AIN Blog: Delta’s Apology Rings Hollow

 - February 20, 2015, 12:32 PM

Delta Air Lines has found it necessary to apologize for comments CEO Richard Anderson made to CNN this week about the “irony” of claims by Persian Gulf carriers that U.S. airlines benefitted unfairly from government financial support immediately following 9/11. In case you missed it, Anderson’s comments related to the recent effort by the big U.S. airlines to convince lawmakers to revisit Open Skies policies to address what they claim amount to government subsidies enjoyed by Qatar Airways, Emirates Airline and Etihad Airways. The Gulf airlines counter that those same U.S. airlines asking for help from their government now have already benefitted handsomely from bankruptcy laws and federal funding to help them recover from 9/11.

In response, Anderson chose to play the terrorism card. “It's a great irony to have the United Arab Emirates from the Arabian peninsula talk about that, given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian peninsula,” Anderson told Richard Quest of CNN on Monday.

As one might expect, Qatar Airways CEO Akbar Al Baker fired back, saying Anderson should be ashamed of himself and questioning the Delta boss’s ability to discern the difference between subsidy and equity. Emirates chief executive Tim Clark expressed indignation of his own, adding that the comments “caused great offense in this part of the world,” including at Delta SkyTeam partner Saudia. Only then did Delta backtrack somewhat, and issue a somewhat qualified expression of contrition.

Richard was reacting to claims the Gulf carriers have been making that U.S. airlines received subsidies in the form of payments from the U.S. government after the 9/11 attacks and the bankruptcy proceedings that resulted,” said the Delta statement. “He didn’t mean to suggest the Gulf carriers or their governments are linked to the 9/11 terrorists. We apologize if anyone was offended.

The point Richard was making is this: Emirates, Qatar and Etihad have long tried to defend their government subsidies by characterizing the 9/11 payments and Chapter 11 bankruptcy as subsidies. This couldn’t be further from the truth. The first was a one-time payment to U.S. airlines in the aftermath of the U.S. airspace closure after 9/11. Delta didn’t receive loan guarantees. The post-9/11 shutdown and its aftermath resulted in the loss of tens of thousands airline jobs and billions of dollars in debt and equity for investors. The bankruptcy proceedings that followed involved a completely transparent process with no government funding.”

Perhaps, but Delta doesn’t dispute that the one-time payment—in this case $5 billion to U.S. airlines—came with no strings attached. If that doesn’t amount to a subsidy, what does? And transparent or not, the process of bankruptcy allowed U.S. airlines to essentially renege on labor contracts, restructure lease deals and the like. The fact that U.S. law allows for such machinations gives its airlines an undeniable advantage over carriers whose countries’ laws don’t allow for such a clean break from their financial obligations.

Now, as the big-three U.S. airlines look for more help in the form of an anticompetitive rollback of Open Skies agreements, they face opposition from consumer advocates and even FedEx. Indeed, if nothing else, Anderson’s effort to link the Gulf airlines with the 9/11 attacks betrays a sense of desperation—if not simple ignorance.  It’s hard to imagine he would not have anticipated the reaction provoked by his xenophobic characterization of the issue. Just as some politicians play to the baser prejudices among the electorate, it seems probable that the Delta boss was looking to whip up ill-founded righteous indignation in a bid to get the U.S. public on his side of the largely bogus debate over Open Skies policy.

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