American, Delta ,and United had a press conference on Thursday that made public the argument they’ve been making against Emirates,Qatar and Etihad . They stated those airlines are violating the fair-play terms of their nation’s” Open Skies” agreements with the US. by receiving massive government subsidies. Among the US carriers arguments were that Qatar paid below market- fees for their government built airport and with Emirates they stated that the government covered losses from a bad bet on fuel hedging. They also said Emirates banned labor unions.
Read More:
http://bizbeatblog.dallasnews….if-not-checked.html/
Read the report the US airlines put out:
There is nothing about the airline industry that is a “free market”. No industry as heavily regulated or subsidized as it is can be. I am not saying that these regulations should not exist, but we can’t impose them and then pretend the market is “free”. It is not.
What I see is a struggle for greater financial support from taxpayers or punishing competition with one-sided taxes and fines. That is not a free market in my view.
thank you for the info.
It’s interesting following the arguments, most of which, on both sides, approach playground squabble level. U.S. airlines complain about the non-union status of Emirates, a status they have in the past aspired to. They complain about government funding of new airports in the Gulf, yet demand it here. Etc. Please don’t make it a fight over principles. ..it is all about commercial advantage, and only proves that those who worship the market when it lowers labor costs don’t believe in it when someone else profits.
I did think the Economist Business Traveler Blog ,Gulliver ,did a good job describing the situation and brought up the point that press coverage might be affected because of Gulf carriers generosity to the media.
Read more from the Gulliver:
http://www.economist.com/blogs…rline-subsidies-gulf
Agree with Paul. They’re like big kids squabbling. I don’t see the argument really being about markets, but rather who can get the most financial perks (or protection) from their governments.
Equally compelling arguments must be made that
a) Without the support of their governments, the Gulf carriers would have had no way to enter the market.
b) All of the existing major carriers entered the market via subsidy or government ownership (KLM, British Air, Alitalia, Air France and all the rest). They now wish to impose restrictions on later entrants enjoying conditions that were considered the norm in their own childhood.
c) Similar arguments apply to the U.S. carriers; a strategic decision after World War I to create a national network of aviation led not only to government (at all levels) constructing airports and in some cases paying airlines to serve them, but also to a system of subsidy through air mail contracts and payment for military readiness that has never ended.
While it is true that the interests of particular governments and nations are affected and feeling wounded (witness Berlusconi’s desperate attempts to keep Alitalia afloat, even refusing a friendly merger with AirFrance/KLM) the whole thing is still nothing more than a larger version of the commercial wars that led to the consolidation of U.S. airlines.
Sorry, but “fair” has never played a role in business competition. Sometimes the tigers have had to be leashed to keep from having no survivor, or one larger than the trainer…but that’s about as far as it goes. Or should, according to those who believe that the “free market” will always come to the right solution. Just because some of the players are sovereigns and others are corporations…not a difference.
I hope I didn’t leave the impression I believe there’s a free market. I believe that’s the slogan of those who wish to be relieved of regulation, taxation, etc. The slogan does not apply when they want the other guy taxed or regulated.
I read the report and if the US airlines facts are correct, the subsidies would put them at a disadvantage. Where I think the US Airlines argument really falls short is their objections to Norwegian Air.
Both sides are going to be on a PR blitz this month and Fairskies.org has already released a radio spot, and in their news section,have an article asking if Sir Tim Clarke of Emirates is going to resign.
http://www.prweb.com/releases/…e2/prweb12553581.htm
http://fairskies.org/2015/03/n…-resigning-tomorrow/