Trump sets his sights on Gulf carriers

03-17-2017 9:18 am

Qatar Airways, Emirates Airlines and Etihad are the latest to find themselves in the line of sight of Donald Trump. On February 9, at the White House, the American president listened attentively to the leaders of American Airlines, Delta and United Airlines, who argue that these three companies are heavily subsidized by their respective governments, which contravenes the provisions of the Open Skies Agreement and competition laws.

The US president promised them tax cuts and other support measures. On Friday, March 8, 35 Republican and Democratic members of Congress representing the states of New York and New Jersey joined in calling on the government to suspend the Emirates Airlines’ new link between Athens and Newark. In a letter to President Trump, these elected officials stated their belief that every long-haul route lost to a Persian Gulf carrier costs more than 1,500 American jobs. This is because they are subsidized by their respective governments, which allows them to offer better rates and better service than American companies.

They demand that foreign governments that contravene the Open Skies Agreement be sanctioned. In addition to launching air routes between the capitals of the Persian Gulf and the American metropolises, Emirates, Qatar and Etihad are beginning to set up transatlantic routes from Europe, taking advantage of the ‘fifth freedom’ rights awarded under the Open Skies Agreement. In February, the presidents of American Airlines, Delta and United Airlines sent a letter to Secretary of State Rex Tillerson to inform him of their grievances. “The Persian Gulf companies have received more than $50 billion in documented grants from their governments, which are also their owners," they write. "If nothing is done, the Gulf companies will continue to take ownership of the US market, causing further damage to American workers.”

The three largest US carriers are asking the Trump administration to revise the Open Skies Agreement, which allows the Gulf companies to fly unrestrictedly to the United States, not only from Qatar and the United Arab Emirates but also from European airports. Their leaders argue that these two countries are contravening the treaties, without the US government doing anything to stop them. In fact, it has been two years since the three biggest US companies and their partners, in an ‘Anti-Open-Skies’ partnership, campaigned for the US government to suspend the privileges granted to the three companies in the Gulf in the Open Skies Agreement.

Several lobby groups - including the Business Travel Coalition - argue that, far from threatening jobs in the United States, the three Gulf companies are creating opportunity and helping to clean the market by lowering tariffs. In particular, they argue that the three carriers and their European partners continue to account for 80 per cent of the traffic between Europe and the United States. They also explain that in the United States, neither the carriers nor their employees suffer undue influence from this competition, a claim supported by figures:

• American, Delta and United have generated combined profits of $ 28.8 billion for the years 2015 and 2016.

• For the same two years, airlines created an additional 90,673 jobs in the United States, an increase of 15.3 per cent.

During the same two years, the three Gulf companies took deliveries of 59 Boeing wide carriers, while the three major US carriers received only 41 of them. For example, since March 2015, Emirates alone has incorporated 28 Boeing 777s into its fleet at a cost of $ 10.8 billion, which according to the Department of Commerce has supported 62,277 well-paid jobs at Boeing, in addition to its 13,600 small and large subcontractors. Over the same period, American and Delta only took delivery of six B777 and Delta, none.

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