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.

Dear Friend,

Dear Friend,

Dear Friend,

Divide and conquer. It is a tactic as old as warfare itself, and when done correctly, it can be ruthlessly effective.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.”

Original article found at: TheStreet.Com

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

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

Read the rest on: WSJ.Com

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.

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

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.

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.

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

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

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

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.

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

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:

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.

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

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

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.

###

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.

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.

“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.

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.

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.”

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.

[pdfviewer width=”600px” height=”849px” beta=”true/false”]https://fairskies.wpengine.com/wp-content/uploads/2017/02/Tillerson-Letter.pdf[/pdfviewer]

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 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.

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.

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.

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.

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.

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.

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.

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.

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.

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%.

• 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.

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.

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.

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.

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.

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.

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

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.

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.

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 (AAL – Get Report), Delta (DAL – Get Report)  , United (UAL – Get 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

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.

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

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

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

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

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

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

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