Sunday, February 12, 2017

U.S. Non-Legacy Airlines Oppose Complaint About Gulf Carriers

Four U.S. airlines are resisting calls by three other American carriers for the new U.S. administration to take up their repeated complaints about allegedly unfair subsidies for state-owned airlines in the Gulf region. The chief executives of Hawaiian Airlines, FedEx Express, JetBlue Airways and Atlas Air have urged U.S. Department of Transportation Secretary Elaine Chao and Secretary of State Rex Tillerson to reject appeals by the country’s big three legacy airlines to freeze Open Skies pacts with the United Arab Emirates and Qatar.
A joint letter dated February 7, sent by Hawaiian Airlines CEO Mark Dunkerley, Atlas Air CEO William Flynn, FedEx Express CEO David Bronczek and JetBlue CEO Robin Hayes under the letterhead of a group called the U.S. Airlines for Open Skies (USAOS), charges United, Delta and American Airlines with trying to reduce competition into what the group calls “an already concentrated U.S. airline market.”

Just six days earlier CEOs Doug Parker of United, Edward Bastian of Delta and Oscar Munoz of American wrote to Tillerson to request a meeting to address their charges of “massive subsidization” of state-owned airlines from the Persian Gulf. The appeal revives an allegation first made two years ago that Emirates Airline and Etihad Airways of the UAE and Doha-based Qatar Airways have benefited from some $50 billion in government subsidies since 2004. “Subsidy-enabled capacity dumping has nearly eliminated U.S. carrier service to the Middle East and India,” the executives charged in their joint letter dated February 1, the day the U.S. Senate confirmed Tillerson as the new secretary of State.

The latest appeal comes as Emirates Airline prepares to open a new route from Dubai to Newark via Athens under fifth-freedom rights in the U.S.-UAE Open Skies pact, a move the U.S. so-called Big Three have condemned vociferously as another example of the Gulf carrier’s ambitions to gain unfair market access.

According to USAOS, the three legacy carriers have failed to name one example of an Open Skies violation. “It is also telling that [the legacy carriers] have not pursued the established dispute settlement procedures under the Open Skies agreements and those administered by the DOT,” it said in the February 7 letter.

“By contrast, freezing U.S. routes would indisputably breach Open Skies, harm U.S. airline passengers, and endanger U.S. jobs,” it continued. “It would reduce competition not only on international routes where the legacy carriers and their joint venture partners already predominate but also in the domestic market by stemming the flow of passengers into the United States that has enabled smaller U.S. airlines to expand service and compete with the legacy carriers. It would also endanger the global networks of U.S. cargo airlines that deliver high-value U.S. exports and vital supplies for the U.S. military around the world.”

While United, Delta and American claim that the Gulf carriers’ expansion in the U.S. threatens American jobs, USAOS argues that the plain facts don’t support their assertion. “Contrary to their claims of job loss, they have hired more than 12,000 new employees during the last four years,” said the group. “Meanwhile, their operating profits have reached record levels, nearly tripling on average since 2007.”

(Gregory Polek - AINOnline News)

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