Airlines: Foreign subsidies are destroying flight competition

A coalition of groups that represent parts of the American aviation industry are calling for a federal review of subsidies received by a trio of Middle Eastern airlines that fly to the United States under the “Open Skies” agreement. 

The groups say Qatar Airways, Etihad Airways and Emirates Airlines, which are owned by the governments of Qatar and the United Arab Emirates, have received more than $42 billion in subsides since 2004. 

The coalition, which is known as the Partnership For Open and Fair Skies, says the subsidies make it hard for U.S. airlines to compete with the foreign carriers and also violate the spirit of the current Open Skies agreement between the nations and the U.S.  

{mosads}”This subsidized support includes interest-free government ‘loans’ with no repayment obligation, government grants and capital injections, free land, airport fee exemptions and more,” the coalition says on its website. 

“These subsidies are a clear violation of Open Skies policy, which is based on the principle of fair competition in a marketplace free of government distortion,” the domestic aviation industry groups continued. “$42 billion in subsidies and unfair benefits is the very definition of government distortion.” 

The Open Skies agreement between the U.S. and Qatar was signed in 2001, and the agreement with the United Arab Emirates was signed in 2002. 

The State Department says the purpose of Open Skies agreements is to eliminate “government interference in the commercial decisions of air carriers about routes, capacity, and pricing, freeing carriers to provide more affordable, convenient, and efficient air service for consumers.”

The coalition that is calling for a review of the agreements includes American, Delta and United airlines, as well as the Air Line Pilots Association, International; the Allied Pilots Association; the Association of Professional Flight Attendants; and the Airline Division of the International Brotherhood of Teamsters.

The groups are calling on the Obama administration to launch a review of the Middle Eastern airlines’ subsidies, which they say is allowed under the existing Open Skies agreements between the nations. 

“We believe these Gulf airlines are playing from the higher side of an uneven playing field, posing a serious threat to American jobs and the long-term viability of our nation’s carriers,” Allied Pilots Association President Keith Wilson said in a statement. 

The Middle Eastern airlines have downplayed the role of government subsides in their growth in recent years. 

“Qatar Airways is the national airline of the State of Qatar and one of the aviation industry’s big success stories,” Qatar Air says on its website. 

“Operations began in 1994 when the airline was a small regional carrier serving a handful of routes,” the Qatar Web post continues. “The airline was re-launched in 1997 under the mandate of the then Emir, His Highness The Emir Sheikh Hamad bin Khalifa Al Thani, who outlined a vision to turn Qatar Airways into a leading international airline with the highest standards of service and excellence. Qatar Airways has since become one of the fastest growing carriers in the world with unprecedented expansion averaging double digit growth year on year.” 

The coalition of U.S. aviation groups paints a much difference picture of the Middle Eastern airlines’ growth in recent years. 

“We welcome competition with all international carriers and are in strong support of Open Skies, which has provided wide benefits to the global economy and millions of Americans,” Delta Air Lines CEO Richard Anderson said in a statement. “However, the subsidies provided by the governments of Qatar and the United Arab Emirates undermine the true spirit of Open Skies and distort the international aviation market.”

Consumer groups have accused U.S. airlines of challenging the foreign carriers out of a fear of competing with them. 

“US network carriers — American Airlines, Delta Air Lines and United Airlines — not satisfied with their near monopoly position domestically or with their airline alliance antitrust immunity are attempting to stop competition from the Gulf Carriers — Emirates, Etihad and Qatar,” Travelers United Chairman Charlie Leocha wrote in a blog post on his group’s website. 

“Consolidation in the US airline industry and antitrust immunity grants to airline alliances have created dangerous degradation of competition in the United States,” Leocha continued. “This juggernaut of anti-competitive and anti-consumer airline actions must stop.” 

The airline groups vehemently deny the suggestion that they are ducking competition with foreign carriers. 

“The U.S. industry can and will compete vigorously with any carrier,” American Airlines CEO Doug Parker said. “We welcome an open global marketplace that drives innovation and service. But the playing field must be level, or U.S. airline jobs will be lost to airlines that are subsidized by their governments.”