More than 30 US airports have added their voices to a campaign calling for the American government to check the expansion of major Gulf airlines, claiming there will be “devastating consequences” otherwise.
In letters to US Secretaries of Transportation, Commerce and State, as well as members of Congress, bosses of 32 local and regional airports have asked their government to open talks with Qatar and the UAE, to end what they say are unfair subsidies that harm American business interests.
The airports have joined a coalition that has been led by three US airlines – American, Delta and United – which demands the US government renegotiate its Open Skies agreement with Qatar and the Emirates.
The agreement currently allows airlines, rather than government regulators, to determine the frequency and capacity of flights.
The group, called Partnership for Open & Fair Skies, claims that Gulf carriers – particularly Qatar Airways, Emirates and Etihad Airways – have benefited from $42 billion in subsidies from their respective governments.
The coalition said this is a violation of the Open Skies agreement that has resulted in “threatening hundreds of thousands of American jobs.”
The three GCC airlines have all denied accusations of unfair competition.
Qatar Airways, however, has not yet provided a detailed response to the specific claims that it has received US$16.5 billion worth of forgiven loans, free land, grants and other forms of support from the Qatar government over the past 11 years.
Intervention appeal
In a joint statement, which includes excerpts of their letters, the US airports’ bosses acknowledge that the introduction of the Gulf carriers to their market has helped bring down prices and open new routes for some Americans.
However, they argue that US airlines’ inability to compete also damages many American travel-related business such as car rental firms, travel agents and taxi drivers.
The joint statement includes part of a letter written by Dan Mann, executive director of Columbia Metropolitan Airport in Columbia, South Carolina, who said:
“If allowed to continue, this will lead to service cuts to both regional and international airports, as many domestic routes serve as feeders for larger, more profitable flights to international destinations, ultimately resulting in substantial job losses throughout the country in a variety of different sectors.”
Meanwhile, Robert Selig, president and CEO of the Capital Region Airport Authority in Lansing, Michigan, said in his letter:
“I can see first-hand the effects that an unfair playing field has on the US carriers. The employees that depend on a healthy airline industry are not limited to airline workers; rental car employees, hotel, taxi and restaurant employees also depend on the influx of passengers through our region.”
Over the past several months, the fair skies coalition has grown to include 262 members of the US House of Representatives; 21 US senators; the US Conference of Mayors, which represents 1,400 mayors across the country; and several local business, trade and economic groups.
Disagreement
However, not everyone in the US travel industry agrees with the allegations.
Last month, the US Travel Association, which represents some of the largest hotel chains and conference organizers in the US, expressed public support for the Gulf carriers.
In a letter sent to several top US officials, including the Secretary of Transportation and Secretary of Commerce, the group said it supported the current Open Skies agreement, arguing that the growth of the GCC carriers in the US had in fact created a significant expansion of tourism-related business in the country.
The letter was signed by the heads of Hawaiian Airlines, Alaska Airlines and JetBlue Airways, as well as several major hotel chains including Hilton, Intercontinental and Marriott.
And aircraft manufacturer Boeing, which has supplied Qatar Airways with at least 67 planes to date and received orders for nearly 150 more, also supports maintaining the existing agreement.
Thoughts?
In the end two things will happen:
1) The U.S. government will intervene, but only after the Gulf careers have reached their expansion peak (or very near it). That’s American politics–only take decisive action when it matters little.
2) Gulf carriers will naturally fizzle out, because the massive support from the government they receive will steadily decline, particularly from Qatar and Abu Dhaibi as oil and LNG prices, and with the national economies, plummet. The region can reasonably support one large international carrier without massive government intervention, and, in terms of position and financing, Emirates has a substantial head start and advantage.
I would be shocked if Qatar Airways is much more than a regional carrier with a handful of dedicated long haul flights in ten years.
It’s not likely that the oil and gas price will fall indefinitely, it will level off for a while as the demand is steady and will rise in some decades as the reserves dry up.
Eventually they will level off, but the likelihood of reaching the previous levels that produced the sorts of massive surpluses that allowed Qatar to heavily subsidize vanity projects (like the massive extension of Qatar Airways) is highly unlikely. In rise in demand will be heavily offset by the emergence of the Australian sector (for Asian markets) and American sector (for European markets). Without an LNG equivalent of OPEC, gas is going to stay fairly inexpensive for a very long time.
In the next few years, Qatar will see a radical decline in public spending as well as a kind of spending that is more frugal and strategic generally. Qatar is headed for a dose of austerity, which, in the end, will be a good thing if managed correctly. There is a tremendous amount of waste that has been fueled by the false premise the money is infinite. Value for money is going to be a catch phrase for a while.
The oil slump is cyclical and won’t last long. This has happened before and will happen again. Everyone in the O&G industry knows that. Lessons from the 80s and early 90s should offer a glimpse on how prices will rise again.
Wishful thinking. For LNG in Qatar the future is more complicated with the emergence of the Australians and US. By the time the slump is over, they will have pushed LNG from the middle east out of a great deal of market share. It’s not running out that will be the problem, it’s remaining competitive against other countries that are closer to the markets.
That is what they said about Emirates 15 years ago when they were flying empty airplanes from London to Dubai. Didn’t happen. These planes are full of paying customers receiving great service.
As long as they can keep up the government subsidies then they’ll continue to prosper. But, given the massive government spending cutbacks, it will be surprising if they choose to sustain the subsidy levels.
read what R. Daniel Hague said
And your point is . . . ?
The birth right of these American companies is cribbing! When America invades another country on false claims e.g. “Weapons of Mass Destruction” in Iraq, it is all fair, but the moment another country provides subsidy to their airlines than it is not fair. Get over it losers.
Yep 🙂
Yes. It’s all about the imperialism and the Iraq War. Personally, I think it is more targeted racism on the part the Americans and their European airline allies. They seem to be especially targeting their racism at the CEO of Emirates.
Yea Hussein was only performing genocide on the Kurds though. No big deal there. Smh haters
My three worst experiences with airlines were the “top” three American airlines. United Airlines, Delta, and American Airlines.
I am an American and I completely agree with you. Their services are crap!!!
The Middle East carriers are so far superior to the bloated US airlines in terms of customer service, it is not terribly different than when Toyota and the other Japanese auto makers ate the lunch of Ford, GM and Chrysler in the
1970’s. Time for the US to retool and offer a better product to the consumer. Go Qatar Airways, Etihad and Emirates!!!
You do know that only when those companies stopped receiving massive government subsidies did they rise to the major automobile powerhouses they are today.
Companies that have massive gov subsidies tend to be inefficient and uncompetitive in the end.
“However, they argue that US airlines’ inability to compete also damages many American travel-related business such as car rental firms, travel agents and taxi drivers.” Could someone explain this part to me? Taxi drivers carry people from and to the airport regardless of what airline they use, so how are they and others negatively impacted by this?
If you read things twice or trice you probably would get it. Read again and stop at where it says regional flights. Then read that same sentence 5 times.
If you have hard time, page me 😉
Was it something I said?
The terrorist attacks of September 11 crippled an already financially troubled industry. To bail out the airlines, President Bush signed into law the Air Transportation Safety and Stabilization Act, which compensated airlines for the mandatory grounding of aircraft after the attacks. The act released $5 billion in compensation and an additional $10 billion in loan guarantees or other federal credit instruments.
Was thinking on using this airline but after seeing hateful comments I’ll be passing.
I remember US-based airlines before deregulation began the downward spiral of quality and safety. If I can, I always avoid them now, and fortunately since a lot of my travel is to/via the Gulf I am able to take advantage of a much nicer experience flying Emirates, Etihad & Qatar Airways. Competitive/better pricing & experience will always win my vote.