Just about everyone in the United States has come out in favor of increasing the amount of overseas air traffic coming into the country. That is, everyone except the Big 3 airlines and their workers’ labor unions. But, the complaint of unfair competition should be falling on deaf ears. The US Big 3 airlines have passenger service to the Middle East and now are trying to eliminate the threat of airlines that were more forward looking.
When I say everyone is in favor of more international traffic, I mean travel agents, other airlines like JetBlue, Alaska, Hawaiian; cargo carriers like FedEx; airports; local tourism officials; US Travel Association; and consumer groups. Why this battle between the US Big Three and the Middle Eastern airlines — Emirates, Qatar, and Etihad — has gone so long is a mystery to me.
Arguments focus on claims that these Middle Eastern airlines are being “unfairly” subsidized. Those arguments are pure horse hockey. They do not stand up to scrutiny and they can be countered by a litany of subsidies that the US airlines enjoy.
Proof is contained in what was once a secret report that the airlines brought to the US President’s offices. The report was eventually made public.
One of the report’s biggest claims was that the Middle Eastern airports were being built with local money and that the airlines were not paying their fair share to support their operations. Of course, any US airline that wanted to make use of the airports at Doha or Dubai can, at the same prices as those paid by the local airlines. That’s not a subsidy.
Another big brouhaha has been over the fact that the world’s economy is only growing at a three percent rate. Since the Middle Eastern airlines are growing at a faster rate, around 8 percent, that was prima facia evidence that they were being subsidized. A quick look at the facts erases that argument.
Yes, the world economy is only growing at a less-than-three-percent rate, but the economies of southern Asia and southern Africa are growing at closer to a 10 percent rate. The chart below shows that growth. And, in every country there are no US airlines operating.
Basically, the Big 3 airlines have been asleep at the international marketing switch. Rather than looking at developing these markets, they have been focused on squeezing more and more money from the domestic market. Now that they are facing severe competition, they have gone to the US government and cried, “unfair competition.”
In reality, the fact that the markets in the southern hemisphere across the Pacific and Atlantic are growing at such a clip means that there is room for more competition in that region. But, the big American international airlines are not answering the bell. They really don’t want competition.
In their eyes, any competition is unfair. America’s airlines hate any semblance of a free market in many areas of the aviation marketplace.
The big airlines have worked to eliminate the ability for the American consumers to comparison shop by refusing to release the full cost of travel, including ancillary fees, to travel agents who make price comparisons available for the public. Delta, in particular is withholding airfares from metasearch engines like Hipmunk.com and Skyscanner.com to thwart comparison shopping. Basically, airlines are doing everything they can to make the life of price-conscious consumers more and more difficult.
The big airlines have worked hard in the bureaucracy in Washington to stop the development of more low-cost transatlantic service with Norwegian International Airlines. Their work now has the Department of Transportation working against Open Skies treaties that have been in place for decades. The results: American consumers have no low-cost choices of travel across the Atlantic that has a significant network of airline traffic through Europe.
And now, with their push against the Gulf carriers, US airlines are doing everything they can to stop expansion of airlines serving the fastest growing areas of the world, all because they don’t want to deal with robust competition.
I am not certain when this issue will be wrapped up, but we can be certain that, in the long run, competition will win out over protectionism. That is the American way, in spite of protestations by our oligopolistic international airline industry.
Photo: Wikimedia Commons
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
