Attempts to Block U.S. Entry by ME Carriers Creates "Toxic Negotiating Environment”

As the U.S. State Department this week announced it is still reviewing U.S. airlines' allegations over what they claim are subsidies being provided to three Gulf carriers and petitioned Washington to roll back its "open skies" agreements with the UAE and Qatar. An industry body has warned that the "toxic negotiating environment created by Delta Air Lines, American Airlines and United Airlines (US3)" in their "subsidies" war on Emirates, Etihad Airways and Qatar Airways (ME3), is undermining negotiations on an "open skies" deal between China and the U.S.

Zhihang Chi, Air China’s VP & General Manager for North America
Zhihang Chi, Air China’s VP & General Manager for North America

Kevin Mitchell, the founder of OpenSkies.travel, an organisation which aims to maintain "open skies" agreements in accordance with the intent of the signatories to such accords, this week cited a report in Airways News, which quoted Dr. Zhihang Chi, Air China’s VP & General Manager for North America as saying that "the current US3 vs. ME3 fight may be contributing to a political climate which makes expansion of international markets hard for U.S. politicians to support, a policy which will continue to stunt growth should it hold.” Dr Chi was speaking at the recent International Aviation Forecast Summit in Las Vegas.
Mitchell pointed out that since the US3 have secured antitrust immunity for their global alliances and dominate internal U.S. aviation following domestic consolidation, they have been aggressively attacking new entry and expanded service by foreign carrier competitors.

Norwegian became the first victim
"Airlines and aviation authorities worldwide are paying close attention to what the Administration will decide and are increasingly apprehensive," said Mitchell. "If, for example, the Administration were to cave in to the US3’s demands, many of these international participants would seek their own protectionist advantages by undoing Open Skies agreements with the U.S. and other countries."
He pointed out that the first battle was to block Norwegian Air International’s (NAI) application to serve the U.S. - now stalled for 19 months - with relentless political pressure, followed by an all-out assault on any new service by the three Middle East carriers.
"One hopes,” stated Mitchell, "that the Obama Administration sees the US3 strategy for what it is: A gambit to restrict international marketplace competition through government-imposed commercial protectionism. The US3 are pursuing a self-serving bid to limit consumer choice and stifle passenger-friendly innovation."
According to Mitchell, the Obama Administration should reject the protectionist demands of the US3 and grant, at long last, a foreign air carrier permit to Norwegian Air. Doing so would lift the current uncertainty, reassert American leadership in international aviation, and assure U.S. consumers, the cargo industry and other airline and travel industry participants that the U.S. will not put the profits of the US3 ahead of the common good.

Dubai accused of state funding carrier EK massively
Joining the battle of the US3 against Norwegian and the ME3 last week, was Rob Britton, adjunct professor at the McDonough School of Business at Georgetown University, who in an article for the Huffington Post, headlined "Why Emirates is not a real airline," accused the Government of Dubai of offering "wheelbarrows of cash to prop up its airline" and "employ gimmicky accounting tricks in an attempt to hide this massive government funding.”
In his rambling contribution to the "toxic negotiating environment,” Mr Britton concluded that the ME3 "are not bound by the commercial realities that drive rigor and discipline at investor-owned carriers" and that "U.S. airlines cannot - and should not have to - compete with airlines with short paths to enormous government treasuries."

Nol van Fenema

Write a comment

Comments: 1
  • #1

    Kmonteath (Wednesday, 23 September 2015 13:29)


    It's a simple calculation without the need to use EXCEL. What are the Airlines in the world that are government RUN! and also have the country Slogan Name that rune this Airline Business! many, many many to speak of. Period.
    If there is open competition and one very simple strategy "survival of the best" like in any service business; I think the Big 3, or the BIG 10 around the world need to jump into the frying pan and FACE the heat!
    It's a service oriented marketing plan and strategy ! The better ones survive! Lets not kid ourselves this is the TRUTH.