U.S. Cargo Operators Urge Washington to Reject Return to Government Protection

The Washington-based Cargo Airline Association, whose members include direct cargo airlines ABX Air, Atlas Air, FedEx Express, Kalitta Air and UPS, has called on the U.S. government to maintain its policy of promoting competition by continuing to negotiate and abide by Open Skies agreements and reject attempts to turn back the clock to a bygone era of government protectionism.

CAA president Stephen Alterman
CAA president Stephen Alterman

In a statement, the CAA said that its members represent the U.S. all-cargo industry, which relies on the 155 U.S. negotiated Open Skies agreements to provide time-definite delivery of high-value goods to customers around the globe.
The statement added that CAA members employ over 760,000 individuals and these jobs will be in jeopardy if any action is taken to limit competitive opportunities and restrict the ability of carriers to operate - not only between countries that are parties to the Open Skies agreements, but also beyond those countries to other areas around the globe.
The CAA noted that although the current debate between three U.S. carriers, American, Delta and United, and the three Gulf airlines, Emirates, Etihad and Qatar, is about subsidies, the beyond rights in the Open Skies pacts are actually under attack.

US$71.5 billion paid to DL, UA, AA
CAA president, Stephen A. Alterman said, “It is not an overstatement that, absent Open Skies agreements, existing worldwide air cargo networks could not exist as we know them today. Unilaterally freezing foreign carrier services or otherwise acting at odds with Open Skies agreements would invite retaliatory measures and threaten U.S. commerce.”
This week's CAA statement coincided with the release of an Etihad Airways-commissioned report by the Risk Advisory Group, which concluded that the U.S. government had paid a total of US$71.5 billion in taxpayers' benefits to Delta, United and American.
The Group said that they were instructed by Etihad Airways to retain complete independence over the contents of our report” and rely upon primary source materials, such as governmental records, litigation filings, annual reports and governmental and regulatory reports.
The US$71.5 billion in benefits, including more than US$70 billion of which has been received since 2000, enabled the three U.S. carriers to transition from the verge of bankruptcy to today’s industry leaders, each achieving multi-billion dollar profits, the report said.
The Risk Advisory Group identified that the majority of benefits which accrued to Delta, United and American came from restructuring under Chapter 11 of the U.S. Federal Bankruptcy Code, yielding them at least US$35.46 billion, and additional pension fund bailouts totaling US$29.4 billion from the U.S. Government’s Pension Benefit Guaranty Corporation.

U.S. airlines receive privileged benefits, claims Etihad
Releasing the report this week, Etihad's general counsel and company secretary, Jim Callaghan, said “We do not question the legitimacy of benefits provided to U.S. carriers by the U.S. government and the bankruptcy courts.
“We simply wish to highlight the fact that US carriers have been benefitting and continue to benefit from a highly favourable legal regime, such as bankruptcy protection and pension guarantees, exemptions from certain taxes, and various other benefits. These benefits, which are generally only available to U.S. carriers, have created a highly distorted market in which carriers such as Etihad Airways have to compete.”

Arrogance-in-the-extreme
In a reaction to the Etihad report, OpenSkies.travel founder Kevin Mitchell said that the report confirms that the United States has found numerous ways to financially help its airline industry become established and profoundly advantage it in ways to enable the most powerful and profitable airlines in the world.”
“At a time when the Big 3’s profits are being driven to record highs by the benefits of antitrust immunized alliances, customer service cost cutting and avoidance of ticket taxes on billions of dollars of revenue from ancillary services, it represents arrogance-in-the-extreme to demand protection from competition. Freezing Gulf carrier access to U.S. markets would be the ‘Mother of all Subsidies’ and stick American consumers with vastly higher fares and much diminished travel options,” added Mitchell.

QR’s Chief Al Baker speaks of “baseless claims” lobbied by U.S. carriers
Adding his voice to the ongoing U.S. Open Skies debate, Qatar Airways CEO, Akbar Al Baker, who was also in Washington this week for meetings with government officials and a press briefing (see CargoForwarder Global’s 12th May Exclusive), refuted as baseless the claims of the U.S. carriers, calling them a transparent attempt to block new competition and limit consumer choice.
U.S. Open Skies agreements are about offering choice – the ability to fly with the airline you prefer, to regions which are under-served by U.S. carriers, said Al Baker. The Big Three want to restrict choice.
Al Baker noted that Open Skies Agreements go well beyond the interests of the Big Three. He cited numerous American companies and groups, which support Open Skies Agreements, including U.S. airports, travel, trade and cargo groups, consumer associations and other U.S. airlines, including the integrators.
Qatar Airways offers important services to the United States and many American interests recognise our value. We serve markets in the Gulf region and Indian subcontinent that U.S. carriers do not serve. The Big Three do not compete with us on a single nonstop route. The beneficial exchange of culture and commerce made possible by the US-Qatar Open Skies Agreement must not be blocked by the Big Three merely because we have chosen to serve markets that they have ignored, Al Baker concluded.

Nol van Fenema

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