Global Airlines: Is It a Fair Playing Field?
The US-UAE Open Skies Agreement mainly focuses on the United States big 3 companies (Delta, United, American) and the United Arab Emirates companies (Etihad, Emirates, Qatar) to eliminate the involvement of government in aviation decision-making. Issues such as pricing, capacity and routes all go into this market and over the years have expanded international travel. The agreement has increased travel and trade, increased productivity, economic growth and everlasting job opportunities for both sides. The main goal is to provide an affordable, convenient and efficient air service for their customers. Mainly Etihad, Emirates and Qatar airways are the few who are receiving government subsidies. According to Diana Stancy Correll from the Washington Examiner, "since 2004, the UAE and Qatar have been given more than $50 billion in subsidies to their state run carriers" (Correll, 2017). This obviously is a violation to the agreement and also giving an edge over the US counterpart.
Even with the Arab countries receiving subsidies, the United States is also at fault. After the 9/11 attacks, the airlines received a massive taxpayer bailout from the Air Transportation and Safety Act. Also, some airports got money from the government for airport construction. Matthew from Live and Lets Fly explains on taking LaGuardia Airport in New York City for example, "the $4 billion initial phase of the renovation program is being funded half by private entries...and half by the Port Authority by New York" (Matthew, 2017). The reason for these subsidies is not only to help the airlines be able to offer customers a better experience, but also help airports get the improvements they need to be able to stay in service.
One of the biggest complaint is that long-haul foreign carriers made would be aircraft purchases at "below market interest rates" which are unavailable to the United States. This is possible because of the Export-Import Bank by equipping them with the financial tools necessary to compete with US global markets. This bank also assumes credit and country risks that the private sector is unable or unwilling to accept these transactions. The bank maintains a low default rate, and closely monitors credit and other risks in their portfolio.
The current issues with the Norwegian International Airlines would be the Department of Transportation approving flights here. Bart Jansen from USA Today interviewed Roger Dow who is the CEO of the US Travel Association said that the travel community were ecstatic. Dow says "There is zero downside to allowing more low-cost carriers to US airports: it's a policy that's good for consumers, stupendous for U.S. economic and job growth, and even good for the U.S. airlines because it broadens the market for domestic connector flights" (Jansen, 2016). While this sounds good for some people others feel betrayed and double crossed by this. Sara Nelson who is the president of the Association of Flight Attendants says "It's a betrayal to hundreds of thousands of aviation workers" and "This decision puts a rubber stamp of approval on the 'flag of convenience' model that destroyed over a hundred thousand U.S. shipping jobs" (Jansen, 2016).
By the information given above I truly feel that even today companies are still getting subsidies from private investors that the public doesn't know. It's really unfair that some companies are getting help from other people like Etihad and Qatar while U.S. airlines are funding their airplanes themselves.
Even with the Arab countries receiving subsidies, the United States is also at fault. After the 9/11 attacks, the airlines received a massive taxpayer bailout from the Air Transportation and Safety Act. Also, some airports got money from the government for airport construction. Matthew from Live and Lets Fly explains on taking LaGuardia Airport in New York City for example, "the $4 billion initial phase of the renovation program is being funded half by private entries...and half by the Port Authority by New York" (Matthew, 2017). The reason for these subsidies is not only to help the airlines be able to offer customers a better experience, but also help airports get the improvements they need to be able to stay in service.
One of the biggest complaint is that long-haul foreign carriers made would be aircraft purchases at "below market interest rates" which are unavailable to the United States. This is possible because of the Export-Import Bank by equipping them with the financial tools necessary to compete with US global markets. This bank also assumes credit and country risks that the private sector is unable or unwilling to accept these transactions. The bank maintains a low default rate, and closely monitors credit and other risks in their portfolio.
The current issues with the Norwegian International Airlines would be the Department of Transportation approving flights here. Bart Jansen from USA Today interviewed Roger Dow who is the CEO of the US Travel Association said that the travel community were ecstatic. Dow says "There is zero downside to allowing more low-cost carriers to US airports: it's a policy that's good for consumers, stupendous for U.S. economic and job growth, and even good for the U.S. airlines because it broadens the market for domestic connector flights" (Jansen, 2016). While this sounds good for some people others feel betrayed and double crossed by this. Sara Nelson who is the president of the Association of Flight Attendants says "It's a betrayal to hundreds of thousands of aviation workers" and "This decision puts a rubber stamp of approval on the 'flag of convenience' model that destroyed over a hundred thousand U.S. shipping jobs" (Jansen, 2016).
By the information given above I truly feel that even today companies are still getting subsidies from private investors that the public doesn't know. It's really unfair that some companies are getting help from other people like Etihad and Qatar while U.S. airlines are funding their airplanes themselves.
References
Correll, D. S., & Krupa, C. (2017, December 02). US airlines at odds over aviation agreements with Qatar and UAE. Retrieved March 17, 2018, from https://www.washingtonexaminer.com/us-airlines-at-odds-over-aviation-agreements-with-qatar-and-uae
Civil Air Transport Agreements. (n.d.). Retrieved March 17, 2018, from https://www.state.gov/e/eb/tra/ata/
Jansen, B. (2016, December 05). DOT approves contested Norwegian Air flights. Retrieved March 17, 2018, from https://www.usatoday.com/story/travel/flights/todayinthesky/2016/12/02/dot-approves-contested-norwegian-air-flights/94838292/
Matthew. (2017, July 21). 10 Ways Taxpayers Subsidize U.S. Airlines. Retrieved March 17, 2018, from http://liveandletsfly.boardingarea.com/2017/07/21/10-ways-taxpayers-subsidize-u-s-airlines/
Billy,
ReplyDeleteThis was a really well put together blog. Great and interesting read. As a lot of people have wrote in their blogs, I also agree that everyone should be able to operate under the same rules and regulations allowing the playing field to be even. No one should get an upper hand, but it seems like that may always be the case.