Berlin (of which Etihad owns 30 percent) on 31 routes. The action turned on specific technical details in the bilateral aviation agreement between the UAE and Germany, but the clear underlying concern was how state-owned Etihad is distorting competition. In late December, an administrative court upheld the decision, which Etihad is now urgently appealing. The court decision noted that the Germany-UAE aviation agreement was clear and specific about cities that UAE carriers could serve on their own or via codesharing arrangements, and chastised Etihad for trying to expand its access to more German markets “through the back door.”

In early January, just after the court decision, Etihad CEO James Hogan predictably accused Lufthansa of “protectionism,” and questioned Germany’s commitment to the security of foreign investment. Mr. Hogan described Lufthansa as “the national airline,” a connotation contradicting its privatization in 1994 (unlike Etihad, which continues to get wheelbarrows of cash, and resorts to accounting tricks to purport profit). Since the Open Skies dispute began, one of the cardinal tactics of the Gulf airlines and their backers has been to use loaded words such as “protectionism,” along with exaggerations and mischaracterizations to mask the real argument: that subsidies distort competition, just as they do in the trade of manufactured goods, agricultural produce, and other things.

Happily, in Germany and elsewhere in Europe, most observers see through the smokescreen. Handelsblatt, Germany’s highly-regarded daily business newspaper, suggested that Mr. Hogan had overreacted, calling it a “surprising attack,” and questioning his tactics, especially his criticism of the court decision – in modern Germany, courts are universally respected for their independence from both politics and company influence. The paper got it right when they said the Etihad CEO was leaning weit aus dem Fenster – far out of the window.

It’s time for Secretary Kerry, Secretary Foxx, and others in the Obama administration to join their European counterparts and take action. The “ask” of American Airlines, Delta Air Lines, and United Airlines is modest: for the U.S. to open consultations with the governments of the United Arab Emirates (UAE) and Qatar, and not to allow their airlines to add flights to the U.S. until the talks begin. We need Washington to level the playing field for American workers. Why not invite Qatar and the UAE to the table to discuss the matter? That just doesn’t seem like a hard thing to do. And in this New Year, it would be a fine resolution.

Originally published on HuffingtonPost.com

americans4fairskies2015The Gulf Airline Trade Dispute: Action in Europe, Silence in the U.S.
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Etihad’s Backdoor Access To Europe Slammed Shut As Germany Axes Air Berlin Codeshares

It is a strategy that has won James Hogan, the chief executive of Etihad Airways, plaudits from the across the airline industry.

Shackled by restrictive traffic-rights agreements, Abu Dhabi’s Etihad has in recent years gone on a shopping spree across Europe. Equity stakes in Alitalia (49%), Air Serbia (49%), Switzerland’s Darwin Airline (33%) and Germany’s Air Berlin (29%) have allowed the Gulf carrier to pursue backdoor expansion across the continent, swapping traffic with local partners and restructuring their networks to feed Abu Dhabi.

The investment model has narrowed the gap between Etihad and its two older, larger Gulf rivals – Dubai’s Emirates Airline and Qatar Airways – contributing an estimated $1.1 billion to the newcomer’s top line in 2014.

All three of these so-called Gulf super-connectors are growing their businesses off the back of intercontinental transfer traffic – poaching market share from European hubs that were long considered the default stopovers on East-to-West journeys. Relentless double-digit growth by Emirates has allowed Dubai to overtake London Heathrow Airport as the world’s busiest international hub.

But the Gulf’s gain could be Europe’s loss, and German authorities are now pulling down the shutters on one of Etihad’s most cherished investments: Air Berlin, the perennially loss-making (but operationally mature) German carrier.

In December, the Administrative Court of Braunschweig upheld a decision by Germany’s Transport Ministry to revoke 29 codeshare agreements between Etihad and Air Berlin. Those accords, which allow Etihad to book passengers onto Air Berlin-operated flights, will expire on January 15th (notwithstanding ongoing legal action by both carriers). Their loss will nearly halve the number of services that Air Berlin operates in conjunction with Etihad, significantly curbing the potential for traffic swapping at its Berlin and Dusseldorf hubs.

The bone of contention between Germany and Abu Dhabi is the ambiguously-worded bilateral air services agreement that both governments have signed.

Under the terms of the agreement, Etihad is permitted to fly from to four destinations in Germany with its own metal, while also placing its code on three other services. Two of those existing codeshare entitlements – Abu Dhabi-Berlin and Abu Dhabi-Stuttgart, both operated by Air Berlin – have now been revoked, purportedly because they are not explicitly named in the bilateral treaty. The remainder of the canceled codeshares are connecting services over Germany; lucrative intra-European flights that the partners use to synergistically grow revenues.

In December, the Administrative Court of Braunschweig upheld a decision by Germany’s Transport Ministry to revoke 29 codeshare agreements between Etihad and Air Berlin. Those accords, which allow Etihad to book passengers onto Air Berlin-operated flights, will expire on January 15th (notwithstanding ongoing legal action by both carriers). Their loss will nearly halve the number of services that Air Berlin operates in conjunction with Etihad, significantly curbing the potential for traffic swapping at its Berlin and Dusseldorf hubs.

The bone of contention between Germany and Abu Dhabi is the ambiguously-worded bilateral air services agreement that both governments have signed.

Under the terms of the agreement, Etihad is permitted to fly from to four destinations in Germany with its own metal, while also placing its code on three other services. Two of those existing codeshare entitlements – Abu Dhabi-Berlin and Abu Dhabi-Stuttgart, both operated by Air Berlin – have now been revoked, purportedly because they are not explicitly named in the bilateral treaty. The remainder of the canceled codeshares are connecting services over Germany; lucrative intra-European flights that the partners use to synergistically grow revenues.

Originally found on Forbes.Com

americans4fairskies2015Etihad’s Backdoor Access To Europe Slammed Shut As Germany Axes Air Berlin Codeshares
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EU Seeks Tough Curbs on Airline Subsidies in Aviation Agreements-Document

BRUSSELS — The European Union is seeking tough limits on public subsidies to airlines and the option of revoking their traffic rights as part of new commercial aviation agreements it wants to negotiate with several countries including Turkey and the United Arab Emirates.

A draft “fair competition clause”, seen by Reuters, which the EU executive wants to include in air transport agreements, lists the forms of public support that could be considered unfair, such as protection from bankruptcy, provision of capital, tax relief and cross-subsidisation.

The clause proposes a consultation period of 30 days in cases of disputes over unfair subsidies to an airline. Should talks fail, the complaining country would be able to suspend or revoke the airline’s air traffic rights as well as impose duties.

The European Commission is seeking a mandate from EU governments to begin talks on air transport agreements with a number of countries including China, Turkey, United Arab Emirates, Kuwait and Qatar.

Such agreements, at the moment often done on a bilateral basis between the governments of two countries, would set out where and how often foreign airlines could fly into the EU, and vice versa.

The issue has become politically charged since some European legacy carriers, notably Lufthansa and Air France KLM, as well as major U.S. airlines, have accused Gulf carriers of receiving unfair state subsidies, allegations they have rejected.

Europe’s aviation industry, which contributes 110 billion euros ($124.60 billion) to EU gross domestic product, has been hit by the rapid expansion of Gulf airlines, such as Emirates and Etihad, and shifting traffic flows to Asia.

A spokesman for the Commission said it supported the objective of ensuring fair and open competition in the aviation sector by promoting EU-level air transport agreements and considering new measures to address unfair practices outside the 28-member bloc.

“Each contracting party shall eliminate all forms of discrimination or unfair practices which would adversely affect the fair and equal opportunity of the airlines of the other contracting party to compete in providing air transport services,” the clause says.

Public subsidies or any other form of support should be made transparent by the receiving airline, including by identifying or separating it clearly in its accounts, the clause says.

The setting off of operational losses, foregoing a normal return on public funds invested or discriminatory access to airport services would also count as unfair public subsidies, the document says.

(Reporting by Julia Fioretti; editing by Susan Thomas)

Originally found on: NYT.com

americans4fairskies2015EU Seeks Tough Curbs on Airline Subsidies in Aviation Agreements-Document
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Gulf airline subsidies forcing US companies into layoffs, service cuts

The Business Travel Coalition’s (BTC) Kevin Mitchell recently wrote an op-ed on The Hill’s Congress Blog titled “Delta Air Lines’ campaign against Gulf carrier subsidies is built on house of cards” (Dec. 14) that is short on facts and long on hyperbole.

Mitchell outrageously compares Delta’s involvement in the Open Skies debate to Kevin Spacey’s underhanded character Frank Underwood in “House of Cards.” However, it is the BTC that is diverting attention from the issue with hysterical accusations. The governments of the United Arab Emirates (UAE) and Qatar have pumped more than $42 billion in subsidies and unfair benefits to the Gulf carriers, distorting the aviation market and violating Open Skies agreements. The cash infusions have allowed the Gulf carriers to expand rapidly into the U.S. market, putting American jobs and air service at risk.

Domestically, U.S. airlines are losing market share by astonishing numbers in cities that the Gulf carriers have entered. Bookings on U.S. carriers dropped an average of 10.8 percent in Boston, 7.6 percent in Dallas-Fort Worth, 21.4 percent in Seattle and 14.3 percent in Washington, D.C. Mitchell fails to understand that the subsidies affect communities across the U.S.
The harmful impact of the subsidies is evident in the service cuts coming from the last few months. Delta announced the termination of its service between Atlanta and Dubai after losing $5 million on that route during the first 10 months of 2015, citing unfair competition with the Gulf carriers. And United Airlines announced that it is discontinuing its Washington Dulles to Dubai route, pointing to the Gulf carriers’ subsidies as a key factor.

For every route lost to a Gulf carrier, more than 1,500 American aviation jobs are lost. The subsidies, essentially blank government checks, make it virtually impossible for the U.S. airlines to stay competitive. The hard-working pilots, flight attendants and hundreds of thousands of other workers who rely on a strong aviation industry should be offended by Mitchell’s disregard for this issue and the devastating impact that inaction is having.

It’s time for the U.S. government to enforce the Open Skies agreements with the UAE and Qatar and level the playing field for American businesses and workers.

From Jill Zuckman, chief spokesman, the Partnership for Open & Fair Skies, Washington, D.C.

Originally published on TheHill.com

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The Gulf Airline Trade Dispute: The Bad News Keeps on Coming

Recently, United Airlines announced that in January it will end its nonstop Washington-Dubai flights, a service it successfully flew for seven years. United’s news adds another proof point to the mass of evidence that the hugely-subsidized Gulf airlines, Emirates, Etihad Airways, and Qatar Airways, are harming the U.S. aviation industry and violating the terms of the “Open Skies” agreements. U.S. airlines can compete in the global marketplace, but not in markets distorted by billions of dollars in unfair subsidies and benefits that the Gulf trio have received from their government sponsors. This news should inspire the Obama administration to address the rigged playing field and open up talks with the United Arab Emirates (UAE) and Qatar.

Unfortunately, there’s much more to the United story. One of the key reasons for United’s withdrawal was their loss of a sizable contract to fly U.S. government employees and contractors to Dubai – more than 15,000 per year, including active duty military personnel. The winner? JetBlue, which operates no international long-haul service whatsoever, much less 7,000 miles across the Atlantic. They have no long-range aircraft. JetBlue has a “codesharing” partnership with Emirates, meaning that JetBlue sells Emirates-operated flights with the “B6” JetBlue code. This partnership allowed JetBlue to bid for the U.S. government’s business to Dubai, even though Emirates will do all of the Washington-Dubai flying and thus get virtually all the revenue. Although United also uses codeshare relationships for some of its government contract flying, it is a global carrier with an extensive international network and is capable of operating any of those routes on its own, that is, without codesharing. That is not the case with JetBlue, which must rely 100 percent on Emirates to meet its obligations to the U.S. government.

And it gets worse: the contract, awarded by the General Services Administration (GSA), the U.S. government’s procurement arm, is subject to a law called the Fly America Act, which expressly prevents the U.S. government from buying airline services directly from a non-U.S. carrier. So JetBlue will really just be the bag man, collecting the payments and remitting them to Dubai. Thus, GSA appears to have disregarded historical precedent that forbids such codeshare arrangements under the Fly America Act.

United’s Dubai cancellation comes just six weeks after Delta announced it was withdrawing from the Atlanta-Dubai market in February 2016. In its announcement, Delta also blamed the market distortion of the subsidized Emirates and the two other Gulf carriers, which are clearly “dumping” seat capacity in the U.S. market.

While the Gulf carriers continue to grow and threaten domestic carriers around the world with unfair competition, foreign governments are stepping up to ensure their domestic carriers are not left behind. Just two days before the United announcement, the European Commission, the executive arm of the EU, released a new aviation strategy that included a commitment to creating a level competitive playing field for EU carriers. The strategy paper recommends important mechanisms to address airline subsidies and unfair practices that have a “significant negative impact on the competitiveness of the EU aviation industry.” European Transport Commissioner Violeta Bulc specifically asked EU governments for authority to negotiate aviation agreements with the six countries of the Gulf Cooperation Council, with a goal of eliminating market-distorting aid to Emirates, Etihad, and Qatar Airways.

It’s time for action. And despite the arm-waving and mischaracterization by the Gulf carriers, the U.S. airlines’ “ask” has always been modest: the U.S. should open consultations with the UAE and Qatar to level the playing field for American workers, U.S. companies, and our aviation industry as a whole.

Originally published on HuffingtonPost.com

americans4fairskies2015The Gulf Airline Trade Dispute: The Bad News Keeps on Coming
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Did The Administration Tip Its Hand On Open Skies?

Did the Obama administration just tip its hand as to where it is leaning in the Open Skies Agreement debate between the big three U.S. airlines and Middle East Gulf carriers?
It sure seems that way.

As both sides continue to await a decision on whether to open consultation between the U.S. and the governments of Qatar and the United Arab Emirates, the administration this week awarded a government travel contract between Washington and Dubai to JetBlue and its codeshare partner, Emirates.

Emirates and fellow Gulf airlines Etihad and Qatar have been accused by American, Delta and United airlines of accepting $42 billion in subsidies from their respective governments from 2004-2014 to help grow their airlines. The U.S. big three carriers say that has distorted the international marketplace and they want the Obama administration to open consultation on the Open Skies Agreement, the deal that allows airlines to enjoy landing rights in other countries without government interference.

Combined, the three Gulf carriers have more than 200 flights to more than a dozen U.S. cities, even though their U.S. counterparts have alleged that the majority of the routes are unprofitable.
The debate has been going on since January, when American, Delta and United presented the administration with a 55-page report detailing the alleged subsidies. The respective Gulf airlines have denied the charges, saying their governments have merely taken an ownership stake in the airlines and all investments must be paid back as if it were a loan.

Both sides were hoping to have a decision before the calendar year, but now it seems as if a decision will not be made until early next year. But as far as United is concerned, the awarding of the government travel contract to JetBlue/Emirates might as well be an early indicator of which way the administration is leaning – a day after the contract was awarded, United canceled its flight from Washington to Dubai.

United’s last flight on that route will be on Jan. 25.

“It is unfortunate that the [General Services Administration] awarded this route to an airline that has no service to the Middle East and will rely entirely on a subsidized foreign carrier to transport U.S. government employees, military personnel and contractors,” Steve Morrissey, the airline’s regulatory and policy vice president, said in a statement. “We believe this decision violates the intent of the Fly America Act, which expressly limits the U.S. government from procuring commercial airline services directly from a non-U.S. carrier. For the Washington to Dubai route, JetBlue merely serves as a booking agent for Emirates.”

Originally published on TravelPulse.com

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Open Skies, Maybe, but Hardly Level Skies

You’ve published letters, including one from Emirates Airline on Dec. 4, in response to an op-ed by American Airlines’ CEO Doug Parker and Captain Keith Wilson “Rigging the Game on Open Skies” (Nov. 11). These letters disregard the fact that the massive subsidies the governments of the United Arab Emirates (U.A.E.) and Qatar provide to their state-owned carriers violate the open-skies agreements between our nations. The U.S. has 117 open-skies agreements with countries around the world, and 115 of them are working. We’re asking the Obama administration to enforce the open-skies agreements with Qatar and the U.A.E. just as they would with any other trade agreement and level the playing field so American businesses and workers can compete.

There is a lack of understanding of the significant harm that subsidies exact on the U.S. aviation industry. The airlines we fly for are being forced off international routes by the Gulf carriers, and this will continue if the Obama administration fails to act. When a U.S. airline cuts international frequency, economists estimate that the result is a loss of more than 800 jobs and cuts to domestic service that communities rely on.

We can compete with airlines from across the world when everyone is playing by the same rules, but it isn’t fair competition when we are forced to go up against the treasuries of wealthy nations. The Obama administration must act swiftly to address the Gulf carrier subsidization because the jobs of hundreds of thousands of hardworking pilots, flight attendants, ground crew and many others are at stake.

Capt. Tim Canoll
President
Air Line Pilots Association, Intl.
Washington

Originally published on WSJ.com

americans4fairskies2015Open Skies, Maybe, but Hardly Level Skies
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United Airlines to stop flying to Dubai

United Airlines on Wednesday said it will cancel flight service between Washington and Dubai starting in late January, meaning no U.S. passenger carrier will fly direct to the Gulf states.

The move comes after the U.S. government awarded a government contract for travel on the route in 2016 to rival JetBlue Airways Corp (JBLU.O) and its codeshare partner Emirates, which will operate the Washington-Dubai flights, parent United Continental Holdings Inc (UAL.N) said in an Internet posting.

Dubai-based Emirates will carry an estimated 15,000 U.S. government employees, United said, adding, “We formally protested this decision but were ultimately unsuccessful.”

United, along with Delta Air Lines Inc (DAL.N) and American Airlines Group Inc (AAL.O), have accused Emirates and two other Middle Eastern carriers of receiving subsidies from their governments that let them buy more aircraft and drive down ticket prices. The Gulf airlines have denied the allegations.

Delta has planned to end all flights between Atlanta and Dubai starting in February 2016. It cited what it claims is “overcapacity” on routes to the region following the expansion of Emirates, Etihad Airways and Qatar Airways, which now serve a dozen U.S. cities with around 200 flights per week.

The Obama administration is considering whether to start talks with the United Arab Emirates and Qatar to address the subsidy allegations, per the U.S. airlines’ requests.

United said its customers will still be able to book travel to the region via its partners Deutsche Lufthansa AG (LHAG.DE) and Air Canada (AC.TO).

Originally published on Reuters.com

americans4fairskies2015United Airlines to stop flying to Dubai
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Delta Air Lines Plans Halt to Atlanta-Dubai Service

Delta Air Lines says it will cancel its Atlanta-Dubai flight due to the difficulty of competing with the subsidized Gulf carriers.

The flight, operated with a Boeing 777, will end Feb. 11, 2016. After that, Delta’s only non-stop flight to the Middle East will be a New York Kennedy-Tel Aviv flight, and the only U.S. carrier flight to Dubai will be United’s Washington Dulles-Dubai flight.

“The cancellation of nonstop service between Atlanta and Dubai comes amid overcapacity on U.S. routes to the Middle East operated by government-owned and subsidized airlines,” Delta said, in a statement posted on its website.

“As a result, Delta has been forced to redeploy the 777 aircraft on this route to a market that’s not distorted by government subsidization of state-owned airlines,” the carrier said.

Between 2008 and 2014, about 11,000 daily seats were added between the U.S. and Dubai, Doha and Abu Dhabi. More than 95% of the capacity on the routes is provided by Gulf carriers Emirates, Qatar and Etihad airlines, which uses the three hubs to connect passengers from throughout the world.

Delta has led an effort, later joined by American and United, to ask the U.S. government to open consultations with Qatar and the United Arab Emirates to address the issue of $42 billion in government subsidies provided to the Gulf carriers.

The U.S. carriers say the subsidies violate the terms of the Open Skies agreements that enable the flights between the U.S. and the Gulf destinations.

Originally Published on Forbes: http://www.forbes.com/sites/tedreed/2015/10/28/delta-air-lines-plans-halt-to-atlanta-dubai-service/

americans4fairskies2015Delta Air Lines Plans Halt to Atlanta-Dubai Service
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Emirates Airline’s One Percenters

By: Rob Britton

The new, $20 million Emirates Airline TV commercial featuring Jennifer Aniston is generating a lot of buzz. If you haven’t seen it, the spot opens with Ms. Aniston dreaming about being aboard a U.S. airline. She’s in her bathrobe, asking three flight attendants about the location of the shower and the bar. They laugh, telling her those things aren’t on board. Then she wakes from the dream, and she’s on an Emirates A380, where, while sipping a martini, she describes her “nightmare” to the bartender. Cute, huh?

If you’re Emirates, based in Dubai, Etihad from Abu Dhabi, or Qatar Airways from that country, you can install showers, butlers and bars on your A380s because your government owners deliver wheelbarrows of subsidy cash. A marketing manager for one of the Gulf airlines, who spent many years at a real carrier (e.g., one owned by private investors who expect financial diligence and profit) recently told our mutual friend that inside the executive offices of the Gulf carrier the omnipresent attitude is that “cost doesn’t matter on anything.” Real carriers like American Airlines, Delta Air Lines, United Airlines, or their European partners, and most other global companies must spend prudently. They don’t have unlimited access to state treasuries.

All that subsidy money, over $42 billion for the three Gulf carriers just in the last decade, creates a tilted competitive playing field – and violates the provisions of the two “Open Skies” agreements between the United States and both the United Arab Emirates and Qatar. The UAE and Qatar gained open access to the U.S. aviation market in exchange for promising to ensure fair competition. They have been violating their promises for years and harming American jobs.

A little travel tip: if you’re flying Emirates from, say, New York to Dubai, don’t expect to use the shower if you’re flying Economy or even in Business Class. Only 2.9 percent of the passengers on a three-class Emirates A380 have access to the shower – Ms. Aniston and the 13 others in First Class. The remaining 475 people, 97.1 percent, will need to bathe after landing – or make do with their moist towlettes. And the showers are only on their 65 behemoth A380s: if you do the numbers for the entire Emirates fleet, only about 1 percent of seats have shower access – no inflight bathing on their 777s nor A330s. The one percenters are privileged.

A few more observations about the ad from a longtime airline marketing professional. First, Emirates has announced they are spending $20 million to secure airtime for the ad – but anything is possible when you have bags of government cash funding your company. Second, Emirates will likely have difficulty airing the commercial in the UK and other markets where advertising regulatory bodies more rigorously scrutinize ad messages – a casual viewer could well conclude that showers come standard, rather than just for the very privileged. In any case, Emirates and Ms. Aniston certainly do raise expectations.

Third, the handsome male flight attendant-slash-bartender to which Ms. Aniston confides her dream has blonde hair and an English accent. Although Emirates does hire some cabin crew from Europe, North America, and Australia/New Zealand, the vast majority are young women from poor countries – as are most of their staff on the ground (it’s hard to find locals willing to load and unload bags when it’s 140° F on the ramp in Dubai.) Staffing with expendable, low-paid workers is an integral part of the Gulf airlines’ high quality/low cost business model. Unlike workers in the West, their employees cannot join a trade union or even enjoy basic worker due process. You mess up, you get sent home – and there are literally millions waiting to take your place (this reality allows Emirates and others to cynically crow about the tens of thousands of applications they receive every year.) And if you need a paycheck so you can send part of it home so your little brother in Manila can pay school tuition, or for mom and dad in Mumbai to buy food and have a mobile phone, you’ll endure whatever is necessary.

So that prompts the question: given the Gulf airlines’ massive subsidies that create an unfair competitive advantage and violate legal agreements, and considering their ugly labor strategy, do they really provide quality service? Do you feel good about that sort of luxury?

And here’s a question for the U.S. government: Don’t U.S. airlines and their workers have the same right as other industries to expect the government to enforce its agreements and defend American jobs?

Originally Published on The Huffington Post: http://www.huffingtonpost.com/rob-britton/emirates-airlines-one-per_b_8330624.html?utm_hp_ref=business&ir=Business

americans4fairskies2015Emirates Airline’s One Percenters
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Accounting Shenanigans at the UAE’s Etihad Airways

By: Rob Britton

One is never comforted when the words “accounting”, “gimmicks” and “shenanigans” all appear together, especially when one is discussing our nation’s major international trade partners. But it’s become glaringly clear that these descriptors ring true when it comes to the three airlines owned by the United Arab Emirates and Qatar. For the latest example, witness the recent discovery of Etihad Airways’ 2014 financial statements (in Hong Kong, not this country), which were found by investigators, but were never disclosed to U.S. regulators.

This lack of transparency is simply one more benefit of being cozy with the state — and reliant on its treasury. And it gives yet another point of credence to what U.S. airlines have said for months now: absent wheelbarrows of government cash in subsidies, Etihad and Qatar Airways would be unlikely to exist and Emirates’ growth would be substantially reduced.

These subsidies violate core U.S. Open Skies aviation agreements with the UAE and Qatar, and the Obama administration must act to address this serious distortion of trade.

As someone who has spent almost his entire working life in the airline industry, five things jumped out when reviewing these newly-revealed statements, and the broader legal filing submitted by the Partnership for Open and Fair Skies — the coalition of American Airlines, Delta Airlines, and United Airlines, and interested aviation trade unions.

First, the massive size of the 2014 subsidy — it must have required a big wheelbarrow to deliver $2.6 billion in cash from the state treasury to Etihad last year, more than twice as large as the prior single-year high for subsidies from Abu Dhabi to Etihad of $1.25 billion in 2010. And the Etihad filing in Hong Kong indicates that total government funding last year was as much as $5 billion.

Second, although in late May Etihad trumpeted that its enterprise generated a 2014 profit of approximately $73 million (“its strongest financial results to date,” they said, but without transparent financial statements), the truth is that their accountants, KPMG, issued a “going concern” opinion. In accounting parlance, this means that auditors are concerned about the ability of the firm to remain in business for the foreseeable future (generally 12 months).

In Etihad’s case, the going concern statement was explicitly tied to the “expected continued financial support from the shareholder of the Company,” which in this case is the Abu Dhabi government. In short, according to KPMG, Etihad would not be commercially viable without the huge subsidies from its sovereign owner.

Third, in 2014, Etihad continued to employ tricks and gimmicks to create the illusion of financial viability. Last year’s whopper was recording a $700 million gain from the sale of the Etihad Global Cargo Management Company LLC to… itself! Just this transaction made the difference between its “profit” and a loss of hundreds of millions of dollars. Self-dealing appears to be common in the UAE: in 2013, Etihad recorded a big gain by selling its frequent-flyer program to itself, and Emirates routinely does a wide range of all-in-the-family, related-party transactions.

Fourth, as a longtime airline marketing professional, I took special interest in the astronomical revenue, $884 million, that Etihad reported last year in other operating revenues for “advertisement, marketing and promotion of supplier products,” for example, Shell paying Etihad cash to run a Shell TV commercial on Etihad’s inflight entertainment system, or Boeing running this advertisement in Etihad’s inflight magazine, Aspire:

These numbers must be incredibly exaggerated. I would estimate that the total revenue that Etihad could derive from advertising in all of their in-flight media, airport properties, and all the rest would not be more than about $100 million. And yet the 2014 total was more than twice what was reported in 2013 ($282 million). No other airlines, certainly none in the U.S., report anywhere near those amounts, either absolute sums or as a percentage of total revenues. In their report, Etihad’s auditors specifically called out the “significant judgments applied by the company” for those revenues. To me, that’s a sanitized version of “I guess it’s okay in your country but it wouldn’t pass muster elsewhere.”

Fifth and finally, the fact that forensic accountants dug up the filing in a third country, Hong Kong, highlights what was already obvious: Etihad has made no serious effort to address the U.S. airlines’ and various labor groups’ demonstration of their receipt of massive subsidies in violation of the U.S.-UAE Open Skies agreement. Indeed, Etihad’s most recent comments in the United States on the issue of their subsidies does not include any evidence in support of what it says — not a single document.

U.S. airlines have learned to compete in a global marketplace. They ask no special favors; only that our government provide equal opportunity to compete, and act to control airlines that could not exist without enormous and ongoing state capitalism.

Originally published on HuffingtonPost.com: http://www.huffingtonpost.com/rob-britton/accounting-shenanigans-at_b_8056512.html

americans4fairskies2015Accounting Shenanigans at the UAE’s Etihad Airways
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Etihad Got $2.5 Billion Capital Injection From Abu Dhabi

By: Rory Jones

The Abu Dhabi government last year injected $2.5 billion into Etihad Airways, new funding that critics say proves the Persian Gulf carrier is unfairly subsidized by the state in violation of air treaties with the U.S. government.

The previously undisclosed cash injection is detailed in state-owned Etihad’s financial statements, which were made public on Monday by the Partnership for Open & Fair Skies, a lobby group led by the three biggest U.S. airlines.

The group, which includes several labor unions and U.S. carriers American Airlines Group Inc., United Continental Holdings Inc.and Delta Air Lines Inc., is pushing the U.S. government to limit the rapid growth of Etihad and its regional peers, Dubai’s Emirates Airline and Doha-based Qatar Airways.

Etihad reported a net profit of $73 million last year on revenue of $5.86 billion, according to the airline’s financial statements, which are audited by KPMG LLP. Earnings were boosted by a one-off sale of a subsidiary to another part of the group for $700 million.

“Etihad’s own financials prove that it is not a commercially viable enterprise and owes its continued existence to massive government subsidies from the United Arab Emirates,” said Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies.

A representative for Etihad said the airline had never hid receiving equity capital and loans from the Abu Dhabi government.

“That is completely normal for any business which has significant long-term capital commitments, for example for aircraft deposits,” the Etihad representative said. “These issues have all been addressed in our submission to the U.S. government.”

The group submitted Etihad’s financial statements as part of its latest legal submission to the U.S. government as part of its effort to prove the Gulf carriers harm U.S. airlines’ operations.

Etihad’s documents were filed by the airline to a corporate registry in Hong Kong last month and were reviewed by The Wall Street Journal.

The big three U.S. passenger carriers in January asked the U.S. government to renegotiate air treaties with Qatar and the United Arab Emirates, where Emirates and Etihad are based. They allege the three state-owned Gulf airlines have received more than $40 billion in government subsidies since 2004 that allow the carriers to unfairly compete in the aviation market.

The U.S. Transportation, State and Commerce departments said they would review the allegations and opened regulatory dockets where any party could file information and lobby for either side.

Emirates, Etihad and Qatar have dismissed the U.S. carriers’ claims, denied they are unfairly subsidized and filed rebuttals on the U.S. dockets.

FedEx Corp.’s FedEx Express delivery unit, Atlas Air Worldwide Holdings Inc., JetBlue Airways Corp. and Hawaiian Holdings Inc.’s Hawaiian Airlines have also said they oppose the big three U.S. carriers’ submissions to the U.S. government.

The Abu Dhabi government’s latest capital injection came as Etihad invested hundreds of millions of dollars in other carriers around the world, according to the airline’s financial statements.

It wasn’t immediately clear how the latest government funds were used, and Etihad declined to comment.

Etihad has minority equity stakes in eight airlines, and supports the carriers through investment in their loyalty programs, bonds and operations. It paid $543 million for a 49% stake in Italy’s Alitalia and bought perpetual bonds valued at $399 million issued by Germany’s Air Berlin PLC. It also spent $150 million on a 50% interest in Jet Airways (India) Ltd.’s loyalty program.

The strategy has helped the airline, the smallest of the three Persian Gulf carriers, to achieve scale globally in markets where aviation rights are restricted or the carrier has faced fierce competition, particularly from its regional peers seeking to funnel traffic through their hubs.

The U.S. government has negotiated 117 “open skies” treaties with countries since 1992, allowing airlines from both sides to access any airport in both countries.

Originally Published on The Wall Street Journal: http://www.wsj.com/articles/etihad-got-2-5-billion-capital-injection-from-abu-dhabi-1440453600

americans4fairskies2015Etihad Got $2.5 Billion Capital Injection From Abu Dhabi
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Gulf Airlines Eat Into Traffic on American, Delta, United

By: Ted Reed

NEW YORK (TheStreet) — Newly available statistics show that U.S. flights by Mideast carriers have a significant impact on the number of passengers carried by American (AAL – Get Report) , Delta (DAL – Get Report), United (UAL – Get Report), as well as their joint venture partners, to the Mideast, Africa, Indian and southeast Asia — all destinations where international airline passengers generally rely on connecting flights.

In four U.S. gateway cities — Boston, Dallas, Seattle and Washington, D.C. — the combined decline in the year after Emirates began service to its Dubai hub ranged between 8% and 21%, according to the statistics, which were filed Monday with the U.S. departments of Commerce, State and Transportation by the Partnership for Fair and Open Skies, which represents the three global U.S. carriers and their unions as they seek to mitigate the impact of the subsidized Gulf carriers’ rapidly expanding U.S. service.

In Boston, Seattle, and Washington, U.S. carriers lost between 23% and 25% of their defined international traffic since the initiation of service by Emirates. In Dallas, the combined impact on U.S. carriers was minimal, but joint venture partners — led by British Airways — suffered a 14% loss in passengers to the defined destinations.

The statistics include flights to Mideast destinations except for Israel, to Indian subcontinent countries India, Pakistan, Bangladesh, Nepal, Maldives and Sri Lanka and ASEAN countries Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

The statistics respond to a previous filing by Emirates, which suggested that its service to the U.S. stimulates traffic and does not harm the U.S. carriers and their partners.

“A closer look at the data shows that, despite their allegations, the legacy carriers and their joint venture partners suffer no loss at all,” Emirates argued. “Far from harming the legacy carriers, in a large number of cases Emirates helped stimulate these emerging markets.”

Jill Zuckman, spokeswoman for the partnership, responded in an interview: “Not only have the Gulf carriers failed to meaningfully stimulate new traffic, but the data clearly show losses — that entry by a Gulf carrier into a U.S. gateway city is followed by an actual decline in U.S. carrier bookings.

“The subsidized Gulf carriers are distorting the global marketplace, harming the U.S. airline industry and threatening American jobs and airline service to communities across the U.S,” Zuckman added.

The four U.S. gateway cities were selected for the study because they were cited in the Emirates filing. In three cases, Emirates was the first Gulf carrier to provide service. At Washington Dulles, Qatar Airways was first.

The exact number of passengers lost to U.S. carriers and their joint venture partners is not specifically quantified in the filing. However, the total number could be as high as a few hundred thousand passengers annually, a partnership spokeswoman said.

In the airline industry, obviously, lost passengers result in lost jobs. The partnership estimates the impact of a lost international flight at about 800 jobs, including 267 airline jobs for each widebody aircraft and 62 jobs at connecting flights. The remaining job losses involve non-airline employees.

The partnership’s filing looks particularly closely at Seattle, where Delta is building an international hub. In the year following Emirates’ first Seattle flight in March 2012, U.S. airlines lost 12% of their passengers to select African, Asian and Mideast destinations, while joint venture partners lost 29%. The combined loss was 21%. At the time, Delta served Beijing, Paris, Osaka and Tokyo Narita from Seattle; it now serves nine international cities.

The impact is likely mounting. Since 2012, Etihad Airways and Qatar have added daily flights to their hubs in Abu Dhabi and Doha, respectively, while Emirates added a second daily flight to Dubai in July.

During Delta’s second-quarter earnings call in July, CEO Richard Anderson said the carrier connects more than 700 passengers per day (each way) between domestic and international flights.

“On the surface, that appears to be a healthy level of flow traffic,” Deutsche Bank analyst Mike Linenberg wrote afterward. However, Linenberg said, the number does not appear to have increased much since 2012, when Delta began its Seattle buildup.

The limited number of connecting passengers underscores “the inroads being made by Middle Eastern carriers,” he wrote, noting that Emirates now offers 626 daily seats between Seattle and Dubai and “will capture a portion of the connecting traffic flows currently being carried by the incumbent airlines {meaning that} Delta (and others) may find it harder to achieve their PRASM targets.” Passenger revenue per available seat mile is a key industry metric.

Breaking out the top 10 destinations from Seattle where U.S. carriers and their partners have lost bookings, the filing lists Hyderabad, with a 63% loss; Madras, 43%; Dubai, 38%; Bangalore, 36%; Mumbai, 26%; Johannesburg, 22%; Tehran 19%; Delhi, 19%; Nairobi, 15%; and Istanbul, 3%.

In Washington, after Emirates began service in September 2012, U.S. carriers led by hub carrier United lost 25% of bookings to the select destinations; partners led by Lufthansa lost 4% and the combined loss was 14%. Today, Emirates, Qatar and Etihad all fly daily to Washington Dulles. Qatar began Washington service in 2007. The statistics include Baltimore flights.

In Boston, American and Delta lost a combined 23% of bookings to the affected destinations, joint venture partners lost 7% and the combined loss was 11%. Today, Emirates and Qatar fly daily to Boston.

In Dallas, U.S. carriers, primarily hub carrier American, lost 0.2%, joint venture partners lost 14% and the combined loss

Originally Published on The Street: http://www.thestreet.com/story/13262979/1/gulf-airlines-eat-into-traffic-on-american-delta-united.html

americans4fairskies2015Gulf Airlines Eat Into Traffic on American, Delta, United
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Urgent Action: Gulf Carrier Subsidies Need to Be Addressed Now

By: Rob Britton

Earlier this week, the U.S. government closed the public docket on the dispute over the abuse of two Open Skies agreements; the procedure invited Americans to submit comments about the massive subsidies to three Gulf carriers, state-owned Qatar Airways, Etihad Airways, and Emirates. Initial results suggest that about two-thirds of the comments – from members of Congress, local mayors and local business leaders, U.S. airline employees, and individuals from across the country – urged the U.S. government to act now to protect American airline jobs. And a new research report highlights the urgent need for the action that so many have called for.

The airline industry, like others, has an ecosystem of experts, and at the top of that food chain is MIT Professor William Swelbar. Bill has an unmatched combination of deep professional experience within airlines (he paid for college as a flight attendant) and data-driven academic rigor. When he writes about aviation, people who truly know the business pay attention. Recently, he released a paper detailing how massive subsidies provided to Emirates, Etihad, and Qatar Airways, are harming airline service to and from small and medium-sized communities. The paper is entitled “Violations of ‘Fair and Equal’ Open Skies Agreements Threaten Large and Small American Communities and their Access to the Global Air Transportation Network,” and his compelling analysis highlights how important it is for our government to act now.

Prof. Swelbar opens with two foundational arguments. First, every one of the U.S. government’s 117 Open Skies agreements, including those with the United Arab Emirates and Qatar, has a provision mandating “fair and equal opportunity to compete,” which means if an airline wants unrestricted access to the huge U.S. market, it cannot be subsidized as their three clearly are – proven subsidies and other unfair benefits totaling $42 billion in the last 10 years alone. Second, established economic theory tells us what we would expect to see in unbalanced, subsidized markets, and the U.S.-Gulf (and beyond) market exhibits four telltale signs:

  1. Huge capacity increases, greater than growth in demand
  2. Decreases in local and connecting passengers on U.S. airlines and their European alliance partners (for example, United and Lufthansa)
  3. Traffic shifting from these services to subsidized Gulf carriers
  4. As a result of the above, drops in U.S. and alliance capacity in much of the world beyond the Atlantic

Swelbar succinctly explains network economics, in this case the flow of passengers from the U.S. to Dubai, Abu Dhabi, and Doha, the vast majority of whom connect to flights bound for points beyond. For example, only 6% of Qatar’s U.S. traffic is bound for its home, Doha, while 67% is headed to 11 cities in India. The paper then thoroughly dismantles the falsehood the Gulf carriers and their allies repeatedly advance, that these three airlines are serving destinations U.S. airlines don’t want to serve. For instance, Emirates claims that they “carry travelers from the U.S to 56 destinations . . . which are not served by any American carrier.” But the facts are otherwise: of the 178 cities the three Gulf carriers together serve, 175 of them (98%) are served by one or more of the three airline alliances to which American, Delta, and United belong. Indeed, United’s Star Alliance alone covers 172 of the 178. So much for “don’t want to serve”!

Professor Swelbar quickly bats down another oft-touted Gulf carrier argument, that they’re growing the market. He writes, “The math is clear. Subsidized Gulf carrier service threatens the viability of nonstop flights with greater economic impact than the Gulf carriers themselves could ever hope to provide.”

Continuing the discussion of network, Swelbar then explains, with customary clarity and brevity, the threat to small and medium U.S. cities: “Domestic flights to smaller airports rely on international traffic to justify their profitability and their existence.” And, parsing the traffic data, he has uncovered a new danger: it turns out that when Gulf carriers enter a new U.S. market, their subsidized low prices incent customers in nearby cities to drive to these new nonstop services, rather than begin their journey at their home airport. Since 2012, U.S. airlines have added capacity at Austin, Texas, and Richmond, Virginia, but traffic from these points to the Middle East and South Asia have declined 20% and 33% respectively, as travelers have opted to drive the 214 miles to DFW Airport, Texas, or 121 miles to Washington Dulles.

Swelbar next turns to a danger he describes as “perhaps even more worrisome,” one often overlooked in the Gulf-carrier debate: the Open Skies agreements permit Emirates, Etihad, and Qatar to carry passengers, without limits, on “Fifth Freedom” services, flights to or from a city not in the U.S. nor their home countries, as long as the flight begins or ends in either of the two countries. For example, for almost two years Emirates has flown New York-Milan (the flight goes on to Dubai). Fifth Freedom flights are an anachronism, dinosaurs with wings that date to a time when airplane range was limited, fuel stops were needed, and airlines could not economically operate without the right to carry “local” customers between countries. But since Emirates flies three times daily from New York to Dubai, it’s pretty clear they don’t need to land in Italy for gas. Their one daily Milan flight is likely just the start; they have the right to fly L.A.-London, Chicago-Paris, and so on, threatening the viability of U.S. service on these routes – and they could do this across the Pacific, too, say, San Francisco-Tokyo-(Abu Dhabi).* Of course, as above, these flights would also endanger service to and from smaller and mid-size communities, because those long nonstops depend on connecting passengers from places like Omaha, Birmingham, and Syracuse. It is an integrated grid – we’re all in this together.

Lastly, Professor Swelbar reminds us throughout the study that things will only get worse, given the expansion plans – and aircraft orders – of all three. The capacity dumping by Emirates, Etihad, and Qatar has rapidly accelerated in the past 18 months. In a single day, Qatar announced new service to three more cities, Boston, Atlanta, and Los Angeles. Although we lump them together, each airline is racing against the other two, and each has wheelbarrows of state-provided cash to advance their economic development goals.

Our government needs to heed this threat to the U.S. airline grid, to domestic economic objectives, and to good-paying U.S. jobs. As someone who worked in the U.S. airline business for 25 years, I know firsthand that American, Delta, and United can compete, but not on a playing field rigged by limitless resources. The American people have weighed in and the docket is closed – the U.S. government must act before the consequences become irreversibly dire.

* The exercise of Fifth Freedom rights also requires the consent of the third country, for example, Japan in the case of San Francisco-Abu Dhabi flights.

Originally published on The Huffington Post: http://www.huffingtonpost.com/rob-britton/urgent-action-gulf-carrie_b_7935388.html?utm_hp_ref=business&ir=Business?view=print&comm_ref=false

 

americans4fairskies2015Urgent Action: Gulf Carrier Subsidies Need to Be Addressed Now
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We Need Honesty in the Gulf Airline Subsidy Debate

By Rob Britton

I’ve worked in and around the airline business for 31 years. I have witnessed firsthand how fair competition drives down prices and makes airlines nimble and more efficient. On a personal level, I’m proud to have helped foster the democratization of air transportation which was once available only to the rich, and to have played a small part in the industry’s difficult but necessary restructuring. Thus, I am offended by recent remarks made by Danny Sebright, President of the U.S.-UAE Business Council, and Roger Dow, President of the U.S. Travel Association (USTA).

During the past several months, both men have repeatedly made inflammatory and knowingly false statements to justify the huge subsidies that the three Gulf mega-airlines – Emirates, Etihad, and Qatar Airways – receive from their governments that grossly distort international competition. These three airlines all enjoy significant access to the U.S. market through “Open Skies” aviation agreements between the U.S. and both the United Arab Emirates (UAE) and Qatar, which permit Emirates, Etihad, and Qatar the ability to fly to and from any U.S. city, with no limits on flights or prices. Under U.S. government policy, however, countries that agree to the Open Skies arrangement must not distort the marketplace by subsidizing their airlines. However, the UAE and Qatar have provided more than $42 billion in subsidies and other unfair benefits in the past decade alone that tilt the competitive playing field and contradict Open Skies policy.

Mr. Sebright said in May that U.S. airlines were “making a mountain out of a molehill,” in raising the subsidy issue with the U.S. Government. $42 billion in subsidies and other unfair benefits is hardly a molehill. But more problematic was his suggestion that if U.S. airlines spent money “on improving the service, making their seats better, making their flight attendants more polite, nice and friendly, we believe they could compete head-to-head with UAE airlines.” In fact, after emerging from an extremely challenging decade-plus of losses, U.S. airlines are now investing enormous sums in service improvements, including better seats. But the “polite, nice and friendly” is simply offensive. Every one of my friends and colleagues who are flight attendants for American, Delta, and United are all those things and more. Their employers treat them fairly and humanely, and unlike their counterparts in the UAE and Qatar they enjoy the legal right to organize themselves into a union.

The Gulf carriers’ labor strategy is straightforward and cynical: hire young, attractive women from poor countries, give them a short, fixed-term contract, treat them badly, dismiss them easily, and then hire more.

In the case of Qatar Airways, this pattern has led to what the International Transport Workers’ Federation found to be “flagrant abuses of aviation workers’ labour rights.” Qatar’s policies are especially egregious. Until recently, their contracts with cabin crewmembers allowed the airline to fire women who became pregnant (and crewmembers who hid their pregnancy were also liable to be terminated), and required company permission to marry. Female employees cannot be dropped off or picked up from company property by anyone other than their father, brother, or spouse. What if the man is back in the Philippines or India? They can be fired if they a) get tattoos, even if they are not visible beneath a uniform; b) use too much hair gel or position their hats incorrectly; or c) post something to Facebook that Qatar Airways finds objectionable.

The USTA View

It’s not surprising that USTA President Roger Dow echoes the same misinformation as the Gulf carriers on the issue of subsidies: his member hotels are expanding massive in the Gulf and are increasingly dependent (like the Gulf carriers) on the largesse of the state treasuries of the UAE and Qatar. But Mr. Dow is wrong on at least four points. Worse, his errors appear to be willful, but he and Mr. Sebright believe that repeating the falsehoods will make them true.

First, Mr. Dow claims that the Gulf carriers are stimulating traffic, when the data shows that they are actually stimulating virtually no traffic and instead using subsidies to divert traffic from others. Second, he claims U.S. airlines are against Open Skies. But American, Delta, and United have said unequivocally and repeatedly that they support Open Skies and have acknowledged that they have benefited from Open Skies. What the U.S. airlines don’t support are massive subsidies that distort the marketplace and undermine fair competition, in violation of the Open Skies policy I supported and worked towards in my many years at American Airlines. The U.S. airlines are the ones defending Open Skies while Mr. Dow, Mr. Sebright and others assail it trying to justify the Gulf carriers’ subsidies. Third, USTA suggests that the U.S. airlines’ arguments are undermined because they went through Chapter 11 restructuring. But the U.S. bankruptcy process is not a subsidy; among other reasons, there is no financial contribution by the U.S. government through the provision of taxpayers’ money, or otherwise.

Finally, Mr. Dow claims that Gulf carriers are promoting growth in small- and medium-sized cities like Portland, Oregon, Lubbock, Texas, and Dayton, Ohio. But Emirates, Etihad, and Qatar will ultimately damage air service to these and dozens of other comparable markets because the diversion of traffic from U.S. carriers’ international flights weakens their domestic networks. This assertion by Mr. Dow is especially troubling because USTA should represent the whole of this country and not ignore the vulnerability of non-gateway cities and its members in those cities that rely on the U.S. airlines’ continued ability to maintain their domestic hub-and-spoke networks.

Mr. Sebright and Mr. Dow owe it to their respective organizations, their members, and the U.S. government officials charged with addressing subsidies and unfair competition to keep their willful mischaracterizations and insults out of this debate.

Originally published on the Huffington Post: http://www.huffingtonpost.com/rob-britton/post_9717_b_7735244.html

americans4fairskies2015We Need Honesty in the Gulf Airline Subsidy Debate
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American Airlines officials: We need a level playing field

Just when U.S. airlines are beginning to operate like real businesses — investing in products and services, offering competitive wages, with a viable, long-term business plan — foreign governments are propping up the competition with subsidies, undermining our hard-won progress and threatening service to smaller communities and thousands of jobs right here in North Texas.

Over the past decade, the governments of Qatar and the United Arab Emirates have provided more than $42 billion in subsidies and other market-distorting benefits to three airlines based in the Persian Gulf — Qatar Airways, Etihad Airways and Emirates.

These benefits take a wide variety of forms, including interest-free loans with no repayment obligations, capital infusions, free land, airport fee exemptions and government assumption of fuel-hedging losses. The magnitude of these subsidies is unprecedented and has enabled the three state-owned Gulf airlines to expand rapidly, buy hundreds of new jumbo jets and fly those jets without regard for industry economics or profits.

In fact, these subsidies have enabled Emirates to become the world’s largest airline as measured by international passengers and capacity, and, given their current subsidized order books of more than 600 aircraft, the three Gulf carriers will soon have a combined widebody capacity greater than the entire U.S. commercial widebody fleet.

It’s hard to understand how two countries with a combined citizenship roughly equal to the state of Rhode Island could have the need to create such a massive fleet. The fact is these airlines aren’t creating new passenger traffic — they are using their subsidized advantage to pull passengers away from U.S. carriers, threatening thousands of Texas jobs.

We’ll compete with any airline — no matter how successful or well-run — and indeed American is already competing vigorously by hiring and training thousands of new employees and investing more than $2 billion to give customers a superior travel experience around the world. But we can’t be expected to compete against the treasuries of governments that write blank checks to their state-owned airlines.

We aren’t saying there is anything wrong with airlines being owned by their governments, and there’s nothing wrong with buying big new airplanes and opening new routes. The problem lies in the extensive government assistance provided to the Gulf carriers by the governments of Qatar and the UAE. That assistance is prohibited under Open Skies policy, which is outlined in the commercial aviation trade agreements the U.S. maintains with these two Gulf nations and 114 other countries around the world. In short: Open Skies agreements allow airlines and market demand to dictate service levels without government interference.

If this subsidized expansion continues, U.S. carriers will be forced off more international routes. As U.S. airlines move out of international skies, service to smaller communities will be impacted as well thousands of jobs. International flights drive significant demand for connecting service, and each long-haul, international flight operated by a U.S. carrier generates more than 800 jobs.

Texas has already answered the call in defense of American jobs. More than 75 elected officials and business leaders throughout the state have asked the federal government to take action, including 23 members of the U.S. House of Representatives from Texas, Fort Worth Mayor Betsy Price, North Texas Commission President and CEO Mabrie Jackson, and Dallas County Judge Clay Jenkins.

These subsidies must stop, so we are asking our government to enter into consultations with Qatar and the UAE to discuss the Gulf carriers’ finances and to request a freeze on new service during consultations. This consultation process is permitted and outlined within the Open Skies framework.

When we are allowed to compete fairly, businesses across North Texas benefit. Flights connect more sellers with more buyers, more products with more markets, and more consumers with more choices. Flights also connect more grandparents with their families, more friends with one another, and more dreamers and thinkers with the chance to bring their ideas to life.

But as long as the marketplace is manipulated by foreign governments the way it currently is, our ability to create jobs and facilitate those connections is threatened.

Doug Parker is chairman and CEO of American Airlines Group. Reach him at [email protected]. Laura Glading is the president of the Association of Professional Flight Attendants, which represents American’s 25,000 flight attendants. Reach her through www.apfa.org. Capt. Keith Wilson is the president of the Allied Pilots Association, which represents American’s 15,000 pilots. Reach him through www.alliedpilots.org.

Originally published on The Dallas Morning News: http://www.dallasnews.com/opinion/latest-columns/20150706-american-airlines-officials-we-need-a-level-playing-field.ece

americans4fairskies2015American Airlines officials: We need a level playing field
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Unbuckled seat belts and violent turbulence: ‘Open skies’ and trade

By Martin Edwin Andersen

Portrayed in advertising as akin to a chic airborne Bedouin-and-breakfast oasis, three Middle Eastern airlines are wielding power more like 19th century robber barons — exploiting their workers at home while shifting valuable U.S. aviation jobs overseas.

The story behind these state-owned carriers — Qatar Airways, Etihad Airways and Emirates — shimmers like an illusion in the desert, luring world-weary travelers to the inn of supposedly “Open Skies” refuge. Incredibly, during a decade in which this trio is estimated to have received more than $42 billion in illegal subsides from the United Arab Emirates and Qatari governments, official U.S. policy has been to embrace the illusion, casting aside our ethical and economic interests in the process.

The issue is disturbingly similar to the all-but-signed Trans-Pacific Partnership, the massive trade agreement riddled with concerns about enforceable labor standards, subsidization, non-discrimination and other international norms. While the Middle Eastern Open Skies saga deserves attention in its own right, the lessons it teaches on the dangers of rushed and insufficiently transparent trade deals are needed now more than ever. After all, at the heart of the TPP debate has been the question of fast-track authority. By prioritizing speed over deliberation, once more the United States risks reliance on misconceptions, both skillful and willful. Let us instead actively revisit the errors of Open Skies in the hope that by righting one wrong, far greater harms might be averted.Currently, U.S. legacy airlines — American, Delta and United — face competitors with unfettered access to the world’s oldest democracy, a phenomenon fueled by ill conceived and rapidly negotiated bilateral agreements. All this “generosity,” however, has served only to displace U.S. airline market share. While Delta and United each offer only a single daily flight to Dubai and none to Abu Dhabi, Emirates alone flies to nine U.S. cities from its Dubai hub, now the world’s busiest travel nexus.Open Skies was meant to limit government interference in airlines’ commercial decisions. Implemented fairly, everyone prospers. But with the Gulf States’s near-monopoly, Open Skies has become open season—on U.S. jobs, U.S. values and basic common sense.

Just this month, the United Nations’s International Labor Office found Qatar Airlines violated international law by flagrantly disrespecting women’s rights. CEO Akbar Al Baker responded: “I don’t give a damn about the ILO.” Perhaps this arrogance shouldn’t come as a surprise. Human Rights Watch has been pointing out for years that Qatari law codifies discrimination against women. Even marital rape is permitted.

Other labor abuses in the UAE and Qatar border on slavery; free speech is a profile left to the truly courageous; and ethnic, social and religious prejudices evoke the worst of the Confederate-flag-waving Jim Crow South. TheWall Street Journal recently noted that Emirates Airlines faces its most difficult labor challenges to date due to expanded shifts, restrictions on dress and mistreatment by supervisors — plus the fact that unions are illegal. While in the region, Secretary of State John Kerry correctly stated that such gross inequity “rips and tears at the fabric of the rule of law.”

In both Qatar and the UAE, the LGBT community faces state terror: In the former, gay relationships are punishable by death, while in Qatar—now mired in the FIFA scandal—2022 World Cup fans were told they might be screened to “detect homosexuality.”

With one of the world’s smallest native populations — slightly more than a quarter-million — Qatar has the largest percentage, 88 percent, of non-nationals. Counting only native citizens, it is the world’s wealthiest nation. This begs the question: Aside from subsidizing airlines and constructing artificial island playgrounds, where does all that money go? David Harris, executive director of the American Jewish Committee, recently described Qatar as “the ATM for jihadist groups.”

Beyond doubt, the United States is stunningly disposed to signing free trade accords that shock the conscience and are anything but free. That’s exactly why TPP should be receiving unprecedented scrutiny. The pact would affect roughly 40 percent of global GDP, including countries routinely condemned for violating human rights — e.g., Brunei, Malaysia and Vietnam. Some experts predict it is likely to decrease wages for 90 percent of America’s workers. Has Open Skies taught us nothing?

Senate Minority Whip Dick Durbin (D-Ill.) sounded that alarm two months ago in an official letter: “The three largest airlines of the Gulf states … are receiving substantial government subsidies … [giving] these airlines an unfair advantage over U.S. carriers. As such, I urge you to carefully review this situation and consider appropriate action to uphold the legacy of our Open Skies agreements.”

The Hadith (the sayings of Muhammad) points to the manumission of slaves as one of the most meritorious deeds available for the expiation of sins. Let us help ourselves, as well as the peoples of Qatar and the UAE, to do just that, opening the sky only for those who repent.

 

Andersen served as senior adviser for policy planning at the Criminal Division of the Department of Justice, where he received the U.S. Office of Special Counsel’s Public Servant Award, one of the highest awards for protecting national security information. He is also a former assistant professor of national security affairs at the National Defense University in Washington, D.C., the author of three books on international affairs and served as senior professional staff at the U.S. Senate Foreign Relations Committee.

Originally published on The Hill: http://thehill.com/blogs/congress-blog/246656-unbuckled-seat-belts-and-violent-turbulence-open-skies-and-trade

americans4fairskies2015Unbuckled seat belts and violent turbulence: ‘Open skies’ and trade
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Emirates CEO: “This is a government issue”

Washington, DC – Today, Emirates Airline released their response to the white paper released in January that outlined the over $42 billion in government subsides that Emirates, Etihad Airways, and Qatar Airways have received over the past 10 years.

At a press conference in Washington, DC to present Emirates’ response, their CEO Tim Clark stated, in respect to the ongoing debate over Gulf government subsidy violations of Open Skies agreements: “After all, this is a government issue.” Mr. Clark, Americans for Fair Skies could not agree more.

In January, evidence was presented to the U.S. government documenting more than $42 billion in subsidies by the United Arab Emirates government to its airlines Emirates and Etihad and the government of Qatar to its airline Qatar Airways. These subsidies are in direct violation of the Open Skies Agreements Qatar and the United Arab Emirates signed with the United States. Airlines in Europe, including Air France-KLM and Lufthansa, have submitted responses to the U.S. government supporting U.S. airline workers and airlines, and presenting their case on how the Gulf subsidies are harming workers in Europe as well as the United States.

As Mr. Clark noted, Open Skies Agreements are negotiated between governments. And the Open Skies agreements contain clear mechanisms for dispute resolutions in the form of government consultations. Americans for Fair Skies is asking for 2 of the 115 existing Open Skies Agreements to be reviewed. The time for the U.S. to formally engage those two violators – the UAE and Qatar – is now. At least Mr. Clark got that right.

americans4fairskies2015Emirates CEO: “This is a government issue”
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A Commitment to America is a Commitment to Open Skies

By Lee Moak

There is no doubt in my mind, nor in the minds of many airline workers here in the United States, that tens of thousands of their American aviation jobs are at risk due to the gross distortion of the international aviation marketplace as a result of more that $42 billion in subsidy violations being perpetuated by two nations in the Middle East. Yet, while walking in downtown Washington, D.C. yesterday afternoon, I was inundated with advertisements for Etihad Airways- advertisements extolling its commitment to the United States and specifically, to the people of Washington, D.C. This is ironic of course, because Etihad’s commitment is not at all to America, or its citizens, but to its single shareholder, the government of Abu Dhabi, ruled by a monarchy in the Middle East nation of the United Arab Emirates. Abu Dhabi has provided Etihad with over 17 billion dollars in the past 10 years. These actions violate their trade agreement with the United States and put U.S. jobs at tremendous risk.

Despite Abu Dhabi’s $17 billion dollar subsidization of Etihad Airways, its state-owned airline has not recorded a profit since its founding. When you combine that with the knowledge that such subsidization is a direct violation of the aviation trade agreement that allows Etihad to fly into the US in the first place and that such subsidies also directly and adversely affect the U.S. aviation industry and those it employs- all of the sudden the “commitment” Abu Dhabi holds to the U.S. and to the people of Washington D.C. seems much flimsier.

Earlier this year, the three major U.S. airlines released a white paper, the culmination of more than 2 years of diligent forensic accounting, that outlined a total of more than $42 billion in subsidies to three Gulf airlines – Etihad, Emirates, and Qatar Airways – have received since 2010 from their respective governments, Abu Dhabi and Dubai in the United Arab Emirates and Qatar. Out of context, the question has been asked, well what is wrong with subsidies? There are U.S. industries that currently receive subsidies (note: The U.S. airline industry is not one of them) and subsidies aren’t illegal in some cases. This is all true. Except that the aviation trade agreement the U.S. holds with the United Arab Emirates and Qatar (and 113 other nations around the world), known as Open Skies, which grants them nearly unrestricted landing rights within the United States, specifically forbids unfair competition. It says that growth should be a result of competition and market demand- and given that Etihad has grown at unprecedented levels in the past 10 years, far beyond the market’s rather steady 5% annual growth and far outpacing global GDP, it is clear before the subsidies are even broken down that there is no correlation between Etihad’s growth and marketplace demand.

The point of Open Skies was to promote travel and access, and to create a private, open marketplace where airlines could compete for customers on the basis of price and service. That is Open Skies as it was intended. But when governments subsidize their state-owned airlines with the specific aim to enter into a market and drive out the competition by deliberately taking advantage of the fundamental parameters governing the relationship they are exploiting, Open Skies ceases to work effectively. Open skies, fair skies, fair competition- call it what you will, the subsidy violations affect it the same. Unfortunately this issue is not as shiny or sexy as Etihad’s recent ad campaigns. Instead, it’s a grimy economic issue affecting an industry that provides a significant percentage of the US GDP and is responsible for hundreds of thousands of American jobs. As the Gulf airlines unnaturally expand through trade agreement violations with the specific aim of driving their competition out of business, they also directly threaten the workers who support the U.S. aviation industry by decreasing U.S. jobs and shipping them overseas to countries that lack the worker protections benefitting U.S. workers. A true “commitment” to the U.S. and Washington happens when our trade partners hold up their end of the bargain, allow for fair competition, and don’t use predatory practices to undermine a valuable and vital aspect of U.S. international trade policy.

Moak is president of Americans for Fair Skies, a veteran U.S. Marine Corps and Navy fighter pilot, former United States Commercial Airline pilot, and the former president of Air Line Pilots Association, International.

 

americans4fairskies2015A Commitment to America is a Commitment to Open Skies
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Delta CEO Says Detroit Knows the Pain of Unfair Competition

NEW YORK ( TheStreet) — Speaking in Detroit, Delta’s(DALGet Report) second-biggest hub, CEO Richard Anderson lauded Detroit Metropolitan Airport while blasting Mideast airlines, which benefit disproportionately from trade agreements in the same way that Japanese automakers once did.

Anderson told the Detroit Economic Club on Tuesday that Detroit Metro is “the best airport facility in the world,” noting that “year in and year out” it is ranked by J.D. Power as the top U.S. airport.

“I am biased,” Anderson confessed. As a vice president at Northwest, Anderson represented the carrier during construction of the McNamara terminal and the fourth runway in the mid-1980s. Delta merged with Northwest in 2008.

Under its summer schedule, Delta operates more than 500 daily Detroit departures to 175 destinations. Anderson called Detroit “the eastern gateway to Asia” because it has five daily flights to Asia, as well as four to Amsterdam and two each to London and Paris.

In 1992, the U.S. signed the first Open Skies treaty with Holland, enabling a joint venture between Northwest and KLM that became a model for U.S. airlines and their international partners and also made Detroit the key U.S. hub for Amsterdam service.

Since 1992, Anderson said, “We’ve signed 115 of those Open Skies agreements over 23 years. All but two worked really well — like many trade relationships, there are outliers.”

Open Skies treaties with United Arab Emirates and Qatar are outliers because their airlines — Emirates, Etihad and Qatar —  “really are not airlines. They are governments,” Delta’s CEO said.

A report prepared for American(AAL), Delta and United(UAL) documents how the governments of Qatar, UAE, and Abu Dhabi and Dubai, the two largest emirates, have provided about $39 billion in subsidies to the three carriers.

The subsidies allow for all sorts of spending, including purchases of new aircraft. Now, Anderson said, countries with a population equivalent to North Dakota’s have orders for 600 widebody aircraft, while China with a population of 1.5 billion and a growing aviation industry has 60 widebodies on order.

Anderson compared the situation to one that threatened Detroit in the 1970s and 1980s, when Japanese automakers flooded the U.S. market with imports. Today, Mideast carriers Emirates, Etihad and Qatar take advantage of Open Skies to flood the U.S. with airline seats.

“Detroit understands the dangers of not enforcing trade agreements,” Anderson said, citing Japanese auto exporting as a case where “our country {was} faced with trade agreements where parties on other side are not private industry. They are governments that cause real trade imbalance.”

Detroit has clearly seen the impact of job losses related to imbalances enabled by trade agreements that somehow work out to the disadvantage of U.S. employers and their workers.

Today, the U.S. airline industry employs more than 300,000 people. “The jobs are like auto industry jobs,” Anderson said. “Our jobs on average pay double what the average job in the U.S. does; these are the jobs we need in this country. It’s how we turn this economy around.”

 

Originally published on TheStreet.Com: Delta CEO Says Detroit Knows the Pain of Unfair Competition

 

americans4fairskies2015Delta CEO Says Detroit Knows the Pain of Unfair Competition
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Qatar Airways’ claims are another reason to open their books

Qatar Airways’ CEO Al Baker has repeatedly stated that he was going to open Qatar Airways’ books and “disprove” the overwhelming subsidy evidence showing its owner, the government of Qatar, has undermined its Open Skies Agreement with the United States by providing more than $17 billion in subsidies to Qatar Airways over the past 10 years. That has not happened. Al Baker went back on his promise to open the books. And now, without any transparency and despite ample evidence to the contrary, he is claiming that his airline is somehow actually earning a profit. You can’t make this stuff up.

When Al Baker claimed to want to take the company public a few years back, he went back on that promise too. Potential private shareholders “didn’t have the stomach” for the government investment (i.e. subsidies) to keep the company running, he said. The over $17 billion infused into the airline by the government of Qatar scared private investors off. And the government subsidies have allowed a company, considered a liability by private market standards, to expand at an unprecedented rate into new markets, with no regard to consumer demand and in direct violation of its international trade agreements.

These subsides harm the U.S. aviation industry and threaten the jobs of U.S. aviation workers. If the subsidies are indeed non-existent, as Mr. Al Baker so unbelievably claims, Qatar Airways needs to open their books and disprove the substantial evidence to the contrary.

In the meantime, the U.S. government must act in support of the U.S. economy and its workers. Consultations need to be opened with Qatar and the other country violating its Open Skies Agreement through subsidization of its state-owned airlines, the United Arab Emirates. It is only through consultations that a pragmatic, equitable resolution following the intended spirit of our Open Skies Agreements can be found.

americans4fairskies2015Qatar Airways’ claims are another reason to open their books
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Americans for Fair Skies response to U.S. Travel Association’s letter date June 11, 2015:

The people who work in the U.S. aviation industry have a simple request of the U.S. government: enforce existing aviation trade agreements, known as Open Skies.

The letter from U.S. Travel Association to the U.S. government suggests instead that the U.S. government should ignore our own laws and instead set the dangerous precedent of allowing foreign countries to violate our trade agreements. This is terrible public policy, and worse, it jeopardizes U.S. jobs to benefit foreign interests.

With more than $42 billion in subsidies from their home nations, three Gulf airlines have distorted the international aviation marketplace and put U.S. jobs and our economy at risk. Americans are pushing back; saying “no,” enforce Open Skies agreements as they were intended. The U.S. Travel Association, which is clearly benefiting financially from the Gulf subsidies, is disingenuous in its letter opposing Open Skies enforcement. We must demand better. American workers deserve better. American worker deserve fair competition and fair skies.

americans4fairskies2015Americans for Fair Skies response to U.S. Travel Association’s letter date June 11, 2015:
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Emirates’ Subsidies Remain Uncontested

U.S. aviation workers have a simple request of the U.S. government: to open formal consultations with the two nations that are violating their aviation trade agreements with the United States.

To hear Tim Clark, CEO of Emirates Airline, at today’s Wings Club lunch in New York City, however, you might think that the aim of U.S. airline workers was to shut Emirates down. Indeed, this week, first at the International Aviation Transportation Association (IATA) meeting in Miami, and again this afternoon, Clark, has engaged in a spin campaign that would make Lance Armstrong blush. Name calling, likening the trade dispute to a natural disaster, and engaging in behavior that is all around unbecoming of a Chief Executive Officer, Clark once again failed to actually offer a rebuttal to the trade violation evidence. He has repeatedly said, “it is coming soon,” but in absence of a substantive response, Clark instead slings mud and garnishes headlines with outrageous statements that detract from the core issue: that Emirates Airline has received billions in unfair prohibited subsidies from its home government.

U.S. airline workers are deeply troubled by the rapid growth of the subsidized (subsidies are a violation of Open Skies) airline traffic into the U.S. that is putting their jobs at great risk as international markets are distorted by said subsidies. Our request, which follows the process set forth in the trade agreements, known as Open Skies, calls on the U.S. government to engage the United Arab Emirates and Qatar, two nations in the Middle East, in formal talks about how to remedy their respective violations of Open Skies. Violations that have been demonstrably proven. Over $42 billion has been given in the last 10 years by Qatar and the United Arab Emirates to Qatar Airways, Etihad Airways, and Emirates Airline.

In trade disputes, and in all matters geopolitical, allies have disagreements. To resolve these disagreements, conversations, or consultations, occur between governments. That is what U.S. aviation workers are asking for. That is what U.S. trade policy calls for. And that is what we expect will happen. Everything else is just a distraction.

americans4fairskies2015Emirates’ Subsidies Remain Uncontested
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Americans for Fair Skies responds to Qatar Airways’ “Retaliatory Protectionism” Threats

“Retaliatory protectionism” was the expression Qatar Airways’ CEO Al Baker used at the IATA annual meeting today to explain how Qatar will handle any potential changes of U.S. Open Skies policy to mitigate the damage being wrought on the U.S. aviation industry as a result of the massive subsidies being provided by the United Arab Emirates and Qatar to their three state-owned airlines in direct violation of their Open Skies Agreements with the United States.

Al Baker, who is the CEO of Qatar Airways, an entity he has argued many times acts separately from its owner, Qatar, highlighted again that they are one in the same as he spoke of potential Qatari government action in retaliation to any attempt to address or reduce harmful Gulf subsidies.

Qatar and the United Arab Emirates have made it clear that any attempt to stymie the subsidized growth of their airlines will result in massive retaliatory actions reverberating far outside of international aviation trade policy, as was seen in 2010 when Canada limited landing rights at the Toronto Airport and were kicked out of Camp Mirage and actively lobbied against by the UAE for a UN Security Council seat as a result. Emirates CEO Tim Clark has made it clear that Emirates will increase flights into the US, not as a result of market demand moving forward, but as a direct response to any potential US action to limit subsidy distortions.

Americans for Fair Skies is committed to the continuation of Open Skies policies, as they were intended, free from subsidy distortions and supporting a private, open marketplace where service and price dictates customer choice and growth. Fair competition is impossible when that process is turned on its head by over $40 billion in subsidies. We cannot allow threats to stop us from acting to save U.S. jobs and support a critical portion of the U.S. GDP. Let’s restore competition and fair skies. The time for U.S. government action is now.

americans4fairskies2015Americans for Fair Skies responds to Qatar Airways’ “Retaliatory Protectionism” Threats
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Americans for Fair Skies Applauds Dutch Action to Stop Gulf Subsidy Distortions

WASHINGTON, May 20, 2015 /PRNewswire-USNewswire/ — Americans for Fair Skies, a nonprofit grassroots organization dedicated to restoring fairness to Open Skies Agreements, applauds the action taken by the Dutch government to stop the expansion of subsidized Gulf airlines into the Netherlands[1] and thanks the Dutch government for their leadership, and calls on other governments, including the U.S., to take similar actions to ensure that foreign airline competition exists on a level playing field.

Since the revelation of the more than $42 billion in aviation subsidies coming out of the United Arab Emirates and Qatar a few months ago[2], three countries have taken action to stop these subsidies from further market distortion.

Germany and France have already frozen the allocation of new routes into their respective countries by the Gulf airlines[3] and have called upon the European Union Commission to institute new EU-level transport agreements with these countries that include “fair competition” clauses[4]. Recently, the Netherlands has joined them in imposing a freeze of new routes into their country until the subsidy distortions are addressed.

Says Americans for Fair Skies President, Captain Moak, “Like the French and the Germans, the Dutch have also seen the evidence that the United Arab Emirates and Qatar have supplied their airlines with more than $42 billions in subsidies, and they are supporting Dutch companies and the future viability of the international aviation market by saying “no” to unfair competition. Americans for Fair Skies has asked the U.S. Government to open consultations with the United Arab Emirates and Qatar, as called for in our Open Skies Agreements with both nations, and to freeze new routes from their subsidized carriers into the U.S. until these trade violations have been sorted out.”

Learn more and take action at fairskies.wpengine.com.

Press release can be found on: http://www.prnewswire.com/news-releases/americans-for-fair-skies-applauds-dutch-action-to-stop-gulf-subsidy-distortions-300086844.html?tc=eml_cleartime

[1] 5/20/2015- dutchnews.nl/news/archives/2015/05/dutch-government-stops-middle-eastern-airline-schiphol-expansion/

[2] 2/11/2015- reuters.com/article/2015/02/11/us-airlines-competition-exclusive-idUSKBN0LF01W20150211

[3] 3/19/2015 skift.com/2015/03/19/the-eu-is-coming-to-the-support-of-u-s-airlines-angry-about-gulf-carriers/

[4] 3/20/2015- aviationweek.com/commercial-aviation/france-germany-protest-gulf-carrier-encroachment

americans4fairskies2015Americans for Fair Skies Applauds Dutch Action to Stop Gulf Subsidy Distortions
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Focus on the facts, not the food fight

By Lee Moak

Threats of (frivolous) lawsuits. Threats to cancel aircraft orders from Boeing, putting even more U.S. jobs at risk. Name-calling. Insults. More threats, in the form of retaliation by further market distortion and abuse of 5th Freedom routes. More insults, suited for a playground and not a business forum. More name-calling …

This has been the response by the leaders of Qatar Airways, Emirates, and Etihad to the public evidence documenting the more than $42 billion in subsidies provided to their airlines by the governments of Qatar and the United Arab Emirates. Rather than respond to the actual substance of the documented evidence of their subsidy violations of Open Skies, however, Akbar Al Baker of Qatar Airways, Tim Clark of Emirates, and James Hogan of Etihad have instead chosen to engage in threats and hurl insults and personal attacks in a desperate attempt to distract from the core issue at hand: subsidies that are violating U.S. trade agreements and jeopardizing U.S jobs.

The United Arab Emirates and Qatar decided to undertake a dramatic expansion of their state-owned airlines as tool for economic growth in their nations. Fueled by billions in government aid, the three major Gulf airlines have grown rapidly, far outpacing global GDP. They are distorting the international marketplace to benefit the Gulf nations at the expense of other airlines and their employees. It is the right of Qatar and the UAE to undertake this government-subsidized business model for their airlines; however, it is not their right to bring that approach into the United States.

U.S. Open Skies aviation trade agreements have been established on the principal of market-based competition. Open and free markets on a level playing field are indeed the basis of all U.S. trade policies. The Gulf subsidies run counter to Open Skies, and therefore can’t be allowed to continue if Qatar Airways, Emirates, and Etihad want to continue to operate into the U.S. under their existing Open Skies Agreements. They can remain subsidized or they can benefit from the advantages provided by Open Skies. They can’t have it both ways.

Naturally, the leaders of these airlines are not happy that their trade violation has been exposed and that the U.S. government is investigating their subsidies. The facts are against Qatar and the United Arab Emirates. They don’t like that. So instead, in an attempt to distract us from the facts, they’ve resorted to hurling insults and issuing threats. Americans for Fair Skies is committed to the evidence and to the facts in this case. We urge the U.S. government to do the same. At the end of the day, the facts will win, and the insults and threats will be nothing more than a distant memory of how desperate men behaved poorly.

Moak is president of Americans for Fair Skies, a veteran U.S. Marine Corps and Navy fighter pilot, former United States Commercial Airline pilot, and the former president of Air Line Pilots Association, International.

Originally published on TheHill.Com: Focus on the facts, not the food fight

americans4fairskies2015Focus on the facts, not the food fight
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Open Skies: Everyone Must Play By the Rules

By Captain Lee Moak

Since their invention, aviation trade agreements, known as Open Skies, have been a tremendous boon for U.S. airlines, consumers, and aviation employees. Reduced interference allows for growth, and growth means more jobs. Which is why there have been 115 Open Skies agreements signed between the U.S. and other nations over the past 36 years. Roger Dow of US Travel would have you believe, however, that U.S. airlines, their employees, and their allies oppose all such aviation trade agreements. As Emirates CEO Tim Clark said it, this is “tosh.” In fact, such spin is quite dangerous, because it grossly distorts a trade dispute that has affected aviation markets across the globe and directly threatens thousands of U.S. jobs.

Of the 115 Open Skies Agreements signed over the past 36 years, there are currently two that Americans for Fair Skies is asking the U.S. government to address. Which means that we are talking about less than 2% of existing Open Skies Agreements. Indeed, we’re not disputing their legitimacy or their existence – quite the opposite. Evidence has been presented that our trading partners are violating these two agreements, and we are simply asking the U.S. government to address the violations of these agreements. Mr. Dowd’s op-ed ignores all of these facts. His story, which sounds disconcertingly similar to the messaging coming directly from Qatar and the United Arab Emirates‘ three subsidized Gulf airlines, misses the key point that Americans for Fair Skies has been trying to make. Our campaign isn’t about ending Open Skies agreements, its about making sure they are enforced so that all parties involved have the same opportunity to compete fairly. This is about restoring fairness to the two Open Skies Agreements that have not been adhered to by our trading partners. Mr. Dow and the Gulf airlines can spin this all they want – they can threaten and they can grandstand, but the facts remain the same. And frankly they’re quite simple. There is a multitude of evidence proving the existence of more than $42 billion in subsidies that have been provided to the state owned carriers of Qatar and the UAE over the past 10 years. These subsidies directly violate the Open Skies Agreements Qatar and the UAE signed with the United States. And these agreements have a built in dispute resolution mechanism that can be employed by any party at any time.

As National Security Advisor Susan Rice recently put it, “increased trade and investment is good for the global economy, but to realize its full potential, everyone has to play by the same rules.” And that is all we are asking – for the U.S. government to bring Qatar and the UAE to the table as outlined by the agreement they signed so that everyone has the chance to play by the same rules. What’s so wrong about that?

Learn more at FairSkies.Org.

Moak is president of Americans for Fair Skies, a veteran U.S. Marine Corp and Navy fighter pilot, former United States Commercial Airline pilot, and the former president of Air Line Pilots Association, International.

americans4fairskies2015Open Skies: Everyone Must Play By the Rules
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Subsidy violations don’t just hurt economy; they threaten national security

By Captain Lee Moak

There has been a lot of attention recently around the government subsidies Qatar and the United Arab Emirates have been funneling to their airlines, which are distorting the international aviation marketplace and violating the aviation trade agreements they hold with the United States, known as Open Skies Agreements. Over $42 billion in government subsidies from foreign competition is devastating for an industry that represents 5% of U.S. GDP and the hundreds of thousands of jobs it directly supports. While this risk to American jobs, and the fact that the subsidies run directly counter to U.S. trade policy, is more than enough reason to expect the U.S. government to call for trade consultations with these two countries to resolve the subsidy violations, it is only the tip of the iceberg when it comes to the reason these subsidies have the potential to devastate not only the U.S. economy, but to jeopardize U.S. national security as well.

I spent more than twenty years flying for the U.S. Marine Corps and Navy as a fighter pilot, where my job was working to protect this country and its citizens. As a commercial airline pilot for a U.S. airline, my contribution to this country’s national security did not end. Serving as a CRAF (Civil Reserve Air Fleet) pilot, I was called on to fly activated commercial airline support and defend our country at a time of national emergency, including missions in Operation Iraqi Freedom.

The importance of preserving a U.S. based aviation industry isn’t just about the important economic benefits it provides. It’s also about the support provided to the U.S. military by U.S. airlines and their employees as the result of an expansive U.S. airline network and fleet. U.S. airlines and their employees have been called upon in tens of thousands of CRAF and Military Airlift Command (MAC) missions supporting U.S. national defense and foreign policy, moving hundreds of thousands of U.S. troops, and millions of pounds of cargo. This is a cornerstone of the U.S. military’s capabilities, saving U.S. taxpayers billions of dollars annually, and it’s been a vital part of our national defense for over 60 years.

By subsidizing their airlines with more than $42 billion, the United Arab Emirates and Qatar are threatening the bedrock of the CRAF program. U.S. airlines are forced to compete against these countries – not their airlines – for international market share, creating unfair competition on an unlevel playing field. Ultimately, facing such drastic subsidies, U.S. airlines will lose or have to forgo international routes, and thereby be unable to sustain the wide-body aircraft utilized to fly both international commercial routes and CRAF missions, undercutting the U.S. military’s ability to call upon U.S. airlines for support for military and humanitarian missions. This can’t be allowed to happen.

As U.S. National Security Advisor Susan E. Rice recently said, “Increased trade and investment is good for the global economy, but to realize its full potential, everyone has to play by the same rules.” When we allow the violations of agreements signed between nations to go unchecked and instead allow the countries perpetuating said violations to encroach on our national interests, we relinquish the ability to not only support our national economy, but also turn the stability of our national security over to the whims of foreign entities with priorities vastly different from U.S. national security interests.

In regards to the subsidy violations of Open Skies being perpetuated by Qatar and the UAE, the U.S. government has taken its first steps towards investigating by opening a joint docket to collect further evidentiary findings. As this process progresses, however, the subsidized Gulf carriers are ramping up their routes into the U.S. in anticipation of a freeze on new routes once formal consultations between nations begin. The U.S. government must act now to freeze new routes for these subsidized carriers into the U.S. until a resolution to the subsidy violations is found. Thousands of U.S. jobs, and the viability of the Civil Reserve Air Fleet program, depend on fair skies free of subsidies. The time for U.S. government action to restore fairness is now.

Learn more at FairSkies.Org.

Moak is president of Americans for Fair Skies, a veteran U.S. Marine Corp and Navy fighter pilot, former United States Commercial Airline pilot, and the former president of Air Line Pilots Association, International.

Originally found on thehill.com: Subsidy violations don’t just hurt economy; they threaten national security

americans4fairskies2015Subsidy violations don’t just hurt economy; they threaten national security
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262 Members of Congress call for Open Skies consultations

Americans for Fair Skies commends the bipartisan majority of the House for calling for consultations with Qatar and the United Arab Emirates over their violations of the aviation trade agreements, Open Skies, they signed with United States with more than $42 billion in state subsidies. It is clear based on the majority of Congress taking action today, and the poll released Monday that showed 79% of Americans want the U.S. government to take action, that the time for government consultations over the illegal trade violations is now. Our government must stand up for American workers and restore fairness to our skies.

americans4fairskies2015262 Members of Congress call for Open Skies consultations
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262 House lawmakers side with airlines in Open Skies dispute

By Keith Laing

A bipartisan group of 262 House lawmakers is pushing the Obama administration to wade into a dispute over foreign airline subsidies that has roiled the U.S. aviation industry.

Unions that represent parts of the U.S. airline industry have alleged Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates Airlines have received more than $42 billion in subsidies since 2004.

The lawmakers said Thursday in a letter to Secretary of State John Kerry and Transportation Secretary Anthony Foxx that the Obama administration should investigate the subsidies because U.S. airlines say the payments violate the spirit of the Open Skies agreements between the U.S. and the governments of Qatar and the United Arab Emirates, which own the Gulf carriers.

“We are concerned that Qatar and the UAE are using these subsidies and other unfair practices to distort the market in favor of their state-owned airlines, contrary to U.S. Open Skies policy,” the lawmakers wrote.

“These actions artificially boost these state-owned carriers and undermine the principles of open competition essential to the airline industry,” the letter continued. “According to available research, each daily international roundtrip frequency lost/forgone by U.S. airlines because of subsidized Gulf carrier competition results in a net loss of over 800 U.S. jobs.”

The fight over the Open Skies agreements has exposed a rift between airlines and travel and consumer groups that argue U.S. carriers are trying to prevent competition for international flights.

Unions that represent U.S. airlines workers have formed campaigns to pressure the Obama administration to question the Gulf carrier subsidies.

Travel industry and consumer groups have, meanwhile, accused the airlines of trying to reduce competition for international flights.

The Obama administration said earlier this month that it’s launching a review of the airline industry’s claims — far short of the full-scale international negotiation the U.S. airline industry has called for.

The administration has said it is taking a look at the allegations against the Middle Eastern carriers because they have been “asserted in a publicly available report, are of significant interest to stakeholders and all three federal agencies.”

The decision was seen as a victory for U.S. airlines, but the lawmakers said the administration should request the full consultations the U.S. government is entitled to under the Open Skies agreements that have been in place since the early 2000s.

“The subsidies that Qatar and the UAE have provided to their state-owned carriers have led to market distortions and unfair competition in international aviation,” the lawmakers wrote. “Failure to address these practices will lead to significant job losses in the United States and set a dangerous precedent that could lead to further harm to the U.S. airline industry and the broader U.S. economy.”

Travel groups dismissed the show of support for the airlines’ position in the Open Skies debate as a byproduct of “limitless lobbying” by the industry.

“The limitless lobbying resources of airlines and their unions are clearly going to allow them to be heard, but we remain convinced that the inarguable merits of keeping Open Skies intact will win the day,” U.S. Travel Association Senior Vice President of Public Affairs Jonathan Grella said in a statement.

“Air passengers are already suffering because competition and choices have been virtually wiped out of the marketplace by airline consolidation,” Grella continued. “Plus, we haven’t heard anyone dispute the reality that breaking Open Skies agreements would drastically harm the overall U.S. economy and jobs—and likely have a chilling effect on all of the trade and security agreements the U.S. has negotiated in good faith. And all of this as the Big Three [airlines] are enjoying record profits anyway.”

Originally published on TheHill.Com: 262 House lawmakers side with airlines in Open Skies dispute

americans4fairskies2015262 House lawmakers side with airlines in Open Skies dispute
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New Poll: Nearly 80 percent of Americans believe the U.S. government should act to end Open Skies trade subsidy violations

New Poll: Nearly 80 percent of Americans believe the U.S. government should act to end Open Skies trade subsidy violations

WASHINGTON, April 27, 2015 /PRNewswire-USNewswire/ — A survey of American voters conducted during the week of April 20, 2015 shows that over 79% of American voters believe that the U.S. government should act to remedy trade violations of Open Skies Agreements and stand up for American workers. The poll results have been formulated from the responses of 2,409 registered voters in San Francisco, Chicago, Atlanta, Dallas, and Washington DC. The nonpartisan, issue-based poll was conducted by Premiere Political Communications of Austin, Texas on behalf of Americans for Fair Skies.

Americans broadly agree that the U.S. government needs to act to end aviation trade agreement violations:

• 74 percent feel the U.S. government should take action to remedy violations if it was proven that foreign partners were violating the Open Skies agreements they signed with the United States.
• 79 percent of voters feel that the U.S. government should take action to resolve these subsidy violations rather than waiting for the consumer-driven marketplace to work out a solution.
• 79 percent of voters feel it is a national security risk to allow the viability of our aviation infrastructure to be threatened due to its important relationship supporting the U.S. military in times of crisis.

For over 10 years, the governments of Qatar and the United Arab Emirates have subsidized their airlines, Qatar Airways, Etihad, and Emirates, with over $42 billion in violation of the Open Skies aviation trade agreements they signed with the U.S. These subsidies have resulted a significant distortion of the private, open marketplace, allowing these airlines to artificially lower the cost of seats, dumping excess seat capacity on routes, undermining the principles of fair competition outlined in the trade agreements and threatening U.S. aviation jobs.

“The poll shows that Americans are ready to see the U.S. government stand up for aviation workers and find solutions to aviation trade violations that threaten the viability of a critical national industry and the hundreds of thousands of jobs it creates,” said Captain Lee Moak, President of Americans for Fair Skies. “The time for consultations between nations to resolve this issue is now.”

For a complete breakdown of poll results, please visit http://fairskies.wpengine.com/april-2015-poll-results.

americans4fairskies2015New Poll: Nearly 80 percent of Americans believe the U.S. government should act to end Open Skies trade subsidy violations
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Qatar Airways shareholders considered dissolving the carrier in 2009, US dossier claims

Qatar Airways shareholders considered dissolving the airline five year ago, amid mounting liabilities, according to a new dossier released by US airlines.

Delta Air Lines, American Airlines, and United Airlines, under the umbrella of Partnership for Open and Fair Skies, have released financial records of Qatar Airways, Emirates and Etihad Airways obtained after a two-year investigation.

Based on this evidence, the US airlines claim their Gulf counterparts have received $42 billion in subsidies and other state benefits since 2004.

The investigators claim they managed to obtain financial statements, charter documents and other records from corporate registries in various countries where the Gulf carriers have local operations.

The worldwide search spanned nearly 30 jurisdictions, including Singapore, Australia, India, Belgium, Ireland, Malta and the United Kingdom, and yielded 44 documents totalling 1,021 pages – all of which are now available online.

The investigation unearthed 19 years of Qatar Airways’ financial statements. In the 2009 financial statement, which was audited by Ernst & Young, it was reported that the airline had accumulated losses that exceeded 50 percent of the share capital. In accordance with the articles of association of the company, an emergency general meeting (EGM) had to be convened to decide whether the situation required a dissolution of the company, decrease its stake or take any other suitable measures, the documents claim.

At the meeting on September 8 2009, the shareholders resolved to continue operations as adequate financial support was made available to meet any liabilities, the documents claim. Qatar Airways did not respond when contacted by Arabian Business for comment.

Both Etihad and Emirates have strongly denied that they have received subsidies, while Qatar Airways’ CEO Akbar Al Baker is due to address the allegations in presentations scheduled for May 13.

Originally published at ArabianBusiness.com: Qatar Airways shareholders considered dissolving the carrier in 2009, US dossier claims

americans4fairskies2015Qatar Airways shareholders considered dissolving the carrier in 2009, US dossier claims
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U.S. Airlines Claim to Document Subsidies at Gulf Rivals

Delta hired gumshoes to find back call for Open Skies treaty revisions

By SUSAN CAREY And RORY JONES
April 20, 2015

As the battle intensifies over U.S. airlines’ allegations of unfair state subsidies to three Persian Gulf rivals, a look at how the American carriers gathered data to support their claims sheds light on the vast financial reporting divide between the two sides.

Alarmed by the rapid U.S. expansion of Emirates Airline, Etihad Airways and Qatar Airways, Delta Air Lines Inc. two years ago hired forensic accountants to learn more about the overseas carriers’ funding. All three are government-owned, and Etihad and Qatar don’t issue public financial statements.

The effort—later joined by American Airlines Group Inc. and United Continental Holdings Inc.—culminated in a trade complaint lodged in January with the U.S. government. The U.S. carriers claim the documents they found show the Gulf trio has received $42 billion in subsidies and unfair benefits since 2004, including about $17 billion for Abu Dhabi-based Etihad, and $16 billion for Doha-based Qatar Airways. The Gulf carriers say they are commercial enterprises that aren’t state subsidized.

Delta hired investigators to dig into their financial histories. The three U.S. carriers say their gumshoes discovered about a year ago that they could request and obtain copies of financial statements for the three from corporate registry offices in some countries where the Gulf airlines operate.

The investigators, which the airlines wouldn’t name, searched in nearly 30 jurisdictions, assembling their dossier mostly from documents filed in the U.K., Singapore, Australia, India, Belgium and Ireland, said Jill Zuckman, spokeswoman for the U.S. airlines’ coalition, called Partnership for Open & Fair Skies. They also used bond-offering prospectuses for the Gulf carriers and their governments to compile the information.

The picture remains incomplete, Ms. Zuckman said, given the often interlocking relationships among the Gulf governments, airlines, airport authorities and aviation service providers. The U.S. coalition, which previously issued only a summary of its claims, said it will release all its documents on Tuesday, giving the Gulf carriers their first chance to evaluate and respond to the assertions.

The U.S. airlines said they amassed 44 documents totaling 1,021 pages. The Wall Street Journal has viewed many of them, at least one of which is in Flemish. Among other information, they indicate that international auditors at times endorsed two of the airlines as viable businesses—or “going concerns”—contingent on further financial backing from their shareholders.

In Etihad’s 2013 annual report, for example, KPMG LLP said it audited the accounts on a going-concern basis “notwithstanding the fact that the group had accumulated losses of $3.76 billion” as of December 2013. KPMG said it had prepared the 2013 statements based on approval of $3.5 billion in additional shareholder funding in 2014 by Abu Dhabi’s ruling body.

The U.S. carriers, citing at least nine years of Etihad financial statements, claim such shareholder funding was part of $17 billion in state subsidies provided to Etihad since 2004.

Etihad says it has received equity investments and loans from its government. It says it can’t comment on specific claims because it hasn’t seen the full documentation behind the U.S. carriers’ previously issued summary.

The U.S. airlines said they also assembled 19 years of annual accounts for Qatar Airways that show it received $16 billion in total subsidies since 2004.

In Qatar Airways’ 2009 financial statement, auditor Ernst & Young LLP reported that the current- and previous-year losses exceeded 50% of company capital. A special meeting was convened that year to weigh options including dissolving the company. Shareholders decided instead to fund its liabilities.

In the same statement, the auditors noted that the government loans were non-interest bearing, had no specific repayment terms and could be converted to equity because repayment wasn’t likely to occur in the foreseeable future.

Qatar Airways said Chief Executive Akbar Al Baker is expected to address the U.S. carriers’ allegations in presentations scheduled for May 13.

Emirates has published its financial statements for the past 13 years and is starting to make earlier reports available as well. But the U.S. carriers claim they also uncovered evidence that it received at least $5 billion in subsidies since 2004.

Among other things, they pointed to a reduction from 15.1 billion U.A.E. dirhams to 5.6 million dirhams in fuel-price hedging contracts on its books between 2008 and 2009, a time when many airlines took hedging losses after jet fuel prices tumbled. The majority of the contracts were transferred to a Dubai government holding company, the financial statement said. PricewaterhouseCoopers LLP audited the books.

Emirates declined to comment on the hedging contracts. Last week, it said it had requested that the U.S. government release the materials received from the U.S. airlines, as well as information it had requested from them, so Emirates can “defend itself against the pernicious falsehoods that have wrongly been advanced against it.”

Emirates, Etihad and Qatar Airways say they abide by International Financial Reporting Standards. Qatar’s books also make that claim. All three companies say they have earned their burgeoning traffic with superior service and a range of new destinations. KPMG, PricewaterhouseCoopers, and Ernst & Young declined to comment on client accounts.

The U.S. carriers want the Obama administration to revise existing “open skies” air treaties with Qatar and the United Arab Emirates to account for the purported government aid. Meanwhile, the U.S. carriers also want the government to freeze additional Gulf airline service to the U.S., retroactive to January, restricting planned new routes.

The Gulf carriers and open skies air treaties generally have won support from U.S. cargo airlines, discount carriers such as JetBlue Airways Corp., and U.S. airport and tourism groups. Centre for Aviation, a respected Australian aviation researcher, took the U.S. airlines to task in a recent report for failing to account for the customer benefits such new airplanes, exotic destinations and lower fares provided by the Gulf carriers and not demonstrating serious harm to U.S. airlines by their expansion.

Write to Susan Carey at [email protected] and Rory Jones at [email protected]

Originally published at WSJ.com: U.S. Airlines Claim to Document Subsidies at Gulf Rivals

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Durbin sides with airlines in Open Skies dispute

By Keith Laing

Sen. Dick Durbin (D-Ill.) is pushing the Obama administration to wade into a dispute over foreign airline subsidies that has roiled the U.S. aviation industry.

Unions that represent parts of the U.S. airline industry have alleged Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates Airlines have received more than $42 billion in subsidies since 2004.

Durbin said in a letter to Secretary of State John Kerry and Transportation Secretary Anthony Foxx that the Obama administration should investigate the subsidies because U.S. airlines say the payments violate the spirit of the Open Skies agreements between the U.S. and the governments of Qatar and the United Arab Emirates, which own the airlines.

“I write to express my concern regarding recent reports that the three largest airlines of the Gulf States of Qatar and the United Arab Emirates (UAE) are receiving substantial government subsidies,” he wrote. “Market distortion caused by state subsidies give these airlines an unfair advantage over U.S. carriers. As such, I urge you to carefully review this situation and consider appropriate action to uphold the legacy of our Open Skies agreements.”

The Obama administration said earlier this month that they are launching a review of the airline industry’s claims similar to the one Durbin suggested because the allegations against the Middle Eastern carriers “are asserted in a publicly available report, are of significant interest to stakeholders and all three federal agencies.”

Originally published at TheHill.Com: Durbin sides with airlines in Open Skies dispute

americans4fairskies2015Durbin sides with airlines in Open Skies dispute
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Labor Voices: When ‘open skies’ means unfair advantage

By James P. Hoffa

Unfair labor practices are once again hurting U.S. workers and threatening jobs here in Michigan and across America. This time, the threat is coming from overseas, as three airlines from the Middle East — Qatar Airways, Etihad Airways and Emirates — are embracing shady financial practices and anti-worker policies to undercut U.S. companies.

These Persian Gulf region air carriers are distorting the market with unfair advantages, and hoping no one notices. U.S. airlines are accountable to their shareholders and operate as private businesses. They respond to pressures in the marketplace and must negotiate contracts with their unionized employees.

In contrast, Qatar Airways, Etihad Airways and Emirates are run as extensions of the countries they serve. In direct violation of the international Open Skies agreement, recent evidence shows the governments of Qatar and the United Arab Emirates (UAE) are pumping billions of dollars into these companies through subsidies, supportive public policies and state-funded construction. These billions provide the airlines with an enormous benefit that upends the international aviation market and undermines global competition standards.

A recent report shows that these subsidies and unfair benefits have totaled $42 billion over the last decade alone. With that much government cash, no wonder these airlines are expanding! With no pressure to earn profits, provide a living wage or control costs, these state-funded enterprises jeopardize American businesses, threatening jobs and consumer choice in the process.

It’s as if a foreign government were manufacturing cars on the cheap in its own country and then selling them by the thousands in U.S. cities at below-market rates. That’s not competition — it’s a tactic straight out of the old monopolist playbook. It’s also one the U.S. government has rejected for decades.

To make it worse, these airlines operate with minimal oversight. In stark contrast to the U.S., airline regulators in Qatar and the UAE are anything but independent. The chairman of Emirates, for example, also serves as the president of the Dubai Civil Aviation Authority, Dubai’s equivalent of the FAA. He is also a director of the UAE’s General Civil Aviation Authority. This would be an absurd conflict of interest anywhere else, but for big companies in these countries, it’s just how they do business.

The Gulf airlines tilt the playing field through other, more sinister policies enforced by their governments. Both Qatar and the UAE outlaw labor unions and offer almost no protection for their workers. The abysmal treatment of workers in Qatar has already drawn widespread condemnation in the lead up to the World Cup, for example, and rightfully so. Conditions for workers in these countries are so poor that their jobs are often compared to indentured servitude. Workers are suffering in Qatar and the UAE, but the airlines save billions as a result.

Access to our skies must be equitable. Like any international accord, these agreements must be enforced. The Teamsters urge U.S. negotiators to revisit the Open Skies protocols with the countries that are receiving governmental support to ensure fairness. American workers can compete with anyone in the world when the playing field is level, but everyone has to play by the same rules.

James P. Hoffa is president of the International Brotherhood of Teamsters.

Labor Voices

Labor Voices columns are written on a rotating basis by United Auto Workers President Dennis Williams, Teamsters President James Hoffa, Michigan AFL-CIO President Karla Swift and Michigan Education Association President Steven Cook.

americans4fairskies2015Labor Voices: When ‘open skies’ means unfair advantage
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U.S. Airlines Have Paid the Government $250 Billion — Amazingly, Some Claim They Are Subsidized

By: Ted Reed

Of all misguided statements that have been in the debate regarding the $39 billion government subsidies of the three Middle East carriers, the most misguided ones suggest that it’s fine because U.S. airlines are also heavily subsidized.

A government report that surfaced recently shows that U.S. airlines received $155 billion in federal subsidies between 1919 and 1998. The report was unearthed by Kevin Mitchell, chairman of the Business Travel Coalition, who found it online after he saw it mentioned in The National, a UAE publication.

The report makes for fascinating reading. It briefly and accurately relates the history of government spending on the airline industry over the 79 years ending in 1998. It was compiled by the Congressional Research Office, which answers questions for members of Congress.

But it is overstatement to call it a “bombshell report,” as the U.S. Travel Association — which represents travel agents and supports the status quo for Mid-East carriers — has done.

Of the $155 billion in spending through 1988 outlined in the report, the vast majority, $140 billion, was spent by the aviation trust fund that supports Federal Aviation Administration spending.

The report does not mention that since 1971, U.S. airlines and their passengers have contributed about $247 billion to the fund, according to Federal Aviation Administration historical data.

The airlines and their passengers today contribute about $10 billion annually to the fund, which currently holds a surplus of about $13 billion. The rest has been spent.

In other words, the U.S. airline industry generally pays for what it gets from the government.
In general, this is not what happens in Qatar, the United Arab Emirates, and Abu Dhabi and Dubai, the two largest Emirates. A report compiled for American, Delta and United demonstrates that the governments of the four entities have provided about $39 billion in subsidies to three airlines — Qatar Airways, the flag carrier of Qatar; and Etihad Airways and Emirates, flag carriers of the UAE.

To be fair, these airlines have a valid argument when they say that many countries subsidize airlines, particularly start-up airlines. That is exactly what happened in the U.S, where the commercial aviation industry began with contracts to mail carriers.

“The irrefutable and germane point of the {Congressional} report is that countries around the world have spent substantial sums of money to establish their commercial aviation industries and, in doing so, they follow the best-practice model of the U.S,” Mitchell said. “The Middle East 3, and their home countries, are no different in this practice.”

But it’s not at all clear that the startup of the U.S. airline industry and the startup of the Gulf airline industry are parallel events.

The book “American Airlines, US Airways and the Creation of the World’s Largest Airlines,” which I wrote with Dan Reed, tells how US Airways and American got started.

American’s earliest predecessors included Robertson Aircraft. One day in 1926, a young aviator named Charles Lindberg “loaded mail into a DH-4 biplane operated by Robertson and flew it from St. Louis to Chicago,” the book says.

US Airways began in 1939 as All American Aviation. Its “unique, cutting- edge concept involved airborne airplanes picking up mailbags suspended from cables in isolated sites in the Allegheny Mountains of western Pennsylvania,” the book says. “It seemed like a good idea at the time.”

In 1925, the Congressional Research Report noted, Congress passed the Kelly Act, which enabled the Post Office to contract with airlines to provide air mail service. The 1930 Watres Act changed the formula a bit. A key was that “the Post Office began requiring that air mail contractors carry passengers {in the hope that} passenger traffic could eventually lead to a reduction in the need for air mail subsidies.”

Once airlines got going, the government provided more subsidies during the ensuing half-century. From 1925 to 1970, the subsidies to airlines totaled about $9 billion. Additionally, from 1926 to 1970, the federal government spent about $1.5 billion to build airports.

Government spending on Mid-East airlines has followed a somewhat different pattern since the founding of Emirates in 1985, Qatar in 1993 and Etihad in 2003.

Rather than gradually building a system to provide the benefits of a new technology to their citizens, the Mid-East governments in question rapidly spent billions of dollars to build three subsidized airlines and gigantic airports and to fill them with the world’s most expensive aircraft, following business models that involve taking advantage of treaties that never envisioned such a thing in order to siphon passengers from the world’s established airlines, which must make money to survive.

Please don’t try to tell me that’s the same thing as helping to fund a risky start-up venture that used tiny aircraft to pick up mailbags suspended from cables at isolated sites in the Allegheny Mountains.

Originally published on Forbes.Com: http://www.forbes.com/sites/tedreed/2015/04/14/u-s-airlines-have-paid-the-government-250-billion-amazingly-some-claim-they-are-subsidized/

americans4fairskies2015U.S. Airlines Have Paid the Government $250 Billion — Amazingly, Some Claim They Are Subsidized
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Americans for Fair Skies commends US government action regarding the Gulf Subsidies

A statement from Americans for Fair Skies:

“We commend the action by the U.S. Departments of Transportation, State, and Commerce to open formal proceedings on the airline subsidies by the United Arab Emirates to Etihad Airways and Emirates Airways and Qatar to Qatar Airways. This is an important first step towards restoring fairness to our skies and stopping the largest trade violation in history.

There will certainly be a diversity of opinions on this matter, but one thing we should all agree on is the freedom to have this dialogue with our government and for our government to have formal consultations with the UAE and Qatar. We believe the evidence is clear: Etihad, Qatar, and Emirates would not be commercially viable without national subsidies. The more then $40 billion in subsidies have instead allowed these airlines to distort the international aviation marketplace and threaten American jobs.

We look forward to presenting our formal case to the U.S. Government in the docket.”

Learn more at fairskies.wpengine.com

americans4fairskies2015Americans for Fair Skies commends US government action regarding the Gulf Subsidies
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Americans for Fair Skies Calls for Investigation into Allegations of Emirates’ Pilot Pushing

Americans for Fair Skies Calls for Investigation into Allegations of Emirates’ Pilot Pushing
UAE Government Cannot Fairly “Investigate” It’s Own State-Owned, State-Subsidized Airline

Washington, DC – In response to today’s Wall Street Journal story, “Pilot Workload at Emirates Under Question,” Americans for Fair Skies is calling on the U.S. government to investigate whether Emirates, an airline with ten current and two forthcoming daily flights into the United States, is safely operating its airline amid serious allegations of underreporting pilot-duty hours so that its pilots can work beyond established safe flight and duty time hours.

Said Americans for Fair Skies President, Lee Moak: “The safety allegations reported today in the Wall Street Journal are very serious, but we cannot be confident that the United Arab Emirates will take the investigation seriously. How can we know whether the UAE government, which also owns and operates Emirates Airways, is truly going to address its own declared problem? Evidence provided to the U.S. government and made available to the public has already made it clear that the UAE is subsidizing its two state-owned international airlines, Emirates and Etihad, in violation of the Open Skies agreement they signed. This alone tells us that they willing to break the rules for their own benefit. It’s not a far stretch to believe that they would handle the alleged safety violations the same way they have mishandled their Open Skies agreement. If Emirates is cheating their financial books, how do we know they are not also cheating their pilot flight hours’ books, just like dozens of Emirates pilots are accusing the airline of doing, according to the Wall Street Journal?”

The UAE has announced that Ismail Al Balooshi, the director of aviation safety at the General Civil Aviation Authority, will lead the investigation. Mr. Balooshi reports to the Board of the Civil Aviation Authority, which includes High Highness Sheikh Ahmed Bin Saeed Al Maktoom, the head of the Dubai Civil Aviation Authority and also the Chairman of Emirates Airways. Said Moak: “There is a clear conflict of interest here that requires independent investigation.” The General Civil Aviation Authority in the UAE is akin to the Federal Aviation Administration (FAA) here in the United States. Having the chairman of an airline leading its own safety oversight authority is a conflict of interest.

Should the United States investigate the allegations of Emirates Airways, which according to the Wall Street Journal, “underreports time on duty to the aviation regulator in the United Arab Emirates, meaning pilots at times exceed daily-duty limits that exist to protect their health and the safety of flights,” the UAE could be at risk of losing its Category 1 International Aviation Safety Assessment (IASA) rating from the Federal Aviation Administration. It is necessary for nations to maintain proper records to maintain their Category 1 rating, which Emirates, an arm of the government, is accused of not doing properly.

Learn more about Americans for Fair Skies, a grassroots coalition formed to restore fairness to our Open Skies, at fairskies.wpengine.com.

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americans4fairskies2015Americans for Fair Skies Calls for Investigation into Allegations of Emirates’ Pilot Pushing
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The Tilted Playing Field in International Airline Competition​

By: Rob Britton
In recent years, three Gulf-based airlines — Emirates, Etihad, and Qatar Airways — have expanded into the U.S. market at a rate that far exceeds growth in the market. They have done so in violation of Open Skies agreements and with massive backing from their governments. Fortunately, the men and women of the U.S. airline industry are fighting back, urging fair competition.

A recent opinion piece under this masthead, “Airlines Squabble Over ‘Open Skies’ Treaties,” argues that “airlines are a systemically critical part of our economy.” I wholeheartedly agree. According to the industry group Airlines for America, the U.S. airline industry drives nearly $1.5 trillion in U.S. economic activity while directly and indirectly supporting more than 11 million jobs. But the author of the piece, Richard Finger, clearly hasn’t spent much time studying airlines, or the facts surrounding the expansion of these Gulf carriers. As someone who has worked in and observed the industry for over 40 years, I am eager to set the record straight.

Airlines play a huge role in the economic success and development in all 50 states, which is precisely why Mr. Finger should understand that ensuring free and fair competition with Emirates, Etihad, and Qatar Airways is so important. These Gulf carriers have received more than $42 billion in subsidies and other unfair benefits from their governments in a clear violation of U.S. Open Skies policy. They are using these advantages to expand rapidly and flood the U.S. marketplace – threatening American companies and jobs.

All 112 Open Skies aviation agreements (not treaties, as Mr. Finger calls them, because unlike treaties they do not require Senate ratification) signed by the United States have been built upon on a key tenet of U.S. international aviation policy: to “Ensure that competition is fair and the playing field is level by eliminating marketplace distortions, such as government subsidies.” If a country wants open access to the U.S. marketplace, the largest in the world, they cannot massively subsidize their airlines. Unfortunately, this is exactly what the UAE and Qatar have done and continue to do. Even as I write this, Etihad has announced plans for a second daily (494- seat) A380 from New York to Abu Dhabi.

Mr. Finger attempts to characterize UAE and Qatari support for their airlines as “amorphous,” but a recent report specifically identifies the nature of the subsidies and other unfair benefits. This report was the result of two years of work — work made more difficult by the fact that none of these three airlines release financial statements that would meet U.S. standards of completeness and transparency.

After examining the extensive nature of governmental support the Gulf carriers enjoy, it is just plain wrong to claim, as Mr. Finger does, that U.S. carriers receive comparable benefits. First, the Chapter 11 process is not, as he says, “synonymous with subsidy.” It is a restructuring supervised by an independent judiciary. The process does not involve taxpayer money. Furthermore, under established international trade law, Chapter 11 reorganizations are not considered subsidies. And many other countries have similar procedures in place.

A second, related point: taxpayers are not liable for any restructuring of airline pension plans in bankruptcy. Mr. Finger equates the Pension Benefit Guarantee Corporation (PBGC) with American taxpayers, but that agency neither receives taxpayer funds nor is backed by the “full faith and credit” protection of the U.S. Government. According to the PBGC website, it “collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.” In fact, in most legacy airline bankruptcies since 2001, the PBGC has actively protected creditors’ rights against debtor air carriers and acted vigorously to minimize its liabilities. For example the PBGC prevailed in the American Airlines case, convincing the bankruptcy court to prevent American Airlines from terminating its pilots’ pension plan and to impose liens on $91 million in American’s foreign assets to secure a potential PBGC liability.

Bankruptcy reorganization has been painful for legacy airline employees, retirees, and creditors, but it has yielded many positive results. Carriers emerged stronger and more competitive, most employees still have their jobs and the entire economy has benefited from unprecedented stability. Given the pivotal importance of airlines to the nation, we all gain from an airline industry that no longer wobbles. This process, however, has been difficult for U.S. airlines, and contrasts starkly with the billions of government dollars the Gulf carriers have received in interest-free loans, equity infusions and more.

Third, Mr. Finger calls provisions of the Air Transportation Safety and System Stabilization Act, passed 11 days after the attacks of September 11, 2001, a “bailout.” I was working at American Airlines on 9/11, and we sure didn’t see it that way. In providing $5 billion in grants and enabling $10 billion in loan guarantees, lawmakers were simply responding to the potential economic damage of a severely weakened domestic industry after an unprecedented disaster. The act provided $860 million to American in 2001-02. When you consider that in late 2001 and early 2002 American often lost $15-20 million in a single day, that welcome support would only fund six to eight weeks of losses (net losses for American’s parent company in 2001-02 totaled $5.3 billion). It’s important to distinguish between modest, one-time emergency support following a catastrophic attack on the U.S. and the ongoing, “business as usual” subsidies the UAE and Qatar provide to their three mega-carriers, on demand, with blank checks.

Fourth, Mr. Finger criticizes tax-exempt bonds issued that enable airlines to modernize their terminals. As joint public/private facilities, airports are complex entities, and most observers – and certainly travelers – appreciate modern and efficient facilities. And, fundamentally, the funds come from debt that airlines must repay. In contrast, the UAE and Qatari governments are spending billions of dollars to expand their airports at no cost to the Gulf carriers. Qatar recently completed the $17 billion Hamad International Airport to facilitate Qatar Airways’ expansion, for example. Dubai is spending $7.8 billion to expand capacity at Dubai International Airport and Abu Dhabi is expected to complete a $6.8 billion expansion of its airport this year.

Finally, I would like to close with a personal comment: as a longtime airline employee, I object to Mr. Finger’s inflammatory rhetoric targeting my former employers and coworkers. His piece is peppered with righteous indignation: “As a taxpayer it is unfair, at every economic hiccup, to shower this industry with gratuitous taxpayer dollars,” he writes. He describes U.S. companies as “whiny” and characterizes my colleagues in the business as “spoiled children.” The hundreds of thousands of men and women working in the U.S. airline industry deserve to be treated with more respect. We are simply seeking the opportunity to compete on a level playing field — to bring people together safely, reliably, and at a fair price.

Rob Britton has worked in and near the airline industry since 1984, and specializes in researching and explaining this complex and changing business to varied audiences. He is an adjunct professor at the McDonough School of Business at Georgetown University, and an annual guest lecturer at 25 business schools worldwide, including Kellogg, Wharton, and London Business School. You can reach Rob at [email protected] or on Twitter at @PlanelySpeaking

americans4fairskies2015The Tilted Playing Field in International Airline Competition​
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False Analogies: From Paper Airplanes to Massive Gulf Subsidies

Qatar Airways, Etihad, and Emirates have received more than $40 billion in subsidies by their home governments in the past 10 years [1]. Over the past few days, those arguing in favor of the Gulf subsidies have referenced a nearly two decades old report that highlights the beginning of aviation in the United States, starting in 1918, and ending before the Open Skies agreements between the U.S. and UAE and Qatar were signed. To compare these current subsidies to a nearly 20-year old report on the founding of aviation in the United States as we first took to the skies with early test-flights is like comparing a Boeing 777 to a paper airplane. The comparison is actually laughable.

Any comparison of the evidentiary findings regarding the current Gulf subsides, which have been presented to the U.S. government and made available to the public, to unrelated and outdated research on the founding of the U.S. aviation industry is an absurd and desperate attempt to distract from the real fact-based evidence on the Gulf subsidies [2].

The facts are straightforward. The definition of subsidy has been clearly defined by the World Trade Organization [3]. Open Skies Agreements forbid subsidies that take away the opportunity for fair competition determined by the commercial considerations of the marketplace [4]. The governments of the United Arab Emirates and Qatar are presently fueling their airlines with billions in government subsidies that are unfairly distorting the marketplace and removing the opportunity for fair competition. These subsidies are a direct violation of Open Skies agreements that they signed.

United States government must immediately engage these two countries in the formal consultations process, outlined and made available to all parties in Open Skies Agreements, to bring about an end to these subsidies, which threaten U.S. aviation jobs by distorting the international marketplace [5].

Americans for Fair Skies is a grassroots coalition, established with the aim of restoring fairness to our Open Skies policies. They are asking the U.S. government to take action regarding the subsidy violations of the Open Skies Agreements with the United Arab Emirates and Qatar.

Learn more at fairskies.wpengine.com.

[1] thestreet.com/story/13051277/1/report-says-gulf-airlines-got-39b-with-more-to-come-in-illegal-subsidies.html
[2] forbes.com/sites/tedreed/2015/03/02/note-to-mid-east-airlines-you-have-some-questions-to-answer/
[3] wto.org/english/docs_e/legal_e/24-scm.pdf
[4] state.gov/documents/organization/114970.pdf
[5]reuters.com/article/2015/02/11/us-airlines-competition-exclusive-idUSKBN0LF01W20150211?irpc=932

americans4fairskies2015False Analogies: From Paper Airplanes to Massive Gulf Subsidies
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A4FS Responds to James Zogby

Our Bias Against Unprecedented Trade Violations
By Captain Lee Moak

Yesterday, James Zogby, President of the Arab American Institute, penned a strongly worded Op-Ed that, while full of bluster at the approach and content of the campaign against Gulf airline subsidies by their home governments, actually did much to support the point that Americans for Fair Skies has been making from the beginning of its campaign: that there is no defense for the massive airline subsidizations coming out of two countries on the Arabian peninsula that are distorting the international aviation marketplace and threatening American jobs. Since 2004, the United Arab Emirates and Qatar have violated the agreements established in Open Skies by providing over $40 billion in subsides to their three international carriers. The result has been a systematic devastation of airlines across the globe through an artificial lowering of seat price and a resulting distortion of the market.

When Americans for Fair Skies undertook the responsibility of educating the public on the subsidy issue and initiated its request that the United States government fulfill the obligation outlined under the Open Skies Agreements to defend its aviation industry in the face of unfair competition [1], it did so with a clear purpose and fact set. This is not about race or ethnicity. This is about a massive and unprecedented trade violation that is threatening a critical component of the U.S. economy and the hundreds of thousands of jobs it creates. And yes, it is undertaken by Middle Eastern governments rich with oil money. Mr. Zogby suggests that pointing that out the location and financial circumstances of these governments is “troubling.” What I find troubling is that he would make such a leap, himself engaging in a smear campaign that is beneath the notable organization that he represents. Further, Mr. Zogby’s sudden “expertise” in international aviation is puzzling, and questionable, given that he demonstrates little knowledge of the fact-based evidence and instead relies on tired arguments and a study from 1998 rather than addressing the current evidence available to the public.

Subsidies
Article 11.2: Each Party shall allow each airline to determine the frequency and capacity of the international air transportation it offers based upon commercial considerations in the marketplace [2].

The Middle Eastern airlines that are currently being highlighted for taking part in these massive trade violations – Qatar Airways, Etihad and Emirates – spent years flatly denying the existence of these Gulf subsidies. When the extent and sheer scale of the subsidies came to light with an evidentiary finding that clearly and methodically demonstrates the subsidy violations [3], their argument switched from denial of the existence of such subsidies to the claim that U.S. doesn’t understand the difference between equity and subsidy. We do actually. As does the rest of the world, as the definition of a “subsidy” is clearly defined by the World Trade Organization [4] and that is the basis of the subsidy violation evidence.

The unprecedented expansion of the three subsidized carriers resulting from these subsidies has not significantly increased the number of seats required for routes, rather, distorted the seat allocation through artificially lowering the cost of seats and dumping capacity onto routes through the use of new wide-body aircraft [5]. These three airlines can and do operate at a continual loss; yet expand into markets they would never be able to fairly compete in “given the commercial considerations of the marketplace” without the billions in subsidies they are receiving [6]. This is a violation of Open Skies and the basis of our entire campaign.

Competition
Article 11.1: Each Party shall allow a fair and equal opportunity for the airlines of both Parties to compete in providing the international air transportation governed by this Agreement [7].

After denying the subsidies proved ineffective for the three subsidized carriers, they then attempted to argue that the U.S. airlines were simply frustrated because they couldn’t compete. U.S. aviation, however, cannot nor should not be expected to compete within the open marketplace created by Open Skies against airlines that are merely arms of their government, with all of the financial, labor, and regulatory benefits resulting from such a relationship. Competition isn’t competition at all when the playing field is not level.

Consultations
Either Party may, at any time, request consultations relating to this Agreement. Such consultations shall begin at the earliest possible date, but not later than 60 days from the date the other Party receives the request unless otherwise agreed [8].

The fundamental point being made is this: the countries of Qatar and the United Arab Emirates have violated Open Skies through their subsidization of their airlines. Because they hold an Open Skies Agreement with the United States, the U.S. has the right (as do both the UAE and Qatar) to request consultations relating to this Agreement. This is a trade dispute among allies. And one that can and should be worked out through the established Open Skies policy.

The U.S. Department of Transportation has clearly stated, “If aviation partners fail to observe existing U.S. bilateral rights, or discriminate against U.S. airlines, we will act vigorously, through all appropriate means, to defend our rights and protect our airlines [9].” The time for consultations is now. Our Open Skies Agreements call for it, the U.S. Department of Transportation calls for it, Americans for Fair Skies calls for it. This isn’t about who is doing the subsidizing, its about what the subsidizing is doing to a vital American industry and the hundreds of thousands of jobs it provides.

Captain Moak is currently the President of Americans for Fair Skies and is a former Delta Boeing 767 pilot and former president of the Air Line Pilots Association, International.

[1] http://www.state.gov/documents/organization/114970.pdf
[2] http://www.state.gov/documents/organization/114970.pdf
[3] http://www.thestreet.com/story/13051277/1/report-says-gulf-airlines-got-39b-with-more-to-come-in-illegal-subsidies.html
[4] https://www.wto.org/english/docs_e/legal_e/24-scm.pdf
[5] http://blogs.star-telegram.com/sky_talk/2014/12/a380s-leaving-dfw-arent-exactly-full-of-passengers-local-aviation-website-says.html
[6] http://fairskies.wpengine.com/2015/03/thai-airways-loses-money-etihad-airways-loses-even-more-money-and-is-the-fastest-growing-airline-in-the-world/
[7] http://www.state.gov/documents/organization/114970.pdf
[8] http://www.state.gov/documents/organization/114970.pdf
[9] US Federal Register / Vol. 60, No. 85 / Wednesday, May 3, 1995 / Notices 21845

Published on TheHill.Com: Our Bias Against Unprecedented Trade Violations

americans4fairskies2015A4FS Responds to James Zogby
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A Deal Is a Deal

By Tim Canoll

Roll Call– In recent weeks, it has become abundantly clear that Qatar and the United Arab Emirates are in breach of their air service agreements with the U.S. and that the Obama administration must act swiftly to restore balance. These countries have unfairly subsidized three of their airlines — Emirates Airline, Etihad Airways and Qatar Airways — and have thus posed a direct threat to the economic security of our U.S. aviation industry and the 11 million jobs that it supports.

Last week, the U.S. government opened a period for public comment in regards to the massive subsidies these Gulf airline carriers receive, and we are pleased the administration is taking this issue seriously. We urge members of Congress to also weigh in by joining our call for a level, competitive playing field for U.S. airlines and aviation workers and stopping these carriers from exploiting loopholes in our Open Skies agreements.

Since 2004, the governments of Qatar and the United Arab Emirates have provided $42 billion in subsidies and other unfair benefits to these three airlines. Because these airlines receive massive government subsidies, they are growing at an astounding rate and expanding their global presence without the normal concern for financial profitability.

That means our airlines aren’t competing with other airlines — they are competing with the treasuries of very wealthy nations.

The U.S. aviation industry is not alone: Carsten Spohr, chairman of the executive board and CEO of the Lufthansa Group, says that other global airlines are being “increasingly attacked” by heavily subsidized Middle Eastern carriers. A basic premise of Open Skies is that airlines would compete on a level playing field, but today, we instead find ourselves competing with gulf carriers receiving blank checks from their governments’ coffers. In addition, the governments of Germany and France have publicly stated their concerns about the massive government subsidies being provided to the Gulf carriers and the impact they have on the aviation marketplace.

When James Hogan, president and CEO of Etihad Airways, was recently asked about his airline receiving $6 billion in equity infusions, he could have denied it, but he didn’t. Instead, he defended the infusions saying, “Why can’t a state invest in growing an airline to create jobs?”

This violation of our international agreements is unacceptable and threatens the careers of highly trained U.S. pilots and others in the aviation industry.

It’s time for the United States to tell the UAE and Qatar that a deal is a deal. The Obama administration should open consultations with Qatar and the UAE immediately, as allowed by the existing air transport agreements, to get the facts about these airlines’ finances. In addition, the administration should request a freeze on current passenger service by these countries’ airlines while consultations are under way.

We need our government — both in the executive branch and our elected officials in Congress — alongside us in the fight for a strong and vibrant U.S. airline industry. All we ask is that U.S. companies have a fair opportunity to compete in the global marketplace so that they may continue to support North American aviation jobs.

Capt. Tim Canoll is president of the Air Line Pilots Association, International.

Originally published at RollCall.Com: A Deal Is a Deal

americans4fairskies2015A Deal Is a Deal
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Americans for Fair Skies’ Statement on APFA’s Open Letter to Actress Nicole Kidman

Washington D.C. (April 2, 2015) – This morning, Laura Glading, President of the Association of Professional Flight Attendants (APFA), sent a letter to actress Nicole Kidman requesting she step back from her prominent role in an advertising campaign for Etihad Airways – a company the Wall Street Journal has publicly reported ‘may fire women if they become pregnant’ and forces flight attendants to live in ‘confinement’ in secure compounds.[1] Americans for Fair Skies supports fair labor practices and has released the following statement in response to the letter from APFA:

“Ms. Kidman, a UN Women Goodwill Ambassador, is a strong advocate for global women’s rights and we find her appearance in an advertising campaign for an airline well known for its discriminatory practices towards those it employs to be both puzzling and unsettling. We support the APFA in their request that Ms. Kidman cease her relationship with Etihad Airways and hope she will instead choose to continue using her considerable talent and fame to support female workers, and all workers in need of fair labor practices, both in this instance and around the world.”

Americans for Fair Skies is a grassroots coalition, established with the aim of restoring fairness to our Open Skies policies. They are asking the U.S. government to take action regarding the subsidy violations of the Open Skies Agreements with the United Arab Emirates and Qatar.

Learn more at fairskies.wpengine.com.

[1] “Persian Gulf Airlines Groom New, Global Flight Crews,” Wall Street Journal, December 3, 2014: http://www.wsj.com/articles/persian-gulf-airlines-groom-new-global-flight-crews-1417646586

americans4fairskies2015Americans for Fair Skies’ Statement on APFA’s Open Letter to Actress Nicole Kidman
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Thai Airways Loses Money & Shrinks; Etihad Airways Loses Even More Money and is the Fastest Growing Airline in the World

$17 Billion in government subsidies fuels Etihad’s market distortion

Washington, DC- After accumulating more than $700 million in operating losses over the past two years, Thai Airways has announced that they will be entering a period of major restructuring that will include everything from significantly reducing the size of their fleet, to redistributing some routes to their LCC, Thai Smile, while doing away with other long haul routes altogether. They have cancelled plans to expand further into Germany, and will be suspending service to Madrid, Spain, and pulling out of Moscow, Russia and Johannesburg, South Africa, with other reductions planned[2].

Meanwhile, in the United Arab Emirates, after recording significant operating losses every year since it’s founding, Etihad Airways is doing the opposite. Etihad has recently retrofitted it’s A380 with a 3 bedroom “residence suite,” has 169 wide-body aircraft on order with another 56 in the works [3],  and has scheduled new routes to Baku, Tbilisi and Dar es Salaam in the second half of 2015, expanding its destinations to 110 [4].

Etihad has received over $17 billion in subsidies from its home government allowing the airline to not only stay in business – the airline would not be commercially viable without the government subsidies – but also to growth at unprecedented and unwarranted rates[5].  Etihad’s subsidies – which includes $6.3 billion in direct government cash and another $4.6 billion in zero-interest “loans” with no repayment terms or obligations – run counter to the Open Skies agreement the UAE holds with the US.

If Etihad were truly a commercial enterprise, continuously recording operational losses, especially ones as large as those recorded would require significant organizational restructuring with the aim to avoid going out of business. That is precisely what Thai Air is doing, restructuring and re-approaching their business model[6] with the aim of ultimately reporting a profit- the goal of any company that competes in a private, open marketplace. Etihad, because it is merely an arm of the government, cannot go bankrupt, and can instead continue to dump seat capacity at sub-market rates in their quest to steal market-share (and ultimately jobs) from U.S. airlines and their workers[7].

The Open Skies Agreement that the United States entered into with the UAE (before Etihad Airways even existed) clearly stipulates that companies competing under such an agreement will do so with the understanding of competing in a private, open marketplace based on fair competition free from subsidies. The UAE has chosen not to abide by their agreement, and as such the U.S. Department of Transportation has clearly stated, “if aviation partners fail to observe existing U.S. bilateral rights, or discriminate against U.S. airlines, we will act vigorously, through all appropriate means, to defend our rights and protect our airlines[8].”

The time for action to restore fairness to our Open Skies and safeguard the American aviation sector and American aviation jobs is now. Captain Moak, President of Americans for Fair Skies shared this, “The UAE and Qatar have failed to observe their bilateral agreements, and they have discriminated against U.S. airlines. Therefore, the U.S. government needs to show real leadership in the fight against unfair subsidies, like many European nations and the EU Transport Minister are now doing, and stand up to the Gulf subsidies by freezing new routes into the U.S. and calling for consultations with the UAE and Qatar.”

For more information visit fairskies.wpengine.com.

[1]thestreet.com/story/13051277/1/report-says-gulf-airlines-got-39b-with-more-to-come-in-illegal-subsidies.html
[2]centreforaviation.com/analysis/thai-airways-embarks-on-major-network-and-fleet-restructuring-but-long-term-challenges-remain-215907
[3] airbus.com/presscentre/pressreleases/press-release-detail/detail/etihad-airways-orders-50-a350-xwb-36-a320neo-and-one-a330-200f/
[4] thenational.ae/business/aviation/etihad-airways-to-add-new-routes-by-mid-2015
[5] fairskies.wpengine.com/the-white-paper/
[6]centreforaviation.com/analysis/thai-airways-embarks-on-major-network-and-fleet-restructuring-but-long-term-challenges-remain-215907
[7]detroitnews.com/story/opinion/editorials/2015/03/13/editorial-keep-skies-open/70282918/
[8]US Federal Register / Vol. 60, No. 85 / Wednesday, May 3, 1995 / Notices 21845

americans4fairskies2015Thai Airways Loses Money & Shrinks; Etihad Airways Loses Even More Money and is the Fastest Growing Airline in the World
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Americans for Fair Skies Applauds European Leadership to Combat Gulf Airline Subsides; Calls on U.S. Government to Act Now

Americans for Fair Skies applauds a recently announced combined European effort to combat the illegal subsidies from the United Arab Emirates and Qatar to their airlines and ensure “fair competition.” Lead by France and Germany, it asks European Union partners and the EU executive commission to work together in finding strategy that will bring about a fair and equitable resolution to this issue.[1]

This development comes after “current EU talks with the six-nation Gulf Cooperation Council on fair aviation competition have failed to curb market-distorting government aid to carriers such as Emirates, Etihad Airways PJSC and Qatar Airways Ltd,” according to European Transport Commissioner Violeta Bulc.[2] If implemented, this new effort, supported by other EU member states and the European Commission, would replace individual bilateral agreement negotiations and will be headed by the Commission on behalf of individual members.

French transport minister Alain Vidalies stated, “Any commercial flying agreement including the granting of air traffic rights to foreign carriers should be accompanied by provisions allowing member states to monitor potential illegal subsidies and unfair competitive practices.”

Germany’s Transport Minister further explained that such an arrangement would allow for the opportunity for both sides to talk about new landing rights and would likely delay the decision to further open European Markets until such conversations had taken place.

“Americans for Fair Skies applauds the efforts that France and Germany have taken to support their aviation industries and their workers and end the market distorting Gulf subsidies,” said Americans for Fair Skies President, Lee Moak. “We are calling on the U.S. government to safeguard our vital aviation industry and the hundreds of thousands of jobs it creates by requesting consultations with the governments responsible for the subsidy violations and until such time as an equitable resolution has been reached, freeze new routes for these parties into the U.S.”

Americans for Fair Skies is a grassroots coalition, established with the aim of restoring fairness to our Open Skies policies. They are asking the U.S. government to take action on what has been established as the largest trade violation in history. Last week, Americans for Fair Skies launched a new television ad, which can be viewed here, highlighting how the United Arab Emirates and Qatar are shredding Open Skies agreements they signed with the U.S. by providing their airlines more than $40 billion in subsidies.

Learn more at fairskies.wpengine.com.

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[1] http://www.routesonline.com/news/29/breaking-news/247817/eu-agrees-joint-approach-to-gulf-carriers/?utm_source=content_and_community&utm_medium=social_media&utm_campaign=the-hub

[2] http://www.bloomberg.com/news/articles/2015-03-13/gulf-carriers-may-face-tougher-eu-effort-to-tackle-subsidies

americans4fairskies2015Americans for Fair Skies Applauds European Leadership to Combat Gulf Airline Subsides; Calls on U.S. Government to Act Now
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Coming Soon: More Subsidized Flights to America, U.S. Aviation Jobs Overseas

Coming Soon: More Subsidized Flights to America, U.S. Aviation Jobs Overseas

Emirates announces 10th daily flight to U.S., threatening U.S. airline jobs

Statement from Americans for Fair Skies on the announcement of service by Emirates Airways to Orlando International Airport (MCO) starting September 1, 2015:

“It kinda makes sense that Emirates would fly to Orlando, home of Disney World, because like Mickey Mouse, this airline is not real. It’s make believe. It’s not a company. What is not a fairy tale, however, is that Emirates is an arm of the Dubai government, located in the United Arab Emirates. But unlike the magic of Disney World, Emirates and the other two subsidized Gulf carriers, Qatar Airways and Etihad, are threatening U.S. aviation jobs and distorting the international marketplace.

“More than $40 billion in subsidies provided by the home governments of three Gulf airlines has allowed for the unprecedented and unwarranted expansion of the airlines into the U.S., dumping seat capacity into the U.S. and putting American jobs at risk. For every route from which the U.S. airlines are displaced, or forgo, to the subsidized competition from the airlines of the United Arab Emirates and Qatar, 800 U.S. aviation jobs are lost. This has to end now.

“Americans for Fair Skies is a grassroots coalition, established with the aim of restoring fairness to our Open Skies policies. We are asking that the U.S. government to take action on what has been established as the largest trade violation in history by freezing new routes from Emirates, Etihad, and Qatar into the U.S. and entering into immediate consultations with the governments of the United Arab Emirates and Qatar to bring about an end to the subsidies to their national airlines.

“The United Arab Emirates and Qatar’s blatant violations of Open Skies policies represent predatory protectionism at its worst through the subsidization of their airlines. Last week, Americans for Fair Skies launched a new television ad, which can be viewed here, highlighting how the United Arab Emirates and Qatar are shredding Open Skies agreements they signed with the U.S. by providing their airlines more than $40 billion in subsidies.”

Learn more at fairskies.wpengine.com

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americans4fairskies2015Coming Soon: More Subsidized Flights to America, U.S. Aviation Jobs Overseas
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Open Skies clouded by subsidies

Since their inception in the early 1990s, Open Skies agreements have expanded international air travel and increased consumer choice. That was the intent when they were created, and that remains their goal today. As a result of their success, the United States has entered into over 100 of these agreements with countries around the world.

These are the facts those arguing in favor of the Gulf airlines keep presenting. And they are absolutely true. These, however, aren’t the only facts that need to be shared. Nor are they the facts that are in dispute. So, to present the challenges surrounding the subsidization of the Gulf airlines and their subsequent expansion into international markets as a black and white argument about being for or against Open Skies as a whole is not only reductive, its entirely inaccurate.

Yes, Open Skies have been a boon for the U.S. economy. Neither the legitimacy nor the benefit of these policies is in dispute. What is in dispute however, is the unnatural expansion and artificial market distortion that is happening within the Open Skies agreements the U.S. shares with the United Arab Emirates and Qatar.
A critical element of these Open Skies agreements is that they come with an expectation of fairness through competition in a private, open marketplace- one free of government subsidies. Yet, since 2004, the United Arab Emirates and Qatar have violated the agreements established in Open Skies through over $40 billion in subsides of their national carriers. The result has been a systematic devastation of airlines across the globe through an artificial lowering of seat price and a resulting distortion of the market.

The irony is that the UAE and Qatar and their respective airlines, Etihad, Emirates, and Qatar Airways, have blustered loudly about consumer choice and competition whenever countries or the aviation industry have tried to stand up to such practices. When that didn’t work, they have switched to threats and scare tactics, such as forcing Canada out of Camp Mirage as a result of bilateral trade restrictions stemming from this subsidization. Now, the U.S., which presents the largest potential payoff for these airlines from a market share perspective, and the largest challenge to their expansion efforts as a result of the size of their national aviation infrastructure, is saying “enough.” And what is the response of these airlines? To threaten legal action. To threaten to cancel aircraft orders from Boeing, putting even more U.S. jobs at risk, if the U.S. takes action in response to their subsidies. To present themselves and their nations as great military allies of the U.S., which is a completely unrelated matter, mixing geopolitics with business.

This isn’t how allies, or true businesses, are expected to treat each other. But then again, these airlines are not true companies; they are in fact arms of their states.

For years, these airlines have explicitly, and on the record, stated that they were not subsidized. When these subsidies came to light, they argued that the world didn’t understand the difference between equity and subsidy (we do, by the way, as it is defined by the World Trade Organization), and finally, when they saw the evidence of subsidization in black and white, they again switched their argument to, “so what if we subsidize? U.S. airlines are just whining because they can’t compete.” Which of course, isn’t remotely the point of the argument. It’s impossible for a private entity to compete with the resources and access of an entire nation. This is why only private entities are allowed to compete in the marketplace established by Open Skies, not countries.

Americans for Fair Skies is asking the U.S. government to take action to restore fairness to our Open Skies policy by taking on the largest trade violation in history undertaken by the UAE and Qatar. We must restore Open Skies, reject the Gulf protectionism, and stand up for American workers.

Moak is a former Delta Boeing 767 pilot and former president of the Air Line Pilots Association, International., who is currently president of Americans for Fair Skies.

Originally published on TheHill.Com: Open Skies clouded by subsidies

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The Argument That US Carriers Should Stop Complaining About Middle East Carriers and Compete on Product Is Garbage

By Brett Snyder
Cranky Flier Blog- The fight between the US carriers and the Middle East carriers is just starting to ramp up, but people are quickly taking sides. As you saw in my lukewarm reception, I think there is merit to what the US carriers are saying but outside of revisiting fifth freedom rights, it’s hard to see how any other restrictions would make sense. Now that the cards are on the table, we’ll see different defenses formed to combat the accusations. While I’m sure some will be better than others, none will be worse than the argument that US carriers should just improve their product and win on that basis. That’s just not going to happen. Nor should it.

The Chairman and CEO of Emirates (and pretty much half of everything in Dubai) has said “offer the best to the passengers and people will fly with you.” Yeah, sure. If you offer me the best then I’ll take it. Wait, I don’t have to pay extra for it do I?

The answer with the Middle East carriers is no. They can keep their costs much lower, and they don’t have the same level of pressure to make a profit. Both Qatar and Etihad in particular will just get more money pumped in from the government. No problem.

These airlines can spend a lot more on things that people might like but won’t influence purchase decisions. So they spend the money and offer tickets for the same price or lower than what airlines offer today in the market. If you’re a passenger that sounds great.

But should American carriers “up their game”? Yes, to an extent, and they have, especially in the premium cabin. Look at what Delta has done by installing flat beds with direct aisle access in business class on its long haul fleet. Look at American doing the same thing. United has been quietly investing in everything from seats to upgrading meals and lounges. In coach there’s been investment as well, particularly by Delta. But these investments only make sense if passengers are going to pay for them. That does mean full flat beds up front are a necessity. Emirates still hasn’t even done that. But does it mean providing limos to every passenger and free hotels on overnight connections? No, it doesn’t.

The other issue, of course, is labor. Qatar’s CEO is incredibly outspoken about his anti-union stance, and he can do that because he lives in Qatar. He can fire people without cause and he can impose strict rules that govern their behavior even off the clock. He can really do whatever he wants in that regard. In the US, that simply can’t happen. It doesn’t matter if you’re anti or pro-union. The rules are the rules, and you can’t just fire people because they’re too old or too large or, incredibly, just too lazy to properly do the work. It’s not how things work here. The airlines might like more flexibility but they will never get anywhere near what can be done in the Middle East.

Could or should a US carrier become like an Etihad or Qatar? No. First of all, with the way labor rules work in the US, they’re just not going to be able to provide the same kind of service as foreign carriers. I mean, I guess they could if they paid a ton of money to get all the angry, disgruntled people to leave on a regular basis but that gets us to the larger issue. US carriers have to create a business that’s profitable (or at least tries to be). Costs are inherently higher for US carriers than they are for Middle Eastern carriers thanks to structural differences. And if costs aren’t low enough to make a profit, they can just get in line for another cash infusion in the Middle East. So for the US carriers to match what those carriers do means they’ll have to charge more. And while some people will always pay more for quality, they’re not going to pay the US carriers significantly more to get the same level of service that the Middle Eastern carriers can provide.

So US carriers are right to focus their investments in areas where people are going to be willing to pay for improvement. It’s not like they’re sitting still as the Middle East carriers might have you believe, but they’re not busy lighting money on fire to match a Middle Eastern product that they could never offer at a competitive fare. Nor should they.

This article was originally posted on: Cranky Flier: The Argument That US Carriers Should Stop Complaining About Middle East Carriers and Compete on Product Is Garbage

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Editorial: Keep the skies open

The Detroit News March 14, 2015

Cheating by Gulf state airlines distorts the international air traffic market and placing U.S. carriers at a disadvantage

Free and fair trade demands that all parties engage in commerce on a level playing field. Or in the case of airlines, in level skies.

That’s the idea behind the Open Skies Agreements the United States has been negotiating with other countries since 1992. There are now more than 100 such trade pacts in place to assure that foreign carriers don’t use subsidies from their home governments to steal business from U.S.-based airlines.

And they’ve worked for the most part, allowing multiple players to expand air service in an efficient global marketplace. Passengers benefited from both competitive fares and increased travel options.

But the arrangement has hit some significant turbulence.

The United Arab Emirates and Qatar are ignoring the rules and channeling huge subsidies to carriers based in the Gulf, allowing them to cut fares below market rates and grab a greater share of passengers.

U.S. airlines are accusing state-owned Emirates, Etihad and Qatar airlines of taking more than $40 billion in government hand-outs, fueling a worldwide expansion of their reach.

The operating subsidies allow the Gulf airlines to cut fares below the level at which U.S. airlines can profitably fly. So passenger traffic is shifting to those foreign carriers, particularly on international routes servicing south Asia.

The Gulf airlines have 25 flights a day to the United States that then fly on to other parts of the world. And while that may not sound like such a large number, each international flight has a spin-off benefit of 1,000 jobs, the domestic airlines contend.

Very little of the traffic is generated in the home airports of the Gulf carriers. Rather, most of their passengers board the connecting flight in the U.S.

For passengers, fares may drop as the Gulf carriers fly at a loss to increase their market share. But ultimately, the number of competing flights will fall and prices for travelers will rise.

This is the equivalent of a state-owned foreign automaker dumping vehicles on the U.S. market at prices far below the real cost of production.

The Gulf carriers have been steadily adding capacity, distorting the marketplace. Their U.S. competitors also accuse them of creating vertically-integrated, wholly state-owned aviation sectors that include complex relationships between their governments, airlines, ground handlers and airports — all in violation of the Open Skies Agreements those countries signed.

Ultimately, such disregard for trade pacts will drive U.S. carriers out of certain international routes, costing jobs in this country.

The agreements signed with the Gulf states are very generous, placing few restrictions on their ability to serve the lucrative American market.

But they do demand that the service be based on honest trade practices.

The Obama administration can not allow the U.S. airline industry to be undermined by predatory, state-owned competitors.

It should demand that the Gulf states honor the Open Skies Agreements or risk losing access to U.S. Airports.

Originally published at DetroitNews.Com: Editorial: Keep the skies open

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Airline subsidies in the Gulf: Feeling the heat

By Gulliver

(The Economist)-ALLEGATIONS of unfair competition are nothing new for the Gulf’s carriers. The region’s big three airlines—Emirates, Etihad Airways and Qatar Airways—have long been accused of receiving government subsidies by their rivals in Europe and America. But supporting evidence has been in short supply. That apparently changed yesterday, when a group of airlines disclosed details of “obvious and massive” Gulf-carrier subsidies totalling $42bn since 2004. The findings have been submitted to the American government in a 55-page dossier urging a re-think of Washington’s open-skies treaty with Qatar and the United Arab Emirates (UAE). It contends that the Gulf carriers—which compete with American rivals on international routes—should only enjoy unfettered access to America’s airports if they operate on a level playing field.

It is a familiar argument that already holds sway with policymakers in Europe. The Gulf’s rebuttal is equally familiar. Tim Clark, the boss of Emirates, maintains that the carrier he helped set up in 1985 only ever received $10m in seed capital. Its meteoric rise on the global stage, he insists, is down to a mixture of the Gulf’s geographical good fortune at the nexus of East and West, and the Dubai government’s pro-aviation policies. The American airlines which made the accusations, he says, are simply trying to hide behind protectionism.

This well-versed stance is now coming under renewed scrutiny by American officials, who will meet with Mr Clark in Washington in a fortnight. He must be concerned that some of the mud will stick. According to the Financial Times, the allegations against Emirates include Dubai’s assumption of a $2.4bn fuel-hedging loss, $2.3bn of savings from artificially low airport charges and $1.9bn of savings from Emirates’ non-unionised workforce. Mr Clark will of course deny that cheap labour and ground-handling constitute a government subsidy; to the contrary, he will say, they reflect the commercial savviness of his government. But the accusations levied against the other Gulf carriers are harder to dismiss. Qatar Airways, it is alleged, has received $7.7bn in interest-free loans from the Qatari government and $6.8bn in reduced debt-interest charges thanks to sovereign guarantees. Etihad is said to have received $6.3bn in capital injections, $4.6bn in interest-free loans with no repayment obligation, and $4.2bn in “additional committed subsidies” from Abu Dhabi.

Do equity transferrals, interest-free loans and debt guarantees constitute subsidies? Not according to Akbar Al Baker, the boss of Qatar Airways, who insists that the Qatari government is free to provide financial support to its airline just like any other shareholder.

But his argument is misleading. First, the sheer scale of equity apparently being provided to the Gulf carriers dwarfs what any privately owned airline could hope to secure for start-up capital. Second, debt guarantees are two different animals in the public and private sector. In the latter, they are provided when a shareholder believes there is little to no chance that the debt will be defaulted on; in the former, they are provided irrespective of the likelihood of repayment, effectively kicking the borrowings into the long grass. On both counts, the Gulf carriers enjoy clear financial advantages over their American and European rivals, affording them a safety net which permits them to operate unprofitable services in order to gain market share.

Transparency is another issue. Proponents of the Gulf model often note that airlines in America benefited from the Chapter 11 bankruptcy protection system after the 9/11 terrorist attacks. This, they claim, amounted to a back-door subsidy, propping up the domestic sector while its debts and costs were trimmed. But that is an unfair comparison. Chapter 11 restructurings do not involve equity injections by the taxpayer. They are restructurings conducted under the watchful eye of an independent judiciary. By contrast, decisions about the organisation of Gulf-carrier balance sheets are taken behind closed doors, by dynastic rulers who have no accountability to their citizens. Unless Qatar and the UAE can demonstrate that their flag-carriers abide by competitive norms in the private sector, the American government is entitled to impose bilateral restrictions—just as most governments in Europe and the Middle East have done.

There is one final point that Gulliver finds pertinent. Gulf carriers are more proactive than most at currying favour with trade journalists. Their generosity to the media goes beyond complimentary flights for press conferences—perks that The Economist’s journalists are prohibited from accepting—and extends well into corporate hospitality. Once a journalist has enjoyed an evening in an executive box at the Emirates Stadium, for example, it becomes awkward to write anything negative about Dubai’s flag-carrier. Such conflicts of interest may well have influenced coverage of the Gulf subsidy row.

Originally published on Economist.com: Airline subsidies in the Gulf: Feeling the heat

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Now that Emirates Subsidies are Proven, Is Tim Clark Resigning Tomorrow?

Emirates CEO previously stated: “you prove a subsidy, I’ll resign the next day.”


Washington, DC – Today, evidentiary findings were released establishing more than $40 billion in subsidies from the governments of the United Arab Emirates and Qatar to their three state-subsidized airlines, including Emirates Airways. Specifically, Emirates Airways has received at least $6 billion in subsidies and other unfair government benefits since 2004, including $2.4 billion from government assumption of losses from fuel hedging and $2.2 billion from subsidized airport infrastructure. Emirates also received nearly a $2 billion benefit from government policies that artificially keep labor costs below market rates.

A statement by Emirates CEO, Tim Clark, from 2010 clearly established that he would resign if Emirates was found to be subsidized. He stated, “you prove a subsidy and I will resign the next day’.” Today, Emirates was proven to be subsidized. And tomorrow is the “next day” after today. The question therefore is: will Tim Clark keep his word and resign tomorrow?

Captain Lee Moak, Americans for Fair Skies President, stated the following: “We await word on Mr. Clark’s resignation. The billions of dollars in government subsidies from the government’s assumption of fuel hedging losses and subsidized airport charges violate the WTO standard of a subsidy, and violate the principles of Open Skies. Emirates has not played by the rules for at least a decade, despite claims to the contrary, and today their underhanded tactics and mistruths have been exposed.”

Also exposed in the release of the white paper today: Etihad Airways and Qatar Airways have received over $17 billion each from their respective governments in subsidies. Said Moak, “We also wonder if Etihad CEO James Hogan and Qatar Airways CEO Al Akbar are now also considering resignations after making numerous public claims, which we now know beyond a reasonable doubt were untrue, that their airlines were not government subsidized.”

Americans for Fair Skies, a grassroots coalition established to restore fairness to our Open Skies policies, is asking the U.S. government to take action on what has been established as the largest trade violation in history. The United Arab Emirates and Qatar are engaged in predatory protectionism at its worst, subsidizing their airlines and shredding Open Skies agreements they signed.

Said Moak: “The evidence is clear. Facts are facts. Emirates, Etihad, and Qatar are all receiving subsidies from their governments in violation of the principles of Open Skies. They have not been truthful for years about these subsidies, attempting to hide them in their quest to steal passengers from U.S. airlines, undercutting American jobs. Enough is enough. The time for action is now.”

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Note to Mid-East Airlines: You Have Some Questions to Answer

By Ted Reed

(Forbes)- On Thursday, Emirates will stage a Herald Square celebration of its fourth daily flight to Kennedy International Airport. The airline will invite the public to play a tic-tac-toe-like game called Connect 4, offering two business class tickets to any of its destinations as a prize.

Certainly long famous-Herald Square is a good place to attract attention, even if the great newspaper that inspired its name is long since gone.

But Emirates will find increasingly find itself in the spotlight in coming weeks, no matter whether it stages events in midtown Manhattan, now that the three global U.S. airlines – American, Delta and United – have begun to battle the three Gulf carriers – Emirates, Etihad Airways and Qatar Airways – over whether massive subsidies from Middle East governments constitute violations of Open Skies agreements.

So far, the U.S. carriers have issued a confidential report detailing the $40 million in subsidies, along with the efforts to cover them up. The CEOs of the three carriers have met with Anthony Foxx, the secretary of transportation. Lee Moak, former president of the Air Line Pilots Association, has created a new organization, Americans for Fair Skies, to lobby for change. Delta CEO Richard Anderson went on CNN to voice concern about the subsidies, although he was temporarily sidetracked by tying the issue to the Sept. 11 terrorist attacks.

On Friday, American CEO Doug Parker laid out the U.S. carriers’ case in an employee magazine, while Laura Glading, president of the Association of Professional Flight Attendants, which represents 25,000 American flight attendants, commented in an e-mail to members on the weak labor protections at the Mid-East carriers, particularly Qatar.

Also last week, in an interview, Moak discussed the deterioration of the relationship between Canada and the United Arab Emirates, home of Emirates and Etihad Airways, after Canada declined to allow more flights to Toronto by the two carriers in 2010. The UAE subsequently declined to extend an agreement for Canada to use a military base in Dubai as its troops fought in Afghanistan.

As discussions continued, Peter MacKay, Canada’s minister of National Defense, announced at a news conference in Afghanistan that Canadian troops would vacate the base, according to Wikipedia. Hours later, as MacKay and other high-ranking Canadian officials were flying back to Canada, the UAE denied landing rights and forced a rerouting to Europe, Wikipedia said.

Later, because of the dispute, the UAE lobbied against Canada’s 2010 bid to join the United Nations Security Council.

“What you find there is that if these countries don’t get their way, they take their ball and go home,” Moak said. “When Canada said there was no need for more seats (between the two countries), the Emirates got angry and said ‘Pull all your troops out of Camp Mirage.’ The message was ‘If we don’t get our way, we will punish you.”

It is a threatening approach for a country that is seeking to build an airport in Dubai that could one day accommodate 240 million passengers annually, a large chunk of the world’s international aviation business, and Moak says it underscores vastly different approaches to commercial aviation.

In the United States, Moak said, “we have a democracy, a president and free enterprise,” while “they have a dictatorship, a sheik and subsidized airlines.”

Meanwhile, Glading raised questions about working conditions for flight attendants at the Gulf carriers. While most U.S. airline employees are protected by union contracts, Qatar and the UAE prohibit collective bargaining, Moreover, according to Glading’s message to members, at Qatar Airways “flight attendants must ask permission to marry or to have children.

Also, Glading said, “They live in locked and closely monitored dorms. They sign employment contracts but if for any reason they cannot complete them, i.e. they no longer meet appearance standards, they are forced to pay back the money they earned. If necessary, this requires working for free in other capacities.”

In a prepared statement, Rossen Dimitrov, Qatar senior vice president/customer experience, denied that the carrier dismisses married or pregnant flight attendants.

“Qatar Airways flight attendants do not have to be, or remain single,” Dimitrov said. “Many of our cabin crew are in fact married. The employment contracts simply use the term ‘single status’ which is a common term in many Gulf companies’ contracts.” The term refers to being single “for benefits/housing purposes,” he said.

Additionally, Dimitrov said, “cabin crew do not have to ask permission before marrying,” but “for health and safety reasons” they do have to notify the carrier when they become pregnant.’ If they cannot fly due to pregnancy or other reasons, they “are assisted with finding suitable ground positions.”

We don’t think the heavily unionized airline industry has finished talking about the working conditions at the Mid-East carriers. And the U.S. public, for all of its complaints about service levels on U.S. airlines, may not like what it hears about those conditions.

Originally published on Forbes.com: Note to Mid-East Airlines: You Have Some Questions to Answer

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U.S. Major Airlines vs. Middle East Carriers: Follow The Money, Pay Attention, And More Next Week

By Holly Hegeman

(Plane Business Banter)- Which brings me to a money issue — closer to home.

I ask that when you read comments or reports concerning this subject that you keep in mind where those comments are coming from. Make no mistake about it. The Middle East carriers are running one very sophisticated and heavily financed campaign.

For example, even I was not aware that John Byerly, the former State Department official who was instrumental in crafting a number of Open Skies agreements, has been on the Emirates payroll for years.

I did know that John has been working with Norwegian.

But as a recent issue of Politico, Byerly “and aviation consultant Michael Korenshave both registered to lobby for Emirates, though Byerly has been consulting for the UAE-based airline for several years.”

Well, how about that.

Then there is Kevin Mitchell’s Business Travel Coalition. We’ve all known for years that Kevin’s coalition is a pay for play organization. Well, if you visit his website now, you’ll see there is a new OpenSkies.Travel section on his site.

If you look at who some of the founders of the site are, you’ll find Dubai Travel and Tour Group based in the UAE. That, in effect, is Emirates.

And this is just the start.

However, all is not lost.

Lee Moak, former President of the Air Line Pilots Association, and grizzled veteran of the Washington patronage pit that passes for reality–well, I guess it actually may be the reality — has started a non-profit organization to help get out the other side of the story. If you are in the U.S. airline industry — if you fly airplanes, work on an airplane, or even fly on a U.S. airplane — I’d highly suggest that you support Captain Moak’s new venture. In whatever way you feel comfortable.

Even if it is to just sign his petition.

His organization, Americans for Fair Skies is a non-profit 501 C4.

It’s a start.

Like I said, hopefully the report will be released next week, we can talk more about the details of the report, and then you’ll know more about why I believe the U.S. major airlines have more than enough justification to have a “consultation” opened up on the “fairness” of the current Open Skies agreements with Qatar and the UAE.

Originally published on PlaneBusiness.com: U.S. Major Airlines vs. Middle East Carriers: Follow The Money, Pay Attention, And More Next Week

americans4fairskies2015U.S. Major Airlines vs. Middle East Carriers: Follow The Money, Pay Attention, And More Next Week
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Report Says Gulf Airlines Got $39B (With More to Come) in Illegal Subsidies

By Ted Reed

(The Street)- A report compiled for the big three U.S. airlines presents a chilling picture of efforts by some Mideast governments to establish airlines funded by massive subsidies which, according to the report, have been systematically covered up in order to mask violations of Open Skies agreements that have enabled the three Gulf airlines’ disproportionate growth.

The governments of Qatar, the United Arab Emirates, and Abu Dhabi and Dubai, the two largest emirates, have provided about $39 billion in subsidies to the airlines — Qatar Airways, the flag carrier of Qatar; and Etihad Airways and Emirates Airlines, flag carriers of the UAE — according to extensively researched report, compiled over two years for American (AAL – Get Report) , Delta (DAL – Get Report) and United (UAL – Get Report) and provided to TheStreet by an airline industry source who asked not to be identified.

The Gulf governments and airlines “have created vertically-integrated, wholly state-owned aviation sectors that include monopoly service providers and complex interrelationships between their government institutions, airlines, ground handlers, airports and state-owned banks,” said the report, which is titled: “Restoring Open Skies: The Need to Address Subsidized Competition From State-Owned Airlines in Qatar and the UAE.”

The subsidies come in forms including cash grants, interest-free loans and favorable contracts with airports, vendors and suppliers funded and generally owned by the governments, the report said. They inevitably reflect close relationships between governments and the airlines, which are often led by the same families and the same individuals.

The $39 billion is just the start. Governments in Dubai, Abu Dhabi and Qatar all plan to build huge new airports because they believe the large airports they already have are insufficient to accommodate the growth they expect.

Dubai is spending $7.8 billion to expand capacity at Dubai International Airport to 90 million passengers annually by 2018. It plans to spend $32 billion more to build the first phase of Dubai World Central Airport, 40 miles away, which could ultimate accommodate 240 million passengers annually.

Abu Dhabi is spending $7 billion to expand capacity at its airport to an annual capacity of 50 million passengers. Qatar is spending $17 billion on Hamad International Airport, which opened in May 2014 and also will have an annual capacity of 50 million passengers.

The report represents “the first time anyone has investigated these subsidies,” said an airline industry spokesperson who asked not to be named. “It took a couple of years for the report to be put together” by a team of forensic accountants and investigators.

“We’ve begun a discussion with the Obama administration about these subsidies and what remedies there are,” the spokesperson said. “The executive branch of government has the power to take a look at this. There is a process in place under Open Skies to address subsidies.”

The report suggested the Gulf airlines’ practices make a mockery of Open Skies policy, developed in the early 1990s in an effort “to enable U.S. carriers to compete in a global market undistorted by government actions that advantage foreign carriers.

“The UAE and Qatar have turned this policy on its head by pursuing aviation industrial policies that are designed to distort the global market in favor of their state-owned carriers,” said the report, which noted that Open Skies policy requires that “competition is fair and the playing field is level.”

In fact, Open Skies treaties have turned into lopsided deals where Emirates flies from Dubai to Boston, Chicago, Dallas, Houston, Los Angeles, New York, San Francisco, Seattle and Washington, and from Milan, Italy to New York; Etihad flies from Abu Dhabi to Chicago, Dallas, Los Angeles, New York, San Francisco and Washington; and Qatar flies from Doha, Qatar, to Chicago, Dallas, Houston, New York, Miami, Philadelphia and Washington.

What do U.S. airlines get? Only this: Delta flies from Atlanta to Dubai and United flies from Washington Dulles to Dubai.

The Gulf carriers already fly 363 wide-body aircraft and expect to add 130 by 2020, ensuring they will grow at a rate that substantially exceeds global GDP growth. “To fill this excess capacity, they must take passengers from other countries’ carriers,” the report said.

Here are brief analyses of each of the three Gulf carriers, based on the information in the report, as well as the carriers’ comments.

Etihad has received more $17 billion in subsidies since 2004, including “$13.5 billion in interest-free government loans, equity infusions, airport fee exemptions and other types of government funding that have enabled the airline to continue in operation despite its $4 billion in accumulated losses.” the report said, citing “company filings in certain third party jurisdictions.”

Abu Dhabi’s government committed to spend an additional $4.2 billion in subsidies in 2014 and beyond, the report said.

Without subsidies, “Etihad would not be commercially viable,” the report said. “The airline’s auditors have been unwilling to classify the company as a ‘going concern’ … without explicit commitments by the government to continue covering Etihad’s financial obligations.”

Etihad spokeswoman Katie Connell declared Thursday that “Etihad Airways operates with a clear commercial mandate — we do not receive government subsidies.

“In common with national airlines the world over, we have received equity and start-up investment from our shareholder during this early phase of our development,” Connell said. “Our 2014 revenues topped $7 billion, our third straight year of profitability. Our success has been built on bringing new competitive choice to consumers on many routes which other carriers choose not to operate.”

Qatar Airways has received more than $16 billion in subsidies since 2004 including $8.4 billion in subsidized loans and shareholder advances, which have been made in every year since 1998, the report said. The government also guarantees the airline’s term loans. “Without the subsidies, Qatar Airways would not be commercially viable,” the report said.

On Thursday, Qatar CEO Akbar Al Baker appeared on CNN International’s “Quest Knows Business” to refute subsidy claims made the previous night on the same show by Delta CEO Richard Anderson.

“Quite frankly Mr. Richard Anderson needs to study to find out the difference between equity and subsidy,” Al Baker said. He argued that the U.S. government provided $5 billion in aid and $10 billion in loan guarantees to U.S. airlines following the Sept. 11, 2001, terrorist attacks. “Was this a subsidy or just a donation?” he asked.

As for Emirates, the most successful of the Gulf carriers, it has received at least $5 billion in subsidies since 2004, the report said.

“Although a pervasive lack of transparency in Dubai’s aviation sector — in combination with Emirates’ failure to release its financial statements for the first 16 years of its existence — precludes anything near a full quantification, information from public and confidential sources indicates that Emirates has received at least $5 billion in subsidies in the last 10 years alone,” the report said.

Speaking Thursday on CNN, Emirates CEO Tim Clark declined to comment on the report saying he hasn’t seen it. “I would have thought if these airlines were going to make allegations the least they could have done is to supply us with that report,” he said.

Clark also challenged Anderson’s controversial reference to “the great irony” involved in Gulf carriers complaining about the Sept. 11 airline bailouts since the attacks “came from terrorists from the Arabian Peninsula.” Clark said Anderson “crossed the line with what he said in regard to 9/11, which has caused great offense in this part of the world.” Later Thursday, Anderson apologized for the remark.

Originally published on TheStreet.com: Report Says Gulf Airlines Got $39B (With More to Come) in Illegal Subsidies

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Documents show royal funding for Etihad: media

Reporting by Lincoln Feast and Praveen Menon; Editing by Matt Driskill and Mark Potter

(Reuters) – Abu Dhabi-based Etihad Airways had access to an interest-free $3 billion loan from the Abu Dhabi ruling family, the Australian Financial Review said on Thursday, stoking criticism from rivals that have long complained of state support for the carrier.

Citing what it said were leaked documents prepared for prospective financiers in 2011, the newspaper said the loan for government-owned Etihad required no repayments until 2027.

The airline, which also has equity stakes in Air Berlin and Aer Lingus, has long rejected allegations from rivals in Europe and Asia that it receives unfair financial support or state subsidies.

In a slide headed “Equity and Shareholders Loan,” the document states: “The shareholder has provided significant loan facility for aircraft deposits and working capital – subordinated, interest free and no repayments until 2027.”

(To view documents, click: link.reuters.com/ruk59v)

Etihad, which has been looking at a possible investment in loss-making Alitalia, said in a statement it had received financial support from its shareholder in the form of equity capital and shareholder loans, but gets no government subsidy.

It said the airline operated under a strict commercial mandate. It did not specifically comment on the $3 billion loan mentioned in the report.

Etihad, along with other state-backed regional carriers such as Emirates and Qatar Airways, have been rapidly expanding their global reach, sometimes through partnerships.

Etihad is already a major shareholder in Virgin Australia Holdings, which has been engaged in a brutal price and capacity war with flag carrier Qantas Airways Ltd.

Qantas has long complained that Etihad and by extension Virgin, have benefited from subsidies from the Gulf state, something Etihad management has repeatedly denied.

The newspaper said industry sources had provided the document, which had circulated among the management ranks of Etihad’s competitors, such as Qantas and Emirates.

The Australian and International Pilots Association said the claims of support from the royal family needed to be checked and action taken to level the playing field.

“Etihad’s contribution to Virgin’s A$350 million ($323 million) equity issue last year was critical to the issue’s success. We now know this contribution was backed by the interest-free generosity of the Abu Dhabi royal family,” said AIPA President Nathan Safe.

“Such an obviously unfair distortion of competition would never be allowed in any other sector of the Australian economy and it should not be allowed to continue in aviation.”

Virgin Australia did not comment on the report.

European airlines, including Deutsche Lufthansa, have often spoken out against Gulf carriers saying their state-owned status meant they do not compete on a level playing field with privatised carriers.

Air Berlin, in which Etihad has a near-30 percent stake, declined to comment.

Originally published on Reuters.com: Documents show royal funding for Etihad: media

americans4fairskies2015Documents show royal funding for Etihad: media
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Other Carriers Can’t Compete With Gulf Airlines Under The Current System — Here’s Why

By Lucky

I’ve written extensively about the battle going on between the “big three” US carriers (American, Delta, and United) and the “big three” Middle Eastern carriers (Emirates, Etihad, and Qatar) regarding the Open Skies agreement.

This debate might seem insignificant to some, but the liberalization of international air service is in consumers’ best interests, and this has the potential to change that trend.

I’ve been doing some research on the issue, and I finally understand the position of the US airlines, and even side with them. Previously I saw where the Gulf carriers were coming from, but the US airlines haven’t done a great job of communicating their position other than “crying foul.” Now that I have a bit more insight as to the stance of the US airlines, their grievances make perfect sense to me.

I think we’ll see a lot more information made public in the near future which puts this into perspective.

Here are my thoughts:

What are Open Skies agreements?

To figure out whether something needs to be changed, it first makes sense to understand what’s at stake.

For decades airlines have been working towards removing the “red tape” required to start new routes, by eliminating government intervention as much as possible. Here’s how the US Department of State describes Open Skies agreements (bolding mine):

“Open Skies agreements have vastly expanded international passenger and cargo flights to and from the United States, promoting increased travel and trade, enhancing productivity, and spurring high-quality job opportunities and economic growth. Open Skies agreements do this by eliminating government interference in the commercial decisions of air carriers about routes, capacity, and pricing, freeing carriers to provide more affordable, convenient, and efficient air service for consumers.

America’s Open Skies policy has gone hand-in-hand with airline globalization. By allowing air carriers unlimited market access to our partners’ markets and the right to fly to all intermediate and beyond points, Open Skies agreements provide maximum operational flexibility for airline alliances.”

It’s clear that a cornerstone of these Open Skies agreements is the “elimination of government interference in the commercial decisions” of airlines.

But lots of airlines are government owned — why single out three airlines?

The next logical question here is “why single out Emirates, Etihad, and Qatar?” If the problem comes as a result of airlines being government owned, then why not go after the smaller government owned airlines, like Oman Air, etc.?

This is the area that’s challenging, because I do think it’s tough to figure out where to draw the line. And in general I’m opposed to making regulations centered around arbitrary metrics.

But there are many things that make Gulf carriers especially unique, including:

Of government owned airlines, Emirates, Etihad, and Qatar are growing disproportionately compared to their respective populations and GDP growth. In a few years these carriers will have more widebody aircraft than all US airlines combined, despite the fact that the UAE and Qatar have a population that’s less than 4% that of the US.

Emirates, Etihad, and Qatar airlines aren’t playing fair. It’s one thing to have a government owned airline that’s losing money, but the behavior of the Middle Eastern airlines is destructive. Their long term business model is basically to run competing airlines out of markets as much as possible, and at any cost, even if they lose billions of dollars doing it.

What dirty tricks do Middle Eastern airlines use?

Let’s be clear about what makes the advantage of the Middle Eastern carriers “unfair.” It’s not that they have lower staffing costs because of where they’re located. Or that they have lower oil costs because of where they’re located.

Rather it’s that they have access to virtually unlimited interest-free capital, and that every aspect of the Gulf carriers operations and supply chain is interconnected. Collusion between the Middle Eastern carriers and their governments allows for zero transparency, which has the result, if not the intention, of giving Etihad, Emirates, and Qatar an unfair advantage.

For example, Emirates Airline’s President, Sheikh Ahmed bin Saeed Al Maktoum, is also President of Dubai Civil Aviation Authority, Chairman of Dubai Airports, and President of dnata. That would be like Doug Parker being CEO of American Airlines, head of the FAA, and President of DFW, ORD, LAX, JFK, and MIA Airports.

If that doesn’t present a conflict of interest — especially for a company that isn’t financially motivated — then I don’t know what does. It’s my understanding that Dubai Airport’s landing fees are less than the cost of providing them. How can an airport justify losing money with every plane that lands?

Because Dubai Airports knows subsidizing landing fees benefits Emirates most. And when you’re in charge of the airline, the airport, and even the civil aviation authority, it’s all just an accounting exercise anyway, right?

Here’s another one. Whenever you fly through an airport there’s a passenger facility surcharge. Basically some component of the ticket cost goes to the airport for having used the terminal.

Virtually all airports charge this to both passengers originating and connecting at an airport (they can differ based on whether you’re originating or connecting, but every passenger is charged at least something).

However, at the airports in Abu Dhabi, Doha, and Dubai, that’s not the case. Only passengers originating or terminating in those cities are charged a facility fee.

Why? Because a vast majority of passengers traveling on Emirates, Etihad, and Qatar are connecting, while a vast majority of passengers on other airlines flying to those airports are originating or terminating there (in other words, you’re not flying Lufthansa in order to connect in Dubai, much like you’re not flying Emirates to connect in Frankfurt).

For example, between Singapore and New York (via Dubai) you don’t pay any sort of Dubai passenger service charges:

Dubai-Airport-Fees

While if originating/terminating in Dubai, you pay ~$20 in passenger service charges:

Dubai-Airport-Fees-1
Even though they don’t care about making a profit, Emirates, Etihad, and Qatar are literally having foreign carriers subsidize operations at their own hubs.

And then there’s the $4 billion fuel hedge loss that Emirates faced, which suddenly “disappeared” and was taken care of by the government. But we’ll save that for another time.

The two sides need to pick representatives to argue this

It’s actually sort of refreshing to see the “big three” US carriers and “big three” Middle Eastern carriers collaborating with one another for once. It’s a nice change of pace from the usual bickering that usually happens amongst the respective sides.

This is such a serious issue, yet unfortunately it seems we’ve heard the most from the two least eloquent people on both sides:

  • Delta’s CEO, Richard Anderson, somehow managed to make this a debate on Islamaphobia by bringing up 9/11, which is just preposterous and counter-productive
  • Qatar’s CEO, Akbar Al Baker, has zero credibility, and unless he’s chiming in on Bravo’s new “Real Housewives of Doha” show, really shouldn’t be given a mic
  • If the two sides knew what was best for them, they’d let Doug Parker make the argument for the US carriers (he’s well spoken and relatable), and Tim Clark make the argument for the Middle Eastern carriers (he’s one of the brightest guys in the industry).

    “The US airlines should just compete”

    The Middle Eastern carriers love telling the US carriers that they should just compete and shut up. But what does that even mean? “Hey, you guys should get with the program and lose as much money as we do?”

    The truth is that other airlines simply can’t compete with Gulf carriers under this system.

    This isn’t about service. This isn’t about airplanes. This isn’t about routes. This isn’t specifically about the fact that the airlines are government owned.

    This is about the fact that Emirates, Etihad, and Qatar are not at all motivated by profits.

    So to those agreeing the US airlines should “just compete,” how?! It’s one thing if the Middle Eastern carriers were making money and saying “try competing.” But when these airlines are losing billions of dollars and saying “compete with us,” what does that even really mean? Compete with the service at the expense of your shareholders?

    What’s the solution?

    This is the tricky part. I don’t know what the solution is. Where do you draw the line and what should be done? Should the “big three” Middle Eastern carriers just be excluded from Open Skies? Should they be forced to “unbundle” their cost structure so that they’re actually paying “fair” amounts for the services they’re receiving?

    I don’t know the answer, but I do know that what they’re doing is quite the opposite of the “elimination of government interference,” which is the very purpose of Open Skies.

    Bottom line

    Open Skies is intended to eliminate government intervention and “free” markets. And there’s no arguing that the Middle Eastern airlines aren’t operating within the spirit of the agreement.

    To be clear, life isn’t fair.

    We’ll never be able to reconcile the differences in staffing costs, passenger facility costs, etc. And that’s something I think the US airlines are fine with.

    But when every aspect of an operation is being run in order to generate a loss and increase market share for the purposes of developing a country rather than an airline, then Emirates, Etihad, and Qatar really aren’t playing within the spirit of Open Skies.

    Where do you stand in the Open Skies debate?

    Originally published on BoardingArea.com: Other Carriers Can’t Compete With Gulf Airlines Under The Current System — Here’s Why

    americans4fairskies2015Other Carriers Can’t Compete With Gulf Airlines Under The Current System — Here’s Why
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    Lee Moak’s Response to Bloomberg

    Adam Minter’s post, “U.S. Airlines Should Quit Whining” completely and utterly misses the point of what is at stake in the effort to bring attention to and ultimately action against the United Arab Emirates and Qatar for heavily subsidizing their airlines.

    Minter got one thing right: It is true that in most cases, Open Skies agreements have been a positive for the U.S. economy, airlines, airline employees, and travelers alike. What he completely fails to address, however, is that the entire Open Skies policy is turned on its head when two countries – in this case, ones from the Arabian Peninsula – decide to pour more than $40 billion into their airlines, propelling them into growth unsubstantiated by the marketplace, thereby taking market-share (and jobs) from U.S. airlines.

    Minter whines that U.S. airlines should up their service and compete – that is exactly what they are trying to do. U.S. airlines and their employees welcome competition when the playing field is level. However, $40 billion in subsides, directly undercut the competition Open Skies aims to create and distorts the playing field to such a degree that only one side – in this case the United Arab Emirates and Qatar – can benefit. They have made the playing field so un-level the U.S. airlines operating in the open marketplace can’t possibly compete with the government money flowing in from the Gulf States. That isn’t Open Skies. That isn’t fair competition. And corrective action needs to be taken immediately.

    Lee Moak
    President
    Americans for Fair Skies

    In response to:”U.S. Airlines Should Quit Whining” Article on Bloomberg.com

    americans4fairskies2015Lee Moak’s Response to Bloomberg
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    Lee Moak’s Response to Travel Pulse

    While I’ve always been an American-made car guy myself, like any motor enthusiast, I can appreciate the German engineering of a Porsche or the sleek profile of an Italian Maserati. I bought my American-made car based on preference, not necessarily an obligation to buy a U.S. made vehicle (though that was a factor, but a personal one), and I agree with Mr. Thomaselli that Americans should have the right, and are smart enough to make their own choices.

    However, the reductive, rhetorical questions that Mr. Thomaselli asks throughout his article display his clear lack of understanding in regards to the fundamental structure of Open Skies agreements and how the governments of the United Arab Emirates and Qatar have strategically sought to distort the international aviation marketplace by violating Open Skies agreements to benefit their state-subsidized air carriers. As I said, I own an American car because I had the luxury of purchasing a car based on choice. But my American-made car was designed and manufactured by a company that had to compete in the open marketplace with all other car manufacturers. Toyota competes against Cadillac just like it competes against Audi and Hyundai. Regardless of where a car is coming from, it’s produced by a company who has to make a profit in order to continue to fund the development and distribution of it’s products, as well as meet the fiduciary obligations it has to its shareholders. If it costs BMW $20,000 to produce a car, BMW can’t then turn around and continuously sell that car for $15,000 (taking a loss each time) and expect to stay in business. A loss on every vehicle sold would result in the company going bankrupt if that company is operating in the private, open market place.

    This is where we meet a fundamental difference between what is happening with car companies (or any other company competing in an open market) and what is happening with the subsidization of the Gulf airlines. Etihad, Emirates, and Qatar Airways can all “afford” to lose money on routes they fly, because their operations are massively subsidized by their governments. Every time they sell a ticket far below the actual cost per seat of the flight, or have one of their new A380s leave Dallas at 38% capacity as recently reported, these airlines are taking a immense loss that privately owned U.S. airlines could never afford. Given many their flights operate this way, these add up to result in massive losses that can’t be covered by the profitable routes they do have. But, when the governments of the UAE and Qatar continuously make up these losses through subsidies and other benefits directly supporting their expansion, these airlines can continue to buy new planes and sell tickets far below their actual cost to the airline. Because the government owns the airline, the airport, all aspects of tourism in their respective nations, and most of the suppliers to their airlines, these “airlines” can operate at a massive deficit, shifting the airline’s loses to other parts of the government-controlled enterprise, hiding the subsidies, while continuing to expand at an unprecedented rate.

    The implication that other carriers, not only in the U.S., but abroad in places like Europe and Australia, could possibly hope to compete with this unprecedented level of subsidization when expected to operate themselves within a competitive marketplace as private entities as dictated by Open Skies agreements, is completely misguided. What Mr. Thomaselli doesn’t seem to comprehend is that US. airlines are strong supporters of Open Skies agreements – however, the Gulf government subsidies have turned the concept of Open Skies on its head with a totally un-level playing field for airlines as a result of the subsidization of the Gulf airlines. Indeed, it’s the worst sort of protectionism when nations like Qatar and the UAE operate their airlines as arms of their government through massive subsidizations.

    So yes, Mr. Thomaselli. This is America, land of the free, bastion of capitalism, and home to the greatest economic system in the world. Let’s support those ideals and values, shall we? Let’s do this by restoring fairness to our skies and leveling the playing field for U.S. aviation workers and by ending the subsidization by the UAE and Qatar of their airlines.

    In response to: “You Can Buy A Ford, But Not A BMW” Article on Travelpulse.com

    americans4fairskies2015Lee Moak’s Response to Travel Pulse
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    Exclusive: U.S. airlines disclose details of bookings lost to Gulf carriers

    By Jeffrey Dastin

    (Reuters) – U.S. airlines have lost at least five percentage points of their share of flight bookings from the United States to the Indian subcontinent and Southeast Asia since 2008, due to fierce competition from Gulf carriers, according to data seen by Reuters.

    More recently, U.S. carriers have seen an erosion in their share of bookings to Milan, according to a report the U.S. airlines sent to the White House and the departments of State, Transportation and Commerce. The 55-page white paper is not yet public.

    The report says the combined share of bookings between the United States and the Indian subcontinent for Delta Air Lines (DAL.N), United Airlines (UAL.N) and American Airlines (AAL.O) has fallen to 34 percent in 2014 from 39 percent in 2008. The drop includes bookings on the airlines’ joint-venture partners, such as British Airways (ICAG.L) and Air France (AIRF.PA).

    In the same time, Emirates Airline, Qatar Airways and Etihad Airways have surpassed them. The Gulf airlines’ share of that market has jumped to 40 percent from only 12 percent seven years ago, according to the report.

    The report sheds light on the intensifying battle between the U.S. carriers and their rivals from Qatar and the United Arab Emirates since “Open Skies” agreements authorized commercial flights between those countries and the United States more than a decade ago.

    The data shows that the Gulf carriers have eroded U.S. airlines’ market share even beyond the subcontinent, although bookings to the region resulted in the largest revenue hit so far, Delta Chief Legal Officer Ben Hirst said in a telephone interview.

    U.S. airlines and their joint-venture partners’ share has fallen to 36 percent from 43 percent of the market between the eastern United States and Southeast Asia, according to the report. The region includes Vietnam, Thailand, Indonesia, Malaysia and the Philippines.

    Gulf carriers, meanwhile, expanded their share of bookings to 13 percent from just 1 percent.

    GOVERNMENT SUBSIDIES

    The U.S. airlines are stepping up efforts to persuade the American government to alter or terminate the Open Skies pacts.

    The white paper, citing confidential financial statements from the Gulf airlines, alleged that their rivals have received subsidies from their home governments contrary to U.S. trade policy. The report says loans, tax exemptions and other support totaled more than $40 billion since 2004, which the Gulf carriers used to pay expenses that airlines typically must cover themselves, such as aircraft acquisitions.

    “We fully expect the government to act on the evidence,” Delta’s Hirst said, adding, “From the U.S. airlines’ standpoint, we’re competing with (foreign) governments, not private businesses.”

    An official from the U.S. State Department said the agency was carefully reviewing the claims and coordinating with other agencies.

    “The U.S. government takes seriously the competition concerns raised by our airlines,” the official said in an email on condition of anonymity. “However, we remain committed to the Open Skies policy, which has greatly benefited the traveling public, the U.S. aviation industry, American cities, and the broader U.S. economy.”

    CHEAPER FARES

    The report says the Gulf carriers could drive ticket prices down to a point where U.S. airlines could not afford to stay in certain markets, costing hundreds of jobs. They say government subsidies enable the Gulf carriers to buy planes and add capacity in excess of demand, forcing industrywide price cuts on certain routes.

    But advocates for travelers say that slashing prices and improving service is precisely what Open Skies agreements are intended to do.

    “From the passengers’ point of view, they want as many choices as possible,” said Erik Hansen, a senior director at the U.S. Travel Association, a non-profit industry group based in Washington.

    Hansen said he had not seen the report and could not comment in detail on its findings, but added that Open Skies pacts have improved the U.S. balance of trade. He said a change would “send a message that the U.S. is willing to implement protectionist policies if just a few airlines protest.”

    Executives of the Gulf carriers dispute the U.S. carriers’ charges that they have received unfair subsidies and bailouts.

    “We have no problem with competition. In fact, we relish it,” Emirates Airline President Tim Clark said in a statement last week.

    The Gulf airlines are pushing to expand their reach. U.S. carriers have lost their share of bookings from New York to Milan since Emirates announced service there in 2013 as a stopover on the way to Dubai. Emirates’ share has jumped to 19 percent since then, while the share held by U.S. airlines and their partners has fallen to 78 percent from 85 percent.

    Article originally published on Reuters.com:
    Exclusive: U.S. airlines disclose details of bookings lost to Gulf carriers

    americans4fairskies2015Exclusive: U.S. airlines disclose details of bookings lost to Gulf carriers
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    Big U.S. Airlines Fault Persian Gulf Carriers: Three U.S. Airline CEOs Say State-Owned Gulf Carriers Are Distorting Air Transportation

    By Susan Carey

    [email protected]
    (with contributions by Rory Jones)

    (Wall Street Journal)- The chief executives of the three largest U.S. airlines said they are pressing the government to modify or—lacking substantive remedies—annul air treaties with two Persian Gulf nations. The CEOs cited what they claim are subsidies and government industrial policies that favor three of the Gulf region’s fast-growing carriers, distorting global air transportation.

    The heads of American Airlines Group Inc., United Continental Holdings Inc. and Delta Air Lines Inc. said in a joint interview Thursday that the three state-owned Gulf airlines have received $42.3 billion in “quantifiable” subsidies since 2004, accompanied by other benefits including breaks on local airport infrastructure and services, exemptions from corporate taxes and advantages from “opaque” related-party transactions.

    The U.S. executives said the policies are giving a big leg up to Emirates Airline, Etihad Airways and Qatar Airways, helping them expand globally by stimulating low-fare traffic through their hubs. More recently, the three Gulf carriers have targeted growth to U.S. airports, where they can fly freely and set prices without restriction due to “open skies” treaties between the U.S. and the United Arab Emirates and Qatar.

    The routes from the Gulf region to the U.S. haven’t produced a meaningful increase in passenger traffic, the U.S. carriers said in a 55-page briefing paper being circulated to officials of the departments of Transportation, State and Commerce, among others. Instead, the new routes “serve to displace the market share of U.S. airlines and to shift good aviation jobs overseas.”

    The three Gulf carriers have boosted the number of daily seats between their hubs and the U.S. by 11,000 since 2008, the document says. But the number of daily bookings between those airports and the U.S., in both directions, which were 2,500 a day in 2008, were up just 85 a day by 2014. The bulk of the U.S. passengers using the Gulf carriers are traveling beyond Dubai, Doha or Abu Dhabi to destinations such as India and Southeast Asia.

    And that hits the U.S. airlines and their Asian and European partners right where it hurts. Doug Parker , American’s chief executive, said his team wants to begin flights to India. But the routes won’t justify themselves, he said, because the fares are so low. And Richard Anderson , Delta’s CEO, said his airline is leaving the Indian market altogether for the same reason.

    Kevin Mitchell of OpenSkies.travel, a grouping of tourism and airline interests, wrote to the three U.S. departments last week, expressing “deep concerns” about the U.S. airline CEOs’ lobbying efforts. He said that after the mergers of six U.S. carriers into three and a situation where the top four airlines control 80% of the U.S. market, “some…shamelessly seek to close off U.S. markets to competition from foreign carriers.”

    In a recent interview, Emirates President Tim Clark said the U.S. airlines’ claims are “outrageous, unsubstantiated [and] incorrect.” He said that his company isn’t dumping capacity or selling below cost and is profitable on every route it operates from the U.S. “Tell us where the subsidies are,” he added. Etihad and Qatar declined to comment.

    Emirates, now the No. 1 international airline by capacity, said it files public financial statements annually that are audited by PricewaterhouseCoopers. Etihad and Qatar have repeatedly denied they are subsidized.

    U.S. carriers have been worried about the Gulf carriers since at least 2012, concerned about losing some of their most lucrative international passengers and alarmed by their rivals’ big buildup of U.S. routes. In 2013, United, Delta, the U.S. trade association Airlines for America, and the largest U.S. pilot union, Air Line Pilots Association, International launched legal and political challenges, and Delta suggested that the U.S. revisit some of its air treaties.

    But this latest effort by the U.S. airlines is the loudest and most direct response to what they see as a growing threat.

    Jeff Smisek, United’s CEO, said the three Gulf carriers “are not normal airlines. They’re arms of the state.” The premise of open-skies treaties, of which the U.S. has signed more than 110 since 1992, is that airlines on both sides receive access, but on a level playing field and free of subsidies, he said.

    European airlines have already been devastated by the Gulf airlines’ rapid growth into their natural markets, said American’s Mr. Parker. “We don’t want to see it get to the point [in the U.S.] where it is in Europe.”

    Richard Anderson, Delta’s CEO, said that the airlines’ efforts are like those of steelmakers or agricultural firms trying to stop imports of deeply subsidized products, and that the airlines’ problem demands a “tried-and-true” trade-policy remedy.

    The three U.S. CEOs said they met last week with representatives of the Departments of Transportation, State and Commerce, the Office of the U.S. Trade Representative and others. The DOT said it is carefully reviewing the U.S. claims and is closely coordinating with its governmental partners. “However, no decisions have been made,” said a spokeswoman, noting that the DOT is committed to the ‘open skies.’ The other agencies couldn’t immediately be reached for comment.

    United’s Mr. Smisek said it has taken a couple of years for the three U.S. airlines to “scour the planet” with forensic accounting to document the three Gulf airlines’ financial records. The U.S. carriers say they identified breaks including free land, forgiven hedging contracts and nonunion rules that help the foreign airlines keep costs down, surmount big accumulated losses and still order huge numbers of new widebody jetliners.

    The information in the briefing paper “is new…and compelling and clearly shows there has been subsidization of these carriers,” said American’s Mr. Parker.

    He added that American won’t terminate its several-year-old code-sharing agreement with Etihad, which helps American passengers get to destinations the U.S. airline doesn’t serve. But American, as a company that needs to cover its cost of capital, wants to compete fairly, he said.

    The carriers hope to persuade the U.S. to enter “consultations” with the Gulf countries and negotiate new rules. Barring that, they would like the U.S. to freeze the Gulf airlines’ expansion into the U.S.

    In the absence of new accords, they would like want to see the air treaties terminated with the requisite year’s notice, the briefing paper said, even though the U.S. airlines fundamentally favor open skies agreements.

    Originally published on WSJ.com: Big U.S. Airlines Fault Persian Gulf Carriers: Three U.S. Airline CEOs Say State-Owned Gulf Carriers Are Distorting Air Transportation

    americans4fairskies2015Big U.S. Airlines Fault Persian Gulf Carriers: Three U.S. Airline CEOs Say State-Owned Gulf Carriers Are Distorting Air Transportation
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    Lee Moak’s Response to Air Transport World

    In the January 21st Air Transport World op-ed urging U.S. airlines to “stop whining” about unfair competition from the three Gulf carriers – Emirates, Qatar and Etihad – the editor suggests that a vital U.S. industry sit idly by in the face of these airlines’ government subsidized expansion that is inflicting undue harm on U.S. airlines and American jobs.

    On it’s face, today’s international air service market may appear to simply be the byproduct of two decades of Open Skies policy. What is lost with this view, however, is that Open Skies was predicated on the belief that governments should get out of the way of controlling and subsidizing their country’s airlines and instead let market forces and competition determine routes, frequencies and prices. This may have been the understanding of the U.S. and the Gulf States when these agreements were signed in the 1990s. But today, the Gulf States, which are radically different countries from those we signed agreements with in the 90s, have turned Open Skies on its head. The philosophy of liberalization, with the byproduct of Open Skies, doesn’t work as intended when one side is playing by it’s own set of rules.

    The heart of the matter is that the Gulf carriers are heavily subsidized by their governments – Dubai, Abu Dhabi and Qatar – in amounts nobody could have possibly fathomed 20 years ago. Over the past decade alone these three Gulf States have conferred tens of billions in subsidies to their three state supported airlines. This staggering level of support means that the Gulf carriers need not worry about earning returns sufficient to cover the costs of capital nor do the Gulf airlines need to post debilitating losses on their balance sheets. They can – and do – simply transfer those losses to their governments and continue their global expansion.

    With tens of billions of dollars in government subsidies and the ability to operate without regard to market constraints, the Gulf State carriers have flooded the skies with an increasing number of wide-body aircraft. The three Gulf carriers combined have an astounding 596 wide-body orders pending, nearly three times the number of all U.S. airlines’ wide-body aircraft on order today. Given their existing order books, it’s no surprise that the Gulf carriers’ share of the international air market will soon dramatically exceed our own. In fact, the Gulf airlines are expected to grow capacity at more than 3 times the growth rate in global GDP.

    The Dresner paper cited in the editor’s op-ed reiterates the Gulf governments’ assertion that their increasing presence on the world stage helps stimulate international air traffic. But this “rising tide lifts all ships” thinking simply isn’t borne out by the facts. According to O&D data, the Gulf carriers aren’t adding passengers to the international air market in any meaningful way. Instead, they’re abusing Open Skies, relying on their governments’ largesse, and stealing passengers from U.S. airlines and our alliance partners. That’s not fair competition. It’s market distortion and predatory behavior by the Gulf governments.

    Our airlines and the tens of thousands of men and women who work in the industry today can compete against any airline in the world. But we need a level playing field to do so. The aviation policies pursued by the Gulf States are unfair, fundamentally incompatible with Open Skies and harmful to the U.S. airline industry and American jobs. That’s why it is wrong to relish the status quo liberalization policy and why our government needs to help restore balance to the few agreements that are no longer working for U.S. airlines and their employees.

    Captain Lee Moak
    Americans for Fair Skies

    In response to: “US carriers should tread carefully in their anti-Gulf carrier campaign” Editorial on ATW.com

    americans4fairskies2015Lee Moak’s Response to Air Transport World
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    Sky Talk: A380s leaving DFW aren’t exactly full of passengers, local aviation website says

    By Andrea Ahles

    (Sky Talk)- It looks like the double-decker A380s leaving out of Dallas/Fort Worth Airport aren’t exactly full of passengers when they depart.

    According to this blog post by DFWTower.com, the Emirates Airline flight to Dubai had an 38 percent for its load factor for its first full month of operation with the A380. Qantas Airways, which operates the only nonstop to Sydney, has about a 76 percent load factor on its A380 route.

    DFWTower.com took traffic statistics provided by DFW Airport for the month of October and compared them to the available capacity on those routes to calculate load factors.

    Here’s what blogger Greg Gayden noticed about Emirates: “This is a carrier that was consistently in the 90% range during their time at DFW; the addition of Qatar to the mix and the big increase in capacity with the A380 have brought loads down drastically.”

    Qatar launched daily service to Doha in July and earlier this week, Etihad Airways started three-times-a-week service to Abu Dhabi.

    At DFW Airport’s board meeting this week, airport chief executive Sean Donohue noted that passenger traffic to Europe had dropped 8 percent in October which the airport attributed to more travelers using the Gulf carriers to connect to destinations in the Indian subcontinent and Africa instead of connecting through Europe.

    Originally published on star-telegram.com: A380s leaving DFW aren’t exactly full of passengers, local aviation website says

    americans4fairskies2015Sky Talk: A380s leaving DFW aren’t exactly full of passengers, local aviation website says
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