Maybe Delta Will Shut Up About Middle East Subsidies Now That They Own a Stake in the Most Subsidized Chinese Airline

I’ve made the point many times in the past that despite protests about subsidies received by the Middle East airlines Etihad, Emirates, and Qatar, that Delta doesn’t actually care about subsidies. They care about scoring political points as leverage to use the power of government to shut down competition.

What Delta wants is to make more competition against them and lower prices illegal.

They’re absolute hypocrites because Delta gets big fuel tax subsidies from the state of Georgia, for instance — Pennsylvania also subsidized Delta’s purchase of an oil refinery in 2012.

They’re hypocrites because Delta’s CEO raised the specter of 9/11 to score points against the big Middle East airlines when Delta’s partner Saudia is actually subsidized by a government that a redacted portion of the 9-11 Commission’s report suggested was complicit in the attacks.


    Sign Promoting a “9/11 Truth” Event Outside the National Mosque in Kuala Lumpur

I’ve written in the past about Delta’s silence on their subsidized Chinese partners.

Delta is considering a hub operation in Shanghai the same way they operate at significant levels in Amsterdam. They have friendly relationships with Skyteam partners China Southern and Shanghai-based China Eastern. Both of these airlines were formed by the Chinese government, using government funds to acquire aircraft and develop operations. And they remain heavily promoted by and beholden to the state which continues to be a major investor.

Now Delta is buying a $450 million stake in China Eastern — which is the most state-subsidized Chinese airline. So Delta will benefit from a chunk of those subsidies.

A Centre for Aviation report in May looked up subsidies received by large Chinese airlines in their annual reports (they don’t hide it) and subsidies received by China Eastern in 2014 were far more than those received by other airlines.

(HT: @Winglets747 via Delta Points)

The piece makes the point as well that United has not publicly disclosed the subsidies it receives for San Francisco-Chengdu service from Chengdu’s subsidies program, and that Delta joint venture partner Air France has stopped disclosing the subsidies it receives for Paris-Wuhan flying.

But now that Delta will be a beneficiary of Chinese state subsidies directly, not merely through partnerships, perhaps they will shut up about how unfair it is for other airlines to receive subsidies too?

Although in fact I don’t mind if they keep criticizing subsidies, though I’d rather they stop taking their own as well. I just think they ought to stop acting shocked by them, and trying to use the fact of subsidies as political cover for even greater government action for Delta’s advantage, to limit flights and raise prices at the expense of consumers.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Pingbacks

Comments

  1. I don’t expect Delta to shut up. But I’m very glad that you’re not, Gary. Keep banging this drum.

  2. The fuel subsidies supposedly ended on July 1, 2015 as a result of this legislation, Gary:

    http://thegate.boardingarea.com/new-tax-five-dollars-per-night-for-hotel-stays-in-the-state-of-georgia/

    “The law also eliminated a tax break on the purchase of jet fuel at the international airport in Atlanta, which had benefited Delta Air Lines — one of the largest companies in the state of Georgia — as well as other airlines, according to Section 5-3 starting on page 9 of this document.”

    Here is the document:

    http://www.legis.ga.gov/Legislation/20152016/153458.pdf

    Note that this comment is not intended to defend Delta Air Lines or disagree with the context of your article, Gary — I am merely pointing out an update pertaining to legislation which occurred since you wrote the article back in February about the fuel tax subsidies.

  3. Gary, please keep exposing the dark sides of DL. I’m loving it!
    p.s. didn’t know Hainan was AA partner. But cannot use AA miles on Hainan metal, right?

  4. As you probably know but refuse to acknowledge, the subsidies received by the Chinese airlines are miniscule compared to the subsidies received by the Middle East airlines. This order of magnitude is what makes the Middle East subsidies outrageous and in need of government intervention. If the Emirates and Qatar were giving a billion a year to their aviation industry — pennies on the dollar compared to what the Chinese are contributing when you consider market size — nobody would care. And the reason nobody would care is that they wouldn’t have the market distorting impact that billions in annual subsidies creates. This is obvious to anyone who has flown a Chinese airline and compared it to the experience of flying a Middle East airline. Your failure to acknowledge this reality is what makes your subsidy comments so remarkably misguided.

Leave a Reply

Your email address will not be published. Required fields are marked *