I’ve been blogging about our world over the past two years and have been impressed as I travel around the US and in my own community served by John Wayne Airport. A lot has changed! I have encountered more travelers, more visitors from overseas and noticed that more people are traveling for leisure than solely on business as was the case in the past. Clearly, this is a sign that our economy is back.
The data bear me out. Airlines report record passenger traffic and profits. A record 74 million foreign visitors entered the US last year, bringing with them a record spend of $181 billion. Travel generates $2.1 trillion annually for the US economy and supports one out of every nine US jobs.
With this good news and an expansion of our global out-reach as a country, why are our airlines leading a highly-publicized charge against Open Skies?
That’s the unavoidable conclusion most would reach from the big airlines’ recent attacks—accompanied by an expensive Washington lobbying campaign—against a policy known as Open Skies. Open Skies agreements are essentially free trade for air travel, prohibiting countries from regulating routes and capacity among each other’s carriers. Such agreements have been in place for more than three decades—with the full and active support of US airlines—and the US now has 114 of these agreements in force with countries in every corner of the globe.
There is no argument that US consumers have benefitted enormously from the expanded options for international travel that have been facilitated by Open Skies—or that the US economy and job creation owe huge thanks to the numbers of visitors Open Skies agreements have brought to our shores.
But now the Big Three US airlines want our government to break some of those agreements in order to keep certain carriers from expanding in US markets. The CEOs of Delta, United and American outlined their position in a letter recently to the Obama Administration, after implying as much in their months-long campaign to get the government to “revisit” some agreements.
The agreements the Big Three want revisited are those with Qatar and the United Arab Emirates—collectively home to Etihad Airways, Emirates Airlines and Qatar Airways. Ostensibly, the US airlines’ complaint is rooted in $42 billion in subsidies they allege the three Gulf carriers have received from their governments that the Big Three contend violates our Open Skies agreements with those countries.
A closer look at their contentions reveals that our Open Skies agreements with the Gulf countries do not define what a “subsidy” is. So even if what the Big Three are alleging is correct, whether it constitutes a violation is yet to be determined. And even if the three Gulf carriers are being subsidized, all three of our major airlines received subsidies in their fledging years almost 100 years ago, most of which were in the form of US mail contracts. Later on, these same US carriers received major support in the wake of 9/11 and when economic times were tough for them, they received advantages in the form of lenient bankruptcy laws.
At the same time, it is puzzling why our Big Three would play the subsidy card against the Gulf carriers in particular when dozens of other airlines are vulnerable to the same argument. Why focus solely on the three major carriers from the Arabian Gulf region, for example, and not also on Europe’s flag carriers, many of which are tied into attractive consumer marketing programs with our Big Three airlines.
Look, we all want the US carriers to succeed financially. Air travel is far too integral a part of our economy to think about the alternative. And healthy businesses tend to have happy customers.
Open Skies agreements have benefitted our industry and consumers as well as communities around the world for more than 30 years now. Let’s work together to make these agreements even more viable. I’ve found that anything we can do to cut red tape, ease the visa process, make travel more economical or make it more comfortable for travelers to move around the world is a good thing. It’s a win-win all around.
Originally posted in Forbes