Internet Travel Monitor - Travel Industry News

September 20, 2017

The Case Against Open Skies is Falling Apart

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The Big Three U.S. airlines and their allies continue to campaign against America's Open Skies agreements - but the government isn't having any of their arguments.

There's no gentle way to say this: the Big Three U.S. airlines' arguments against Open Skies don't add up - and without a real case to present, they won't see any meaningful action.

American, Delta and United Airlines, along with coalition allies, have poured resources into a repetitive, stalled and very expensive-looking PR campaign, pleading with government officials to roll back our country's Open Skies aviation agreements. They want the U.S. government to freeze and eliminate all new routes to the U.S. operated by Gulf carriers Emirates, Etihad and Qatar Airways, claiming that those airlines compete unfairly and that every new route threatens American jobs.

That could not be farther from the truth. Policymakers in both Congress and the executive branch have taken note, turning a deaf ear to their demands.

As they should. The Big Three's tendency to plead poverty in Washington but boast of record profits, wages and employment on Wall Street and in industry gatherings has not gone unnoticed (don't take our word for it - just listen to Airlines for America President and CEO Nick Calio's remarks at the group's Commercial Aviation Industry Summit earlier this week). The Big Three are doing very well - well enough to pour a significant amount of money into promoting shaky arguments.

On the Big Three's claim that the Gulf carriers violate Open Skies as it is written, and therefore compete unfairly: pot, meet kettle. Around 60 percent of the international airlines in the Big Three's global alliances have some form of government ownership - and the Big Three themselves have received financial assistance and bankruptcy protection from our own government. Government ownership and assistance aren't even factored into U.S. Open Skies agreements because, as the Big Three well know, airlines from almost every country (including our own) would risk disqualification.

Secondly, on that "unfair competition" point: the Big Three and the Gulf carriers only compete directly on...two routes. You heard that right: millions of jobs and billions in spending created by the Gulf carriers and other airlines would be sacrificed over two routes.

Furthermore, data has proven time and time again that Open Skies agreements, and the new flights and passengers they bring in, are actually incredibly beneficial for American workers and American communities. Last year, the Gulf carriers alone brought over 1.7 million additional visitors to the U.S. who, spent nearly $7.8 billion on their trips, supporting 114,000 American jobs. That's just from three airlines, and it's all because of our Open Skies agreements . Moreover, these flights to the U.S. are actually good for the Big Three's bottom line, since 30 percent of Gulf carrier passengers transfer to domestic flights once they arrive here.

That doesn't even include the millions of other American jobs in the cargo, airline, and aviation manufacturing industries bolstered by increased international travel (which is, after all, America's largest service export, fueling an $87 billion trade surplus).

If the Big Three's demands were to be entertained, and Open Skies agreements with Qatar and the UAE were to be altered, that would pave the way for damage to our Open Skies agreements with other countries - and American workers and flyers would be the first to feel those effects. Open Skies agreements, and the healthy competition they engender, save travelers $4 billion in fares every year. The recent nonstop flights to previously underserved U.S. cities announced by low-cost carriers Norwegian Air, Icelandair and WOW Air didn't come out of nowhere - they are made possible by Open Skies agreements with the European Union. Fewer flights, and fewer flight choices, mean fewer travelers. Fewer travelers mean fewer aviation, manufacturing, and other travel-related jobs. It makes one wonder: do the Big Three really have the best interests of American flyers and workers in mind?

Those paying attention in Washington may have noticed that the Trump administration, whose stated goal is to protect and add American jobs, has met with the Big Three multiple times, but thankfully not done anything to re-open, alter, or otherwise tamper with Open Skies. Many Beltway insiders have observed that at this point, the Big Three's faction within the White House appears to be shrinking, and that their cause is essentially on life support. Politically, this issue appears to be a rare unifier - leaders on both sides of the aisle seem content to let the Big Three shout into the proverbial void.

Their Open Skies case may be falling apart, but not all is lost for the Big Three. Rather than pouring millions of dollars into ad campaigns, lobbying, and meetings with skeptical officials, they could do what they should have done all along: file a claim against the Gulf carriers with the Department of Transportation, as outlined in the International Air Transportation Fair Competitive Practices Act (IATFCPA). Of course, that's too easy - an expensive, protracted lobbying blitz is much more appealing when the case has no legs. However, if the Big Three truly believe that the Gulf Carriers have violated Open Skies, we would encourage them to take this route. It would be much simpler (and cheaper).


Copyright 2017 U.S. Travel Association. All rights reserved. From http://www.ustravel.org.
By Jonathan Grella, Executive Vice President of Public Affairs, U.S. Travel Association.
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