Air Execs Call Out the U.A.E. and Qatar
by Daniel McCarthy /Pic: Execs from the Big 3 sit with ASTA's Zane Kerby during the ASTA Global Convention in D.C.
The Big Three airlines showed up at ASTA for the first time in 20 years earlier this month, with a dual purpose. While trying to renew friendships with the travel agency community at home, they also took the opportunity to fire some salvoes at their competitors from abroad.
If Gulf carriers won’t play by the rules of Open Skies, the U.S. government should freeze routes to the U.A.E. and Qatar, a panel of executives from American, Delta, and United Airlines said.
The question—debated for months now—is whether the Gulf States are paying subsidies to their airlines and, if so, whether those subsidies violate the Open Skies agreement.
“All we’ve asked is for the government to poll UAE and Qatar and talk about this issue…From there we’ll see how it turns out,” said Dave Hilfman, United Airlines senior vice president of worldwide sales. “It is a complex issue but it’s also pretty straightforward once you look at the facts.”
A little history
The U.S. began to pursue Open Skies agreements with countries around the world in 1979 and, by 1982, had signed 23 smaller nations to agreements that guaranteed commercial air transport security among the countries.
The agreements were designed to eliminate government interference in commercial airline routes, capacity, and pricing, according to the Department of State, enabling airlines to cross land borders and territorial waters without prior consent from the individual nations over which they fly. Today, the United States has agreements with more than 100 countries and more than 70% of international flights from the U.S. fly to countries under Open Skies.
Earlier this year, several major U.S. airlines petitioned the government to freeze Open Skies over the alleged subsidies by the governments of the U.A.E. and Qatar. In response, Qatar Airways alleged that the Big Three really were upset about losing market share.
“We are concerned to see the Big Three seek to change the rules of the game as soon as they see U.S. consumers respond well to the services offered by a competitor,” said Qatar Airways CEO Akbar Al Baker, at the time.
For United, the issue boils down to the U.A.E. and Qatar considering it their duty to help their national carriers thrive. According to Hilfman, the countries have given their airlines more than $42 billion in subsidies.
“We have seen where the government has provided them significant, unfair advantages and all we’re asking for is a level playing field,” he said, “I think we’ve made enormous progress, we have enormous respect for airlines around the world. However our issue is that we want to compete fairly.”
Delta, the airline that started the Open Skies protest, had the same issue—competition is fine, but only on an even playing field.
American, meanwhile, just joined the S&P 500 in March, and is finally on track to make a profit, said vice president of global sales Derek DeCross. It’s ready for fair competition from other airlines—but not from the governments behind them.
“You can’t compete with countries, you compete versus other companies,” he said. “And that is all we are asking for.”