February 26, 2015

Major players once more take opposing sides on US Open Skies agreement with Gulf carriers

It seems claims that Gulf carriers received government aid in excess of US$40bn to operate competitively will not go away. For Delta, United and American Airlines, the Open Skies Agreement, which was signed between the UAE, Qatar and the US nearly 20 years ago, is seen as an uneven playing field where government aid enabled these new airlines to grow rapidly, enter sectors of the market they would not have ordinarily been financially capable of, and begin to dominate long-established US airline routes. Basically the three major airlines remain opposed to the Open Skies agreement with the Gulf States, though perhaps it is their desire for further investigation into the supposed subsidies that is top of their agenda and not the agreement itself. To date 114 open skies agreements have been signed between the US and other foreign governments. This would appear to be the only one currently attracting attention.
However Delta, United and American Airlines aren’t having it all their own way stateside. Other sectors connected with the aviation industry are keen to see the Open Skies agreement continued. For one, Boeing have seen their order books bulge with orders from the expanding Gulf Carriers, so guaranteeing many thousands of jobs. “Boeing supports a commercial-aviation industry based on open and fair competition, and Open Skies has long been a key factor in this, benefiting both US and international airlines,” a Boeing spokesman said.
FedEx were more blunt and in a quote from a letter sent by David Bronczeck, Chief Executive of FedEx’s Express air cargo unit to the heads of the US Departments of State, Transportation and Commerce on the 18th February, “The US should not capitulate to the interests of a few carriers who stand ready to put their narrow, protectionist interests ahead of the economic benefits that Open Skies provides.” Additionally, JetBlue Airways, who has a codeshare agreement with Emirates, has also openly indicated it wishes to see no change to the Open Skies agreement.
The three major airlines’ complaints could potentially put Barack Obama in an awkward position prior to a forthcoming election, but the balancing effect of Boeing and FedEx’s input could prove a saving grace and provide sufficient reason not to tamper with the current agreement. New York University law professor, Michael Levine, made it clear in a statement that “I think the entry into the fray of Boeing and the others as countervailing pressures to the airlines will make it easier politically for the administration to do what I believe the Department of Transportation wants to do, namely, to continue to pursue its successful Open Skies strategy.”



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