The chief executives of three major U.S. airlines have written to new U.S. Secretary of State Rex Tillerson, charging that “massive subsidization” of state-owned airlines by Persian Gulf nations is eroding American jobs. The CEOs of American, Delta and United request a meeting with the former ExxonMobil CEO, who started work as the Trump administration’s chief diplomat on February 2.
CEOs Oscar Munoz of United, Edward Bastian of Delta and Doug Park of American revive an allegation first made two years ago that Gulf carriers have benefited from some $50 billion in government subsidies since 2004. “Subsidy-enabled capacity dumping” by Qatar Airways and UAE carriers Etihad Airways of Abu Dhabi and Emirates of Dubai “has nearly eliminated U.S. carrier service to the Middle East and India,” the executives charge. Their joint letter was dated February 1—the day the U.S. Senate confirmed Tillerson as the new secretary of State.
Of 120 Open Skies agreements the U.S. has with other countries, those with UAE and Qatar are problematic, say the executives, who suggest that they be renegotiated. During the previous Obama administration, U.S. government agencies reviewed the carriers’ allegations against Gulf airlines, but did not seek to formally renegotiate the trade agreements.
“Fully 118 of these agreements are working as U.S. Open Skies policy intends, creating significant benefits for U.S. travelers, workers and the economy,” the letter states. “We stand with our employees in raising concerns with respect to just two of the agreements because the countries in question—the United Arab Emirates and Qatar—are abusing the agreements, and our government has done nothing to stop them.”
The U.S. airline industry is not monolithic in opposing the Gulf carriers, however. Testifying on February 1 before the House Transportation Committee, FedEx chairman and CEO Frederick Smith said the cargo carrier “wholeheartedly” supports all Open Skies agreements.
“As international competition has become more vigorous and new models challenge the traditional legacy carrier dominance, some say that Open Skies agreements should now be limited to protect large U.S. airlines from new competition. FedEx is part of a coalition of U.S. passenger and cargo airlines which support Open Skies,” Smith stated in written remarks. The U.S. Airlines for Open Skies coalition counts FedEx, Atlas Air, Hawaiian Airlines and JetBlue as members.
Separately, the Air Line Pilots Association (Alpa) has asked new Transportation Secretary Elaine Chao to reconsider a December decision the department made under previous secretary Anthony Foxx to grant a foreign air carrier permit to Norwegian Air International, the Irish subsidiary of Norwegian Air Shuttle.
“Throughout her confirmation process, Secretary Chao pledged to ensure that our country’s Open Skies agreements ‘produce genuine benefits for the American people,’ a goal with which we wholeheartedly agree,” the pilots’ union stated in a January 31 release. “Today, Alpa pilots are reaching out to Secretary Chao urging the Department of Transportation to uphold the Trump administration’s ‘America First’ governing philosophy and immediately examine the Obama Administration’s grant of a foreign air carrier permit to Norwegian Air International in order to revoke or suspend that permit.”