A Deal Is a Deal | Commentary
By Tim Canoll In recent weeks, it has become abundantly clear that Qatar and the United Arab Emirates are in breach of their air service agreements with the U.S. and that the Obama administration must act swiftly to restore balance. These countries have unfairly subsidized three of their airlines — Emirates Airline, Etihad Airways and Qatar Airways — and have thus posed a direct threat to the economic security of our U.S. aviation industry and the 11 million jobs that it supports.
Last week, the U.S. government opened a period for public comment in regards to the massive subsidies these Gulf airline carriers receive, and we are pleased the administration is taking this issue seriously. We urge members of Congress to also weigh in by joining our call for a level, competitive playing field for U.S. airlines and aviation workers and stopping these carriers from exploiting loopholes in our Open Skies agreements.
Since 2004, the governments of Qatar and the United Arab Emirates have provided $42 billion in subsidies and other unfair benefits to these three airlines. Because these airlines receive massive government subsidies, they are growing at an astounding rate and expanding their global presence without the normal concern for financial profitability.
That means our airlines aren’t competing with other airlines — they are competing with the treasuries of very wealthy nations.
The U.S. aviation industry is not alone: Carsten Spohr, chairman of the executive board and CEO of the Lufthansa Group, says that other global airlines are being “increasingly attacked” by heavily subsidized Middle Eastern carriers. A basic premise of Open Skies is that airlines would compete on a level playing field, but today, we instead find ourselves competing with gulf carriers receiving blank checks from their governments’ coffers. In addition, the governments of Germany and France have publicly stated their concerns about the massive government subsidies being provided to the Gulf carriers and the impact they have on the aviation marketplace.
When James Hogan, president and CEO of Etihad Airways, was recently asked about his airline receiving $6 billion in equity infusions, he could have denied it, but he didn’t. Instead, he defended the infusions saying, “Why can’t a state invest in growing an airline to create jobs?”
This violation of our international agreements is unacceptable and threatens the careers of highly trained U.S. pilots and others in the aviation industry.
It’s time for the United States to tell the UAE and Qatar that a deal is a deal. The Obama administration should open consultations with Qatar and the UAE immediately, as allowed by the existing air transport agreements, to get the facts about these airlines’ finances. In addition, the administration should request a freeze on current passenger service by these countries’ airlines while consultations are under way.
We need our government — both in the executive branch and our elected officials in Congress — alongside us in the fight for a strong and vibrant U.S. airline industry. All we ask is that U.S. companies have a fair opportunity to compete in the global marketplace so that they may continue to support North American aviation jobs.
Capt. Tim Canoll is president of the Air Line Pilots Association, International.
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