U.S. Airlines Complain To Trump – Stop The “Cheating” Middle East Airlines



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Jul 13 2017
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Ever wonder why Emirates Airlines, Etihad Airways and Qatar Airways could offer unbelievable low price tickets every now and then? That’s because those three Middle Eastern airlines have been receiving more than US$50 billion in subsidies over the past decade from their respective kingdom – U.A.E. (United Arab Emirates) and Qatar.

 

The U.S. and the Arabs do not only fight and compete over crude oil market; they also fiercely fight over airspace. Therefore, it’s not hard to understand why three largest U.S. airlines – American, Delta, and United Airlines (popularly known as the US3) – have been crying, whining and bitching since 2015 about the unfair competition.

 

Emirates, Etihad, and Qatar Airways (otherwise known as the ME3) were accused of flooding the international market with unrealistic and artificial low prices designed to drive out competitors and threaten the job security of US aviation workers. This is the same way Saudi Arabia flooded the crude market with cheap oil to drive out U.S. shale producers.

Emirates Airlines, Etihad Airways and Qatar Airways

Not only the ME3 has invaded the U.S. aviation industry unfairly, they also want to acquire the U.S. airlines, despite U.S. law that caps foreign interests from buying more than 24.9% of a U.S. airline. On 22 June, in a surprise twist, American Airlines revealed that Qatar Airways intends to buy a 10% stake in the world’s largest carrier.

 

In retaliation, American Airlines Inc. announced on Wednesday that it was cancelling code-share agreements with Qatar Airways and Etihad Airways as “an extension of our stance against the illegal subsidies that these carriers receive from their governments.” In essence, the U.S. carrier and the Middle East carriers can no longer book passengers on each other’s flights.

 

Today, however, Qatar Airways said it will go ahead with plans to buy a stake in the U.S. carrier anyway. Although rejected, Qatar Airways sent a revised antitrust filing to U.S. regulators on Wednesday seeking clearance to buy 10% stake in American Airlines Inc. In what appears to be a new escalation, the complaints have reached the desk of President Trump.

Qatar Airways Buying 10 Percent Stake in American Airlines

The three largest U.S. carriers asked the U.S. president in an open letter to enforce the agreements with the U.A.E. and Qatar. The US3 argues that while they must react to supply and demand when deciding routes, the Middle Eastern carriers are not beholden to market forces and can simply leverage on an unlimited pool of government subsidies when determining where to set their routes.

 

Hence, the US3 has asked the Trump Administration to re-examine the Open Skies agreements with the U.A.E. and Qatar while prohibiting any further expansion into the US by the ME3. Delta CEO Ed Bastian said – “They’re taking our jobs, they’re taking our markets, and over time, they want to take over international flying.”

 

Because the Arab airlines operate with an unfair advantage by receiving large government subsidies, the U.S. airlines claim that the ME3 are in violation of the Open Skies agreements that govern air travel between the US and 120 nations. The playing field is unbalanced and that it is unfair to expect a private company to compete against the resources of a national government.

Etihad Airways Cabin Crews

Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies said – “Trade cheating by the UAE and Qatar puts over 1.2 million American jobs at risk and threatens the entire U.S. aviation industry. We are encouraged that the Trump administration is poised to take on this important matter.” Obviously, the US3 hopes Trump would put into practice his “American First” slogan.

 

But not every U.S. airlines agree with the US3. On Monday, U.S. Airlines for Open Skies (USAOS) released a new 30-second advertisement calling for the Trump Administration to ignore the US3’s demands. USAOS – whose members include JetBlue, Hawaiian Airlines, FedEx, and Atlas Air – believe the US3’s actions put U.S. airlines operating in the U.A.E. and Qatar at risk for retaliatory actions.

 

In fact, the USAOS believes the US3’s campaign will destabilize the whole network of more than 100 Open Skies agreements that support hundreds of thousands of US jobs while saving consumers US$4 billion annually in airfares. In other words, the group blames the US3 as merely crying babies who couldn’t compete in an open market.

Emirates Airlines, Etihad Airways and Qatar Airways - Aircraft Tail

To be fair, USAOS could talk big because they are not in direct route competition with the ME3. For example, Atlas flies cargo for Etihad while JetBlue is a code-share to Emirates, meaning that the two airlines share the same routes and market the flights under their own brand on a set number of international routes. They don’t compete with the ME3.

 

In a nutshell, Trump Administration has to decide which faction of the U.S. aviation players he wants to protect – the US3 which competes directly with ME3 or other American airlines that do not compete with ME3 but depend on code-sharing with ME3 for business. Nevertheless, the intervention by President Trump on the complaints has gotten US3 cheering.

Emirates Airlines Cabin Crew

 

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