Just before U.S. airline industry CEOs met at the White House with Donald Trump on Thursday, the big three carriers — Delta, United and American — released a video featuring some of Trump’s populist rhetoric about “trade cheats” and directing viewers to a website for a lobbying campaign to “protect American jobs.”
But the campaign, called the Partnership for Open & Fair Skies, is in reality a cutthroat bid to block certain Arab airlines from U.S. airports — a decision analysts say would limit the choices for consumers while increasing market consolidation for the big three.
This comes after a similar request for protection during the Obama administration — which sought to prevent foreign competitors from offering lower prices — was largely rebuffed.
But now that there’s a president who has promised to crack down on foreigners, the airlines are at it again, hoping to harness “America First” rhetoric for profiteering protectionism.
The day after Trump won the election, the Partnership for Open & Fair Skies campaign issued a statement saying, “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.” Jill Zuckman, a managing director at SKDKnickerbocker, the public relations firm helping to orchestrate the partnership, did not respond to a request for comment from The Intercept.
The big three U.S. airlines maintain that Emirates, Etihad Airways, and Qatar Airways — airlines backed by governments of Qatar and the United Arab Emirates — are unfairly subsidized and that their expansion into the U.S. market represents unfair competition that should be blocked by regulators.
“The Gulf carriers have received over $50 billion in documented subsidies from their government owners since 2004,” the chief executives of the big three wrote in a recent letter to Secretary of State Rex Tillerson. “Mr. Secretary,” the letter continues, “we are confident that the Trump Administration shares our view on the importance of enforcing our Open Skies agreements, ensuring that U.S. airlines have a fair and equal opportunity to compete in the international market, and protecting American jobs.”
But the Gulf carriers counter that they provide flights to the Middle East, Europe, and India that have been long ignored by U.S. airlines and that the charge of unfair subsidies is boldly hypocritical given the tens of billions dollars in subsidies granted to the airline industry by various U.S. government agencies for decades.
Travel industry writer Gary Leff scoffs at the lobbying campaign, arguing on his blog Boarding Area that the “U.S. airlines are highly subsidized, and subsidies do not in any way violate our treaties.” Leff has previously detailed the ways in which the U.S. airline industry receives far more government subsidies than their Middle East competitors. Leff notes, citing a 1999 Congressional Research Service study, that the U.S. government has provided subsidies to airlines worth over $150 billion to purchase commercial jets, to serve remote communities, in the form of state and federal fuel subsidies, in the tax code, and through military and postal flights, among other generous programs since 1918.
Qatar Airways in a 2015 filing, listed the subsidies that benefit the U.S. airlines. It noted that U.S. carriers have received upwards of $30 billion alone in cost savings from Chapter 11, using the bankruptcy system to restructure, offloading pension obligations and other liabilities to the taxpayer. The filing argues that Qatar’s services are vital and that their flights offer “one-stop travel options to cities and parts of the world that never have been served by U.S. carriers.”
Meanwhile, recent studies show that market consolidation has led to increased profits for the industry and higher prices for consumers.
But the blatant hypocrisy of the big three is eclipsed in Washington by a formidable lobbying apparatus.
United, Delta, and America, along with their trade group Airlines for America, spent over $20 million on federal lobbying last year. Lobbyists on retainer include former senators John Breaux and Trent Lott. SKDKnickerbocker, the firm managing the campaign, is run by senior Democratic operatives including Anita Dunn, Obama’s former White House communications director. The airlines have also enlisted their respective unions, with the powerful Airline Pilots Association working to advance the campaign to block the Gulf carriers.
They have also used nativism to push the campaign.
In 2015, at outset of the campaign to pressure the Obama administration to squeeze out foreign competition, CNN’s Richard Quest asked Delta Airlines Chief Executive Richard Anderson about Gulf carriers’ claims that the big three received favorable government treatment using bankruptcy protection.
“It’s a great irony to have the United Arab Emirates from the Arabian Peninsula talk about that given the fact that our industry was really shocked by the terrorism of 9/11 which came from terrorists from the Arabian Peninsula that caused us to go through a massive restructuring,” Anderson responded.
Invoking 9/11 to attack the Gulf carriers makes no sense beyond an appeal to bigotry. None of the 9/11 hijackers were from Qatar. Two were from the UAE, but the vast majority — 15 — were from Saudi Arabia, the home of state-subsidized airline Saudia, which is a Skyteam partner with Delta Airways. Saudia has not pushed to compete directly with the big three, and therefore has not been targeted by the Partnership for Open & Fair Skies.
During the meeting Thursday, according to pool reports, Trump discussed changes to the air-traffic-control system and upgrades to airports. The chief executives of United, Delta, Southwest, Alaska, and executives from airport operators were among the participants.
But the campaign to block Gulf carriers has gained new urgency.
In recent weeks, the Partnership for Open & Fair Skies lashed out at Emirates for opening a flight between Athens and Newark, a route that United plans to operate as a seasonal flight from May 24 to early October. The Partnership claims that the route is a violation of U.S. treaty agreements, and is asking regulators to block the competitive route.
“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 told The Street in January.
Correction: Feb. 10, 2017
An earlier version of this story incorrectly described the nationalities of the 9/11 hijackers. The story has been updated to reflect that two were from the UAE.
Top photo: A United plane starts its engines at National Airport in Washington in 2016.
There’s our hardworking American corporations, defending that “free” “market” of theirs again.
Appreciate the article.
Thanks
If AA is so worried, why are they Partners with Qatar Air via OneWorld? We’ve flown QA because of the Alliance and the trip went well.
Those carriers just need to pour money into the US political system and they’ll be fine. Maybe book a stay for the CEO ar Mar a Lago.
Great article, Lee Fang.
I wonder how many Americans would really feel that comfortable seeing the shadow of an Arab airplane cross over their houses, if they knew that’s what it was… Lambaste him as you will, but Trump has a winner with this one: American jobs, Arab pilots out of the sky, plus, he’s following the model of longstanding maritime legislation banning any foreign carrier from carrying supplies between any two American ports.
So, you’d say a ban on American civilian jets from Latin America, swaths of Africa, the ME, Pakistan, the Philippines, Japan, Russia, Haiti, Grenada, Cuba (and l’m sure the list extends further than that, given America’s history of invading, bombing, sponsoring the overthrow of democratic governments and support of repressive regimes) would be a good idea.
PS, the irony is that that maritime legislation was intended to force the economies of the US occupied countries/territories to become complete hostages of the US, and is one of the primary reasons Porto Rico is now not even allowed the pretence of democracy or independence.
Maybe you live somewhere in flyover country where you don’t see what brand of airplanes are flying overhead, but for us (ahem) coastal elites, we’ve got a lot of different carriers flying to our main airports, and American carriers flying to their countries as well, and the combination used to make foreign travel possible. (I’m on the west coast, so we mainly see Asian carriers rather than European or Middle Eastern.)
I’d rather have a well-maintained Arab-oil-country airplane overhead than Russian Aeroflot, which is more likely to drop engines or lose other large pieces. On the other hand, I personally wouldn’t fly the airline of a country that jails a passenger who had a bit of cannabis leaf on the bottom of his shoe or a woman who’d been given codeine by her dentist, because I wouldn’t feel personally safe, nor would I change planes in their country. (I think those were both Dubai, or maybe one of the other Emirates.)
As far as I know, the only suicide pilot so far was that depressed german guy that crashed a Germanwings plane. Arab pilots so far have a record as perfect as any others. You wish your chances of winning the lottery would be similiar to your chances of being hit by a plane, be it arab, iranian or from Newark.
To be sure, these are all reasonable points – security hysteria is, by and large, hysteria. We ought to be afraid of more practical things, like heart disease. I was just saying I can’t see Trump losing with an idea like that.
Boarding Area is not Gary Leff’s blog. His blog is titled ‘View from the Wing’.
Boarding Area is a travel blog hosting site featuring dozens of blogs written and operating as independent entities and businesses.
It’s not unfair competition that’s hurting US airlines, they are themselves their worst enemies.
And American (AA) leads the way. It was the first to kill Travel Agent commissions, it was the first to start charging for checked baggage and it was the first to charge for ‘food’.
In addition the fly the oldest fleets and usually have the worst cabin staff (attitude, attentiveness, appearance).
Living in Indochina I have the option of using many regional and international carriers and, without exception, even the smallest puddle jumpers offer better service than American carriers from the cheery, genuine look in their eyes, Welcome Aboard, to the toilets that never seen to get dirty (because of constant staff attention), to the constant help-yourself-food in the galley.
American carriers fail at all levels.
And don’t say US carriers don’t get subsidised! They are all busy slurping at the taxpayer funded benefits trough.
Roger that. What you said about AA is also true in spades about Continental, er, oops! I meant United. Particularly under CEO Jeff Smisek, they did everything conceivable to alienate their customers and demoralize their employees.
I’ve only been to Asia a few times, but from that experience and that in Europe I have experienced levels of service and quality that are almost completely absent in the US. Trump and his supporters want to block foreign goods and demand that other countries use ours without doing anything to remedy the dismal quality of most US products and services. The elites – democrat and republican alike – like to push the blame down to the US workers, but in reality the cause is at the top, of corporate executives who dream of new ways to cut costs to enhance their own bottom lines, ways that include eliminating employee incentives and benefits, skimping on training to keep their workforce competitive, slashing R&D, and lobbying to reduce public spending on things like education. But when it comes to getting a tax exemption or having a new road put in for their facilities, they are never hesitant to hold open their hands.
Well, i can tell you this. Before Emirates and Qatar came to Boston, flying to India, (via Dubai or Doha) used to generally be around $1200-1400 R/T.
When these airlines arrived, it has generally been in the $800-900 R/T range. Great for the consumer, but bad for business, perhaps.
I don’t lean either way. But i do know that globalization is here to stay and it is one of those catch 22’s where the more you fight it, the more it bites you in the ass in the long run.
.02
Hmm…. After Boeing gets more than a billion in tax incentives from SC taxpayers, they also want to block other airlines from competing in the market? You mean that our tax dollars afforded Boeing being used as token collateral to finance the Iranian jets that Boeing now wants to block from flying in our markets? How would civil servants or Boeing Union workers view this informational manipulation.? Heck, how would this be used as political leverage to lobby for offshore funds? My Backside…!! . How would Trump verify data to base his decision on?…… or a military advisor?
Even more than price-gouging, cramped leg room and shabby maintenance, the airline industry is famous for fighting the slightest government regulation tooth and nail, while being among the first to belly up to the public tax money bailout feeder when business goes south.
I distinctly remember an interview with an airline executive shortly after 9/11 in which the exec was blaming the government for the success of the attack because government regulations had kept the airline from installing cockpit door locks.
That took some nuts, because the fact of the matter was, out of concern for…drum roll, please…and rim shot…profits, the airlines sacrificed public safety and then fingered the government as a cheap and easy foil to distract from their greed.
I hate cliches as much as the next guy, but this is deja vu all over again, and with that, I’m outta here…
Gary Leff blog is View from the Wing.
The notion that it is solely the Gulf States airlines that are subject to restrictions, along with the notion that the provisions of protectionism for US corporations will benefit either airline employees or the flying public are false. Can you choose British Airways for your trip from New York to LA? Or JAL for your trip from Seattle to Chicago? No, because no foreign flag airline is allowed to fly between any two cities in the US. The government doles out a handful of slots to other nations’ airlines to maintain the appearance of a free market, and consumers suffer as a result.
The fantastic decline in service by US airlines should be sufficient to convince even republicans that the airlines care not a whit for the comfort of their customers. When fuel prices rise, so do fares, but when they plummet, the fares do not. Ratchet up the prices! And when, despite the decreases in service and increases in ticket costs the airlines still fail to make sufficient profits, who else pays? The employees. Because it is all about the 0.1%.
BTW nobody complains when a foreign airline places a huge order at Boeing. Part of Americun hypocrisy: buy Americun, but don’t bring your Americun airplanes into our Cuntry.
Sorry, but this has NOTHING to do with cabotage (airlines being able to fly domestic routes in foreign countries) but rather the pretty much universal standard of foreign airlines being able to fly into any international airport in the US. And seeing as that is what the ‘Open Skies’ agreements are all about, basically, what the lobbying is trying to do is get the US to violate an international deal on transparently false pretences.
Lee,
Excellent article. One small point – 2 of the 9/11 hijackers (Fayez Banihammad and Marwan al Shehhi) were from the UAE.
Pure and unadulterated greed.
public transportation.
I vote that the US should nationalise one of the carriers and cut fares 99%. The calculable losses could be paid by taxing the wealthy by that amount thereby automatically systematically placing currency back into circulation where it belongs and out of the hands of the hording wallstreet thieves.
As well as the massive government subsidies the US airlines enjoy it’s also worth mentioning the complex web of protectionist rules and regulations that favour them, such as the near total absence of cabotage rights and the ban on foreign majority ownership. As someone who unfortunately is obliged to use US airlines for international travel I would suggest the most useful thing they could do with their 20 million of lobby money and all those subsidies is to upgrade their standards and customer service to something beyond the third world levels they currently offer.
The issue is, airline pilots are seriously underpaid for their jobs relative to say, bankers and hedge fund managers. If Trump’s “nativist protectionism” delivers higher wages, that will be a big win for his administration – although it’s equally likely the CEOs and shareholders will suck up all the profits and give nothing to the pilots and service staff. This is a major issue for American workers, and if Trump does deliver for them, expect a big boost in his popularity.
See also:
http://www.mcclatchydc.com/news/politics-government/white-house/article128460389.html
This is where Democrats have tied their own rope; by not placing the interests of American workers first, instead serving the financial cartels, they’ve alienated their base and risk eight years of Trump.
And if you think the cockpit crew are ‘underpaid’, wait until you figure out what the cabin crew are actually paid (you think that long period of time boarding the aircraft, waiting for the doors to be closed, and waiting to get off it after the doors have opened is annoying to you, imagine how it feels to the cabin crew that are politely directing you, assisting you, putting up with your demands and crankiness, all without being paid one cent, because despite them being required to do all that, and subjected to discipline if they fail to do so ‘properly’, they only get paid for the time they are ordered to close the doors, and the time they’re ordered to open them)
Not shocking at all.. Business interests defend their views.. Nothing new under the sun.
And honesly, Lee Fang should do mathand come up with a fact or opinion on which company receives most subsidies.
Deregulation of airlines was one of the stupidest things the United States has ever done in a business sense. Those of us old enough remember the good old days of flying when luggage was free and seats were roomy and the food was good and planes took off and landed on time.
Yes and in real terms air fares were probably 10x what they are now.
“For the first time in decades, we have deregulated a major industry. When I announced my own support of airline deregulation soon after taking office, this bill had few friends. I’m happy to say that today it appears to have few enemies. Governors, mayors, consumer advocates, all supported the bill. And all will benefit from the increase in competition and the guarantees of quality services to smaller communities. Taxpayers will benefit from the orderly phasing out of the functions of the Civil Aeronautics Board and from the sound precedent this bill sets for dealing with other over-regulated industries.”
– a former US President (hint: not a Republican)
It is either “free trade” and Walmart sells cheap foreign made goods to the EBT crowd which is likely to become most of America. OR we have “America First” trade restrictions which brings high wages and higher consumer prices.
We can either pay good wages or have a 3rd world populace on benefits.
Because that (yesterday’s article is on “conflict minerals”), that erryday’s as been against the murder of the natural order to acquire Ta (cell phone batteries, all),and it’s only Ta, there is no such thing as coltan. And, we have a race to correct, and that is a 200-year span, so, “Electrolux” makes a race war, like Leoplod (10,000,000 hands, cuts off), and you & me have ice cream, our cell phone, with the charger (so its gift is it’s home’s), it won’t work. That’s nuclear as fuck, to save gorillas; to save one. You have to have a 1980’s to (trippin’!!) battery in it. Talking serious genocidal reasons to destroy “civilzations” who are bent. [deduct the murder. We all have names (elephants), just no…(lost). No “thing”, no “trial”.
killing off free trade will not make anyone great – but it will make people rich….(follow the money)
Land of the FREE – – – Home of the BRAVE – – shaking in their boots…..hiding in bomb shelters??
ALL ABOUT MONEY . . . .
The brave beef exporters are shaking in their cowboy boots:
“Mr. President, he likes to use case studies and examples. I wish he would see one from the other perspective, of somebody who is being hurt by the very policy that is trying to protect us. That said, I probably don’t want to piss him off,” Levin said, with a laugh.
https://www.washingtonpost.com/news/wonk/wp/2017/02/10/trumps-trade-rules-could-leave-american-farmers-and-ranchers-behind/?utm_term=.519336fc49f6
Slightly off topic, but this dickhead, the Mango bloviator did talk about jobs, in the run up to this debacle. I voted for him because this situation had to happen. Now, the most important piece of the puzzle is how much can the sheeple take and realize how divided we are and are willing to take a stand. Doesn’t look from where I’m observing. Thanks for this valuable news source. Go Glenn!!
You voted for him, or you voted for her, you are getting precisely what you deserve. There was no essential difference between the democrats and republicans, and there still isn’t. But there were other choices in the election, but the Americun voters were collectively too stupid, or too well conditioned, to notice.
People who are part of that Collective have through their votes surrendered their right to complain.
Lee, I believe you meant “American” (AA) rather than “America” as the third carrier in those instances within the article.
The “American” multi-DUI CEO did not attend, deeming his attendance at a “leadership” seminar was more important.
As someone who lost their pension from a bankruptcy filing, I think Qatar has a great point.