Why Trump Needs to Tackle the Subsidized Foreign Carrier Issue

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President Trump presided over an extraordinary meeting in the Oval Office earlier this month.

The heads of most major U.S. airlines sat down with both Trump and vice president Mike Pence to air their grievances.

The U.S. carriers believe some Middle Eastern airlines are unfairly competing with them. Specifically, they complained about Qatar Airways, which recently bought a large stake in an Italian airline and expanded its flights to the U.S.

The U.S. carriers believe this violates the letter and spirit of the Open Skies agreement, which regulates which airlines get to enter another country’s territory. The goal is to benefit consumers by providing open entry, unless a government-subsidized carrier is using an artificial advantage to unfairly compete with private carriers.

At issue is whether Qatar can use a form of trade “transshipment” — the method that China uses to avoid tariffs by rerouting much of its steel and aluminum exports through Malaysia or Vietnam before they reach the U.S. — to evade a 2018 agreement with the U.S. not to launch flights between Europe and the United States.

Qatar Airways denies its recent explosive growth is being subsidized by the natural-gas rich government of Qatar. But the rest of the aviation industry doesn’t believe that. In fiscal year 2017, Qatar’s government injected $491 million into the flagship carrier.Stay Updated with NR Daily

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It’s probably not a coincidence that was the same year that Qatar Airways bought a 49 percent stake in a failing carrier called Air Italy, which previously had flown only regionally in Europe along with a couple of seasonal flights to the U.S.

Two days after Qatar Airways bought a stake in it, Air Italy began an expansion that now has it making nonstop flights from Milan, Italy to New York and Miami year-round. It also flies from Milan to Los Angeles and San Francisco in the summer.

Its bargain rates are clearly designed to poach passengers from U.S. carriers. It can count on Qatar-government subsidies to make up any losses while it builds market share.

United Airlines CEO Oscar Munoz calls Air Italy “the Italian version of Qatar” and he told President Trump at the Oval Office meeting they fly in the face of existing air service agreements.

But Trump has to factor in the stance of the European Commission, which believes that Air Italy’s activities are permissible under the Open Skies agreement. Last month, the commission used unusually direct language in warning the U.S. it “will take all steps necessary to defend” the rights of Air Italy if the U.S. tries to curb its transatlantic service. In other words, if the U.S. sanctions Air Italy, the European Commission could sanction U.S. carriers.1

But the Trump administration is unlikely to be dissuaded easily. It has long been worried about the abuse of transshipment by foreign nations. Last year, President Trump told reporters that: “If you talk China, I’ve watched where the reporters have been writing 2 percent of our steel comes from China. Well, that’s not right. . . they trans ship all through other countries.”

So watch the outcome of the U.S. negotiations with China over tariffs — the June truce both countries declared to block scheduled tariff increases is set to expire this fall. The transshipment issue will be on the table in those talks. The result of those negotiations could provide a template for how the U.S. approaches the transshipment issue when it comes to airlines applying for entry in the lucrative U.S. market.

Originally Published on National Review.

americans4fairskies2015Why Trump Needs to Tackle the Subsidized Foreign Carrier Issue
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Trump and Emir Must Clear the Air on Open Skies

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Qatar’s “devious scheme to violate its Open Skies agreement with the United States” should have been a topic of discussion during Qatari Emir Sheikh Tamin bin Kamad’s recent visit to the White House. Even though Secretary of State Mike Pompeo says he has the issue covered, National Center Senior Fellow Drew Johnson says that Qatar “is making Congress and the [Trump] administration look ridiculous.”

In a Townhall commentary, Drew explains that the United States has Open Skies airline agreements with 126 countries. These agreements “level the playing field” between state-run carriers and their competition by “eliminating government subsidies to airlines and curtailing political involvement in business decisions such as routes and pricing.”

But Drew notes that the U.S.-Qatar relationship is a “rare and troubling exception” because Qatar recently bought 49% of a failing Italian carrier it is now subsidizing in a manner that goes against its Open Skies agreement.

Drew writes:

After using tens of billions of dollars in government funds to underwrite Qatar Airways, the Persian Gulf nation signed an Open Skies agreement and pledged to stop funneling subsidies to the airline. Just last year, however, Qatar was suspected of again using tax dollars and other government funds to subsidize Qatar Airways.

The Trump administration responded by renegotiating Open Skies to end the illegal subsidies, increase Qatari financial transparency, and freeze new Qatar Airways routes to the United States.

Unfortunately, Qatar was back to its old ways before the agreement was even finalized. Qatari officials concocted a shady way to sidestep Open Skies and both subsidize an airline and launch new routes to America.

Drew reports that the new proxy courier – Air Italy – has used the state-run Qatar Airway’s planes and crews and has received support from the airline’s executives and subsidies that can be traced back to the Qatari government.

That’s why, Drew explains, it was a mistake for President Trump not to bring this up during the Emir’s recent visit:

By ignoring its Open Skies agreement with the U.S., Qatar is jeopardizing the relationship between two strong allies. The situation is also setting a terrible precedent that the United States is willing to look the other way when countries aren’t playing by the rules – a precedent that could have dire consequences when it comes to trade and military negotiations in the future.

Drew’s Townhall commentary echoes concerns made by another National Center senior fellow, Horace Cooper, in a commentary last month in The Western Journal.

Noting the threat to American carriers and their economically diverse customer base from subsidized state-owned carriers, Horace wrote: “The Gulf State carriers are able to poach the best customers while marginalizing their competition – market-based airlines that must sink or swim based on the market.”

Horace added that “Air Italy should agree to be bound by the Qatari [Open Skies] agreement… [N]ow isn’t the time to allow the international market to head back to the anti-competitive subsidy policies of yesterday.”

Originally Published on National Center for Public Policy Research.

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Trump must hold Qatar accountable for violating the Open Skies agreement

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Last week, President Trump hosted Sheikh Tamim bin Hamad al-Thani, the Emir of Qatar, at the White House.

The two leaders discussed Middle East security and peacekeeping efforts, and celebrated a Qatar Airways agreement to purchase five American-made Boeing 777 cargo planes.

While the order is good news for beleaguered Boeing, which is still reeling from the crashes and groundings of its 737 Max jets, Trump should’ve used the opportunity to hold Qatar and Qatar Airways accountable for a devious scheme to violate its Open Skies agreement with the United States.

Open Skies pacts are intended to level the playing field among international carriers by eliminating government subsidies to airlines and curtailing political involvement in business decisions such as routes and pricing. The agreements are very common; the U.S. maintains Open Skies arrangements with 126 countries throughout the world. In an overwhelming majority of instances, the agreements are followed and respected. America’s Open Skies pact with Qatar is a rare and troubling exception.

After using tens of billions of dollars in government funds to underwrite Qatar Airways, the Persian Gulf nation signed an Open Skies agreement and pledged to stop funneling subsidies to the airline. Just last year, however, Qatar was suspected of again using tax dollars and other government funds to subsidize Qatar Airways.

The Trump administration responded by renegotiating Open Skies to end the illegal subsidies, increase Qatari financial transparency, and freeze new Qatar Airways routes to the United States.

Unfortunately, Qatar was back to its old ways before the agreement was even finalized. Qatari officials concocted a shady way to sidestep Open Skies and both subsidize an airline and launch new routes to America.

Qatar Airways purchased a 49 percent stake in Meridiana, an insolvent regional Italian airline, and rebranded the carrier Air Italy. The new airline operates as a thinly veiled proxy for Qatar Airways, illegally ignoring Open Skies guidelines by offering service to five U.S. cities and pocketing millions of dollars in subsidies from the Qatari government.

Secretary of State Mike Pompeo promised members of Congress the Trump administration is working to address the problem.

“I have personally engaged in this issue and we are working to make sure every party to those agreements complies with every element of those agreements. The U.S. government sees what’s going on…,” Pompeo told lawmakers. “It’s not fair. It’s not right.”

In the meantime, though, Qatar’s Air Italy charade is making Congress and the administration look ridiculous.

Air Italy uses Qatar Airways jets to fly passengers served by crewmembers wearing variations of Qatar Airways uniforms. Until a few months ago, Air Italy’s Chief Operating Officer, Chief Flight Officer, and Vice President for Sales and Distribution were all Qatar Airways executives. Air Italy operates in the red and requires funds from Qatar Airways – and, ultimately, subsidies from the Qatari government – just to stay in business.

By ignoring its Open Skies agreement with the U.S., Qatar is jeopardizing the relationship between two strong allies. The situation is also setting a terrible precedent that the United States is willing to look the other way when countries aren’t playing by the rules – a precedent that could have dire consequences when it comes to trade and military negotiations in the future.

It is imperative that President Trump hold Sheikh Tamim to his commitment to the Open Skies agreement — and send a message to Qatar that disregarding the pact will no longer be tolerated by the United States.

Originally Published on The Economic Standard.

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Airline CEOs: Subsidized Gulf airlines are violating trade agreements, threatening US jobs

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For decades, the U.S. aviation industry has served as an economic engine in every state, creating jobs for millions of Americans and building business opportunities across a wide range of industries. We’re proud that the three airlines we lead are an integral part of this story.

But in recent years, two foreign countries have thrown a wrench into this engine. For over a decade, the United Arab Emirates and Qatar have violated trade agreements with the United States by funneling over $50 billion in subsidies into their government-owned airlines — Emirates, Etihad Airways and Qatar Airways. These state subsidies are destabilizing the global airline industry and threatening to undermine our nation’s entire system of trade enforcement. Left unchecked, they send a signal that other countries can ignore our trade deals and trample upon our workers without consequences.

Thankfully, last year President Donald Trump negotiated new agreements designed to end these trade violations, mandate financial transparency and restore fair competition. But before the ink was even dry, these countries that are meant to be our partners were looking for loopholes.

Workers pay price for unfair trade

Qatar is perhaps most blatantly disrespecting its January 2018 agreement. The country pledged that its airline would not launch any flights directly between the United States and Europe. It quickly shrugged off the commitment by investing in a failing regional Italian airline and rebranding it as Air Italy, which is now being used as a proxy for new subsidy-backed routes between the U.S. and Italy.

To be clear, U.S. airlines are not opposed to competition. We compete each day for the business of millions of travelers, whether our rivals are large, small, private or government-owned. But what’s happening with the Qatar and UAE airlines is not fair competition.

Subsidies allow these carriers to fly money-losing flights in a way no rational commercial airline could afford. It is an advantage that no airline — no matter how big — can reasonably overcome. Ultimately, it’s U.S. airline workers who pay the price.

President Trump campaigned on a platform of defending American workers from bad deals and unfair trade practices. By violating their Open Skies agreements, Qatar and the UAE are putting over 1.2 million American jobs in jeopardy. It isn’t just the hard-working pilots, flight attendants and ground crews whose livelihoods are at risk; it is everyone who depends on the economic engine that the aviation industry creates for our country. An economic analysis we submitted to the government shows that for every long-haul international route a U.S. carrier loses or forgoes due to subsidized Gulf carrier expansion,1,500 American jobs are lost.

It also raises questions about how the United States should deal with partners that openly undermine trade agreements. In any business, you wouldn’t stand by and do nothing while the other side refuses to comply.

In light of actions by Qatar and the UAE over the past year, the Trump administration likely now sees that they have no intention of complying with their longstanding Open Skies agreements or last year’s deals.

Don’t reward bad behavior

Aside from Qatar’s blatant actions regarding Air Italy, we’re also seeing obvious inaction on the part of both countries when it comes to financial transparency. In fact, the Gulf carriers are less transparent today than before the UAE and Qatar signed their respective agreements.

Failure to enforce these agreements sends a message to other countries that they can take advantage of the United States without consequences. That can’t be our position. If Qatar and the UAE aren’t willing to uphold their side of the deals, the United States should consider removing itself from these two Open Skies treaties altogether.

This administration knows a trade violation when it sees one. The United States must act decisively to hold Qatar and the UAE accountable. Failure to do so would reward bad behavior and signal to other countries that they too are free to exploit American workers. That is a dangerous precedent that our airline workers and our country cannot afford.

Originally Published on USA Today.

americans4fairskies2015Airline CEOs: Subsidized Gulf airlines are violating trade agreements, threatening US jobs
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NEWT GINGRICH: TRUMP SHOULD PUSH QATARI EMIR TO END UNFAIR SUBSIDIES | OPINION

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The US economy is a behemoth. With an estimated $21.06 trillion gross domestic product, no other country on the planet can match our overall economic strength—without cheating, anyway.

Unfortunately, some countries do cheat.

One of the principle ways that other countries unfairly undermine and attack our economy—and therefore American jobs—is by heavily subsidizing their own industries to create artificially cheaper products and services that out-compete US companies.

American steel and aluminum manufacturers have been greatly harmed by China subsidizing its own metal industries and then dumping tons of artificially cheap steel and aluminum into the US market. The factories and other companies that use these products naturally buy the cheaper Chinese metals, and many American manufacturers have been shuttered as a result.

The US solar panel manufacturing market was essentially wiped out by this same strategy. In fact, in 2017, the US International Trade Commission ruled 4-0 that US solar manufacturers had been greatly harmed by Chinese subsidization. Twenty-five US-based solar cell manufacturers closed from 2012 to 2017. This represented an 80 percent reduction in the US industry.

In response to this Chinese metal and solar panel subsidization efforts, President Trump began the long-term trade strategy that he is still maintaining now with tariffs on these two industries.

This week, President Trump has an opportunity to stop another foreign government from harming a US industry. Sheikh Tamim bin Hamad al-Thani, the ruling emir of Qatar, is meeting with President Trump on Tuesday. The sheikh’s government partially owns Air Italy, which was a small, regional airline before the Qatari government bought a 49 percent stake in late 2017. Air Italy suddenly went from offering a few short flights to announcing new routes from Milan to San Francisco and Los Angeles in late 2018. These routes were only possible because Air Italy was being financially supported by the government of Qatar. So, US-based airlines that operated these routes would now have to compete with a government-owned airline that didn’t have to bother with making a profit.

The new route announcement was particularly troubling, because Qatar had previously agreed in January 2018 to be more transparent about the funding for its own Qatar Airways—which it had subsidized to the tune of $25 billion. It also agreed to not open new routes into the US. Instead, it has been using Air Italy to get around the 2018 agreement. So, Qatar has repeatedly said it was going to stop cheating and undercutting the American airline industry, but it hasn’t stopped.

President Trump has a great opportunity here to push Qatar and show the Emir that simply buying and subsidizing other small airlines is not a way to make good on past promises of fair play.

Originally Published on Newsweek.

americans4fairskies2015NEWT GINGRICH: TRUMP SHOULD PUSH QATARI EMIR TO END UNFAIR SUBSIDIES | OPINION
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President Trump Needs to Hold Qatar Accountable for Cheating on Open Skies

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The administration is rolling out the red carpet for Qatari Emir Sheikh Tamim bin Hamad al-Thani during his visit to Washington. Among the items on the agenda, dinner at the Treasury Department on Monday, organized by Secretary Steve Mnuchin, which President Trump attended. Trump has a meeting with the Emir on Tuesday. 

There’s much to discuss. The Emir almost certainly wants to discuss the U.S. position on the continuing Gulf Crisis that’s paralyzed relations between his small country, the UAE, Egypt, and the Saudis, and the impact it’s having on efforts to bring peace to the region.

For President Trump, the list is much longer. In addition to discussing the crisis and the problems created by Iran’s renewed aggressions — Iran being a full partner with Qatar in one of the world’s largest known natural gas fields — there are a few items one hopes he’ll raise that are important to the U.S. economy.

On the top of that list is the need for Qatar to live by the spirit of the Open Skies agreement governing international air travel, something that’s been a problem since President Trump’s first year in office.

The operations of Qatar Airways (along with Etihad Airways and Emirates Airline) are generously subsidized by their respective governments, thanks to the income generated from their abundant energy resources. Their airlines, referred to collectively as the ME3, have experienced huge capacity growth but not the profits that should follow. 

According to data compiled by Thomas J. Duesterberg of the Hudson Institute as of 2015, Qatar and the UAE had provided more than $52 billion in subsidies and in-kind discounts to the M3 carriers. His analysis also shows the three airlines have increased capacity 10-fold since 2001 and have placed orders for hundreds more Airbus and Boeing aircraft. Unlike U.S. carriers, these airlines don’t have to show a profit to stay in business. 

The Open Skies agreement the U.S. has with Qatar, the UAE and 124 other countries says that: “Each Party shall allow a fair and equal opportunity for the designated airlines to compete …” That’s supposed to level the landing field and prevent the government-subsidized carriers from driving the privately-owned ones out of business in price wars. 

In 2018 — while refusing to agree they were violating the Open Skies pact, Qatar and the UAE agreed to more transparency, fewer subsidies, and that they would not launch so-called “fifth freedom flights” to the U.S. This commitment was memorialized in a side letter as part of the government-to-government agreements between each country and the United States.

Since that agreement was made, however, Qatar has found a loophole big enough to fly several wide-body aircraft through. It bought, or rather Qatar Airways bought a 49% stake in Meridiana, a struggling Italian carrier. Now rebranded as Air Italy, and with an infusion of cash and equipment from Qatar Airways, it’s begun direct service to the U.S. 

The E.U., which also ought to partner with the U.S. on calling the Qataris out for cheating, has thus far been unwilling to describe Qatar Airways as anything but a minority investor in Air Italy. For that, they’ve gotten the promise more aircraft will be purchased from Airbus, the European conglomerate that competes with all-American Boeing. A sweet deal to be sure, but of the kind President Trump has already proven he can see through. 

On its face, the operation of Air Italy in this manner — with executives from Qatar Airways and flight crews and uniforms and airplanes — certainly violates the spirit of the Open Skies agreement. An investor with unlimited resources and no need to turn a profit will disrupt the global aviation market adversely, as far as U.S. private carriers are concerned, they’re allowed unfettered access to the American and European markets. 

As the current president often reminds us, past administrations were all too willing to sign bad trade deals and bad national security deals, to placate others. His predecessors since Ronald Reagan did little when agreements were broken so as not to offend trading partners or risk trade wars. That was a failed strategy that has rightfully been discarded. Any agreement that goes unenforced is not worth the parchment it’s printed on.

If he chooses to make an issue of it, he’ll have support in Congress from Republicans and Democrats. House Transportation and Infrastructure Committee Chairman Peter DeFazio and Republican Sen. Ted Cruz of Texas have both questioned Qatar’s investment in Air Italy. 

President Trump should challenge the Emir to make sure the right thing gets done. and get it resolved. He’s made it a central tenet of his trade policy to get out of bad deals and to negotiate good ones. He told the American voters he’d fight for American national security, American Jobs and American trade. To keep that promise he must bring this issue to the table. 

Horace Cooper is a writer and legal commentator based in Washington. D.C.

Originally Published on Issues & Insights.

americans4fairskies2015President Trump Needs to Hold Qatar Accountable for Cheating on Open Skies
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Newt Gingrich: US Expects Results From Qatar on Airline Actions

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President Donald Trump, while meeting with Qatar’s ruling emir Sheikh Tamim bin Hamad Al Thani in Washington on Tuesday, must inform him that the United States expects “results, not just words” on its actions towards the airline industry, former House Speaker Newt Gingrich said Monday.

“Qatar has been deliberately undercutting and acting in ways that make it impossible for a company to compete in the Middle East,” Gingrich told Fox Business’ Maria Bartiromo.   “They promised several months ago that they would stop. They haven’t stopped,” 

People who have been working on the issue hope that Trump “is going to look them in the eye and say ‘look, you’ve got to keep your word,'” said Gingrich. “We want to expect results, not just words. For the future of the American airline industry, this is a very big issue.”

Gingrich noted that Qatar is “pretty isolated,” as the Saudis and the United Arab Emirates are both against it. 

“Qatar is not coming from a position of great strength,” said Gingrich. “I suspect they’re eager to find some way to make Secretary (Steven) Mnuchin and President Trump happy.”

In June, the White House said the planned visit was being held to discuss economic and security ties, along with counterterrorism issues. 

Meanwhile, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with Qatar with Qatar in 2017, accusing the country of supporting Iran and Islamist militants, which it denies.

Originally published on Newsmax.

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Qatar Airways Subsidies Continue to Undermine Competition in Vital Transatlantic Routes

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Commercial aviation in international markets has never come under the disciplines of the World Trade Organization (WTO). It is instead loosely governed under a system of bilateral and sometimes regional “Open Skies” agreements which embody rules establishing mutually beneficial rights for services between signatory countries. The U.S. has over 120 separate agreements which generally promote flexibility in setting schedules, fares and capacity between the parties.  They require non-discriminatory treatment of carriers in the markets of each participant. Most agreements require that each party provide a fair and equal opportunity to compete on generally accepted commercial terms for both landing rights and associated support services such as financing and provision of airports and ground transport. The most important exception to the functioning of this system comes from the large and growing competition from subsidized carriers in the Gulf states of Qatar and the United Arab Emirates.

While the history of commercial aviation in its early years was dominated by state-owned (and often subsidized) carriers, in the last three decades the industry has moved toward a private sector model. Open Skies agreements have proliferated since 1992 in response to this new model and accommodate the huge growth in traffic. The commitment to use generally accepted commercial terms is the only effective check on government subsidies in the absence of WTO rules.

The biggest outliers to this model, although not the only ones, are the three Middle East-based carriers: Emirates, Etihad and Qatar airlines. Since the mid-1980s Emirates has become the world’s largest carrier in terms of capacity, and along with the others is rapidly taking market share from traditional carriers in the U.S., Europe, Australia, and Hong Kong, to name a few of the hardest hit. The U.S. lost six percent of its total international market share after 2007. Its market share declined from 48 percent to seven percent in travel to and from the Middle East. Massive subsidies approaching $50 billion to the oil-rich Middle East carriers have fueled this growth.

In late 2017 and early 2018 the U.S. State Department signed memoranda of understanding (MOUs) with the United Arab Emirates and Qatar under Article 15 of their respective Open Skies agreements to “seek disciplines on subsidies, transparency and state-owned enterprises.” High level support by the U.S. government was signaled by the presence of both then-Secretary of Defense Jim Mattis and then-Secretary of State Rex Tillerson at the signing ceremony for the Qatari MOU.

While the evidence is not yet clear regarding a major rollback of subsidies under the MOUs, the new transparency requirements have allowed documentation of a major breach on the part of Qatar.  In late 2017 Qatar bought a 49 percent stake in bankrupt Italian domestic airline Meridiana. The majority stake was retained by the Aga Khan Charitable Foundation. Meridiana was soon rebranded as Air Italy and its aging fleet of 11 Boeing 767s began to be retired and replaced by its new Qatar Airlines investor with Boeing 737 MAX and Airbus A330s. This would allow expansion of the previously short-haul domestic dominated carrier to major international routes. There is no evidence of how Air Italy is to pay for this massive transfer worth billions of dollars from the Qatar order-book to modernize its fleet.

There is however evidence that at least $30 million of the initial Qatar Airways injection into the holding company for Air Italy has been forgiven by the Middle East airline company. Additionally, Qatar Airways received a $491 million cash injection from the government of Qatar in 2018 partially to offset its operating loss that year and to facilitate the continued aid to Air Italy. Finally, Qatar Airways guaranteed a $30 million loan to Air Italy from HSBC, which carried a 2.5 percent rate of interest. Another $28.8 million loan from the parent holding company to Air Italy carried the same coupon rate. Such favorable loan terms could never have been approved for a startup just emerging from bankruptcy without backing from a larger and more stable firm. The Aga Khan majority owner has provided no fresh cash or loans to assist the new entity, and all major operating leaders of Air Italy came from Qatar Airways, indicating fairly clearly that the latter is in firm control.

The heavy subsidization of this small but growing airline is of concern for two principal reasons: it is in breach of the 2018 MOU with the U.S. and it threatens in the long run the ability of U.S. carriers to compete in major parts of the normally lucrative transatlantic markets. U.S. carriers have already seen their share of this market fall from 42 percent in 2005 to 34 percent in recent years. After righting their performance in the last three years, the three major U.S. carriers are building new capacity in an effort to reclaim lost share in the transatlantic market.

The clear target of Air Italy is to expand as a competitor in transatlantic routes to Italy, and it appears to be doing so at highly subsidized rates. I noted earlier the acquisition of a new fleet of long-haul equipment by Air Italy. Starting in 2018 and expanding this year, this new entity is using the international hub of Milan to offer direct flights to New York, Miami, San Francisco and Los Angeles, and has announced service to Chicago starting next year. Even offering new direct flights from Europe to the U.S. violates an understanding the American side asserted as part of the 2018 MOU. According to U.S. officials the parties to the MOU are barred from initiating new flights from third countries such as Italy. Additionally, the prices offered in a three-week test period this spring for these routes appear designed to win market share at the risk of losing money, a practice called dumping under WTO rules. Average fares for the four cities served by Air Italy averaged 28 percent less than those of competitors (which include Emirates Airways in the New York-Milan route) and fully 60 percent in the normally more profitable business class submarket. I did searches on the Air Italy website on June 10 and July 2 and found the following prices for round trip economy fares:

San Francisco-Milan            $618

Los Angeles-Milan                                  593

New York-Milan                                   545

Miami-Milan                                   661

Air Italy has announced its intention to eventually offer direct service to Rome. A one-stop (Milan) connection from Miami to Rome was priced at $383 for flights last spring and $440 for fall flights.

While financial reporting for the Italian carrier is not transparent enough (another violation of the MOU) to estimate the actual cost for these flights, it is difficult to imagine such prices allow for a market-based profit. Air Italy has announced plans to quadruple its flights by 2022 as it acquires new aircraft, escalating the pressures on U.S. and European airlines, which have lost one-third of their market share to Asia partially as a result of competition from the subsidized Mideast carriers.

There will be some who will not lament displacement of U.S. and European airlines from important international routes, especially price hungry consumers in search of even lower fares (and narrower seats). But tens of thousands of U.S. workers and suppliers will bear the brunt of subsidized competition from the deep pockets of the oil sheikdoms. Having a large domestic aircraft fleet is certainly important to U.S. transportation needs in times of conflict or emergency, especially given the demise of the U.S. commercial naval fleet and defense transport fleet. Trying to maintain a global trading system based on clear rules for transparency, fair play on a commercial basis, and reciprocity is also an important reason for pursuing Qatari violations of the spirit and letter of the 2018 MOU.

Qatari Emir Sheik Tamin bin Hamad al-Thani will visit President Trump and other senior officials in Washington on July 9. This offers a timely opportunity to raise the issues arising from poor implementation of Qatari commitments from the MOU. The circumvention of this understanding represented by the Air Italy expansion should be at the center of the discussions.

Originally published on Forbes.

americans4fairskies2015Qatar Airways Subsidies Continue to Undermine Competition in Vital Transatlantic Routes
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Deseret News: Utah Rep. Chris Stewart: Predatory trade practices have literally hit the sky

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We find ourselves in contentious and uncertain times. At every turn, our national and economic security is being threatened, forcing us to confront the many pressures that seem to confound us. There is no better example of these concerns than the predatory trade practices that have weakened our economic and strategic standing in the world.

Since the end of the Cold War, globalization has dramatically reshaped the world economy. Markets have become so interconnected that disentangling them and returning to a time of economic isolationism now seems an impossible task (just ask the U.K. and the EU). By and large, this interconnectedness has been a good thing. Economic interdependence and free market capitalism have lifted entire nations out of poverty, helped to steady some of the most unstable parts of the world while creating a growing middle-class of hundreds of millions of people.

Despite this progress, increased interdependence is only good if all countries adhere to fair trade principles. But the truth is, more and more countries are not playing by the rules. Some nations have been caught violating the nature and spirit of trade agreements, thereby undercutting the global economy and harming American industries. Under the current administration, more focus has been placed on convincing trading partners to level the playing field through new treaties, but the U.S. also needs to enforce existing agreements. If we don’t, there is no point in signing new agreements.

In particular, I want to discuss the need to enforce two recent agreements signed with Qatar and the United Arab Emirates.

In January 2018, President Trump successfully reached terms on an Open Skies agreement with Qatar and, more recently, signed another deal with the UAE of a similar nature. Open Skies is a web of treaties that regulate which airlines get to enter another country’s territory. The aim of these agreements was to end state subsidies to domestic airline providers, including Qatar Airways, Emirates, and Etihad, as well as to force these companies to comply with standard international accounting practices.

For years, Qatar and the UAE have propped-up their domestic airlines with an estimated $50 billion in state subsidies. Basic economic principles make it clear that when nations buttress domestic carriers with supplemental income, the subsidized carriers are not required to think about profitability the way other airliners, such as Delta, United Airlines, and American Airlines, must do. Subsidized airlines can fly unprofitable routes and provide other services that don’t correspond with market demand. By doing so, they undercut international competitors and steal market share. This forces American airliners to cut jobs and, in some cases, end services.

” If we allow countries to take advantage of the U.S., decades of progress towards international peace and stability will be undermined. “

Despite agreeing to end state subsidies to their domestic airlines, both Qatar and the UAE have gone back on their word. For example, shortly after the announcement of the Qatar Open Skies deal, Qatar Airways purchased a 49 percent stake in Italy’s Meridiana airline and rebranded the carrier as Air Italy. Air Italy then announced new flights to the U.S. This move is problematic because Qatar Airways agreed not to start new flights to America originating outside the Persian Gulf and, in almost all but name only, Air Italy is Qatar Airways. Air Italy’s extensive operating losses are covered by the Qatar Airways. The top executives are almost all former executives at the airline. Even the crew uniforms are almost identical. All of this is a clear violation of the spirit of the Open Skies agreement.

This anti-free market behavior has a direct impact on Utah’s economy. Around 15,000 employees come to work at the Salt Lake City airport every day. In addition, at peak there will be about 2,000 full-time employees working on the airport expansion project. When the Qatari and UAE governments undermine the airline industry, they threaten these jobs.

Fortunately, President Trump has proven that he is willing to do the right thing for American workers and I’m grateful the administration is trying to address this issue. He has taken immediate action when our partners don’t live up to their end of the bargain, and I’m confident he will continue to fight against illegal subsidies and protect American workers.

Our commitment to free market capitalism is part of what propelled America to become the greatest nation in history. But with this position comes a special responsibility, and we must stand up to those who undermine fair trade principles. If we allow countries to take advantage of the U.S., decades of progress towards international peace and stability will be undermined.

U.S. Rep. Chris Stewart represents Utah’s 2nd congressional district.

Originally published on Desert News.

americans4fairskies2015Deseret News: Utah Rep. Chris Stewart: Predatory trade practices have literally hit the sky
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For Trump, an Opportunity to Defend American Workers

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One of the key reasons many workers across the country supported Donald Trump in the 2016 election was his willingness to call out countries that violate U.S. trade agreements. For far too long, the United States has been unwilling to enforce its trade deals — and as a result, the U.S. airline industry is under attack right now from foreign trade-violators who claim to be our partners.

For over a decade, Qatar has subsidized its state-owned carrier Qatar Airways to the tune of more than $25 billion in violation of the country’s Open Skies aviation trade agreement with the United States. To address the subsidies, the Trump administration announced in 2018 that it had obtained a commitment from the Qatari government to end the trade agreement violations and cease launching new flights directly between the United States and countries outside Qatar.

Yet, Qatar was already preparing to break the deal before the ink on its commitment was dry. In 2017, Qatar Airways bought a substantial stake in Meridiana, a struggling Italian carrier, and rebranded it as Air Italy, and announced that Qatar would massively expand Air Italy to make it the dominant carrier between the Italy and the world.

Qatar Airways installed many of its top executives in leadership roles at Air Italy. Two of Air Italy’s five board members have ties to Qatar Airways. Air Italy’s chief operating officer held the same position at Qatar Airways, running the Middle Eastern carrier’s day-to-day operations. Air Italy’s top flight and ground operations executive held a similar position at Qatar Airways. On top of that, Qatar Airways gifted Air Italy 50 new planes and invested heavily in the Italian carrier. The intent was clear: redirect Qatari government subsidies into Air Italy and use the carrier as a proxy for Qatar Airways.

In this role, under Qatar Airways’ backing and direction, Air Italy is launching new routes to the United States. It doesn’t matter if these routes lose money because continued infusions of Qatari subsidies will wipe away any losses. Given the difficulty they face in matching this subsidized competition, U.S. carriers may well be forced out of markets, which could result in my fellow pilots, as well as others in the airline industry, losing their jobs.

Recently, Qatar Airways’ supporters have delivered a half-hearted defense of Qatar’s attempts to break its promises to the Trump administration. In a letter to the Trump administration, Qatar Airways’ few supporters claim the Air Italy transaction was legal and approved by European regulators. But therein lies the problem. What may benefit Qatar can hurt the United States and its workers. The Trump administration’s foremost obligation is to look out for American interests and especially American industries and workers––whether that is the pilot, flight attendant, ground crew, or airport employee. U.S. airline industry jobs are exposed and stand to be affected by Qatar’s continuous violations––and by extension those of Air Italy.

What American workers need –– and what the entire country needs – –is for the Trump administration to enforce its understanding with the government of Qatar that Qatar Airways will be financially transparent and not introduce new nonstop flying between the United States and points outside Qatar.

Trump campaigned on being a strong advocate for U.S. workers. As the leader of a union that represents more than 62,000 pilots across the United States and Canada, that message resonates. We hope the administration will make good on the president’s pledge and call out these trade violators. Ensuring that all carriers follow the same rules is the most important action our government can take in helping the global aviation industry thrive.

Originally Published on Inside Sources.

americans4fairskies2015For Trump, an Opportunity to Defend American Workers
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When Open Skies Mean Broken Windows

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The sociologist James Q. Wilson is famed for the “broken windows” school of policing.  Small signs of disorder quickly lead to chaos on a greater scale, he reasoned. His theory holds that broken windows should be quickly fixed, fresh graffiti immediately painted over, and even seemingly small offenses like jumping subway stiles should be policed attentively to stop larger problems before they start.  

In the 1990s, New York City Mayor Rudy Giuliani applied the broken windows theory to make New York City, formerly beset by crime, into one of the safest major cities in the world. Of course, there is more than one way to break a window.  Other cities have successfully applied Wilson’s theory to make public spaces safer and more livable, but broken windows can occur in global trade as well.  

Imagine the case of one, or possibly two small countries with unlimited resources from oil production determined to build the largest airlines in the world without regard to expense or profitability.  These countries, if they wished, might spend $50 billion or more to build the world’s largest airline by capacity (not revenue) and build colossal airports to go with them.   This sounds fantastic, and yet it has happened.  

In an October 2018 study, scholar Thomas J. Duesterberg of Washington’s Hudson Institute compiles data to show that as of 2015, the oil kingdoms of Qatar and the United Arab Emirates have provided $48 billion in subsidies, plus another $4 billion of in-kind subsidies in the form of below-market-rate fuel, to build out not one but three separate airlines–Emirates Airlines, Etihad Airways, and Qatar Airways, known collectively as the Middle East 3 or ME3.

The money is still flowing.   Duesterberg recounts that as of 2017, Emirates and Etihad had 228 Boeing aircraft in their fleet and orders for another 300 on the books.  Emirates Airlines also had 101 Airbus A380 planes which carry up to 500 passengers in its fleet and 77 more on order.  Emirates is literally the world’s largest carrier by capacity, though not in terms of revenue. Etihad similarly has 66 Airbus planes in its fleet and 62 more on order.  

These airlines have increased their passenger capacity by 10-fold since 2001, Duesterberg reports, and are building airport capacity to match.  Qatar’s Hamad Airport is five times the size of Chicago’s O’Hare.  The government of Dubai is building what it says will be the world’s largest passenger airport at a cost of $32 billion and that will be able to hand 200 million passengers per year and service 100 Airbus A380s simultaneously. This growth in capacity far exceeds growth in the actual number of passengers.  

The airline business has notoriously low profit margins.  Excess capacity lowers profit margins for everyone.  Excess capacity by state-subsidized carriers destroys the profitability of commercial airlines that receive no state support and even that of state-owned airlines that operate under commercial rules.  It destroys the value of private-sector investment and undermines competitive markets.

The excess capacity problem isn’t a fluke or isolated occurrence.  It is one of the major issues in trade disputes between China and its trading partners including the United States.  Unprofitable Chinese excess capacity in steel, for instance, has wiped out steel industries around the world.  China has state-subsidized airlines too, that are growing at rates similar to ME3 and, as they reach beyond China, will soon contribute worldwide to excess capacity in the way the ME3 have, and perhaps even on a grander scale.   

There is a way to stop this problem.  Air travel between countries is governed by bilateral treaties between countries called “Open Skies” agreements.  Open Skies agreements ensure that each country has a reasonable and equitable number of flights from one to another.  In the US, Open Skies agreements are managed by the US Department of Transportation. The United States has Open Skies agreements with the UAE and Qatar.   But Open Skies agreements must be kept up to date.

In late 2017, Qatar Airways has used its petrodollar resources to buy a controlling stake in a failing Italian airline with 11 aging planes which it has rebranded as Air Italy and furnished with 50 new aircraft (Boeing 737 MAX and 787s) with plans for more and larger planes to come.  Air Italy has landing rights in five U.S. cities. In the new Air Italy, these cities now form the US anchor of a global airline that stretches from the US to East Asia and employs state-subsidized, oil-financed excess capacity all the way.   

The DOT has not yet revised the current US Open Skies agreement with Qatar to address this new reality of a Qatar-owned Italian air carrier. It needs to, quickly, because subsidized overcapacity, along with technology theft and other uncompetitive practices, mostly by China, is a central issue in the trade disputes that threaten the global economy.  China represents an enormous challenge to fair and free bilateral trade worldwide.   Qatar is a small problem in comparison, but the broken windows theory tells us to fix small problems before the large ones become unmanageable.

Originally Published on Town Hall.

americans4fairskies2015When Open Skies Mean Broken Windows
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Trouble for CNN over terror nation ties to TV analysts

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A report highlighted by Donald Trump Jr. that some CNN national security analysts have undisclosed ties to a Middle Eastern nation that sponsors terrorism threatens to undercut the network’s support among Democrats and independents, according to a new survey.

A poll of six battleground states found that likely voters, especially Democrats, believe the report, the latest evidence that President Trump’s attacks on CNN have had an impact.

Donald Trump Jr. tweeted the story out, adding, “Shocked to hear this. Many of CNN’s national security analysts have undisclosed ties to oppressive Qatari regime.”

Qatar has been in trouble with the administration over subsidizing its Qatar Airways and flooding U.S. routes in violation of an open-skies agreement that shuns subsidized airlines.

The “believability” poll tested three anti-Qatar messages and the one mentioning the CNN report topped the charts.

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It read: “The nation of Qatar is paying national security analysts, and specifically those working for CNN, who are speaking out positively on their behalf and not disclosing they are being paid by Qatar.”

It was the “most effective” message in the poll.

What’s more, it was the top message among Democrats and independents, two groups that have long supported CNN.

Republicans chose, instead, a message about American jobs being lost to the subsidized Qatar Airways.

The poll also found support for Trump retaliating against Qatar for violating the open-skies agreement. Those results:

  • Two-thirds of voters support efforts to stop Qatar Airways from violating international agreements (66%), which is strongest in Florida (71%) and Iowa (69%). Support is strongest among Republicans (79%), conservatives (77%), and voters without a college education but make over $75,000 (76%).
  • Though overall support did not adjust, invoking the president’s name caused partisanship support to increase (Republicans 82%, conservatives 80%). Support is now highest among voters in Florida (71%), Wisconsin (71%), and Iowa (70%).
  • Nearly half of all voters would be more favorable of the president (45%), with one-third claiming it would make no difference (14%). Less than one-fifth would become less favorable (14%). A plurality of all states would have a more favorable impression.
  • Two-thirds agree that immediate action must be taken by the president (67%) with a majority “strongly” agreeing (54%). Support is strongest in Florida (73%) and Wisconsin (71%).

Originally Published on the Washington Examiner.

americans4fairskies2015Trouble for CNN over terror nation ties to TV analysts
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No cheating on friends

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A president who talks and acts tough on trade has been a long time coming. Donald Trump made getting fair dealing on trade a major plank in his campaign platform and has followed through. China can’t say it wasn’t warned about the imposition this week of additional tariffs on selected goods coming into the United States.

Bad trade deals have cost the United States billions of dollars and cost millions of American workers their jobs over the last several decades. Supporters of free trade find tariffs against China, Europe, Mexico and Canada hard to take. Tariffs are taxes hiding under another name and lead to higher prices for U.S. consumers. The stock market dropped 500 points after the new China tariffs were announced. Tariffs provide a safe harbor for inefficiencies, and protect markets and manufacturers from the need to innovate and increase productivity. But as a short-term strategy to get the Chinese to the table to make agreements to protect American intellectual property, for example, it might be that rare occasion on which to do something bad so that good may come. A tariff strategy worked with the Europeans, and for Japan, Mexico and Canada, and now they’re talking about new trade deals that critics of the president said would never happen.

Mr. Trump must remember that a deal on paper and signed is only the beginning. Other signatories to a deal will be tempted to cheat if they think they can get away with it. This is what’s happening now with Qatar, which by being too clever by half found a workaround to an agreement it concluded with the United States regarding the operation of the heavily subsidized Qatar Airways.

Under a deal cut a year-and-a-half ago under Open Skies, an international regulatory regime meant to enable open entry into a nation’s airspace, an airline must not use government subsidies to establish lower fares in competition with U.S. carriers.

Qatar, a nominal U.S. ally and host to the largest American military base in the Gulf, agreed to terms in January 2018 it is now subverting through its purchase of a 49 % share in an Italian carrier it renamed Air Italy. Soon afterward, Air Italy said it would offer bargain-rate flights from Milan to New York, Miami, Los Angeles and San Francisco. Qatar is using Air Italy to get access to gates at U.S. airports it said it would not pursue under its own name. The word for that is cheating. Qatar Airways is not being shy about it. Air Italy is operating flights with Qatar Airways aircraft, with financing provided by the Qatar government. Its financial statements show Qatar Airways covers Air Italy’s operating losses. Air Italy’s chief operating officer and ranking executives are former Qatar Airways senior executives. Air Italy crew uniforms that are just like those worn by Qatar Airways crews.


This hasn’t escaped the notice of U.S. carriers, which are rightly angry about it. American advocates on Capitol Hill, including Sen. Ted Cruz of Texas, a conservative Republican, and Bob Menendez of New Jersey, a liberal Democrat, are trying to do something about it. They’re asking the Trump administration what it intends to do. Unless pushed, probably nothing.

Qatar must be called to account, and not just for its own mischief but for the message that would send to the Chinese and other major U.S. trading partners. If Qatar Airways continues to use Air Italy as its proxy, and gets by with it, that would tell China, Japan, MexicoCanada and Europe they can agree to trade deals and if they’re caught cheating the United States will look the other way. Someone could write a book, and call it “The Art of the Steal.”

Originally Published on The Washington Times.

americans4fairskies2015No cheating on friends
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Air Italy plans North American growth despite US protests

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Air Italy plans to announce at least two additional North American destinations for the summer of 2020, as the airline expands transatlantic service despite opposition from US legacy carriers.

The carrier also hopes to unveil its first US interline partner later this year, chief operating officer Rossen Dimitrov tells FlightGlobal.

He declines to specify the new destinations pending agreements with airport operators, but says one of the two will likely be seasonal. In addition, Air Italy sees potential for one of its two Californian destinations – Los Angeles and San Francisco – to convert to year-round service in 2020, says Dimitrov.

The Italian carrier recently added seasonal service to Toronto from Milan Malpensa, after launching seasonal flights from Milan to both Los Angeles and San Francisco. It plans to suspend US seasonal flights later this year in favour of destinations like the Maldives, Mombasa, Tenerife and Zanzibar. Air Italy serves Miami and New York John F Kennedy year-round.

Its expansion across the Atlantic is unfolding as Air Italy becomes the focus of a years-long campaign backed by three US mainline carriers, which allege that Air Italy‘s 49% shareholder Qatar Airways is using the smaller carrier as a proxy to expand into the USA.

The US airlines – American AirlinesDelta Air Lines and United Airlines – are backed by their unions in the lobbying coalition, called The Partnership for Open and Fair Skies.

Dimitrov, who dismisses the allegations as “baseless”, says the campaign by the US carriers will have no impact on how Air Italyexpands its North American network.

“Why should it? We are a European airline which is completely compliant with regulations,” says Dimitrov.

Despite Qatar Airways‘ stake in Air Italy, the Italian carrier does not codeshare with the Doha-based carrier on its routes to the USA from Milan, points out Dimitrov.

“It has always been the case,” he says. “Let them [the US carriers] prove we’ve done it.”

Air Italy does not carry Qatar Airways‘ code on any flights, Cirium schedules data show. The Gulf airline carries Air Italy‘s code on routes between Doha and four Italian destinations, according to schedules.

The campaign by the three US legacy carriers has made it difficult for any potential partnerships, as Air Italy seeks its first interline and codeshare deals across the Atlantic.

“We will be happy to work with American, Delta and United, I have all respect for them. Instead of us fighting, we could work together,” says Dimitrov.

The Italian carrier, in the meantime, is in talks with other potential US partners.

“In terms of the interline, we might be able to announce something this year as long as the work gets completed,” he says. An interline agreement will be the first step towards forming a codeshare partnership, he adds, saying Air Italy could potentially partner more than one US carrier.

Given the dominance of the US legacy carriers, Air Italy will not have many other US airlines to choose from if it wants a codeshare partnership with substantial coverage from its year-round US destinations of Miami and New York JFK.

At JFKJetBlue Airways is likely the best option. New York-based JetBlue, which has partnerships with several foreign carriers, is the second largest airline at the airport after Delta.

American operates more than half of the capacity out of Miami, Cirium schedules data show. Aside from the US legacy carriers, only Frontier Airlines operates US domestic service from Miami.

Originally Published on Flight Global.

americans4fairskies2015Air Italy plans North American growth despite US protests
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Enforce the Open Skies Act

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President Trump is in the middle of a growing number of trade disputes. On Sunday, he promised to dramatically raise tariffs on $200 billion in Chinese goods if a trade deal isn’t completed by this Friday.

But while the Trump trade threats over tariffs steal the headlines, the Trump administration will soon have to make a series of decisions about non-tariff barriers to trade. Those include quotas in the new Trump agreement with Canada and Mexico that will supersede NAFTA and a nasty dispute over agreements the U.S. has negotiated to ensure fair competition in international airline flights. In these non-tariff trade cases, the chief debate isn’t over how to convince trading partners to level the playing field but how to enforce existing agreements. As Douglas Holtz-Eakin, a former chair of the Congressional Budget Office, notes, “unless trade agreements are enforced, it does not matter what philosophy drives their negotiation.”

International airline travel has exploded in recent years, making enforcement of the dozens of agreements under the Open Skies Act ever more important. Open Skies regulates which airlines get to enter another country’s territory. The goal is open entry, unless a government-subsidized carrier is using its artificial advantage to unfairly compete with private carriers.

Such is the case with Qatar Airways, which is owned by the fossil-fuel-rich government of Qatar and has spent billions to become a major player in international aviation. Qatar Airways is now so big that the U.S. and Qatar signed an agreement in January 2018 to limit Qatar’s ability to fly directly into the U.S. from European cities. These so-called fifth-freedom flights are carefully negotiated to avoid unfair competition.

But Qatar soon made it clear that it was reinterpreting the agreement in such a way as to make it meaningless. It bought a 49 percent stake in a failing carrier called Air Italy, which previously had flown only regionally in Europe along with a couple of seasonal flights to the U.S. Two days after Qatar Airways bought a stake in it, Air Italy began an expansion that now has it making nonstop flights from Milan, Italy, to New York, Miami, Los Angeles, and San Francisco. Its bargain rates are clearly designed to poach passengers from U.S. carriers, using its Qatar-government subsidies to make up any losses.

Qatar Airways didn’t make much of an effort to hide the fact that Air Italy is basically a front for its Qatari owners. Air Italy’s extensive operating losses are covered by Qatar, its top executives are almost all former executives at Qatar Airways, and even Air Italy’s crew uniforms are almost identical to those worn by employees of Qatar Airways.

A range of U.S. officials, from Democratic senator Bob Menendez of New Jersey to Republican senator Ted Cruz of Texas, have called foul on this subterfuge and complained to U.S. Secretary of State Mike Pompeo. At a recent Senate hearing, Pompeo responded to such concerns by reiterating his support for the Open Skies Act: “The U.S. government sees what’s going on, and we’re working to put this agreement — we think it was a good agreement, and we’re trying to ensure it’s enforced.”5

Open Skies agreements not only promote free-market principles, but they give the U.S. aviation industry the opportunity to compete around the world. The distortions that government-owned carriers in the Persian Gulf are creating in the airline market threaten a wide range of other airline agreements and make a mockery of financial transparency.

As President Trump has decided which trade fights to pick, he has sometimes made mistakes or exaggerated the dangers. But when it comes to the Open Skies agreement with Qatar, the U.S. has an obligation to make sure it is fully enforced. Anything else would make a mockery of the very idea of a trade agreement working in behalf of the American people.

Originally Published on The National Review.

americans4fairskies2015Enforce the Open Skies Act
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Ken Blackwell: Democrats have no answer to Trump trade deals

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With the Democratic primary campaign underway, presidential hopefuls on the left are seeking to contrast themselves with Donald Trump in a variety of ways. They want to raise taxes on the wealthy to fund free college, free health care, and the Green New Deal. They want to end private health insurance. They want to pack the Supreme Court. They want to let death-row inmates vote. They want open borders.

Meanwhile, they are all but ignoring the president’s America First policy, especially his efforts to reverse the unfair treatment of American companies and industries. This has been an unsung victory for the Trump administration, and Democrats don’t have an answer for it.

Chief among the president’s successes is the renegotiation of NAFTA – which was clearly in need of major modernization and revision.  In its place, President Trump negotiated and implemented the United States-Mexico-Canada Agreement, a fairer trade deal that boosts America’s ability to create new jobs. Trump’s ability to get Mexico and Canada to the table in the first place should be commended. The USMCA is a great trade deal, and Congress should work towards approving it.
 
In addition to the new NAFTA, President Trump has renegotiated our trade agreement with South Korea, with an eye towards greater protection for American companies.  While previous administrations have talked tough on China, the Trump administration has taken aggressive action to stop the unfair treatment of American industries and finally level the playing field. As a result of all these actions, the U.S. trade deficit fell to an eight-month low in February.

Standing up for American companies and workers and ensuring our partners don’t take advantage of us will be a winning message heading into the 2020 elections.

Across the board, the administration has pursued a strong America First policy to ensure that other nations live up to their end of our trade deals.  American companies and industries will compete on a level playing field once and for all.
 
Another critical part of the economy where the President has stood up for the enforcement of existing agreements is the airline industry.  For years, U.S. airlines, workers, elected officials complained that Qatar and the United Arab Emirates were violating the open skies agreements between our nations by illegally subsidizing their airlines and putting our airlines at a disadvantage.
 
While the Obama administration did nothing for years, the Trump administration stood up for our workers and brought both nations to the table and negotiated strong agreements with both to ensure their compliance with the open skies agreements.

Unfortunately, it appears that Qatar has now begun to test the limits of those agreements – and likely the patience of the administration.  Qatar Airways has bought a commanding stake in Air Italy, previously a small regional carrier with financial woes, and Qatar Airways CEO Akbar Al Baker now describes the airline as if it is his own. Additionally, Air Italy and Qatar Airways share many of the same executives, and they are operating almost as one company. Qatar Airways has even provided aircraft from their own fleet for Air Italy to use in service between Milan and New York, an already crowded route. Five other airlines have daily flights along the same path that Air Italy is encroaching in with the help of subsidized Qatar Airways.
 
This represents a violation of the spirit of the hard-fought negotiations between Qatar and the Trump administration and has brought a great deal of criticism.  Senator Ted Cruz, R-Texas, led a group of 11 senators who wrote to the administration asking them to review Qatar’s compliance with the previous deal.  Rep. Matt Gaetz, R-Fla., a key Trump ally wrote to the president urging him to take the issue seriously.
 
Not surprisingly, the administration is keeping a close eye on this issue and if the president’s track record is any indication, their concerns will be addressed.  Secretary of State Mike Pompeo recently said the administration is “looking very closely” at Qatar’s compliance.

President Trump understands that for too long, the United States has been trampled on in trade deals, treaties and alliances and is reworking deals to protect American interests.   Not only is it critical that he continue to renegotiate trade deals, but also to hold our trading partners’ feet to the fire in the commitments they make and ensure they don’t use loopholes to get around them.
 
Standing up for American companies and workers and ensuring our partners don’t take advantage of us will be a winning message heading into the 2020 elections.

Originally Published on Fox News.

americans4fairskies2015Ken Blackwell: Democrats have no answer to Trump trade deals
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Qatar Accused of Violating Agreements in Bid to Undercut U.S. Air Carriers

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U.S. air carriers are calling foul on Qatar for violating an international agreement aimed at leveling the playing field for international airlines, a backdoor move that has seen the small oil rich nation inject tens of millions of dollars into a once-defunct Italian airline.

Qatar in 2018 signed on to an agreement known as the Open Skies Act that was meant to prevent the nation from using its massive cash reserves to subsidize its international air carrier, Qatar Airways. Soon after the agreement, Qatar devised a backdoor scheme to purchased a stake in the failing Italian airline Meridiana and use it to violate the terms of the agreement.

The original agreement was meant to stop Qatar’s expansion into the United States and focused on national security issues, such as Doha’s continued support for extremist terror groups across the Middle East. In purchasing a major stake in Meridiana, now branded as Air Italy, Qatar was able to sidestep the agreement.

U.S. air carriers and some in Congress are now calling on the Trump administration to hold Qatar accountable for its violation of the Open Skies Act, arguing that the purchase of Air Italy has enabled Qatar to offer bargain rates for flights into the United States.ADVERTISING

U.S.-based airlines are now feeling the pressure and jointly sponsored a full page New York Timesadvertisement urging the Trump administration to hold Qatar accountable for its backdoor dealings.

“Qatar Airways is ignoring the 2018 agreement that your administration signed by using massive government subsidies to launch new routes to the United States through its stake in Air Italy,” states the advertisement, which was signed by American Airlines, Delta, and United. “Air Italy was a struggling regional carrier until Qatar Airways injected tens of millions of dollars into the company to circumvent the agreement and expand its U.S. presence.”

“In the last few days, Qatar Airways has used its Italian proxy to launch routes to Los Angeles and San Francisco, and added flights to Miami—a further effort to undermine U.S. airlines. Simply put, Qatar Airways represents a grave threat to American jobs and the health of the airline industry,” the carriers wrote. “No rule-abiding business can compete with a massively subsidized airline that ignores economic realities and can wipe away losses with one infusion of government cash after another.”

Secretary of State Mike Pompeo, in recent comments before concerned members of Congress, assured lawmakers he is working on the issue and is in discussions with Qatar to ensure it upholds its commitments under the Open Skies Act.

Sen. Robert Menendez (D., N.J.), during a hearing with Pompeo, chastised Qatar for breaching the agreement.

“At the same time as the agreement was being negotiated, Qatar Airways acquired a 49% stake in Air Italy, a formerly struggling regional Italian carrier, and rebranded it as an international carrier with flights to five U.S. destinations from Milan. That runs directly counter to the one-year agreement,” Menendez said.

“I have personally engaged in this issue and we are working to make sure every party to those agreements complies with every element of those agreements,” Pompeo responded. “The U.S. government sees what’s going on, and we’re working to put this agreement—we think it was a good agreement and we’re trying to ensure it’s enforced.”

A State Department official, speaking to the Washington Free Beacon on background, said that U.S. officials are working to address the concerns raised by lawmakers and U.S. air carriers.

“The Department of State is committed to leveling the playing field and ensuring American companies have the opportunity to succeed globally,” the official said. “Some U.S. airlines have raised concerns about subsidized competition. Since 2017, the Department of State has led serious negotiations with Qatar—and the United Arab Emirates—to address those concerns.”

“We have sought to do so while maintaining the Open Skies framework of U.S. international aviation policy,” the official said. “Our goal is to provide beneficial results for as many U.S. stakeholders as possible.”

Lawmakers have petitioned the White House in recent months to exert greater pressure on Qatar, arguing that American jobs are at stake.

“Not only does Qatar’s cheating undermine competition and threaten American workers—over 1,500 American jobs are lost for every route launched into the U.S. by a subsidized Middle Eastern carrier—but it directly and deliberately threats our ‘American First’ policies,” Rep. Matt Gaetz (R., Fla.) wrote in a recent letter to the White House. “Mr. President, I urge you to continue standing up to Qatar and demanding enforcement of the deal they are violating or we must withdraw from the agreement altogether.”

Qatar has defended its acquisition of Air Italy in public comments, maintaining that U.S. air carriers are being unfairly “hostile” to the country.

“Qatar Airways’ investment in Air Italy was a matter of public knowledge (as were Qatar Airways’ investments in other airlines) at the time of the U.S.-Qatar discussions; airline investments were not raised as a point of concern during those talks,” Qatar Airways said in a statement. “The Understandings do not mention or prohibit cross-border investments of any type.”

“Furthermore, Qatar Airways does not codeshare on any of Air Italy’s flights to the United States, and has no plans to do so,” the carrier said. “Qatar Airways is not operating any Fifth Freedom scheduled air services to the U.S.”

Originally published on The Washington Free Beacon.

americans4fairskies2015Qatar Accused of Violating Agreements in Bid to Undercut U.S. Air Carriers
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Largest U.S. airlines urge Trump to enforce Qatar deal barring subsidized flights

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A group representing the three largest U.S. airlines and aviation unions said Wednesday that Qatar’s state-owned airline is playing President Trump for a fool by flouting a deal with the administration not to add new flights to the U.S. market.

Qatar’s behavior on this issue has been outright insulting to both the president, the Secretary of State and the American people,” said Scott Reed, campaign manager for the Partnership for Open & Fair Skies, which represents Delta Airlines, United Airlines and American Airlines and the unions.

The group took out full-page newspaper ads this week calling on Mr. Trump to enforce an agreement the U.S. negotiated in 2018 with Qatar Airways not to add new flights to the U.S. The airline purchased a 49-percent stake in Air Italy, which has been flying to U.S. destinations since last June and is adding flights to Miami this month.

Secretary of State Mike Pompeo told the Senate Foreign Relations Committee last week that the administration is “looking very closely” at the acquisition. Mr. Reed said in an interview Wednesday that’s not enough, and the administration needs to enforce its agreement.

“We’re working our way into Obama territory,” Mr. Reed said. “The Obama State Department did nothing. For the sake of fair competition and American jobs, we’re counting on President Trump to prove that our country won’t accept this raw deal from our trade partners.”

The White House had no immediate reaction.  TOP ARTICLES1/5READ MOREElijah Cummings accuses Jim Jordan oftrying to ‘actively obstruct’ drug company investigation

The group said Qatar’s subsidies to its airline create unfair competition with the U.S. carriers and threaten about 1.2 million U.S. jobs.

But some other U.S. aviation firms are urging the administration against an enforcement action.

In a letter to Mr. Pompeo and Secretary of Transportation Elaine Chao last week, JetBlue Airways Corp, FedEx Corp and Atlas Air Worldwide Holdings Inc. said taking action against Qatar Airways and Air Italy could prompt retaliation against U.S. carriers.

“For JetBlue, who just announced its intention to begin service to London from New York City and Boston starting in 2021, the possibility of retaliation could have a devastating impact on the ability to obtain authority to operate in the EU under the U.S.-EU Open Skies agreement,” the airlines said.

Originally published on The Washington Times.

americans4fairskies2015Largest U.S. airlines urge Trump to enforce Qatar deal barring subsidized flights
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U.S. looking ‘very closely’ at Qatar-Air Italy deal: Pompeo

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The United States is scrutinizing state-owned Qatar Airways’ acquisition of a 49 percent stake in Air Italy, which has been flying to U.S. destinations since June in a move seen by U.S. lawmakers as flouting a deal not to add new flights to the domestic market.

Questioned repeatedly about the acquisition during a U.S. Senate hearing, Secretary of State Mike Pompeo said on Wednesday, “We’re looking very closely at this recent decision by Qatar to take on 49 percent of this airline.”

Both Republicans and Democrats at the Senate Foreign Relations Committee hearing said they were concerned that the deal with the Italian carrier violated an agreement Qatar Airways reached with the United States in early 2018.

“There are lots of consultations taking place,” Pompeo said. In January, U.S. and Qatari officials met to discuss civil aviation matters, the State Department said earlier this year.

Since 2015 the largest U.S carriers – Delta Air Lines, American Airlines Group and United Airlines – have argued their Gulf rivals are being unfairly subsidized by their governments, distorting competition.

Gulf airlines have always denied those accusations and last year the three major Middle Eastern carriers reached a voluntary agreement, saying they would not add new flights to the United States.

However, Air Italy has been flying to New York and Miami since June last year and was due to start serving San Francisco and Los Angeles from this month and Chicago in May.

Qatar Airways acquired 49 percent of Italian airline Meridiana in 2017, rebranded it Air Italy and transformed it into a carrier with five announced non-stop U.S. destinations from Milan.

Scott Reed, campaign manager for the Partnership for Open & Fair Skies, a group representing the three largest U.S. airlines and aviation unions, said “the future of this industry – and the jobs it supports – depend on the Trump administration holding Qatar accountable for its trade-cheating actions.”

In December, 11 Republican senators wrote a letter to Pompeo suggesting the flights from Milan “were consistent with Qatar Airways pattern of adding subsidized capacity in markets where demand is already well served.”

Reed said “there is bipartisan concern that Qatar Airways is violating last year’s agreement with the United States – making its finances more opaque instead of less and using Air Italy as a proxy to undermine the U.S. airline industry.”

An aide to Senator Bob Menendez, the ranking Democrat on the foreign relations committee, noted that January marked the one-year anniversary of agreements between the United States and Qatar on government subsidies to Qatar Airways.

In a side letter to the agreements, the Qatari government indicated there was no intention to launch additional flights from Qatar to U.S. destinations but said some passengers would board flights in Europe before flying to U.S. destinations.

Originally Published on Reuters.

americans4fairskies2015U.S. looking ‘very closely’ at Qatar-Air Italy deal: Pompeo
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Testing Time on Trade

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The distinguishing feature of the Trump Administration’s economic policy has been its approach to international trade. Its “fair and reciprocal” trade philosophy has embraced tariffs as a strategic tool to force trade talks, it has focused closely on issues of bilateral trade balance, and it has signaled a surprising comfort with non-tariff barriers to trade (e.g., quotas and regional content rules in the U.S.-Mexico-Canada Agreement). The debate over the desirability of these features will continue, but one thing is quite clear: Unless trade agreements are enforced, it does not matter what philosophy drives their negotiation.

From that perspective, the administration is facing a testing period on trade. The China talks continue to drag on, reportedly largely over disagreements on enforcing the negotiated provisions. Because the talks are private, it is difficult to assess the state of play. But there is a very visible test facing the White House as well: Qatar and the Open Skies agreements for international commercial aviation.

Air Italy — the thinly disguised front for Qatar Airways — launched its inaugural flight from Milan to Los Angeles, on top of last year’s Milan to New York-JFK and Milan to Miami flights. These so-called “fifth freedom” flights are fundamentally non-economic for Air Italy or Qatar Airways (which bought a 49 percent stake in Air Italy and launched the new routes). This reality raises the suspicion that Qatar continues to subsidize Qatar Airways to offset these losses. Any such subsidies are a violation of the U.S.-Qatar Open Skies agreement (there are 120 U.S. bilateral Open Skies agreements designed to prevent government intervention in commercial airline travel). The logic of this agreement was impeccable. If it was not possible to channel subsidies to the airlines, they would not be able to run unprofitable international routes, and pricing would be on a playing field level with international competitors. Any genuinely non-economic fifth freedom route would simply disappear. And over a year ago, Qatar Airways further committed to greater financial transparency. It appeared to be a big win for trade enforcement.

Experience suggests that the financial reporting is not transparent enough to stop the Qatar government from continuing to funnel billions in illegal subsidies to Qatar Airways. The issue has been highlighted by Senator Ted Cruz, who has indicated he plans to hold a Senate hearing on the matter. And it has been acknowledged by Secretary of State Mike Pompeo, who said, “Make no mistake about it. American jobs are impacted when other countries subsidize the airlines. It’s not fair. It’s not right.”

It is crunch time for adherence to Open Skies. How will the administration react?

Originally Published on American Action Forum.

americans4fairskies2015Testing Time on Trade
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Air Italy’s New Uniform Just Cements the Concern its Qatar Airways With a Different Name

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Of all the different branding elements that an airline can use, the cabin crew uniform has to be one of the most important.  From the distinctive red hats worn by Emirates cabin crew or the iconic sarong kabaya of Singapore Airlines, the right uniform can instantly bring brand recognition and evoke feelings of trust and professionalism.

It’s understandable then that airlines spend a fair amount of time, effort and money developing the right uniform.  Staff not only have to be smart and professional but the look has to make them ‘stand out from the crowd’ – a walking billboard if you like that will hopefully make passengers stop in their tracks.

You would have thought then that a new airline would want to dress its crew in a uniform that really is different.  That, however, can’t be said of Air Italy – look quickly and you could easily be forgiven for thinking they’re from Qatar Airways.

It’s a strange decision and one that is only going to cement the concern raised by many critics that Air Italy is a subsidiary of State-funded Qatar Airways – being used to circumvent an agreement the Persian Gulf country reached with the United States last year.

Air Italy isn’t technically brand new – Qatar Airways bought a 49% stake in little-known Italian airline Meridiana a couple of years ago.  Then, in February 2018, Qatar Airways announced plans to rebrand Meridiana as Air Italy – there are plans to grow the ‘new’ airline quite significantly over the next few years.

By 2022, Air Italy hopes to have 50 aircraft in its fleet – the airline will be getting brand new Boeing 787 Dreamliner’s, as well as 737 MAX aircraft that have all been funded by Qatar Airways.  In the interim, Qatar Airways has also leased out its own A330 aircraft.

Air Italy says it will work with Qatar Airways to “build a sustainable airline alternative for the people of Italy”.

In fairness, the involvement of Qatar Airways with Air Italy has always been fairly obvious – the branding makes use of the distinctive Qatari burgundy colour in the bucket load.  Apart from the fact the airline has the word ‘Italy’ in its name, you wouldn’t know it was actually Italian.

And then there’s the uniform – aside from the Air Italy logo and an updated neck scarf, the uniform is exactly the same to the one worn by Qatar Airways cabin crew.  We actually thought this was a temporary solution but no, Air Italy confirms this is the permanent uniform that was originally designed for Qatar Airways by Danish workwear company Olino in 2008.

Critics claim Qatar Airways has received (it’s claimed) over $25 billion in undocumented subsidies from its government owner, so in turn, the argument goes that Air Italy has also been financed through State-funded subsidies.  You would have thought that Air Italy would want to distance itself from its controversial majority shareholder.

The timing for Air Italy’s launch has also raised eyebrows – it came just months after Qatar and the United States reached an agreement over an Open Skies dispute.  Qatar agreed to become more transparent and also said it had no plans to open any fifth-freedom routes to the United States.

You could argue that Qatar Airways investing in Air Italy is no different than any other airline making international investments – say, like Delta Air Lines buying a stake in Virgin Atlantic in order to increase its market share at London’s Heathrow Airport.  But Delta says that’s missing the point.

Qatar Airways isn’t subject to market forces like Delta because it’s funded through government subsidies.  Essentially, they claim the competition that Air Italy is creating might be good for passengers but it’s not fair and could put jobs at risk.

That argument, though, is slightly clouded by the existence of Alitalia.  The Italian flag-carrier hasn’t made a profit in years, is technically bankrupt and is being propped up by a multi-billion Euro government loan paid for by Italian taxpayers.  For all intents and purposes, the airline should have gone out of business but is only still flying because it’s being bankrolled by the Italian State.

The plan is to offload Alitalia on to private investors by the Summer – if that does actually happen (there’s every chance it doesn’t) then that could make it a lot harder to justify where Air Italy is getting its funding from.

Originally published on Paddle Your Own Kanoo.

americans4fairskies2015Air Italy’s New Uniform Just Cements the Concern its Qatar Airways With a Different Name
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President Trump’s Leadership on Open Skies Has Paid off for American Travelers

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In 1987, then-real estate mogul Donald Trump laid out the strategies and wisdom that built him one of America’s largest real estate empires in his book The Art of the Deal. Now, as President of the United States, Donald Trump has been using those same tactics to deliver real results for the American people, and it’s time he gets some credit for his work.

The first people in line to thank him should be America’s air travelers, as we’re approaching the one-year anniversary of the Trump administration’s decision to protect America’s Open Skies agreements with some of our key global partners. To provide a little bit of background, the U.S. government negotiates Open Skies agreements with foreign countries to open up the market for air travel worldwide.

Before the existence of such agreements, foreign governments pulled the strings when it came to decisions about air service within their borders. How many flights were allowed to enter the country, how many people could be accommodated on board, and how much airline tickets should cost are just some of the important determinations that were out of airlines’ control.

Open Skies puts the power back in these airlines’ hands, allowing them to consider demand when operating in new markets, rather than relying on governments to make these decisions for them. By removing the restraints of bureaucracy, Open Skies has done wonders for the American travel and tourism industry. 

Just ask the State Department, which cites “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” as just some of the many benefits we have seen due to Open Skies.

It’s no wonder that the United States has signed over 120 of these agreements with a range of different countries.

However, another characteristic of Open Skies agreements is that they inject competition into aviation markets, which has been a bitter pill to swallow for some of America’s larger airline carriers. Over the years, these legacy carriers – Delta, United, and American – have challenged Open Skies agreements with Qatar and the United Arab Emirates specifically, pushing the Trump administration to renegotiate our longstanding deals with these countries.

Thankfully, under the guidance of President Trump, last year the State Department stood up against their requests and refused to undermine Open Skies, a move that has paid dividends for American citizens from coast to coast.

Why is this decision so important? For starters, the very Gulf carriers being targeted by the legacy carriers brought 1.7 million foreign visitors to the United States in 2016. These individuals spent nearly $7.8 billion while inside our borders and supported nearly 80,000 additional U.S. jobs. The economic toll of losing customers like these would be devastating to American enterprise.

Open Skies are also essential for the U.S. aviation industry to function at its highest level. As more travelers enter the United States, smaller domestic airlines serving mid-sized cities have been able to expand their routes and offer new connecting flights. This is especially powerful for consumers living outside of major cities like New York and Los Angeles, as they’re given more choice when booking their flights.

Plus, while competition may not be the best thing for Delta’s bottom line, it lets the market decide what prices airlines should charge for their tickets. In the case of Open Skies, this has saved passengers an estimated $4 billion.

Without President Trump’s leadership, the American public wouldn’t be able to take full advantage of these benefits. So, the next time you’re looking at flights or booking a ticket, it’s President Trump and his administration that deserve the credit for keeping your fares low and choices high.

Originally published on Townhall.

americans4fairskies2015President Trump’s Leadership on Open Skies Has Paid off for American Travelers
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Matt Gaetz tells Trump to get tough on Qatar for ‘Cheating’ US Airline Companies

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A GOP lawmaker sent a letter to President Donald Trump Wednesday calling for the White House to take action against Qatar for violating international Open Skies agreements and a 2018 pact between the two countries.

Qatar is “cheating” U.S. airlines by subsidizing foreign competitors, cutting flight prices and outcompeting American companies in U.S. markets, according to GOP Rep. Matt Gaetz of Florida.

Open Skies policies are meant to limit governments from subsidizing and aiding certain airlines or interfering with others by setting strict limits on flight routes, prices and carrying capacity. For years, American carries had accused Qatar and its state-owned airline Qatar Airways of violating Open Skies to capture U.S. markets.

“Last year, you [Trump] negotiated a deal for greater Qatari transparency and to put an end to their illegal subsidies for their state-owned airline Qatar Airways – even including the halt of expansion by Qatar Airways into the United States until these subsidies were completely ended,” Gaetz wrote. “It was an ‘America First’ victory.”

After the bilateral agreement, Qatar Airways purchased a controlling share in the Italian airline Meridiana. Qatar renamed and rebranded the acquisition Air Italy and began subsidizing it with cash and assets, including new planes. Qatar is now using the new company to compete for U.S. flight routes against American companies, Gaetz’s letter said.

“Air Italy is nothing more than a proxy airline for Qatar to get around the deal it signed after pledging to stop this trade cheating,” Gaetz said.

“Not only does Qatar’s cheating undermine competition and threaten American workers – over 1,500 American jobs are lost for every route launched into the U.S. by a subsidized Middle Eastern carrier – but it directly and deliberately threatens our ‘America First’ policies,” Gaetz continued.

Originally published on The Daily Caller.

americans4fairskies2015Matt Gaetz tells Trump to get tough on Qatar for ‘Cheating’ US Airline Companies
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Lawmakers urges Trump to enforce Open Skies deal with Qatar

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A Republican ally of President Trump is urging the president to enforce an agreement with Qatar aimed at stopping illegal subsidies for its state-owned airline, saying the Middle Eastern nation is cheating on the deal and harming U.S. airline workers.

Rep. Matt Gaetz, Florida Republican and a member of the House Armed Services Committee, told Mr. Trump in a letter obtained by The Washington Times that Qatar is “blatantly” violating the Open Skies agreement that is intended to ensure fair competition.

The lawmaker said soon after the agreement was reached last year, Qatar Airways purchased an Italian regional airline with $100 million euros from the Qatari government and announced that the new “Air Italy” would fly to five cities in the U.S. In December, a bipartisan group of senators raised similar concerns with the administration.

“Not only does Qatar’s cheating undermine competition and threaten American workers — over 1,500 American jobs are lost for every route launched into the U.S. by a subsidized Middle Eastern carrier — but it directly and deliberately threatens our ‘America First’ policies,” the lawmaker wrote.

He said the Open Skies agreement was supposed to halt the expansion by Qatar Airways into the U.S. until its state subsidies were halted completely.

“Air Italy is nothing more than a proxy airline for Qatar to get around the deal it signed after pledging to stop this trade cheating,” Mr. Gaetz wrote to the president.

Originally published on The Washington Times.

americans4fairskies2015Lawmakers urges Trump to enforce Open Skies deal with Qatar
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Newt Gingrich: It’s time to hold Qatar accountable

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Negotiations between nation states require a great deal of flexibility and discipline. In the past few days, we’ve seen a variety of international negotiating tactics from the Trump administration.

Early last week, we saw strategic restraint. President Trump announced he would delay implementation of an additional $200 billion in tariffs on Chinese products due to progress in trade negotiations with the country. After already following through on the implementation of $250 billion in tariffs last year, which brought China to the table, Trump wanted to send a signal that the United States is a good faith partner. Ultimately, this restraint may allow talks to continue to move smoothly.

Then, late last week, we saw a display of strength. The President abruptly cut short his summit with North Korean dictator Kim Jong un because Kim’s demands were unreasonable. Trump needed to remind the North Korean leader that his country is the one that is economically desolate and isolated, and North Korea needs a deal more than the United States.

In the coming days, I hope we will see another negotiating tactic from President Trump in his administration’s international dealings: resolve.

As I have written before for Fox News, Qatar and the United Arab Emirates have for decades subsidized their state-owned airlines in violation of their Open Skies Agreements with the United States.

Open Skies Agreements between countries allow airlines to establish international flights without prior approval from the government. A central tenet of the 126 Open Skies Agreements the United States has with countries that have state-owned carriers is that the flights must reflect actual market demand. This ensures that state-owned carriers do not create international flights that operate at a loss for the purpose of driving other airlines out of business. This ensures a level playing field between privately owned and state-owned airlines.

A strong, resolute response to Qatar from our government would show that the United States is no longer going to put up with global cheating in trade. A weak response sends the signal that the Trump administration is not as effective in standing up for American workers as it needs to be. All these countries we are negotiating with will feel emboldened to cheat.  

Unfortunately, monitoring whether state-owned airlines are living up to this agreement is difficult. For years, Qatar and UAE got away with creating below-market international flights to and from the United States by keeping their finances opaque. But they couldn’t get away with it forever.

The Trump administration took a big step in January 2018 by forcing Qatar to agree to transparency in its airlines’ finances. Also, in a side letter to the agreement, the administration got Qatar’s leadership to commit to refrain from adding more flights from third-party countries to the U.S.

Unfortunately, Qatar quickly began to find ways to circumvent this agreement.

Qatar Airways has a 49 percent stake in Air Italy. However, despite this minority ownership position, the president of Qatar Airways often makes announcements about the future of Air Italy as if he is in charge. This makes sense because Air Italy is depending on Qatar Airways – and thus dependent on the government of Qatar – to stay afloat. Since acquiring the airline in 2017, Qatar Airways has provided cash, airplanes, and other resources. In fact, two years before the announcement, Air Italy operated at a combined 50 million-euro loss. Qatar Airways gave it 100 million euros in cash and guarantees to make up the gap – in addition to aircraft.

Over the course of the last year, Air Italy has launched or announced five new flights from Milan to the United States. This is clearly a violation of the agreement Qatar signed with the Trump administration. Qatar is simply using Air Italy to do that which it agreed not to do – launch heavily subsidized service to the U.S. across the Atlantic.

It is also typical of the type of maneuvers that different countries – especially ones who subsidize their industries – use to circumvent trade agreements and tariffs. They simply buy an ownership stake in a foreign company not subject to the trade measure and go back to their old practices under a new flag.

How the Trump administration responds to Qatar’s truly blatant and obvious cheating is critical.

In addition to the negotiations with China, the U.S. recently came to terms with Mexico and Canada on an updated version of the North Atlantic Free Trade Agreement, which is much fairer to the United States. We also reached an agreement with Asian Pacific countries.

These new agreements won’t be worth the paper they are written on if the United States will not enforce them.

A strong, resolute response to Qatar from our government would show that the United States is no longer going to put up with global cheating in trade. A weak response sends the signal that the Trump administration is not as effective in standing up for American workers as it needs to be. All these countries we are negotiating with will feel emboldened to cheat.

The U.S. should immediately protest Qatar Airways actions to the Qatari government and use full diplomatic pressure to get the government to order their airline to halt the new flights. If the Qatari government does not act quickly, President Trump should be prepared to use the U.S. government’s authority to limit Air Italy’s ability to operate in the United States.

By doing so, President Trump would be standing up for the American workers in the airline industry. He would also be putting the U.S. in a more authoritative position to stand up for workers in all American industries against unfair foreign competition.

Originally published on Fox News.

americans4fairskies2015Newt Gingrich: It’s time to hold Qatar accountable
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Flight Attendant Leader: How Can Airline With ‘Misogynist’ CEO Offer a Diversity Award?

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The leader of the largest flight attendant union is blasting the creation of a diversity and inclusion award funded by an airline that she says has a poor record on women’s rights and a “misogynist” CEO.

The International Air Transport Association announced Tuesday that it has launched the award with a sponsorship from Qatar Airways. Qatar will provide $25,000 awards in each of three categories: Two are for women contestants and the third goes to an airline.

Sara Nelson, president of the Association of Flight Attendants, took to Twitter Tuesday morning.  She tweeted: “Seriously?

At Qatar, Nelson tweeted: “No union rights. {Flight attendants} must apply to get married. Dismissed if pregnant. &CEO says women could never be CEO. Hypocrisy.”

In an interview Tuesday, Nelson called the new awards “window dressing.

“They only happened because of pressure from unions and human rights groups,” she said. “We’re going to keep it up until they change not only written policy but also every-day practices.”

AFA represents 50,000 flight attendants at twenty airlines.

In June, Akbar Al-Baker, CEO of Qatar, was named to a one-year term as chairman of the IATA board of governors. IATA represents 290 airlines that carry 82% of global air traffic.

The global airline industry and IATA wants the award to be “a force for real change,” IATA said Tuesday in a prepared statement. The organization said it is determined “to improve the participation of women at every level and in every region of the globe.

“That will require support from all participants in the industry,” it said. “The IATA Diversity and Inclusion Awards aim to help that process by recognizing and encouraging positive examples of people and teams that are making a difference.

“Qatar Airways stepped forward and generously offered to sponsor these awards in full understanding and support of their aim,” IATA said. Judging for the awards will be conducted independently of the sponsor.

As for Al Baker, he “is on record apologizing for his earlier remarks on women in airline leadership,” IATA said.

Earlier, in a prepared statement, Al-Baker said,  “Qatar Airways recognizes the need for wider diversity in the workplace, not just in our airline but across the industry as a whole.” He said Qatar will work with IATA for the next decade, “continuing to encourage greater inclusion and diversification in the airline community.”

U.S. and European labor unions have long criticized Qatar for its practices regarding female employees. In addition, Qatar has long been engaged in conflict with the big three U.S. airlines because, despite being subsidized, it serves seven U.S. cities from its hub in Doha — in violation of Open Skies treaties.

Al-Baker, long known for incendiary comments, has been in open conflict with Nelson several times.

In 2017, speaking in Dublin at a celebration of the launch of Qatar Airways’ Doha-Dublin service, Al-Baker referred to the “excellent service from our international cabin crew,” adding, “By the way, the average age of my cabin crew is only 26 years.”

By contrast, he said, “You know you are being served by grandmothers on American airlines.”

After Nelson spoke out, Al-Baker apologized to her publicly and sought to call her. But Nelson refused to take a phone call the from an Al-Baker assistant, saying her schedule was too crammed.

In a second tweet Tuesday morning, Nelson noted that Qatar once asked her to attend its private Jennifer Lopez concert. That occurred in 2016 in Atlanta, when the carrier was launching Doha-Atlanta service. Nelson tweeted:

“I told them I’d be happy to accept if an openly gay Qatar cabin crew member called to invite me. Radio silence! “

In 2018, Al-Bakar responded to questioning on women’s rights at the European Parliament’s Committee on Transport and Tourism. His remarks were posted on a flight attendant’s website, paddleyourownkanoo.com

He said women have more rights in Qatar than in any neighboring countries. He said, “It is unsafe and unhealthy for a cabin crew to be pregnant and flying,” so pregnant flight attendants are provided an opportunity to work in other jobs.  He said that while flight attendants are recruited on a “single status contract,” they must inform the carrier of marriages due to insurance and other procedural changes.

Nelson said the policies remain discriminatory and Al-Bakar remains “a misogynist.”   She said only a half dozen of Qatar’s 10,000 flight attendants (including 8,000 women) have been allowed to switch jobs when they are pregnant.  Also, U.S. airlines do not require flight attendants to disclose whether they are married.

The new IATA awards will be granted in three categories. An inspirational role model award is for women over 30 who hold a senior position in the airline industry and has promoted gender diversity. A high flyer award is for women under 30 who have displayed inspirational leadership. A team award is for an airline that has enhanced diversity and inclusion.

Originally Published on Forbes.

americans4fairskies2015Flight Attendant Leader: How Can Airline With ‘Misogynist’ CEO Offer a Diversity Award?
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Ed Bastian op-ed: Air Italy’s mysterious benefactor

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How Qatari state subsidies flow to an obscure Italian airline, circumventing a key agreement with the U.S. and putting thousands of American jobs at risk.

A Deutsche Bank airline analyst asked a question recently: “Who is funding Air Italy’s losses?”

In a Dec. 7 report, the firm noted the obscure Italian carrier produced a negative pretax margin – i.e., a loss – of 18.4 percent last year, on top of a negative margin of 9.2 percent in 2016, representing losses of hundreds of millions of euros. Yet despite its financial hemorrhaging, the airline suddenly has a fleet of brand new jets, and has announced a major global expansion of flights between Milan and North American cities including New York, Miami, Chicago, Los Angeles, San Francisco and Toronto.

It doesn’t take Sherlock Holmes to solve this particular mystery. The airline’s benefactor is Qatar Airways, the government-owned airline of Qatar, which recently acquired 49 percent of Air Italy. Even though Qatar’s recent financial statements (which remain opaque) show that it is one of the worst performing airlines in the history of the airline industry with over $2 billion of operating losses over the past three years, Qatar has been giving its new acquisition billions of dollars’ worth of new airplanes, including Boeing 787 and 737 jets, with plans to deploy larger Boeing 777 and A350s as well. Qatar is using the tiny, close-to-defunct Air Italy to skirt its promise to the U.S. to not add so-called “Fifth Freedom” flights to the U.S., which are routes that operate outside of a carrier’s home country – such as nonstop flights between the U.S. and Europe. 

Qatar’s promise was part of an agreement with the U.S. in which Qatar said it would finally take steps toward fair competition in aviation, after it had enjoyed the benefits of billions of dollars in government subsidies. These subsidies drove U.S airlines out of the Mideast and India, and threatened thousands of airline jobs in the U.S.

Only months later, Qatar is back to their old tricks, thumbing its nose at the Trump Administration with its clumsy scheme to get around its promises. These Italian routes, already highly competitive and well-served by existing carriers, are simply not economically viable without Qatari subsidies. By flooding these markets with subsidized capacity and dropping prices far below cost, Qatar is launching another assault on U.S. airline employees and travelers, and disrespecting the Administration.

We shouldn’t be surprised, given that if it played by the same rules as everyone else, Qatar Airways simply wouldn’t exist. It’s remarkable that in an era when global aviation is thriving, Qatar must keep its state-owned airline aloft with a massive infusion of subsidy dollars. The airline lost $1.3 billion in its most recent fiscal year, flew fewer passengers, and has said it may ask its government for another capital injection.

Thankfully, these concerns have gotten the attention of Congress. More than a dozen U.S. senators recently sent letters to the administration raising their concerns about the Air Italy-Qatar connection and its impact on U.S. jobs.

As the CEO of Delta, my No. 1 job is taking care of our 80,000 employees, who are the best in the business and work hard every day to ensure all of our flights are safe and reliable. On their behalf, I join those Senators in asking the Trump Administration to examine this situation and send a strong message to the Qatari government that these actions simply won’t be tolerated.

We should demand an answer to the Deutsche Bank question: Who is funding Air Italy’s losses?

Originally Published on Delta

americans4fairskies2015Ed Bastian op-ed: Air Italy’s mysterious benefactor
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Newt Gingrich: Left unchecked, China will cheat American industries and workers — Just look at what Qatar has done

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As the Trump administration continues to negotiate and define its trade relationship with China, it’s important to remember that whatever agreement comes out of the current détente will only be one step in a continual process.

Worldwide trade is incredibly complex and ever-changing. No trade regime with China can be completely defined or enforced under a single agreement. The moment one deal is made, China will immediately begin looking for other ways to gain an unfair advantage – and they are not the only ones.

This is why the Trump administration must continue to develop a system that can enforce the trade agreements it makes with China – and every other country with which the U.S. does business.

For example, the Qatari government had provided an estimated $25 billion in illegal subsidies to its state-owned carrier, Qatar Airways, in violation of its years-long Open Skies agreement with the U.S. – a bilateral treaty that ensures fair competition in the aviation market. These subsidies essentially propped up Qatar Airways, wiping away massive losses and insulating the carrier from challenging market forces. The global aviation community correctly recognized that it would be impossible to compete with an airline that didn’t have to worry about profits or demand.

President Trump brought the Qatari government to the negotiating table and held it accountable for its dubious actions. A new agreement struck in January represented an opportunity for Qatar to turn the page, and for rule-abiding airlines to finally compete on a level playing field. Qatar pledged to be more transparent in its financial transactions and in a letter accompanying the agreement, said it had no plans to launch “fifth-freedom” routes, such as those from Europe to the United States.

The Qatari leadership has continued to do virtually everything it said it wouldn’t.

Qatar’s finances have only become murkier. In late 2017, prior to the latest agreement, Qatar Airways bought a 49 percent stake in the holding company of the long-troubled airline Air Italy (once known as Meridiana). Early this month, Air Italy announced it will launch new routes from Milan to San Francisco and Los Angeles next year.

This isn’t a coincidence. Qatar Airways is simply dumping its government subsidies into Air Italy, so it can gain access to the United States via the Italian airline. Air Italy would not have been able to launch these routes without the financial backing of Qatar Airways, and Qatar would have not been able to provide its backing without illegal subsidies. Prior to Qatar’s purchase, Air Italy was mainly serving just a few regional routes.

This puts the U.S. aviation industry and the 1.2 million jobs it supports at risk.

Consider this: Qatar’s ability to skirt markets and dump subsidies into pet projects is a fraction of a fraction of China’s capability.

Even before news of Air Italy’s California routes came out, there was widespread concern that Qatar was violating the January agreement. Recently 11 senators, including Ted Cruz, R-Texas, and Rand Paul, R-Ky., wrote to Secretary of Transportation Elaine Chao, Secretary of State Mike Pompeo, and Secretary of Commerce Wilbur Ross, expressing concerns over Qatar Airways and Air Italy.

Consider this: Qatar’s ability to skirt markets and dump subsidies into pet projects is a fraction of a fraction of China’s capability.

This is why President Trump is taking China so seriously. He knows that he has to bring maximum toughness to every negotiation with China so China’s leaders begin to understand that cheating will not be tolerated.

However, the system that the Trump administration builds for keeping China and other trading partners accountable once these deals are made must be even more tough. To be sure, Trump’s resolve in the fight over trade with China has caused some U.S. industries some pain, but this is nothing compared to what an unchecked China could do. Chinese President Xi Jinping has been clear about all of the sectors he intends to dominate.

This is potentially the greatest challenge President Trump – and America as a whole – face in the coming decades. Free, fair, and reciprocal trade is a fight we must win. Our survival depends on it.

Originally Published on Fox News.

americans4fairskies2015Newt Gingrich: Left unchecked, China will cheat American industries and workers — Just look at what Qatar has done
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U.S. Airlines Complained About Air Italy’s New Routes Into America; It Responded By Adding Even More

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A transatlantic war of words has broken out between a small Italian airline and the giants of U.S. aviation

Air Italy – a minnow in the global aviation industry with a fleet of just 16 aircraft – announced in early December that it was preparing to launch new services to Los Angeles and San Francisco from Milan Malpensa airport, starting in April next year.

It marked a doubling of the carrier’s route network into the U.S., adding to its services to New York and Miami it had launched earlier in the year.

Airlines launch new routes all the time without any fuss. But not this time. A group called the Partnership for Open & Fair Skies, a coalition that includes American Airlines, Delta Air Lines and United Airlines, issue a strongly-worded statement calling for the U.S. government to step in.

“We expect the Trump administration will take strong action and stand up for American workers in response to these violations,” the group said.

An Air Italy Boeing 737 Max plane at Milan Malpensa airport, Italy on May 14, 2018. (Photo: Pier Marco Tacca/Getty Images)GETTY

Its issue isn’t with the idea of an Italian carrier launching flights to U.S. cities though; it is with Air Italy’s second biggest shareholder.

Partnership for Open & Fair Skies was set up to campaign against what it says is unfair competition from the three big Middle East airlines: Emirates, Etihad Airways and Qatar Airways. The last of these owns 49% of Air Italy.

According to the lobby group, the Italian airline’s new services amount to a violation of the commitments made by Qatar in January 2018 that Qatar Airways would not launch any more so-called “fifth freedom” flights to the U.S. (in other words, flights between two foreign countries).

“By exploiting its investment in Air Italy to create a loophole and dodge this pledge, Qatar has violated this agreement and the trust of the United States,” said Scott Reed, campaign manager for the Partnership for Open & Fair Skies. “Qatar has demonstrated a stunning lack of respect for President Trump and Secretary of State Pompeo.”

Some U.S. politicians have added their voice to the criticism, with a group of senators calling for an investigation into Qatar Airways.

If all that was meant to cower Air Italy, it has not worked. On December 18, Air Italy said it was going to launch a non-stop service from Milan to Chicago O’Hare International airport from mid-May. Chief operating officer Rossen Dimitrov said the new route “reflects the importance of the North American market to us.”

Dimitrov has also denied that his airline was being unfairly aided by Qatar. “We are registered in Italy and not subsidized by Qatar Airways, who are minority stakeholders,” he said at a recent event in Delhi to launch new services to India. “They do not manage us.”

The U.S. might struggle to find any reasonable grounds to stop these flights. In January, Qatar and the U.S. held discussions over civil aviation links and reached a set of understandings to address the concerns that U.S. carriers said they had about unfair competition. According to that political agreement, Qatar Airways committed to issuing audited financial statements and, within two years, to start disclosing any significant transactions with state-owned enterprises and “take steps to ensure that such transactions are based on commercial terms.”

On the issue of additional flights, the wording of the agreement was particularly vague. Qatar merely made an assurance that it had “no current plans” for Qatar Airways to operate fifth freedom flights to the U.S. At the time, both sides were able to claim victory. Now, however, the weakness of the pledges is becoming all too apparent to the U.S. airlines.

A follow-up meeting between U.S. and Qatari officials was penciled in for early 2019, although it is unclear at this stage if that will go ahead.

Air Italy will have gained some useful publicity from the episode, which will do it no harm at all as it pushes ahead with a significant overhaul of its operations. In March 2018 it changed its name from Meridiana as part of its revamp. Since then it has added new domestic and international routes, including long-haul services to Bangkok, Delhi and Mumbai, as well as the U.S. destinations.

The airline has a small fleet of ten Boeing 737s, one Boeing 767 and five Airbus A330s, but is aiming to operate 50 aircraft by 2022. The new long-haul routes are being served by the A330. The fleet expansion program is being aided by Qatar Airways, which has given Air Italy the five A330 jets from its own fleet.

Qatar Airways’ investment in the Italian airline also plays into its fierce rivalry with the two UAE carriers. Emirates already operates a fifth freedom service between Milan and New York with one of its own planes. Etihad had previously invested heavily in Alitalia, the national carrier of Italy, although it could not prevent it slipping into administration in May 2017

Originally Published on Forbes


americans4fairskies2015U.S. Airlines Complained About Air Italy’s New Routes Into America; It Responded By Adding Even More
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U.S. Airlines Complained About Air Italy’s New Routes Into America; It Responded By Adding Even More

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A transatlantic war of words has broken out between a small Italian airline and the giants of U.S. aviation

Air Italy – a minnow in the global aviation industry with a fleet of just 16 aircraft – announced in early December that it was preparing to launch new services to Los Angeles and San Francisco from Milan Malpensa airport, starting in April next year.

It marked a doubling of the carrier’s route network into the U.S., adding to its services to New York and Miami it had launched earlier in the year.

Airlines launch new routes all the time without any fuss. But not this time. A group called the Partnership for Open & Fair Skies, a coalition that includes American Airlines, Delta Air Lines and United Airlines, issue a strongly-worded statement calling for the U.S. government to step in.

“We expect the Trump administration will take strong action and stand up for American workers in response to these violations,” the group said.

Its issue isn’t with the idea of an Italian carrier launching flights to U.S. cities though; it is with Air Italy’s second biggest shareholder.

Partnership for Open & Fair Skies was set up to campaign against what it says is unfair competition from the three big Middle East airlines: Emirates, Etihad Airways and Qatar Airways. The last of these owns 49% of Air Italy.

According to the lobby group, the Italian airline’s new services amount to a violation of the commitments made by Qatar in January 2018 that Qatar Airways would not launch any more so-called “fifth freedom” flights to the U.S. (in other words, flights between two foreign countries).

“By exploiting its investment in Air Italy to create a loophole and dodge this pledge, Qatar has violated this agreement and the trust of the United States,” said Scott Reed, campaign manager for the Partnership for Open & Fair Skies. “Qatar has demonstrated a stunning lack of respect for President Trump and Secretary of State Pompeo.”

Some U.S. politicians have added their voice to the criticism, with a group of senators calling for an investigation into Qatar Airways.

If all that was meant to cower Air Italy, it has not worked. On December 18, Air Italy said it was going to launch a non-stop service from Milan to Chicago O’Hare International airport from mid-May. Chief operating officer Rossen Dimitrov said the new route “reflects the importance of the North American market to us.”

Dimitrov has also denied that his airline was being unfairly aided by Qatar. “We are registered in Italy and not subsidized by Qatar Airways, who are minority stakeholders,” he said at a recent event in Delhi to launch new services to India. “They do not manage us.”

The U.S. might struggle to find any reasonable grounds to stop these flights. In January, Qatar and the U.S. held discussions over civil aviation links and reached a set of understandings to address the concerns that U.S. carriers said they had about unfair competition. According to that political agreement, Qatar Airways committed to issuing audited financial statements and, within two years, to start disclosing any significant transactions with state-owned enterprises and “take steps to ensure that such transactions are based on commercial terms.”

On the issue of additional flights, the wording of the agreement was particularly vague. Qatar merely made an assurance that it had “no current plans” for Qatar Airways to operate fifth freedom flights to the U.S. At the time, both sides were able to claim victory. Now, however, the weakness of the pledges is becoming all too apparent to the U.S. airlines.

A follow-up meeting between U.S. and Qatari officials was penciled in for early 2019, although it is unclear at this stage if that will go ahead.

Air Italy will have gained some useful publicity from the episode, which will do it no harm at all as it pushes ahead with a significant overhaul of its operations. In March 2018 it changed its name from Meridiana as part of its revamp. Since then it has added new domestic and international routes, including long-haul services to Bangkok, Delhi and Mumbai, as well as the U.S. destinations.

The airline has a small fleet of ten Boeing 737s, one Boeing 767 and five Airbus A330s, but is aiming to operate 50 aircraft by 2022. The new long-haul routes are being served by the A330. The fleet expansion program is being aided by Qatar Airways, which has given Air Italy the five A330 jets from its own fleet.

Qatar Airways’ investment in the Italian airline also plays into its fierce rivalry with the two UAE carriers. Emirates already operates a fifth freedom service between Milan and New York with one of its own planes. Etihad had previously invested heavily in Alitalia, the national carrier of Italy, although it could not prevent it slipping into administration in May 2017.

Originally Published on Forbes.

americans4fairskies2015U.S. Airlines Complained About Air Italy’s New Routes Into America; It Responded By Adding Even More
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Air Italy Announces Yet Another New North American Destination: Where to Next?

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At this point, it’s becoming a little difficult to see Air Italy as little more than a Milan-based front for Qatar Airways to continue its North American expansion.  Just a day after announcing it would start flying to Toronto, Air Italy says it will open up a new route between Milan and Chicago in May 2019.  This all comes just two weeks after Air Italy also laid out plans to start flying to San Francisco and Los Angeles – an announcement that caused a furore over Qatar Airways’ plans for the airline.

Of course, Qatar’s investment in Air Italy, as well as the heavy involvement its had in shaping the airline’s business strategy isn’t necessarily a bad thing.  The recently rebranded airline will add significant competition in the Italian aviation market where it’s sorely needed – given the fact that flag-carrier Alitalia is living off a seemingly never-ending bridge loan funded by the Italian taxpayer.

Passengers should also benefit from a much improved onboard experience although they should be forgiven if they happen to get confused about what airline they’re actually flying.  Qatar Airways has loaned its own long-haul aircraft to Air Italy, complete with distinctive burgundy-coloured furnishings.  On the outside, Air Italy’s branding also features the same burgundy shade that you’ll find on the Qatari national flag.

It’s probably no coincidence either that Air Italy’s cabin crew and ground staff wear a near-identical version as that worn by their Doha-based colleagues at Qatar Airways.

One theory for Air Italy’s current expansion plans is that it’s targeting the Indian diaspora.  New route openings to Dehli and Mumbai will connect to metropolitan areas with some of the largest Asian Indian populations in North America – it’s a similar market that Qatar Airways has longed targeted by connecting passengers through its Doha hub.

If Air Italy continues with this strategy don’t be surprised to see the likes of Washington DC, Seattle, Houston and Dallas added as routes in the not so distant future.  We’d also wager a service to Manila, and maybe even a Chinese mainland destination coming at some point in 2019 as well.

This all comes at the same time that Qatar Airways has been forced to tame its own North American expansion plans.  It’s ambitions, however, don’t appear to have been diminished by a concerted campaign against competition offered by Persian Gulf airlines against their U.S.-based counterparts.

Scott Reed, a campaign manager at the Partnership for Open & Fair Skies – a lobby group funded by some of the largest airlines in the USA including American and United is far from impressed by Air Italy’s latest announcements.

“Once again, Qatar is using Air Italy as a Trojan horse built from subsidized cash to avoid its commitments to the Trump administration and launch new fifth freedom routes,” Reed said in an emailed statement.

“What’s clear now is that the writing is on the wall. Qatar Airways knows that President Trump and Secretary Pompeo won’t accept flagrant trade cheating that hurts American workers, and is quickly launching further subsidized flights before the administration takes action.”

“As we said earlier this month, faced with clear evidence that Qatar will not play fair or abide by its commitments, we expect the Trump administration will stand up for American workers in response to these violations.”

Qatar’s plan for Air Italy is novel but arguably no different than what the likes of one of its biggest critics, Delta Air Lines has done itself – in that case, buying a significant stake in Virgin Atlantic to gain a foothold at Heathrow Airport and then changing up the airline’s route network to focus on North America.

At the same time, Qatar Airways / Air Italy is actually opening up new routes that will benefit consumers in both Italy and India.  It’s probably worth noting that U.S. airlines have underserved India for many years so they have the option to compete on both fronts if they choose to.

Bottom Line

Air Italy is pretty much Qatar Airways by a different name.  That is by no means a bad thing although it’s understandable why competitors are getting upset about the upstarts ambitious expansion plans.

Originally Published on Paddle Your Own Kanoo.

americans4fairskies2015Air Italy Announces Yet Another New North American Destination: Where to Next?
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U.S. airlines bristle at expansion of Qatar-backed Italian airline

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An Italian airline is now caught in the middle of a simmering dispute over government subsidies between the largest U.S. airlines and state-owned Qatar Airways.

Qatar Airways owns a 49 percent stake in Air Italy, which is planning to serve Los Angeles and San Francisco next year from Milan. Delta Air LinesAmerican Airlines and United Airlines say the Doha-based airline is using the carrier to offer flights to Europe, violating an agreement the Qatar government reached with the Trump administration last year.

In January, Qatar Airways agreed to open its books and said it did not have plans to launch flights between the U.S. and destinations other than its home country, according to the Trump administration. Similar agreements were struck in May with United Arab Emirates carriers Abu Dhabi-based Etihad and Dubai-based Emirates. (Emirates currently flies from the New York area to Milan and Athens, an example of the so-called “fifth freedom” flights.)

The four-year-old international feud is over allegations from U.S. carriers Delta Air LinesAmerican Airlines and United Airlines that several of their Persian Gulf rivals, known for their plush upper-class cabins, have received since 2004 more than $50 billion in subsidies from their home countries that create an unfair playing field for their U.S. competitors.

“With regards to the Italian version of Qatar, we are strongly opposed, and we together — Delta, American and United — are very closely aligned on this issue,” United’s CEO Oscar Munoz said on a call with reporters last week. The expansion is an “an-in-your-face to our administration on agreements that have been reached.”

Some U.S. lawmakers are asking the Trump administration to step in. Eleven Republican senators, including Sen. Ted Cruz of Texas, earlier this month sent a letter to Transportation Secretary Elaine Chao expressing concern about Air Italy’s expansion.

“Air Italy’s entry into this crowded market appears consistent with Qatar Airways pattern of adding subsidized capacity in markets where demand is already well-served,” said the letter.

Qatar Airways and the White House did not immediately respond to a request for comment. When asked about the dispute, Air Italy emphasized that Qatar Airways owns a minority stake in the airline, but did not respond to the allegations directly.

Originally Published on CNBC

americans4fairskies2015U.S. airlines bristle at expansion of Qatar-backed Italian airline
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Trump administration holds talks with airlines, keeps pressure on Gulf carriers

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WASHINGTON (Reuters) – The Trump administration met with major airlines on Tuesday to discuss complaints that some Gulf states are unfairly subsidizing state-owned carriers, keeping up pressure on the Middle East airlines at the center of a spat with U.S. rivals.

U.S. and Gulf airlines representatives met at the U.S. State Department with administration officials to discuss the status of the government’s review of complaints about subsidies. A State Department official said there would be no announcement after the meeting, but officials plan new talks with Gulf states starting this week.

Heads of the three largest U.S. passenger carriers – American Airlines Group Inc (AAL.O), United Continental Holdings Inc UAL.N and Delta Air Lines Inc (DAL.N) – have urged the Trump administration to challenge the conduct of three major Middle Eastern carriers under “Open Skies” agreements signed in the early 2000s. The U.S. airlines contend the Gulf carriers are being unfairly subsidized by their governments.

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

President Donald Trump told airline executives in February he recognized they were facing pressure from foreign carriers, but added that he wanted foreign airlines also to do well.

“They come with big investments, in many cases those investments come from their governments, but they are still big investments,” he said.

In a Sept. 14 White House memo seen by Reuters on Tuesday, Trump administration officials agreed the U.S. government “should take action to address the unfair behavior of Gulf carriers.” It said the government should “seek disciplines on subsidies, transparency and state owned enterprises” and consider withdrawing from the Open Skies agreements if “sufficient progress it not made.”

The Partnership for Open & Fair Skies, which includes Delta, American, United and some major airline unions, on Tuesday applauded “the Trump administration for taking action to level the playing field with the Gulf carriers and their massive government subsidies”, spokeswoman Jill Zuckman said.

But U.S. smaller airlines grouped under the U.S. Airlines for Open Skies Coalition said their larger rivals “still cannot point to a specific violation” of the Open Skies agreements.

It said 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).

U.S. Travel Association President and CEO Roger Dow also said on Tuesday: “We strongly oppose any efforts to reduce secure travel, connectivity, growth and consumer choice.”

Originally Published on Reuters


americans4fairskies2015Trump administration holds talks with airlines, keeps pressure on Gulf carriers
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The 11 US senators against Air Italy: used by Qatar to violate the agreements

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[Translated from Italian to English]

Request to Washington to investigate the expansion of the carrier to 49% of Qatar Airways. From Doha they reject the accusations: we do not use Air Italy to fly to the USA

Air Italy is a Trojan horse from Qatar Airways in the American market. Eleven US senators – all Republicans – ask the White House to investigate the airline partner born from the sundial Meridiana with 49% in the hands of the Doha carrier. In a letter sent last December 3 to Mike Pompeo (US Department of State), Elaine Chao (Transport) and Wilbur Ross (Commerce), the senators headed by Ted Cruz invite the Trump administration to shed light on the operations of Air Italy.

The agreements

Operations that, according to the representatives, seem to violate the agreement between the United States and Qatar at the beginning of this year and which establish among other things the renunciation by Qatar Airways not to have flights in fifth freedom, therefore to recur only to direct connections and not to those with a stopover in Europe, as is the case for Emirates with the Dubai-Milan-New York and Dubai-Athens-New York routes. For the eleven American senators, Qatar Airways would be circumventing that constraint by financing the routes of Air Italy between Malpensa and the US.

The reply

An accusation reminiscent of that of Doug Parker, CEO of American Airlines. “There is a Persian Gulf carrier who is using his investment in another company to fly to the US, which is something that needs to be solved,” Parker said a few weeks ago. Accusation that is rejected by the leaders of the Doha carrier. “On this point I want to be clear: Qatar Airways does not use Air Italy as an alternative way to take passengers from Doha to the US,” said Akbar Al Baker, from the Gulf company, to Corriere in a conversation in May immediately after delivery of the first Boeing 737 Max 8 at Air Italy. «We do not even have codeshare flights with them over Europe and we have not even thought about it.

The accusations

The Republican senators think otherwise. The Milan-New York flight of Air Italy is boiling as “questionable from the commercial point of view, considering that there are already five companies (United, Delta Air Lines, American Airlines, Alitalia, Emirates)”. The reason why the eleven believe that “entry into an already crowded market” is in line with the Qatar Airways strategy “to add flight seats with state aid to markets where demand is already well served”, write in the letter.

The routes

As a pet “that offered domestic flights and some international seasonal connections”, Meridiana then became Air Italy according to the American representatives went with launching regular flights to the USA. Markets in which Air Italy, they continue, “would have had no access without Qatar Airways money, as it would not have been possible for Qatar Airways without the direct support of the Qatari government”. So the request for investigation and verification of the respect of the treaties of January 2018 between Doha and Washington. Request that started two days before the announcement by Air Italy of two new direct routes , in April 2019, from Milan to Los Angeles and San Francisco.

Originally Published on Corriere della Sera.

americans4fairskies2015The 11 US senators against Air Italy: used by Qatar to violate the agreements
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Is Air Italy a Wolf in Sheep’s Clothing? Lobby Group Says Qatar Airways is “Disrespecting” U.S. President

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Back in February, the State of Qatar announced that it had reached an important agreement with U.S. authorities over a long-running dispute involving its government-owned national airline, Qatar Airways.  A little over two weeks later and a little known Italian airline going by the name of Meridiana Fly revealed a big strategic change just months after Qatar Airways had taken a 49% stake in the carrier.

Initially, the Qatari investment wasn’t entirely surprising – Qatar Airways has taken stakes in a number of airlines, including the owner of British Airways and Iberia as well as South America’s LATAM Group and Hong Kong-based Cathay Pacific.  More recently, Qatar Airways even attempted to buy a stake in American Airlines although decided not to pursue that idea after its advances were rebuffed by the airline.

But it soon became clear that Qatar wasn’t merely making a passive investment in Air Italy’s parent company AQA Holding.  Along with a complete rebranding (the first thing to change was the Sardinian airline’s name as it rebranded to Air Italy) came a complete change in strategy as it transformed from being a mainly regional carrier – moving its operating base from Olbia to the industrial Italian heartland of Milan.

Air Italy’s fleet would be bolstered by the addition of five Airbus A330-200 long-haul aircraft – all of which would be borrowed from Qatar Airways.  The fleet would also gain the latest generation Boeing 737 MAX 8 aircraft – again, belonging to Qatar Airways but delivered new to Air Italy.  With the addition of new aircraft, Air Italy would also expand its route network – to Bangkok in the East and to New York City and Miami in the United States.

By 2022, the airline wants to have grown its fleet by as many as 50 aircraft and has plans to start taking delivery of brand new Boeing 787 Dreamliner’s next year.

So far, the two events that occurred earlier this year seem fairly unrelated.  Now, however, some lawmakers in the United States say Qatar’s investment in Air Italy, as well as its major shift in business strategy, is an attempt by Qatar to subvert the agreement it reached with the U.S.

For the past few years, the three biggest airlines in the United States – American, Delta and United Airlines – have been locked in a bitter dispute with the so-called Middle East Three or ME3.  These are the three largest airlines in the Middle East and comprise Emirates, Etihad Airways and Qatar Airways.

These three airlines have been accused of receiving billions of dollars in illegal State-funded subsidies and in turn capacity dumping with loss-making fares in an effort to force other airlines out of the market.  The U.S. carriers were unhappy with the rapid expansion of Persian Gulf airlines into the United States and wanted the government to take action.  A lobby group called the Partnership for Open and Fair Skies that they funded claimed failure to act would result in the loss of thousands of American jobs.

The deal that the State Department struck with Qatar didn’t go nearly as far as the U.S. carriers had initially demanded – they basically wanted the Open Skies agreement which allows airlines like Qatar Airways to fly freely to and from the United States to be rewritten and effectively limit the number of flights the airline could operate – a little like rules imposed by the Canadian and Australian governments.

Instead, the final deal involved Qatar Airways agreeing to release fully audited financial results and within two-years publicly disclosing any significant new transactions with other state-owned enterprises.  A side note of the deal, which was seized on by U.S. carriers was a statement from Qatar Airways saying that, at present, it had no plans to open any so-called fifth freedom routes to the U.S.

The agreement seemed to draw a line under the dispute – the U.S. carriers, including Atlanta-based Delta Air Lines, claimed victory while business seemingly carried on as normal for Qatar Airways.  At the same time, lobbying from the Partnership for Open and Fair Skies stopped almost overnight – in fact, when we contacted the group earlier this year requesting comment about Qatar’s financial results, a spokesperson refused to be drawn on the matter.

Now, though, the bitter dispute has suddenly resurfaced and it’s been brought about by yet another route expansion by Air Italy into the United States – this time to Los Angeles and San Francisco.  While some see the new routes as a boon for passengers that offer direct flights on currently underserved routes, the Partnership for Open & Fair Skies has a very different opinion.

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

The full statement from the lobby group continues:

“Qatar Airways has received over $25 billion in documented subsidies from its government owner, in violation of the Open Skies agreement with the U.S.”

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

“By exploiting its investment in Air Italy to create a loophole and dodge this pledge, Qatar has violated this agreement and the trust of the United States. What is now clear is that Qatar Airways has no intention of playing by the rules and of working cooperatively with the American government. We expect the Trump administration will take strong action and stand up for American workers in response to these violations.”

Interestingly, Air Italy has has just inaugurated a new service to Delhi and will soon begin flying direct to Mumbai.  The flights will allow the Indian diaspora to travel seamlessly from these two cities to the United States via Milan.  Three of Air Italy’s four U.S. destinations are in the Top Five cities of U.S. metropolitan areas with large Asian Indian populations.

The new connectivity afforded by Air Italy’s route network is likely to have infuriated Delta who only recently announced plans to restart services between the United States and Mumbai – a market it said had long been “impacted by government-subsidized Middle Eastern airlines.”

Meanwhile, one of Qatar Airway’s largest passenger markets has always been India – especially in connecting Indian citizens between their mother country and the West through its Doha hub.  It’s entirely possible to think that Qatar Airways could be using Air Italy as a proxy for its own expansion plans.

Who’s in the right and who’s in the wrong pretty much depends which side of the fence you sit on.  There are strong arguments and opinions on both sides and while Air Italy’s expansion is definitely a good thing for passengers, it’s not hard to understand why U.S.-based carriers are aggrieved.


What side of the fence are you on?

Originally Published on Paddle Your Own Kanoo.

americans4fairskies2015Is Air Italy a Wolf in Sheep’s Clothing? Lobby Group Says Qatar Airways is “Disrespecting” U.S. President
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Planned Milan To LAX And SFO Flights Mean Qatar Airways Violates Deal, U.S. Airlines Say

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

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

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

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

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

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

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

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

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

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

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

Originally Published on Forbes.

americans4fairskies2015Planned Milan To LAX And SFO Flights Mean Qatar Airways Violates Deal, U.S. Airlines Say
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Qatar Airways Launches A350-1000 Service Between New York JFK and Doha

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Qatar Airways, the launch customer of the Airbus A350-1000XWB aircraft, has just flown the state-of-the-art jet on its first regularly scheduled route between Doha and New York JFK. The A350-1000 aircraft has since replaced the Boeing 777-300ER on Qatar Airways’ second daily departure. For those who do not already know, Qatar Airways flies twice daily between Doha and New York JFK; the carrier operates the older A350-900 aircraft on the other scheduled flight between Doha and New York JFK.

The carrier’s A350-1000 aircraft can accommodate a total of 327 passengers; 281 in Economy and 46 in Qatar Airways’ award-winning Qsuite Business Class Cabin. Economy seats are arranged in a 3-3-3 configuration while every other row in Business Class offers seats that can be transformed into a connecting fully lie-flat double bed – perfect for couples and family members traveling together.

Qatar Airways’ Qsuite Business Class product has been recognized at the 2018 Skytrax World Airline Awards and 2018 TripAdvisor Travellers’ Choice Awards for being the World’s Best Business Class.

Although the Boeing 777-300ERs that operated the Doha-New York JFK route also offered customers Qsuite Business Class seats, the ones available on the new A350-1000 aircraft come packed with increased amenities as well as newer, more passenger-friendly technology.

Qatar Airways also uses the A350-1000 aircraft for nonstop flights connecting Doha and London. The airline has plans to deploy the A350-1000 jet on routes from Doha to Singapore as well as Frankfurt.

At the moment, Qatar Airways has just four of the A350-1000 plane variants in its fleet. The airline has recently upgraded five of its current A350-900 orders for the bigger, newer A350-1000 variant. The airline has stated the state-of-the-art A350-1000 aircraft is a welcome addition to its fleet. Besides their stellar performance, passengers have been incredibly pleased with the new generation aircraft’s unprecedented levels of comfort and technology.

The aircraft offers advanced air conditioning technology, advanced air system technology that promises optimal cabin air quality, full LED ambient mood lighting, lower cabin pressure, the lowest twin-engine noise level of any aircraft, lower fuel burn, larger overhead bins, generous legroom and more.

Originally Published on Get.com.

americans4fairskies2015Qatar Airways Launches A350-1000 Service Between New York JFK and Doha
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Hudson Institute Releases New Study on State Subsidies and Unfair Competition in Global Commercial Aviation

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

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

Key takeaways from the report include:

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

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

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

Originally Published on Hudson Institute.

americans4fairskies2015Hudson Institute Releases New Study on State Subsidies and Unfair Competition in Global Commercial Aviation
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Brooklyn Nets seal landmark Qatar Airways deal

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The Brooklyn Nets have become the first National Basketball Association (NBA) team to sign a major partnership with Qatar Airways

The multi-year deal sees the Qatari flag carrier become the franchise’s official global airline partner of the franchise and its Barclays Center stadium in New York. Qatar Airways will benefit from huge exposure in the US, with the Barclays Center Courtside Club being rebranded as the Qatar Airways Club.

The arrangement with the venue is doubly significant, with the arena also hosting a wealth of high-profile concerts and entertainment acts on top of its commitment to the Nets.

Brett Yormark, chief executive of BSE Global, the Brooklyn team’s management company, added: “We are thrilled to be the first NBA team and venue to welcome Qatar Airways as an official partner.

“It has been an ongoing priority of the Brooklyn Nets and Barclays Center to expand our reach globally, and Qatar Airways helps us bring brand awareness to a dynamic new audience.”

Qatar Airways Group chief executive Akbar al-Baker added: “This new partnership will provide Qatar Airways with maximum exposure to the rest of the world, echoing our belief in bringing people together. We are proud to be able to bring spectators from around the world to New York, and we look forward to celebrating together at Barclays Center.”

JetBlue, Qatar Airways’ codeshare partner, will continue as the official domestic airline partner of the Brooklyn Nets and Barclays Center.

The Nets become the latest major global sporting name to align themselves with the airline, following soccer clubs Bayern Munich, Boca Juniors and Roma.

In May 2017, Qatar Airways also announced a deal with Fifa, which sees the airline become the official partner and official airline of soccer’s global governing body until 2022, when Qatar will host the Fifa World Cup.

Originally Published on SportsPro.

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Emirates gets approval to codeshare cargo services with Alaskan Airlines

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The US Department of Transportation has approved Emirates’ application for a blanket statement of authorisation to codeshare with Alaska Airlines for an indefinite period.

The approval relates to cargo services operated by Emirates from the UAE, via the UAE and intermediate points to points in the US and beyond, as well as between the US and any points.

It an extension of the passenger codeshare agreement that Emirates Airlines signed with Alaskan Airlines in 2015, giving customers the simplicity of purchasing 300 daily Alaska Airlines connecting flights using one reservation, and a seamless ticketing, check-in, boarding and baggage check experience during the entire journey.

That simplicity will now be available to freight forwarders as well.

Alaskan Airlines operates a fleet of 320 aircraft, the majority of them Boeing 737s and Airbus A320s. It’s air freight capacity is primarily in bellyhold as there are just three Boeing 737 freighter aircraft.

In June this year, Alaskan Airlines merged with Virgin America, expanding its air cargo capacity in bellyhold by 40%.

“Our goal is to create a hassle-free experience for our cargo customer and with additional capacity, we are delivering on that commitment,” said Jason Berry, managing director for Alaska Air Cargo.

“With our increased transcontinental connections originating across the west coast, we will be offering more frequency and reliability. Whether you are in Los Angeles, Seattle, San Francisco or New York, you can count on Alaska Air Cargo to deliver.”

In addition to increased belly load capacity, Alaska Air Cargo recently upgraded their fleet to include three 737-700 retrofitted freighter aircraft. With the addition of a dedicated all-freighter fleet, Alaska Air Cargo provides reliable scheduled and drop-in service for 19 communities across Alaska; connecting them to the cargo hub in Seattle.

Originally Published on Arabian Industry.

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Does The End Of Etihad Spell Doom For Money-Losing National Airlines?

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

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

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

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

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

Originally Published on Forbes.

americans4fairskies2015Does The End Of Etihad Spell Doom For Money-Losing National Airlines?
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Emirates, Etihad airlines deny report they may merge

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State-owned Emirates and Etihad, two of the Middle East’s top airlines, denied a Bloomberg report on Thursday which quoted unnamed sources as saying Emirates was seeking to take over smaller Etihad to create the world’s largest carrier.

“There is no truth to this rumor,” an Emirates spokeswoman told Reuters. Etihad made a similar statement.

Emirates is owned by the government of Dubai, the region’s tourism hub, while Etihad is controlled by the government of neighboring Abu Dhabi, which thanks to oil exports is the wealthiest member of the United Arab Emirates.

The ownership of the two airlines would make any merger politically sensitive. There have been few cross-border mergers within the UAE, a federation of seven semi-autonomous emirates; such tie-ups require the approval of the ruling families of the emirates involved.

Both airlines, which grew rapidly earlier this decade, have faced financial pressures in the past two years because of tough competition in the industry and a regional economic slowdown due to low oil prices.

Earlier this year, the two carriers signed agreements to cooperate in some areas, such as a deal under which Etihad pilots can join Emirates on a temporary basis for two years.

However, Emirates chairman Sheikh Ahmed bin Saeed al-Maktoum ruled out a merger in May this year.

A source close to Etihad told Reuters on Thursday that while a merger could conceivably happen in the future, Abu Dhabi would not quickly give up control of its airline and brand, especially after it had invested billions of dollars in its international airport and other aviation infrastructure.

A senior banker monitoring business in the Gulf said the idea of an Emirates-Etihad merger had been circulating “on and off for at least five years”, but that he hadn’t heard of any new development. No bank has been mandated to arrange a deal, which would be very difficult operationally, he added.

Emirates mainly operates alone – an approach that gives it control over its network and has helped it deliver 30 consecutive years of profit.

In contrast, loss-making Etihad built up a global network of partner airlines in which it invested; that strategy ran into trouble when two of the partners, Alitalia and Air Berlin, became insolvent. Now Etihad is shrinking operations in an effort to become a profitable mid-sized carrier.

Emirates is far larger than Etihad. Its fleet of 268 Airbus A380 and Boeing 777 jets as of March 31 is roughly three times as big as Etihad’s, measured by number of aeroplanes.

Dubai and Abu Dhabi are both spending heavily on airport facilities. Dubai is developing a new airport that will one day be able to handle around 200 million passengers a year and replace Dubai International, currently the world’s busiest airport for international passenger traffic, as Emirates’ hub.

Meanwhile, a new terminal is scheduled to open next year at Abu Dhabi International Airport, where Etihad is based.

Originally Published on Reuters.

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OPINION: WE NEED A REVOLUTION IN TRADE ENFORCEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Originally Published on The Daily Caller.

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

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

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

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

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

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

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

THREAT FROM AIR ITALY

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

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

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

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

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

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

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

DISAGREEMENT OVER TERMS

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

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

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

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

It is not surprising many premium customers prefer Emirates.

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

Originally Published on Skift.

americans4fairskies2015American CEO on Gulf Carrier Pact: ‘Someone Is Cheating Already’
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Emirates May Resume U.S. Growth as Business Recovers From Trump Policies

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Feisty as ever, Emirates CEO Tim Clark said Friday his airline soon may expand in the United States by resuming double daily flights from some larger U.S. cities, or by connecting new markets to Dubai.

It’s a slight strategy shift for Emirates, as it has in the past couple of years reduced its U.S. footprint because of lagging demand. The airline was stung by the Trump Administration’s short-lived electronics ban last year, which required passengers departing Dubai and several other cities, mainly in the Middle East, to put laptops in checked luggage. Emirates was also hit earlier in 2017 by the Trump Administration’s sweeping executive order banning visitors from several Muslim-majority countries.

But today, Clark said, most Emirates customers who need a visa can get one, even though a version of the travel ban remains in effect. And with business improving, Clark said, Emirates could restore its second daily frequency to some cities that were cut to one, including Boston and Los Angeles.

In addition, he said, Emirates could expand into smaller U.S. markets. But he declined to say which U.S. cities Emirates might pursue, saying he feared U.S. airlines, and the trade groups that support them, might complain about new competition.

“I’ve been there,” Clark said during an interview at the Aviation Festival in London, an industry conference. “The moment I do it, suddenly everyone is rushing off to Washington to stop us from doing it.”

SMALLER MARKETS

Emirates has generally focused on the largest U.S. cities, as well as a couple of markets — Boston, a JetBlue Airways focus city, and Seattle, a Alaska Airline hub — where its partner airlines are strong.

But by using the newest twin-engine jets, such as the Boeing 787, U.S. and foreign carriers have been increasingly flying between Europe and Asia and U.S. cities that historically could not support long-haul service. In recent years, Austin, Texas, New Orleans, Indianapolis and San Jose, California have all secured long-haul service that might been impossible with larger, older-generation aircraft.

Emirates still flies the biggest aircraft — Boeing 777s and Airbus A380s — and that makes smaller U.S. markets challenging for it. But last year, Emirates placed an order for 40 smaller and more fuel efficient Boeing 787-10 Dreamliners, and while the 787-10 have the least range of the three 787 models, Emirates has conversion rights to the Boeing 787-9 that can fly longer routes. Emirates also soon will begin taking delivery of the newest Boeing 777 that could allow it access to U.S. markets that previously were not viable.

“Imagine the 787-9 going into some of these cities or even the 777-8X,” Clark said. ‘It’s still a big airplane, but it’s not a 380. You’ve got much more [appropriate] capacity for fitting the demand for these second or third-level tier cities than you might have with a A380.”

FIFTH FREEDOM

Clark again declined to rule out future fifth-freedom flights, or routes that originate in Dubai, but stop in Europe to pick up passengers.

These flights, which Emirates can fly under the United Arab Emirates’ aviation treaty with the United States, have irritated U.S. airlines, who do not like competing with Emirates between the United States and Europe. For now, Emirates operates two — Newark to Athens, and New York JFK to Milan.

In May, representatives for the U.S. carriers said Emirates had agreed to not add more fifth-freedom routes for the foreseeable future, under a deal brokered by government officials. But Clark said Friday that while Emirates signed an agreement that requires it to be transparent about its finances, it made no promises about fifth-freedom opreations.

“In no way was there any commitment, verbally or otherwise,” said Clark, a Brit who has been in aviation roles in the Middle East for more than 40 years. “What we said was, that was never the thrust of our business model.”

Clark said Emirates continues to receive pitches from European airports desperate for a nonstop route to the United States. But he said Emirates only moves when it sees a prime opportunity.

“We don’t do it for the sake of doing it,” he said. “If there’s an opportunity there, if they’re underserved markets and if the incumbent carriers don’t take it and if we have the air service rights to do it, then why wouldn’t you do it? It’s a commercial decision.”

Originally Published on Skift.

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Airlines face perfect storm

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Original Found on: WashingtonExaminer.Com

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

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

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

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

Brian Wollet,

Gates Mills

Published on The Cleveland Plain Dealer.

americans4fairskies2015Not giving everyone an even break is abjectly unpatriotic: Letter to the Editor
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Donald Trump Is The ‘Get-Things-Done’ President

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From enforcing border security and foreign policy to protecting American jobs, Donald Trump is the “Get-Things-Done” President.

Since taking office just sixteen months ago, President Trump has moved at a breakneck pace to enact reforms after reforms that streamline our economy, lower taxes, secure our borders, enforce our trade agreements and reassert America’s strength as the world’s leader advancing liberty.

In the waning days of the Obama presidency, careerists at the State Department put American interests and allies in danger with Obama’s ill-conceived Iran Deal. At the time, Americans were told that the agreement would prevent Iran from acquiring nuclear weapons. Assisting with crafting that narrative was White House staffer Ben Rhodes, a self-proclaimed storyteller, whose entire job appears to have been spinning good yarns to accompany reckless foreign policy initiatives.

In reality, and as predicted by experienced foreign policy experts like National Security Advisor John Bolton, William Tobey of Harvard University and General William G. Boykin, the Iran Deal wasn’t even a speed-bump in Iran’s development of nuclear weapons. Iran continued its nuclear program unabated, while the United States lifted $150 billion in sanctions, along with delivering a $1.7 billion pallet of cash to the Mullahs.

On May 8, 2018, President Trump announced that the United States had officially withdrawn from the Iran Deal, and would instead pursue the reinstatement of sanctions, along with a recommitment to working with our allies to develop a “…a real, comprehensive, and lasting solution…” to the threat of a nuclear Iran.

President Trump recognizes that the very same allies we need to block Iran from becoming a nuclear power have been watching the United States to see if we would honor our commitment to Israel. Time and time again, U.S. presidents have promised to move the U.S. embassy from Tel Aviv to Jerusalem. The Israeli people have seen Republican and Democratic presidents come and go, while the embassy remained in Tel Aviv. But all of that has changed with Trump.

Just last week, President Trump fulfilled that promise, with the opening of the new U.S. embassy in Jerusalem.  The move righted an old wrong, recognizing that Jerusalem is the capital of Israel — something Presidents Bill Clinton, George W. Bush, and Barack Obama had promised to do but failed to execute.

Beyond foreign policy, President Trump has enacted an aggressive America First economic agenda at both home and abroad. The end of 2017 saw the passage of a historic tax reform package. Trump became the first president since Ronald Reagan to accomplish such an extensive overhaul of the tax code. Almost immediately, we saw American workers and taxpayers benefiting from the reform through bonuses and increased wages.

At the international level, President Trump has put American workers first and sought to seriously enforce our trade agreements. The White House has entered into talks with Canada and Mexico about updating NAFTA for the 21st century and making sure that our neighbors to the north and south are upholding their end of the bargain.

Just a few months into 2018, President Trump scored a major win for American airline jobs by resolving two ongoing trade disputes with Qatar and the United Arab Emirates. These two Gulf nations have engaged in illegal subsidization of their national airlines, undermining our Open Skies agreements, and putting American jobs at risk.

White House trade advisor Peter Navarro notes in the Washington Examiner that “…the subsidy-enabled dumping of airline capacity by the Gulf carriers into the U.S. market has nearly eliminated U.S. airline service to the Middle East and India.” And that “every long-haul route forgone by U.S. carriers, more than 1,500 American jobs are lost, they estimate. The result of this unfair competition, these U.S. airlines allege, is that Emirates, Etihad, and Qatar Airways have become among the fastest growing carriers in the world. The UAE’s Dubai airport is now one of the world’s busiest.”

Writing in that same op-ed, Navarro argues that President Trump’s enforcement of the Open Skies agreements is just another example of Trump’s commitment to keeping his campaign promises. Navarro is absolutely correct. President Trump is keeping his word by putting America first.

Isn’t it about time we had a president whose entire agenda puts America — and Americans — first?

Jenny Beth Martin is chairman of Tea Party Patriots Citizens Fund.

Published on The Daily Caller.

americans4fairskies2015Donald Trump Is The ‘Get-Things-Done’ President
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After agreement with Middle Eastern rivals, Delta to resume nonstop flights to India in 2019

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Delta Air Lines will fly nonstop from the U.S. to India for the first time in a decade, a decision the airline said was due to recent agreements over three of its Middle Eastern rivals’ practices.

The flights will begin next year and either depart from New York’s John F. Kennedy International Airport or Delta’s home base at Hartsfield-Jackson Atlanta International Airport, but the airline has not made a final decision.

Delta’s announcement came after agreements this year appeared to put to rest a bitter, years-long dispute with three Persian Gulf airlines — Qatar Airways, Emirates and Etihad — which U.S. airlines said received government subsidies making it impossible for the U.S. carriers to compete in certain markets.

Delta CEO Ed Bastian told CNBC earlier this month the airline intended on returning to markets, including India, where it had been “hurt” by the three carriers.

In January, Qatar agreed to open its books and provide financial statements. Earlier this month, the United Arab Emirates agreed to a similar deal with the Trump administration. Bastian credited the administration for allowing the airline to restart the service to India. The three Persian Gulf carriers involved in the dispute with their U.S. competitors offer frequent service from their hubs to India.

“This move will mark a return to India for Delta, which was forced to exit the market after subsidized state-owned airlines made service economically unviable,” the company said in its announcement

The service requires government approval, Delta said, adding that it plans to also expand its code-sharing agreement with local partner Jet Airways to carry passengers to other destinations in India.

United Airlines is the only U.S. airline that currently flies nonstop to India from the United States.

Published on CNBC.

americans4fairskies2015After agreement with Middle Eastern rivals, Delta to resume nonstop flights to India in 2019
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The Fight for Fair Skies is not yet Over

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Friends,

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

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

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

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

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

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

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

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

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

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

americans4fairskies2015The Fight for Fair Skies is not yet Over
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Trump deal on global airline competition makes the skies more open

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By: Peter Navarro, Assisant to the President for Trade & Manufacturing Policy

This week, President Trump secured another big win for American workers and businesses. At the direction of the White House, Secretary of State Mike Pompeo, working closely with the Department of Transportation, struck a deal that resolved a three-year “Open Skies” disagreement between the U.S. and the United Arab Emirates over the UAE’s unfair subsidization of its two major airlines, Etihad Airways and Emirates Airline.

The U.S. has signed “Open Skies” civil aviation agreements with about 125 countries, including the UAE and Qatar, which are intended to facilitate the growth of an efficient, market-based international aviation system. Worldwide, these agreements have helped protect the interests of American workers and businesses, but in the case of UAE and Qatar, serious concerns were raised about their effectiveness.

According to some U.S. airlines, the oil-rich governments of the UAE and Qatar have provided their air carriers over $50 billion in subsidies since 2004. These American carriers have asserted that the subsidy-enabled dumping of airline capacity by the Gulf carriers into the U.S. market has nearly eliminated U.S. airline service to the Middle East and India.

For every long-haul route forgone by U.S. carriers, more than 1,500 American jobs are lost, they estimate. The result of this unfair competition, these U.S. airlines allege, is that Emirates, Etihad, and Qatar Airways have become among the fastest growing carriers in the world. The UAE’s Dubai airport is now one of the world’s busiest.

What these U.S. carriers have been arguing is simple: Their pilots, flight attendants, machinists, and other working men and women flying our open skies cannot compete with state-owned airlines operating outside the free and fair marketplace envisioned by the Open Skies framework. The pleas of these U.S. carriers, however, fell on deaf ears during the Obama Administration.

In contrast, the Trump White House quickly assembled a task force with representatives from the two key agencies – the State Department and Department of Transportation – along with representatives from the Departments of Commerce and Justice, the U.S. Trade Representative, and the Council of Economic Advisers. Emblematic of Trump’s America First policies, the State Department was directed to secure a new understanding with Qatar, which was consummated in January, and then with the UAE, which was achieved this week.

The contours of these two new understandings are very similar. First, the parties acknowledge that government subsidies adversely affect free and fair competition in the international aviation market. The Gulf carriers should pay their full and fair share of the costs of operating out of their international airports.

Second, the UAE and Qatar governments have committed to financial transparency and to conduct transactions based on commercial terms. Their airlines should not operate behind an opaque accounting wall that shields their government subsidies from public view. Together, these reforms should substantially curtail any unfair subsidization.

Third, both the UAE and Qatar governments have informed the U.S. that their respective carriers have no current plans to begin any new commercial “Fifth Freedom” flights. This is particularly important to the concerned U.S. carriers, as such routes involve the Gulf carriers flying from the U.S. to destinations like Europe without U.S. travelers ever landing in Qatar or the UAE.

By addressing the concerns of these U.S. carriers and standing against unfair trade practices, President Trump is keeping his own campaign promises at a record pace. He has slashed the corporate tax rate, eliminated scores of unnecessary regulations, unleashed our coal and petroleum resources, and withdrawn from bad deals ranging from the Paris Climate Accord and Trans-Pacific Partnership to the Iran nuclear fiasco. He has taken action to address threats to our national security by imposing tariffs on aluminum and steel and negotiating means to address those threats with various countries. He has also taken action to address injurious imports of solar cell and modules and washing machines, thereby stimulating significant new investment on U.S. soil. He has successfully renegotiated the deeply flawed South Korea trade pact.

 

Peter Navarro is the director of the National Trade Council.

Published on The Washington Examiner.

americans4fairskies2015Trump deal on global airline competition makes the skies more open
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A voice for the American worker

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By: James H. Burnley IV, former U.S. Secretary of Transportation

Presidents are judged by how they stand up for the American people. Whether it is protecting U.S. jobs or safeguarding our industries and our jobs from foreign trade cheating, we expect our presidents to act in the best interests of Americans.

That was one of the defining principles of President Reagan’s administration, and I was proud to put his agenda into action as his secretary of Transportation. Today, I see that same vision coming from the Trump administration. In less than 18 months, President Trump has shown the world that he will always be a voice for the American worker.

This week, that voice got louder. On Monday, the Trump administration announced a historic agreement with the United Arab Emirates (UAE) over its Open Skies violations. For more than a decade, the UAE subsidized its airlines — Emirates and Etihad Airways — to the tune of more than $25 billion. Those subsidies violate the UAE’s Open Skies agreement with the United States, a bilateral treaty that allowed airlines from the two countries to travel back and forth without restrictions or government interference.

Beyond the blatant trade cheating, the UAE’s subsidies put 1.2 million American jobs in jeopardy. These are workers who rely on a strong U.S. airline industry — an industry that for decades has been a symbol of the strength and vibrancy of the American economy. To allow it to crumble because of foreign trade violations would be unfathomable.

Fortunately, Mr. Trump acted decisively. His administration’s agreement with the UAE requires it to commit to unprecedented transparency measures — from engaging in transactions based on commercial terms to meeting new, tough financial disclosure standards. The UAE also agreed to freeze additional “fifth freedom” flights to the United States — routes that take passengers between two countries without stopping in the carrier’s home country.

Peter Navarro, director of the White House National Trade Council, put it more succinctly: “There will be no additional routes into the United States until further notice.”

Additionally, the UAE acknowledged for the first time that government subsidies hurt competition. After years of denying the dangerous effects of its subsidies, this is without question a historic moment.

It comes just a few short months after the Trump administration negotiated a similar agreement with Qatar over its subsidization of Qatar Airways. Collectively, these agreements represent the most significant progress on this issue in over a decade.

Throughout this fight, U.S. airlines, unions and the hundreds of thousands of workers they represent have been supported by more than 310 members of Congress, more than a dozen governors and hundreds of local officials and business leaders. They are Republicans and Democrats. They come from every corner of the country, rural and urban areas alike.

What they share is a desire to see a strong U.S. airline industry. When that happens, U.S. airline workers can pay off their mortgages, send their children to college and save for retirement. And U.S. travelers get more choices and better options for international travel, which in turn, allows U.S. carriers to service small and mid-sized communities around our great country.

But the work is far from over. Everyone must remain vigilant — from our elected officials to aviation leaders to the men and women whose jobs were threatened. We can expect the Trump administration to make sure the UAE and Qatar uphold the agreements — and take a dim view of any attempt to shirk their commitments. In announcing this deal, Mr. Navarro was clear: “What we expect moving forward is transparency, full accounting, stopping of subsidies and a freeze on routes until further notice.”

After years of inaction by the Obama administration to hold the UAE and Qatar accountable, we are finally seeing real progress from the Trump administration. Just like Mr. Reagan, Mr. Trump has positioned himself as a strong defender of American workers. For that, he deserves our high praise.

Published on The Washington Times.

americans4fairskies2015A voice for the American worker
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Trump’s Trade Enforcement Helps Keep America Safe

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President Donald Trump and his administration just took important action to keep America safe and to keep our trade fair by striking an important agreement with the United Arab Emirates to end its aviation trade cheating and freeze its plans for future incoming indirect routes (known as 5th Freedom flights) to the United States.

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. President Trump’s successful negotiation will ensure that the U.S. military’s ability to deploy troops, strategic assets, and supplies effectively, efficiently and without interruption around the globe will remain unimpeded. This is critical to our national security and President Trump deserves recognition for this important victory for America.

Using his skills as a negotiator and a dealmaker, the president and his team brought the UAE — 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. The UAE and its state-owned airlines, Emirates and Etihad, have been found 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.

The UAE, like Qatar, which President Trump negotiated a deal with this past January, now must abide by international accounting rules. This will ensure that their marketplace distortion will end or they will face severe enforcement penalties. The deal with the UAE, in fact, is stronger than the deal with Qatar, as both parties recognize that subsidies are dishonest, specifically stating, “such government support in whatever form may adversely impact competition in providing international air transportation.” This is an improvement over the deal with the Qatar, because Qatar did not recognize the harm their subsidies cause to international competition and the United States. The UAE proved itself in this negotiation to be truly interested in correcting its mistakes by recognizing the harm it has done and agreeing to meaningful changes going forward.

Qatar, however, while agreeing to greater transparency, did not go as far as the UAE and actually accept responsibility that illegal subsidies are harmful to the United States. Further, shortly after the agreement with the Qatar was finalized, one of the subsidies of the state-owned Qatar Airways, an airline it recently purchased in Italy renamed to Air Italy (from Meridiana), announced new service to the United States. This route may be in violation of the agreement freezing any new 5th Freedom flights, and the Trump administration must look into this with great interest and ensure that if it is in violation, that the agreement is enforced and this flight is prohibited.

I 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 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. When the UAE and Qatar were cheating our trade agreements, 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 with the UAE and Qatar 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.

Robert Mitchell is a cybersecurity entrepreneur, former Navy SEAL and former CIA paramilitary operations officer.

Published on The Daily Caller.

americans4fairskies2015Trump’s Trade Enforcement Helps Keep America Safe
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Enforcing Trade Agreements: Another Trump Promise Fulfilled

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President Donald Trump can celebrate another victory for his America First agenda. On Monday, the United Arab Emirates came to terms with the United States, agreeing to uphold the Open Skies agreement between the two nations. For several decades, now, the UAE and Qatar have poured subsidies into their national airlines in an effort to corner the international air travel market. The heavy subsidization has allowed the two Gulf states to engage in capacity dumping – similar to product dumping. Qatar has already come to terms with the United States and has agreed to end their subsidization of Qatar Airways, now the UAE has made the same guarantee regarding Etihad and Emirates.

Enforcing our trade agreements has been a cornerstone of the Trump Administration – and was a key campaign promise that resulted in the President’s 2016 triumph. Across our nation, from Nevada to my home state of Ohio, Americans – especially those who work or have worked in heavy-industry, manufacturing, and industrial labor jobs – have seen the toll exacted on our economy because of our refusal to assert American interests and equitably enforce our trade agreements. With President Trump, that has changed.

Undeterred by “convention”, President Trump has reasserted America’s economic position in international trade. This can be seen from the intense renegotiation of NAFTA terms, to the Trans-Pacific Partnership, to our Open Skies agreements. Former-CBO director and President of the American Action Forum, Douglas Holtz Eakin hit-the-nail-on-the-head when he tweeted that President Trump’s deal with the UAE on the Open Skies agreement was a win because “Enforcing our trade agreements is just as important as negotiating them…” and the UAE “(1) admits subsidies are harmful to competition, (2) will use commercial, arms-length prices, (3) will meet int’l standards of financial transparency, and (4) will freeze loss-leader int’l flights.”

Like on so many other issues, the Obama administration did nothing as American companies and workers, and elected officials on both sides of the aisle, raised concerns about these two nations violating the existing agreements. After years of inaction, Trump and his team acted decisively and worked quickly to ensure enforcement of our deals and the protection of our industries.

Effectively, ours and the UAE’s renewed commitment to Open Skies will ensure that the United States will be aware of any new financial involvement between Etihad and Emirates – allowing us to continue to effectively enforce the agreement. Additionally, the UAE will freeze any new “fifth freedom” routes, preventing capacity dumping, subject themselves to international accounting standards, and require their national airlines to pay for their operation costs out of the UAE’s international airports.

Even more impactful, a major portion of our economy and potentially millions of American jobs are reliant on our nation’s airline industry. By ensuring our foreign competitors are playing by the same rules that we are bound by, we’re guaranteeing that the American spirit of innovation, hard work, and know-how has the best shot to win out as it has time and time again – when the playing field isn’t titled against us. This is what the other side won’t admit. Critics of the administration have fallen back on name calling and spreading fake news about the public-and-open bipartisan coalition standing behind the President. When your critics resort to politics as usual, that is when you know you are winning and doing the right thing for the American people – and not the DC Swamp.

His critics and the news media might not want you to hear it, but President Trump is accomplishing much – especially on ensuring our trade deals are enforced and that all parties abide by the terms of our international agreements. The strength America has shown on trade and diplomacy have and will continue to bear fruit, from our Open Skies agreements to de-nuclearizing North Korea, to updating NAFTA for the internet age. President Trump continues to prove himself as the man for the American people at home and abroad.

Published on Town Hall.

americans4fairskies2015Enforcing Trade Agreements: Another Trump Promise Fulfilled
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Re-Opening The Skies

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By: Douglas Holtz-Eakin

Yesterday, the United States and the United Arab Emirates (UAE) signed an agreement regarding the future of their Open Skies agreement, a deal that follows on the heels of a similar agreement reached with Qatar a few months back. Open Skies agreements are trade agreements in the form of bilateral treaties that permit cross-border competition in commercial aviation. The United States has over 120 Open Skies agreements, and all but two have been enormous successes.

The new agreement with the UAE addressed a substantive problem: UAE subsidies to state-owned airlines that were forcing competitors out of the market. The subsidies are in violation of Open Skies’ Fair Competition clause — in which all airlines are allowed a “fair and equal” opportunity to compete — and forced U.S. airlines to terminate their competing routes to Gulf nations. Without enforcement, UAE-owned airlines would continue benefitting from these subsidies and driving U.S. competitors out of the market.

By re-negotiating these Open Skies agreements, the Trump Administration has used its trade-enforcement tools to bring the Open Skies agreements back to their original intent. As Eakinomics noted earlier, this willingness to enforce trade agreements will be an essential part of restoring the public’s faith in negotiating future trade agreements.

The UAE agreement is a significant accomplishment. The UAE had resisted attempts to start discussions for three years. The Trump State Department not only got the UAE to the negotiating table, but also achieved several significant steps forward. The UAE acknowledged for the first time the existence of subsidies and the fact that government subsidies undermine healthy market competition. Accordingly, it agreed to conduct all transactions with their airlines at commercial, arms-length prices — no more cushy deals that implicitly are subsidies.

To further display its commitment to a level playing field, the UAE agreed to financial transparency — using internationally accepted standards for accounting and financial statements. Thus, outside groups (e.g., the U.S. carriers) will have the ability to monitor the UAE’s compliance with this agreement. That monitoring is an important part of the work going forward. After all, the UAE did not comply with its original Open Skies agreement; nobody should simply assume that they will comply with this one.

Finally, the UAE agreed that its airlines should not introduce any new “Fifth Freedom” flights — routes on which U.S. customers can travel to, e.g., Europe without actually setting foot in the UAE. The subsidies had driven U.S. carriers off these routes and cut back on the feeder flights from domestic places to cities with international flights. Competition will be improved across both the domestic and international networks.

The agreement is important for commercial aviation in the United States. But it may be just as important as a model for successfully enforcing trade agreements more broadly.

Published on American Action Forum.

americans4fairskies2015Re-Opening The Skies
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How Qatar Airways is (subtly) expanding U.S. presence

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

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

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

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

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

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

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

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

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

Those are the only U.S. destinations Air Italy has announced plans to serve so far. But with Air Italy’s fleet set to continue to grow over the next several years, the carrier’s presence in the United States could grow too. Which, no doubt, would make Qatar Airways’ Al Baker quite happy indeed.
americans4fairskies2015How Qatar Airways is (subtly) expanding U.S. presence
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White House trade director says UAE agreement includes routes freeze

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In what appears to be a divergence from the terms of the US and United Arab Emirates (UAE) new Open Skies side agreement, a top White House official told industry stakeholders that there is a freeze on adding routes to the US.

Peter Navarro, assistant to US President Donald Trump and director of the White House Trade Council, told aviation industry stakeholders during a briefing May 14 that the UAE had committed to a freeze on fifth freedom routes to the US as part of their agreement to continue the two governments’ Open Skies pact, signed in 2002.

“There will be no additional routes into the United States until further notice,” Navarro said. “That’s a promise that will be kept.” But he added the freeze applied only to passenger airlines, not cargo carriers. FedEx operates fifth freedom rights via Dubai, while Dubai-based Emirates Airline operates two fifth freedom routes, from Italy and Greece, to the US. Abu Dhabi-based Etihad Airways does not operate any such routes.

Navarro’s statements, however, do not sync with UAE government statements, which say the Open Skies agreement remains fully intact. Nor do they fit with the side document recording main points agreed—known as the Record of Discussion—which makes no mention of route freezes or fifth freedom restrictions.

Tori Barnes of the US Travel Association, who attended the White House briefing, asked for clarification about fifth freedoms, route freezes and changes to the Open Skies agreement rights, saying the association did not see any changes in the side document. US State Department assistant secretary Manisha Singh replied, “Your rights under the agreement do not change. That is correct.”

But Navarro then added, “What we expect moving forward is transparency, full accounting, stopping of subsidies and a freeze on routes until further notice. So, there it is. And that’s strictly on the passenger side.”

When Barnes asked for further clarification, Navarro replied, “The US has the rights with the Qataris and the Emiratis over two separate agreements, they agreed to basically not schedule any more routes until further notice. You can call that a freeze. That’s a freeze to me. If you don’t want to use the language, that’s fine. But this only affects them.”

Washington DC-based lobbying organization, the Partnership for Fair & Open Skies, which was hired by those US airlines that wanted to restrict the ability of the major Gulf carriers to expand their US networks, issued a release touting Navarro’s statements as proof that the UAE airlines’ routes have been frozen.

“The UAE has committed to a freeze on fifth freedom routes to the United States,” the Partnership said. “Navarro repeatedly indicated that Trump officials disagreed with UAE Ambassador Al Otaiba’s characterization of his nation’s commitments to the United States, calling Otaiba’s comments “disconcerting” and saying that his comments “seemed to undermine the intent of the letter.”

The White House did not respond to an ATW request for clarification on the governments’ differing interpretations.

The US and UAE governments announced the agreement May 14, with the UAE posting the Record of Discussion. Much of the document is a diplomatic affirmation of the importance of the two government’s economic and security ties and an acknowledgement of the mutual benefits of Open Skies.

The document does not change the US-UAE Open Skies agreement in any way; the State Department also said that all the rights and provisions of the original Open Skies agreement “remain in force.”

Campaigns over three years by American AirlinesDelta Air Lines, and United Airlines, supported by unions such as the Air Line Pilots Association, International (ALPA) and Association of Flight Attendants (AFA), are believed to have cost them some $50 million as they lobbied to prove that Emirates Airline, Etihad Airways and Qatar Airways were heavily subsidized by their governments and therefore were contravening the Open Skies agreements with the UAE and Qatar. The US allegations were not proven, but led to government talks that resulted in the Open Skies side agreements with both the UAE and Qatar.

An agreement was reached with the Qatar government in January.

Published on ATW Online.

americans4fairskies2015White House trade director says UAE agreement includes routes freeze
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The UAE Finally Owns Up: Their State Subsidies to Airlines Distort Competition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Published on Medium.

americans4fairskies2015The UAE Finally Owns Up: Their State Subsidies to Airlines Distort Competition
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Delta Eyes New Flights to India after Gulf Deal

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Delta Air Lines Inc. Chief Executive Ed Bastian said an agreement between the U.S. and two Persian Gulf states affords new protections to U.S. airlines that make it worth restarting service to foreign destinations that could include India.

“We can now go back into markets that we’ve been run out of,” he said Monday in an interview.

Hours after the U.S. and the United Arab Emirates reached an agreement, a diplomatic spat broke out over its interpretation.

Gulf carriers such as Emirates Airline for years have been taking market share on flights to India and Africa from U.S. and European airlines. U.S. airline executives and some lawmakers have argued that Gulf carriers have illegal government backing to buy jets and set fares at below-market price.

The U.S. and the United Arab Emirates on Monday said they’d resolved the dispute, mirroring a deal struck earlier this year between the U.S. and Qatar.

However, White House adviser Peter Navarro later told airline industry leaders that the U.A.E. had agreed to freeze additional flying between the emirate and the U.S. via Europe.

U.A.E. officials said the issue hadn’t been raised in months of talks.

United Continental Holdings Inc. UAL +0.88% is the only U.S. carrier that flies direct to India, from its hubs in Newark and Chicago. American Airlines Group Inc. AAL +0.54% dropped its Chicago-to-New Delhi service in 2012, three years after Delta ended a flight from New York to Mumbai. Delta also stopped a Mumbai flight operated via Amsterdam in 2015.

Gulf carriers such as Emirates deny they receive illegal subsidies. They say they have expanded consumer choice by offering more flights, lower fares and better service than their U.S. airlines and their European partners such as Deutsche Lufthansa AG and Air France-KLM SA.

European officials are also in discussions with Persian Gulf states over alleged airline subsidies.

The new agreements commit Emirates and Etihad Airways in neighboring Abu Dhabi, as well as Qatar Airways, to improve financial disclosures and avoid doing business at low prices with service companies that are in turn subsidized by Gulf governments.

Gulf government officials said financial transparency was important, but the new agreements left airlines free to operate as before.

“U.A.E. and U.S. airlines will continue to have complete commercial flexibility to add or adjust service to meet travelers needs,” said U.A.E. Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan.

Emirates, the world’s largest carrier by traffic, said it welcomed the U.S.-U.A.E. agreement but that it wouldn’t curb existing flights and retained the right to expand services to the U.S., including flights via Europe.

The U.S. pacts with the U.A.E. and Qatar preserve existing open-skies aviation deals that allow unlimited direct flying between the two nations. The pacts also protect other benefits including rights for U.S. cargo carriers such as FedEx Corp. to operate a hub in Dubai.

The U.S. has such deals with more than 100 countries, with China a notable exception.

The Chinese government still controls the country’s largest airlines, which in recent years have rapidly expanded service to the U.S. and started funneling passengers and cargo from other countries through their own airport hubs.

American CEO Doug Parker has said state subsidies to Chinese carriers are “nothing close” to the level secured by Gulf carriers.

Still, Mr. Bastian said the subsidies stood in the way of open-skies deals.

“That would be a discussion at the table before an agreement was reached,” he said.

Delta has a 3.6% stake in China Eastern Airlines Corp. Ltd. American—which also campaigned against the expansion of Gulf carriers-—is allied with China Southern Airlines Co. Ltd.

“We will see what happens if we ever get to open skies with China,” Mr. Parker said in an interview earlier this year.

The U.S. and China haven’t held talks on liberalizing their aviation deal for several years. However, airline executives said an opportunity may emerge next year when new capacity becomes available at congested airports in Beijing and Shanghai.

Published on The Wall Street Journal.

americans4fairskies2015Delta Eyes New Flights to India after Gulf Deal
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U.S., UAE sign pact to resolve airline competition claims: sources

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WASHINGTON (Reuters) – The United States and United Arab Emirates signed a deal on Friday to resolve U.S. claims that Gulf carriers have received unfair government subsidies, sources briefed on the matter said.

The voluntary agreement, which applies to Etihad and Emirates airline and is expected to be announced next week, is similar to a deal announced in January between the United States and Qatar in which Qatar agreed to release detailed financial information about state-owned Qatar Airways. Since 2015 the largest U.S. carriers have urged the U.S. government to challenge the conduct of the 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.

Published on Reuters.

americans4fairskies2015U.S., UAE sign pact to resolve airline competition claims: sources
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Trump’s America First Agenda Wins Trade Dispute with United Arab Emirates

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President Donald Trump’s State Department will reportedly announce a new trade agreement with United Arab Emirates (UAE) on Monday, scoring a victory in a trade dispute over UAE’s subsidizing its two state-owned airlines to the detriment of U.S. airlines and workers.

Breitbart News reported how several foreign nations – including the UAE – have been subsidizing their nation’s state-owned airlines to the tune of $52 billion, in violation of “Open Skies” executive agreements that those nations have with the United States. For the UAE, the two carriers are Emirates Airlines and Etihad Airways. Those “Open Skies” trade agreements are designed to ensure free market competition between airlines, without government support.

The Trump administration acted on the issue after Breitbart News and other outlets brought the issue to light, with the State Department and Transportation Department pushing through an agreement that will protect U.S. workers and bolster America’s economy.

Sources close to the deal speaking exclusively with Breitbart News on condition of anonymity say that the United State and UAE are signing an agreement in private on Friday that will be announced on Monday, ending these subsidies and restoring a competitive environment for U.S.-based carriers.

The new trade agreement will include an explicit admission by UAE that subsidizing airlines harms foreign competitors, reversing three years of denying those accusations. The UAE also agrees to:

  • Freeze any new “fifth freedom” flight routes, under which UAE companies could fly routes directly between the United States and other foreign countries, harming the ability of United, American Airlines, and Delta to compete in those same routes.
  • Reporting any new transactions involving Emirates Air and Etihad.
  • Requiring Emirates Air and Etihad to fully pay for new airport construction and development, which previously had been subsidized by the UAE government.
  • Operating in a transparent manner according to international accounting standards, ensuring compliance with the terms of this agreement.
  • Meet with U.S. representatives in one year to review the results of implementing the new agreement.

Any violations of this deal could result in the United States invoking Article 15 of the agreement, under which America could disallow any flights by UAE-owed airlines in the United States, with devastating consequences to those foreign airlines.

Experts estimate that the Trump administration’s new trade deal could protect as many as 1.2 million jobs which depend on a robust domestic airline industry.

This deal comes on the heels of the Trump administration’s success in January of getting Qatar to sign such an agreement. Unconfirmed reports are that Secretary of State Mike Pompeo will make the announcement on Monday regarding the UAE alongside the foreign minister from that nation during his visit to Washington.

Supporters of United, American Airlines, and Delta had tried for the final two years of Barack Obama to persuade his administration to do something about this issue. One year after President Trump took office, a new agreement has been reached, consistent with the president’s America First agenda.

Published on Breitbart.

americans4fairskies2015Trump’s America First Agenda Wins Trade Dispute with United Arab Emirates
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President Trump Takes Action Against UAE Open Skies Violations

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Friends,


News broke today that as a result of President Trump’s leadership on trade enforcement to safeguard U.S. jobs, the United Arab Emirates (UAE) has agreed to end its market distorting airline subsidies and freeze any additional new 5th Freedom routes into the United States. This is a huge step forward in the fight for fair competition in the international aviation marketplace.

Americans for Fair Skies, and the tens of thousands of aviation workers and hundreds of thousands of Americans 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 aviation subsidies by the UAE, and its two state-owned airlines, Emirates Airline and Etihad Airways. President Trump’s leadership and deal-making savvy has now led to successful negotiations for U.S. workers with both the UAE and State of Qatar, which was announced this past January, the two biggest trade cheaters in aviation history. President Trump’s agreements with the UAE and Qatar will ensure that U.S. aviation companies and their workers, consumers, communities, and our country will remain competitive and safe from unfair trade practices.

The recognition that subsidies in aviation are wrong and the increased transparency agreed upon by the UAE will allow the U.S. government to ensure that Emirates and Etihad (and Qatar Airways from the previously announced agreement) all operate free from state subsidization and quickly address the issue if any of the carriers continues to cheat. Like the agreement with Qatar, the UAE agreement also forces the UAE airlines to cover their own airport expenses instead of letting its government pick up the tab.

Most significantly, the Trump Administration successfully received assurances from the UAE and Qatari governments that their will not operate any new 5th Freedom flights into the United States. This is huge, especially for the UAE, as Emirates had been planning a massive, job-killing expansion into the United States, which is now frozen.

The Gulf carriers, Emirates, Qatar Airways, and Etihad Airways, have received over $50 billion dollars in illegal subsidies from the governments of Qatar and the United Arab Emirates. These illegal subsidies have cost over 1,500 American jobs for each discontinued or forgone international flight, hurting U.S. companies and their workers. The subsidies have hurt America’s consumers and connectivity by reducing the number of flight options and destinations, impacting over 8,000 consumers each day. This will now halt, as President Trump has put American workers first, and put a framework in place to end the subsidies from the UAE and Qatar.

americans4fairskies2015President Trump Takes Action Against UAE Open Skies Violations
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Letter: Fair and open skies

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While the left claims to be the party of the middle class, it is conservative activists, alongside our president, who are working to protect the livelihoods of American citizens. A perfect example would be the recent win in the Open Skies agreement.

International trade is a cornerstone of our nation’s success, but fair and free trade only works if both parties abide by the rules. Such has not been the case with the Open Skies agreement – a bilateral agreement between foreign governments and the U.S. regarding international flights.

Three Middle East government-owned airlines – Emirates, Etihad Airways and Qatar Airways – have, for years, violated this agreement which explicitly prohibits government subsidization of the airlines. This trade cheating allowed the three airlines to fly unprofitable routes for the sole purpose of driving out the competition, putting the jobs of omore than 1.2 million American workers at risk. Unfortunately, very few people were aware of the violation and no previous administrations had attempted to rectify it, until now.

Due to the efforts of conservative activists, Qatar is now committing to provide transparency of its records, which will have a domino effect with other countries. Conservative activists worked to educate the public by reaching over one million Americans through webinars, op-eds, “tool-kits” and calls to members of Congress, resulting in thousands of signatures being hand-delivered to the White House. Thanks to the tireless effort of these activists, and the persistence of our president, the campaign promise to enforce trade agreements is becoming a reality, as well as the President’s agenda to ‘make America great again’ and put American workers first.

Orignally Posted on Argus Leader.

americans4fairskies2015Letter: Fair and open skies
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Open-skies enforcement good for Kansas workers

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Kansas has a rich history of aviation that stretches back all the way to the dawn of flight. In fact, Glenn L. Martin grew up in my hometown of Salina, later starting a business with the Wright brothers, and lending his name to current-day Lockheed Martin.

Our great state houses one of the five aerospace clusters in the world, and over 32,000 Kansans are directly employed by the industry. With our central location and deep aviation roots, Kansas has the potential to benefit even more from a healthy American aviation industry through added jobs and increased connectivity.

However, one major international dispute has the potential not only to stall any future growth in the industry, but also to reduce the ability of Kansans to travel around the United States in an easy and affordable manner.

In the past 10 years, the governments of Qatar and the United Arab Emirates have injected their national carriers with over $50 billion in unfair and anti-competitive subsidies. This massive subsidization allows Qatar Airways, Etihad Airways, and Emirates to predatorily expand into America, dumping capacity and distorting the market. These unfair practices force U.S. carriers to abandon once-profitable routes, and every time they do so 1,500 American families lose the stable middle-class income that a career in the aviation industry provides.

While this issue may seem abstract and international, it has a direct effect on communities all across America — Kansas included. American carriers are able to operate smaller and less-profitable domestic routes thanks to the profitability of their long-haul international ones. Gulf trade cheating threatens many of those routes, and therefore directly impacts the availability and cost of routes in and out of Kansas.

 

The people of our state need to be able to get from city to city and state to state to conduct business, visit family, or just spend a few days away on a nice vacation. Gulf trade violations threatens our ability to do so.

President Trump has repeatedly expressed his support for the enforcement of our trade agreements and the removal of any agreement that takes advantage of American workers. The previous administration chose to ignore these job-killing violations in order to push other priorities, but Trump has made it clear that nothing is of higher priority than free and fair trade policies.

Kansas helped send the president to Washington expressly because we expected him to stand up for American workers, not foreign interests. He took a good first step on this issue a few months ago by negotiating an agreement with Qatar, but more enforcement action is necessary from the administration and Congress.

True enforcement of our aviation trade agreements will allow American carriers to build out further domestic and international routes, potentially increasing Kansas’ connectivity and providing more much-needed aviation jobs. However, if the Gulf carriers are allowed to continue their predatory subsidized activities, U.S. carriers will be forced to cut domestic routes to cover lost international revenue.

This will not only affect Kansans’ ability to travel around the United States in an affordable and time-effective manner, but will also cost well-paid and stable middle-class Kansas aviation jobs.

americans4fairskies2015Open-skies enforcement good for Kansas workers
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Secretary of State Nominee Pompeo Commits to Enforce Open Skies

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Yesterday, Senator Johnny Isakson – a longtime supporter of Fair Skies – took part in Secretary of State-designate, and current CIA Director, Mike Pompeo’s confirmation hearing. In addition to discussing State Department morale, Senator Isakson asked for Director Pompeo’s commitment to enforce America’s crucial Open Skies Agreements, which have been long-abused by two nations, Qatar and the UAE, which are cheating American workers. Thankfully, Mr. Pompeo offered a clear promise to continue the enforcement of these agreements.

Director Pompeo’s commitment to Open Skies enforcement is a welcome development. The State Department under Secretary Tillerson took an important first step forward when they successfully negotiated a deal with Qatar that resulted in increased transparency commitments from Qatar Airways and an important written pledge not to fly 5th Freedom routes into the United States. However, the fight is far from over, and American aviation workers need a Secretary of State who will lead the charge against unfair, anti-competitive, and job-killing Gulf aviation trade subsidies. This includes holding Qatar accountable to the agreement it signed and ensuring action is taken to force the United Arab Emirates – which has two subsidized airlines flying into the U.S. – to comply with its Open Skies agreement.

Quickly confirming Director Pompeo as Secretary of State is in the best interest of US consumers and workers, the American aviation industry, and the economy. Americans for Fair Skies calls on the Senate to efficiently conduct the confirmation process so that Director Pompeo can begin the urgent work of helping advance President Trump’s international agenda and stand up for American workers threatened by Gulf cheating.

americans4fairskies2015Secretary of State Nominee Pompeo Commits to Enforce Open Skies
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Retired Military Leaders Write to President Trump on Keeping America Safe, Trade Fair

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Former military leaders have written to President Trump expressing their concern over the threat Gulf aviation trade cheating poses to our national defense. They are asking the president to complete the mission he started when he took on Qatari trade cheating by taking similar action to combat the illegal aviation trade practices of the UAE. Read their letter here:

Dear President Trump, 

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 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, better known as 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 is comprised of 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.

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 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 present a threat to U.S. national security and military readiness.

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.

We must keep America safe and our trade fair.

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, and the ramp supervisors and dispatchers who ensure safe global operations.

Sir, you have stated that free and fair reciprocal trade is priority for your Administration, 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 your personal commitment to these priorities. You 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 compete in the international marketplace fairly, and therefore protects the integrity of the CRAF program. By enforcing our trade agreements, you are working to reestablish America’s economic power and to 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 stateowned and state-subsidized airlines of the United Arab Emirates, which continue to be less transparent and exhibit the same unfair trade practices. We must complete the mission. 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. Mr. President, by leveraging the initial success with Qatar to bring about a negotiated deal during the ongoing talks with UAE, you can ensure that we continue to keep America safe and to keep our trade fair.

Respectfully,

VADM John G. Cotton, USN (Ret)
Captain Charles T. Nash, USN (Ret)
RADM John C. Sadler, USN (Ret)
RADM Bryan P. Cutchen, USN (Ret)
RADM John A. “AJ” Jackson, USN (Ret)
ADM Mark P. Fitzgerald, USN (Ret)
VADM Robin R. Braun, USN (Ret)
RDML Michael R. Groothousen, USN (Ret)
RADM Jon W. Bayless, Jr, USN (Ret)
Maj Gen Hugh H. Forsythe, USAF (Ret)
RADM Michael R. Scott, USN (Ret)
RADM Stephen S. Oswald, USN (Ret)
Captain Richard G. Dodson, USN (Ret)
Senior Chief Special Operator SEAL, Thomas Shea USN (Ret)
Robert Mitchell, Former US Navy SEAL/CIA Paramiltary Operations Officer

Tell President Trump that would you like him keep America safe and our trade fair by signing our petition.
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americans4fairskies2015Retired Military Leaders Write to President Trump on Keeping America Safe, Trade Fair
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Why Trump should enforce the Open Skies agreement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Orignally Posted on the Washington Times.

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

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By Robert Mitchell

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

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

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

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

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

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

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

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

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

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

Published on RealClearDefense.Com

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Published on Lifezette.

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

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A top Delta Air Lines executive says the U.S. airline industry is seeing gains in its effort to restrict the U.S. growth of three subsidized Middle East carriers, thanks largely to President Trump’s administration.

“We applaud the Trump administration,” said Peter Carter, Delta’s chief legal officer and executive vice president, in an interview. “It has moved mountains in understanding that these subsidies are contrary to Open Skies agreements and need to be addressed.”

Two weeks ago, the Qatari government agreed to annually provide audited financial information for Qatar Airways, a step that could lead to diminished state subsidies.  Qatar also said the carrier has no current plans to begin “Fifth Freedom” flights between third countries and the U.S.

Carter called the agreement “a major milestone from our perspective.”

“If [the Qataris] live up to what they said they will do, that will solve the issues,” he said. “If they are not using subsidies and have transparent financials, [Qatar Airways] becomes a full-fledged member of the international airline community, playing on a level playing field.”

U.S. government negotiators have moved on to talks with the government of the United Arab Emirates, seeking similar goals in what would appear to be a tougher setting. Dubai-based Emirates airline already serves New York from Athens and Milan, while Abu Dhabi-based Etihad Airways, struggling financially, depends heavily on subsidies.

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

 

In the case of Emirates, Carter said, U.S. airlines do not envision halting the two fifth freedom flights serving Athens and Milan.

“We don’t anticipate anybody dropping anything,” he said. “Our government is not asking any other government to restrict what already exists. This is much more about the future, and in making sure that [Emirates’] huge order [aircraft] book isn’t used to expand fifth freedom flights, whether from Europe or Asia.”

As for Etihad, “I am not sure whether or not the nation of the UAE can justify two carriers of that size and scope,” Carter said. “It looks like Etihad has really existed solely as a result of the largesse of the UAE. Whether it could retool without those subsidies and try to only fly routes that have appropriate demand, I don’t know.

“When European airlines said no to state aid, a number flourished and a number had to shut down.” he said.

Carter spoke in behalf of the Partnership for Open & Fair Skies, a coalition that includes American, Delta, United and seven major airline labor unions and that lobbies for the U.S. to enforce Open Skies agreements with UAE and Qatar.

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

‘There’s a buzz out there that’s growing,” Carter said. “People understand that if these carriers are allowed to grow unfettered, it will have a major impact on U.S. airlines.”

The U.S. airline industry offers 19 daily departures to China, but only two daily United departures to India, a similarly sized country, partially because the Middle East carriers have built sizable market shares between the U.S. and India.

For its part, rather than compete with subsidized carriers, Delta ended Amsterdam-Mumbai service in March 2015 and Atlanta-Dubai service in February 2016, eliminating hundreds of employment opportunities in each case. Amsterdam is a hub for Delta joint venture partner KLM.

Carter said Trump “ran on the idea that we must enforce trade agreements to protect U.S. jobs, and this is a shovel ready violation of trade agreements that are being violated, hurting U.S. jobs.”

The Obama administration “did acknowledge that the subsidies were real, but for whatever reason, they were moving very slowly,” perhaps because the administration “was winding down and it is harder to get things done at the end of an administration,” he said.

Published on Forbes.

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

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By: Douglas Hultz-Eakin, Jacqueline Varas

Executive Summary

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

Introduction

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

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

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

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

Dispute Settlement

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

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

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

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

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

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

Anti-Dumping and Countervailing Duties

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

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

Additional Trade Enforcement Mechanisms

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

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

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

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

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

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

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

Enforcement in Other International Agreements

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

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

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

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

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

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

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

Conclusion

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

Published on American Action Forum.

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

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

Transport Daily News has the story:

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

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

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

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

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

Published on Tea Party Patriots.
americans4fairskies2015Strong enforcement of Open Skies agreement with Qatar is good for the U.S.
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Open Skies agreement with Qatar foretells strong U.S. enforcement to protect airline industry

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The Trump administration’s recently announced agreement with the State of Qatar promises marketplace protections for the 1.2 million American jobs that depend on a strong and stable U.S. aviation industry and indicates that the White House is serious about enforcing its Open Skies agreements.

“The Trump administration has demonstrated its commitment to enforcing our trade agreements and protecting American jobs from unfair competition through its recent agreement with Qatar,” James H. Burnley IV, one of the nation’s foremost authorities on transportation law and policy, told Transportation Today.

The agreement, announced Jan. 30 during a U.S. State Department event featuring Secretary of State Rex Tillerson and Secretary of Defense James Mattis as part of the U.S.-Qatar Strategic Dialogue, is “a set of understandings on civil aviation” aimed at ensuring healthy competition exists in the global aviation sector while maintaining the U.S. Open Skies framework, according to the State Department.

Since 1992, the United States has entered bilateral Open Skies trade agreements with 121 countries to foster airline industry growth and enable passengers to fly from the United States to almost anywhere around the globe, explained Burnley, who is chairman of the Eno Center for Transportation and a partner at the Washington, D.C., law offices of Venable LLP.

“The bilateral treaties were put in place to create an open marketplace where airlines could freely and fairly compete for travelers’ business on their products’ merits, free of market distortions,” wrote Burnley, who served as the U.S. Secretary of Transportation from 1987 to 1989, the Deputy Secretary of Transportation during 1983-1987, and as general counsel of the department in 1983, in a recent article for the Eno Center.

But two of the 121 agreements — which get negotiated by the State Department and the U.S. Department of Transportation — haven’t been working as intended, namely those with the United Arab Emirates (UAE) and Qatar.

The Partnership for Open & Fair Skies has documented more than $25 billion in subsidies that the government of Qatar has provided to its state-owned airline in violation of its Open Skies agreement with the United States. The partnership said it has been working with the U.S. government for almost three years to address the more than $50 billion in rule-breaking subsidies it says the Gulf carriers – the state-owned airlines Emirates, Etihad Airways and Qatar Airways – have received since 2004 from the UAE and Qatar.

Such government subsidies create an uneven playing field that U.S. carriers cannot fairly compete on, according to the airlines and industry stakeholders, and they threaten U.S. jobs supported by the aviation industry. If left unchecked, the Gulf carriers will continue to expand into the United States, putting at risk service to small and medium-sized communities around the country, stakeholders say.

“Fair and free trade is a cornerstone of our great country and essential to ensuring American economic strength and growth,” wrote Burnley, who is also a consultant for American Airlines, a member of the Partnership for Open & Fair Skies.

In fact, for every international route where a U.S. carrier cannot compete and is forced to cede the route to a subsidized Gulf carrier, over 1,500 American jobs are lost, according to the partnership, a coalition that along with American Airlines also includes Delta Air Lines and United Airlines, the Air Line Pilots Association, the Allied Pilots Association, the Southwest Airlines Pilots’ Association, the Association of Professional Flight Attendants, the Association of Flight Attendants-CWA, the Communications Workers of America, and the Airline Division of the International Brotherhood of Teamsters.

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.

Additionally, under the U.S.-Qatar agreement, Qatar has promised not to introduce any “fifth freedom” passenger flights to the United States, which are flights coming from outside Doha carrying passengers to the United States, according to the Partnership for Open & Fair Skies.

This pact will balance competition for all U.S. carriers, said American Airlines Chairman and CEO Doug Parker in a statement, adding that the Trump administration’s actions “thoughtfully address the illegal subsidies received by Qatar Airways, … support American workers and closer to home, American Airlines’ 120,000 team members.”

Now the focus turns to enforcement of the U.S. Open Skies agreement with the UAE.

When Secretary of State Tillerson announced the U.S.-Qatar agreement last month, he said President Donald Trump “has made this matter a priority, and the outcome we achieved will ensure a level playing field in the global aviation market.”

Martin thinks “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.”

Moving forward, the Partnership for Open & Fair Skies said it intends to work with the Trump administration to ensure Qatar upholds its commitments. The coalition also said it looks forward to working with the Trump administration as it negotiates with the UAE to end its government subsidies to Emirates and Etihad Airways.

Burnley remains confident and told Transportation Today, “I am optimistic that the State Department will push hard to persuade the UAE to end its subsidies for Emirates and Etihad Airways in order to restore fair competition in the global airline industry.”

Published on Transportation Today.

americans4fairskies2015Open Skies agreement with Qatar foretells strong U.S. enforcement to protect airline industry
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Skies Are Looking Fair

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A little more anyway. Last year, I wrote about a battle between U.S. airlines and three aggressive Middle East competitors: The charge from this hemisphere was that the state-owned airlines — Etihad Airways, Emirates, and Qatar Airways — were violating and exploiting the “Open Skies” agreement by spending a whopping $50 billion to undercut the U.S. carriers and unfairly compete via expanded routes and services in the U.S.

Unchecked, the trio’s efforts were projected to result in a major loss of U.S. aviation-related jobs. Well, there seems to be a little good news to share: The association for the embattled U.S. carriers, Partnership for Open and Fair Skies, announced last week that, courtesy of State Department intervention, Qatar would start to end it wicked ways. Years late and a few billion bucks short, sure. But still, things just got a little more fair. So, that makes it one airline down, two to go. Chop chop Rex!

Published on National Review.

americans4fairskies2015Skies Are Looking Fair
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US Open Skies Qatar Agreement Helps Make America Great Again

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

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

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

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

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

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

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

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

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

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

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

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

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

Originally found at: The Washington Times

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

americans4fairskies2015Progress with Qatar Sets Stage for UAE Negotiations 
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Major Airlines In the US Praise Secretary Tillerson’s Agreement With his Qatar Counterpart

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The Secretary for the US State Department Rex Tillerson has confirmed that the United States and Qatar have come to an understanding on matters about civil aviation. The consensus is aimed at addressing the issues that have been raised by major airlines in the United States about subsidy allegations to carriers in the Gulf. Rex Tillerson stated a representative of the Qatari government in the State Department in Washington. The Qatari representative was among a high-level delegation that had been sent to Washington by their government. President Trump admitted that the meeting of the officials from the two countries was a success and that they would provide the global aviation industry with a level playing ground.

The government of Qatar has committed to releasing an audited financial statement for the past fiscal year of the Qatar Airways which is a state-owned corporation. The financial statement is set to shed light on transactions that the company has been involved in and particularly the ones that have been transacted by entities based in Qatar or owned by Qataris. An assurance has been issued to the United States by the government of Qatar that the state-owned airline will do not have plans of operating fifth freedom flights to America. However, Qatar Airways has not issued any guarantees that it won’t operate such plane in the future. Under the Qatar-US Open Skies pact, fifth freedom flights are permitted.

One of the results of the negotiations between the two countries concludes that the United States will not seek to have the open skies agreement re-opened for talks. The US-Qatar accommodation on aviation comes after major American airlines United Airlines and Delta Airlines spent nearly 36 months pushing the American government to take action on what they alleged as illegal subsidies from the Qatar government to the state-owned airline valued at billions of dollars. The allegation was also leveled by the two American airline majors against the United Arab Emirates to Etihad Airways and Emirates Airlines.

However, it is not clear whether the US government has made the same agreement with the UAE as the one that was reached between the Qatari government and the US State Department on January 30. Labor groups from the US, United, American and Delta airlines praised the agreement between the US and Qatar as a significant leap forward and said that it takes care of the concerns that they have raised for the last three years.

Published on Wings Journal.

americans4fairskies2015Major Airlines In the US Praise Secretary Tillerson’s Agreement With his Qatar Counterpart
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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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Trump Strikes Major Victory on Trade: Brings Qatar to Table on Open Skies Agreement

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Ensuring that our trade agreements are enforced was a cornerstone of President Donald Trump’s campaign in 2016. Now, the President struck a major victory on that front by bringing Qatar to the table and ensuring their compliance with the Open Skies Agreement between our two countries.

BloombergPolitics reports: “Qatar Airways will commit to greater financial transparency and to not run any indirect flights to the U.S. through other countries… .” Greater transparency and the adoption of international norms will help to put an end to the massive subsidization of Qatar Airways by the Qatari government.

This is a great start to trade fairness and the first shot across the bow of the United Arab Emirates who continue to violate their Open Skies Agreement, threatening American jobs, with the heavy subsidization of their airlines, Etihad and Emirates. The world is taking notice that President Trump means business when it comes to taking on trade cheaters.

Published on CNS News.

americans4fairskies2015Trump Strikes Major Victory on Trade: Brings Qatar to Table on Open Skies Agreement
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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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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.

americans4fairskies2015U.S. should enforce Open Skies agreements
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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

americans4fairskies2015Middle-Eastern Cheaters Leave US Airlines Flying Blind
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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

americans4fairskies2015Ensuring ‘Open Skies’ still flies
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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

americans4fairskies2015Georgia officials push Trump administration to intervene on issue with Middle East air carriers
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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 SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market 100.0% 8.6% 9.6% ​-0.7% 77.8​%
Africa 2.2% 11.6% 11.9% ​-0.1% ​65.7%
Asia Pacific 31.5% 9.8% 9.6% ​0.1% ​79.0%
Europe 26.7​% ​7.5% 7.3% ​0.2% 77.7​%
Latin America 5.4% ​7.2% 7.3% ​-0.1% ​79.5%
Middle East ​​9.4% 11.0% 16.7% ​-3.8% ​73.3%
North America 24.7% 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 SHARE1 RPK ​​ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic 36.4% 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 Federation 1.3% 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

americans4fairskies2015Etihad strategy flies into difficulties
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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

americans4fairskies2015Gulf Carriers Continue to Take Traffic from American, Delta and United
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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.

americans4fairskies2015United Airlines keeps turning up heat on three Middle East carriers
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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 c