Buoyed by Donald Trump’s protectionist campaign rhetoric, U.S. airlines who believe they are in an unfair competition with heavily-subsidized Persian Gulf carriers say they will ask the president-elect to intercede on their behalf.
The three big U.S. international carriers — Delta, American and United — have unsuccessfully lobbied the Obama administration to take up their cause against a trio of Gulf airlines who have grown exponentially, making inroads in the global market. The U.S. airlines want Trump to hear their case for renegotiation of Open Skies Agreements with the United Arab Emirates and Qatar.
“We look forward to briefing President-elect Donald Trump and his new administration on the massive, unfair subsidies that the UAE and Qatar give to their state-owned Gulf carriers,” said Jill Zuckman, spokeswoman for the Partnership for Open and Fair Skies. “The Gulf carrier subsidies threaten the jobs of 300,000 U.S. aviation workers and the American aviation industry as a whole, and we are optimistic that the Trump administration will stand up to the UAE and Qatar, enforce our trade agreements and fight for American jobs.”
Open Skies agreements with more than 100 nations allow airlines from different countries equal access to one another’s airports without interference from the respective national governments. But the rapid international expansion of three airlines from the two nations — Etihad Airways, Qatar Airways and Emirates — has alarmed the three big U.S. airlines.
While altering an international airline agreement affecting that many nations could cause headaches for the United States, the airlines hope that opening formal or informal talks backed up by the White House with the two gulf countries could win concessions from their airlines.
Last year, the three U.S. airlines said competition from the gulf carriers had cut their passenger load to the Middle East and Asia by more than 20 percent.
In a filing to the U.S. Department of Transportation, the airlines said passenger loads from Boston were down by almost 23 percent and from Washington Dulles International Airport by 25 percent, and their joint venture partners had seen a more than 28 percent drop from Seattle on flights bound for the two regions.
The U.S. airlines contend that the three gulf carriers receive enormous subsidies from the countries that own them. Determining subsidies vs. investments is challenging because the gulf airlines have not opened their books to scrutiny.
As an example of a subsidy, the filing by the U.S. airlines last year cited the $7.8 billion United Arab Emirates spent to expand and transform the airport in Dubai for the benefit of Emirates airline. It also pointed to government land that was given to Qatar Airways to build office and residential space. And it said financial statements showed that Etihad received billions in cash from the Abu Dhabi government.
The gulf airlines counter that their governments are making investments in their airlines with the expectation of financial returns. They reject the contention they are government-subsidized.
The international market is vital to recently resurgent U.S. airlines, which have regained profitability after a decade of bankruptcies and mergers. But the companies’ return to solvency comes in an era in which there is little growth in the domestic market and international flights offer a better prospect.