Poor judgement, arrogance, hypocrisy, out of touch with reality, and an alarming lack of understanding of how the global airline industry has evolved in the past 30 years.
That adequately sums up the recent, so far unsuccessful, attempts by three U.S. legacy carriers, Delta, American and United, to try and force a review of the more than 100 Open Skies agreements which the U.S. has signed since 1992 when it inked its first pact with the Netherlands.
The three U.S. carriers claim that their Gulf competitors - Emirates, Etihad and Qatar - have disproportionately profited from the Open Skies pacts and are unfairly receiving government subsidies amounting to an estimated U.S.$40 billion since 2004.
In fact, the big three are asking for the Obama administration to grant protections to the airlines in select markets, arguing that direct international flights operated by Gulf carriers undermine competition.
The executives also claim that the Gulf operators have more to gain from the agreements, considering that the American marketplace is much larger compared to domestic opportunities in the Middle East.
In an interview with CNN, Delta Air Lines CEO Richard Anderson last week added his peculiar view to the "War on Open Skies" debate. In response to a claim by Gulf carriers that: "the U.S. carriers benefitted from U.S. government aid and Chapter 11 bankruptcy protection over the last decade," Anderson blatantly stated that it was "a great irony to have the UAE from the Arabian Peninsula talk about that, given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula.”
A "breathtaking" error
Anderson's absurd accusation was met with disbelief by several executives from the airline industry, including the Business Travel Coalition (BTC), whose chairman Kevin Mitchell said that Anderson's attempt to draw a causal link between the terror attacks of 9/11, and later US airlines’ bankruptcy proceedings, and the Gulf carriers, was a "breathtaking" error.
“Implying that the Gulf carriers were somehow responsible for the acts of 9/11 is as absurd as saying the U.S. carriers are to blame for allowing their planes to be used on 9/11 as weapons of mass destruction,” Mitchell was quoted as saying. He added that it showed "how desperate some U.S. airlines are to get a leg up on successful competitors and stifle consumer choice."
"Moreover, it’s just wrong to bring up terrible memories for those families that lost loved ones for the self-serving purpose of changing public policy to your commercial advantage,” Mitchell claimed.
"The overall impression from watching the U.S. airline CEOs is that the big network airlines want to lock out independent airlines that offer lower fares, newer airplanes, faster connections, more destinations and better service. U.S. airlines appear to have lost touch with their customers and if they do not step up their game they will continue to lose international market share in a long but slow grind," he concluded.
FedEx concerned about the "dark clouds"
The BTC is leading a group of lobbyists, which includes FedEx Express, whose mandate it is to counter the attempts by the three carriers to roll back the Open Skies policy and keep out competition. In a reaction, FedEx Express managing director, regulatory affairs, Nancy Sparks said that in FedEx’s view, “Open Skies is the corollary of aviation” and the company was “very concerned about the dark clouds and where they are coming from.”
She added, “What we would like to see if for Open Skies agreements to continue unabated and our view on competition is ‘bring it on.’ Protectionism harms the consumer and in the long term the provider is also harmed.”
BTC's Mitchell stated that: "The three major U.S. airlines have “worked overtime” to communicate that they feel threatened by foreign carrier new entrants and disadvantaged by new
customer-service oriented business models and airlines in which governments hold equity stakes.
Reconsider antitrust immunity for U.S. airlines
Mitchell hinted that if those benefits are threatened, the antitrust immunity granted to U.S. airlines should be reconsidered. “The antidote to normally anti-consumer agreement among competitors is new entry. Antitrust immunity is serious business; airlines should not take it for granted. We do not need to return to the ‘Fortress America’ mindset of the 1990s,” he said.
Meanwhile, Qatar Airways' outspoken CEO, Akbar Al Baker responded to Anderson’s contentious statement that: “He (Anderson) should be ashamed to bring up the issue of terrorism in order to hide his inefficiency in running an airline. He should compete with us instead of cry wolf for his shortcomings.”
Delta's CEO Anderson has meanwhile publicly apologized for his 9/11 comments. However, this has publicly been rebuffed by Emirates, the largest of the three leading Gulf carriers. As reaction to Anderson’s apology the airline commented: "We believe that the statements made by Mr. Anderson were deliberately crafted and delivered for specific effect."
ALPA union supports Open Skies review
In a related development, the U.S.-based Air Line Pilots Association International (ALPA) issued a statement on the subject of Open Skies saying, “ALPA maintains that several Open Skies partner nations equip their airlines to do business globally through state policy and significant direct economic underwriting that undermines fair competition. Our union urges the U.S. government to review existing Open Skies agreements to ensure that state support cannot distort a fair international marketplace to the detriment of U.S. airlines and their workers.”
However, Airports Council International - North America, has expressed strong support of existing Open Skies policy and urged the U.S. government to stand behind the 114 established Open Skies agreements signed over more than 20 years which, according to ACI, have brought “billions of dollars in economic activity to communities throughout the U.S.”
According to Kevin M. Burke, President and CEO of Airports Council International -North America: “International air service provides U.S. airports and their communities with access to the global economy, which translates into economic development and employment from business and tourism travel, trade, and investment. Exports and imports generate jobs at U.S. airports and the broader economy.”
Separately, Emirates Airlines last week entered the top 200 of the world’s biggest brands for the first time, according to the 2015 Brand Finance Global 500 report released this week. Emirates’ estimated brand value has grown more than 21% from U.S. $5.48 billion to U.S. $6.6 billion. The airline also retains its long standing position as the most valuable airline brand.
Nol van Fenema