After 3 years of intense lobbying to try to get the government to make it illegal for Emirates, Etihad and Qatar to lower airfares and to limit flights to the US by these three airlines — so consumers would have to pay more and have fewer choices — they lost.
The Obama Administration went through an extensive process — collecting public comment, examining US aviation treaties, engaging in diplomacy — and refused to take any action at all.
With Donald Trump elected as President Delta declared they would have another bite at the apple. They viewed nationalist rhetoric as aligned with their policy goals and Delta’s CEO declared himself encouraged by Donald Trump. (The US airline lobbyists also viewed ‘facts’ as ‘fake news’.)
Steve Bannon was an ally of the major US airlines, but he was pushed out. That left Peter Navarro (in the Bannon wing) fighting with Gary Cohn, head of the National Economic Council. Cohn was out (recall he objected to the President’s comments on Charlottesville before objecting to the President’s stances on trade) but he was replaced by free trader Larry Kudlow.
At the end of the day the Big 3 airlines got nothing of substance.
- The Gulf carriers will publish audited financials conforming to international accounting standards. Emirates already does this. Etihad will have cleaned up its balance sheet by the time they do this. Qatar will keep getting subsidies and use the UAE/Saudi blockade as justification.
- The Gulf carriers say they aren’t currently planning to add more flights between the US and Europe. Etihad isn’t adding more flights between anywhere and anywhere these days. Qatar only flew Europe-US back when they didn’t have the aircraft to fly from Doha non-stop, and can offer all the Europe-US flights they want and just call it “Air Italy” (or British Airways for that matter, they’re the largest owner of BA, Aer Lingus and Iberia parent IAG).
- The agreement specifically says that subsidies aren’t illegal or improper. Which is good for Delta, American and United, because the US airlines are subsidized as well.
The big airlines lost but they want to do two things: save face and position themselves for future wins. They know this is an iterative game. They want government favors and subsidies. And they’re losing their wholly-owned member of Congress to retirement.
So they took out a full page ad in the New York Times and also in the New York Post to flatter the President. (HT: One Mile at a Time)
Thank You President Trump For Standing Up For American Jobs
President Donald J. Trump
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear President Trump,
With your new agreement to stop trade violations by the United Arab Emirates, you have shown the world that your administration will not stand for unfair trade deals that hurt American jobs and businesses. On behalf of the men and women of the U.S. airline industry, thank you for taking decisive action.
For over a decade, the UAE and Qatar have provided billions of dollars in subsidies to their government-owned airlines (Emirates, Etihad Airways and Qatar Airways), violating Open Skies trade agreements with the United States, and blocking fair competition with American businesses. By acting to enforce our agreements and restore a level playing field, your administration has again shown that you stand with American workers and will fight for our jobs and economy.
As with your successful agreement with Qatar earlier this year, this new agreement with the UAE will save American jobs. More than 310 members of Congress, more than a dozen governors, and hundreds of local elected officials and business leaders from both parties agree with you that the U.S. must enforce its Open Skies trade deals. Now we look forward to working with you to hold the UAE and Qatar to their word.
Thank you for your leadership and your commitment to the American people.
The Partnership for Open & Fair Skies
Delta — which buys Airbus planes and not Boeing’s jets — isn’t ‘concerned about American jobs’. As if to underscore that point, as Lucky points out, the ad uses a foreign airline’s Airbus A330 for a graphic.
US jobs in aviation are at a peak. Fedex benefits from Open Skies, operating a cargo hub in Dubai. Alaska Airlines and JetBlue benefit from all of the passengers from the Mideast, India and Pakistan that Emirates brings. Delta makes whatever argument benefits Delta.
And while it’s true that Delta didn’t get what it said it wanted — restrictions on flights to the US for Emirates, Etihad and Qatar and restrictions on their pricing — Delta actually did win because of this campaign.
United couldn’t support the campaign too publicly. Criticizing airline entanglement with government is tough for an airline which lost its last CEO to a political corruption investigation. United CEO Jeff Smisek had to step down after approving a payoff to the Chairman of the Port Authority of New York New Jersey (“the Chairman’s flight“).
But they managed to snooker American into going all-in on this effort.
- American severed codesharing relationships with Etihad and Qatar. That cost them feed from India and Pakistan.
- Delta outmaneuvered them taking on Jet Airways as a close partner and cutting off American’s relationship with Jet. Now Delta can build on their feed from India.
American Airlines is the largest airline in the world but with little presence in a major region of the world. It lacks meaningful reach into India because London Heathrow connections on British Airways are so limited. BA doesn’t fly to Pakistan. They don’t fly to Bangladesh.
So Delta improved its competitive position in the United States. And they should be thanking the President I suppose for going along with the charade I suppose.