Another round in the unending boxing match between the \nthree biggest US carriers and the three biggest Middle East carriers \nabout alleged subsidies and unfair competition played out on Thursday \nJuly 18. In the ring were the self-styled Partnership for Open & \nFair Skies, represented by American Airlines CEO Doug Parker and United \nAirlines CEO Oscar Munoz, working as a tag-team, against Qatar Airways \nGroup CEO Akbar Al Baker. The match was refereed by both President \nDonald Trump and vice-president Pence. Bystanders on the airline side \nwere JetBlue Airways CEO Robin Hayes, FedEx CEO and chairman Fred Smith,\n and Atlas Air CEO Bill Flynn; and White House Chief of Staff Mick \nMulvaney, National Security Advisor John Bolton, Director of the \nNational Economic Council Larry Kudlow, and Peter Navarro, Director of \nthe Office of Trade and Manufacturing Policy on the US government side. \n Each were allowed to throw an occasional punch, with or without gloves.<\/p>\n\n\n\n
The ring was set up in the White House\u2019s Oval Office. <\/p>\n\n\n\n\n\n\n\n
Who chose the exclusive location remains the matter of rumour, claim \nand counter-claim. The Big US 3 and their Open & Fair Skies \ncoalition claim POTUS acted on their call for a private meeting, while \nothers assert the session arose from Trump\u2019s meeting with the Emir of \nQatar on July 9. At that meeting\u2014at the White House\u2014Qatar Airways \nfinalised an order for five Boeing 777 freighters and Qatar Executive \nsigned a deal for 14 Gulfstream G650ERs and four G500s; Sheikh Tamim Bin\n Hamad Al-Thani announced an additional defence investment with Raytheon\n and a joint venture of Qatar Petroleum with Chevron Phillips Chemical \nto develop an $8 billion petrochemicals complex in Qatar.<\/p>\n\n\n\n
After all this investment and loyalty to the US economy and jobs\u2014Trump himself acknowledged that much<\/a>\n \u2013 why are we being accused of unfair market behaviour, Al Baker and the\n Emir must have pondered. In keeping with the President\u2019s approach to \nsuch matters, he called the meeting to \u2018sort the issue out himself\u2019.<\/p>\n\n\n\n Box on.<\/p>\n\n\n\n Not that Trump was insensitive to the Big US 3\u2019s concerns. Open &\n Fair Skies had used the president\u2019s favorite communication channel to \nhighlight \u2018that @WhiteHouse<\/a>\u2019s Made in America Week is a chance to level the playing field for American workers. To do that, @realDonaldTrump<\/a> should enforce our #OpenSkies<\/a>\n agreements and hold Qatar accountable for its violations that put 1.2 \nmillion U.S. jobs at risk\u2019. However, POTUS is above all a businessman. \nThe $1.8 billion order for embattled Boeing, $1 billion for General \nDynamics\u2019s Gulfstream unit, and \u20ac3 billion in the Qatari funds flowing \nto his country\u2019s industrial defence complex took front stage. Let\u2019s not \nforget the thousands of US troops that are based in Qatar. Everybody \nhas a limit to their hospitality, Trump must have thought, while also \nbeing keen not to repeat last year\u2019s diplomatic faux pas when he \npublicly called Doha a \u2018funder of terrorism at a very high level\u2019. He \npatched things up with the Emir soon after that, but still.<\/p>\n\n\n\n The bell rang. All of the allocated rounds were completed. No \nTwitter storm; no commitment to remove the US from the open skies with \nQatar, or with the UAE, home of Emirates and Etihad; no promise to \ncurtail traffic rights. Instead, a simple and clear-cut advice to \nParker and Munoz that, if they have a complaint about unfair \ncompetition, they should use the formal DOT review process. Knock-out! \n This is exactly what the Big 3 Middle East airlines have been asking \nfor years. So far, however, the Partnership and its members have \nproduced plenty of dazzling figures about subsidies but they have never,\n individually or collectively, filed a complaint under the International\n Air Transportation Fair Competitive Practices Act.<\/p>\n\n\n\n The situation is similar in Europe where Lufthansa and Air France-KLM\n continuously claim that the carriers from the Gulf states compete \nunfairly and damage the European aviation industry. In a recent \nresponse to a question of Dutch MEP Caroline Nagtegaal about improper \nstate aid to Qatar Airways and its Middle Eastern mates, Transport \nCommissioner Violeta Bulc affirmed that the Commission \u2018has, to date, \nnot received any complaint about unfair competition from airlines based \nin the Middle East\u2019.<\/p>\n\n\n\n The Partnership for Open & Fair Skies took their defeat on the \nchin, at least in the arena. The meeting was \u2018productive\u2019, its managing\n partner Scott Reed said. Trump, he added, \u2018shares our concerns and \ninstructed us to keep working with the US Department of Transportation, \nwhich we plan to do\u2019. In the dressing room, the mood was less amicable.\n There was anger that Al Baker was present\u2014euh, the President wanted \nhim there; for sure he did not enter the Oval Office uninvited\u2014 and that\n Delta Air Lines CEO Ed Bastian had sent his cat.<\/p>\n\n\n\n The Atlanta-based airline\u2019s comms team tried hard to deny press \nspeculation that Bastian had refused the invitation and pointed out to \nCNBC that \u2018Ed unfortunately had some previously scheduled travel that he\n was unable to reschedule\u2019. This did not sit well with POTUS and his \nego. Trump was not the only one to notice Bastian\u2019s absence. Al Baker,\n never short of a quick quip, remarked that he had rescheduled his \nagenda and had flown all the way from Doha for the meeting. Bastian, \nsome people told us, apparently was in Europe where his airline has \nalready vast interests and is planning to add to its portfolio. Delta \nis eyeing a 10 to 15% stake in Alitalia, the Italian flag carrier that \nis flying thanks to a \u20ac900 million bridge loan from the Italian \ngovernment and in which the Italian state plans to control and own the \nmajority once it exits bankruptcy. In light of this, Bastian\u2019s rhetoric\n against state ownership and state subsidies becomes difficult to \nsupport or even understand. And making a case against Sardinia-based \nAir Italy when he is about to take a shareholding in this little \nairline\u2019s state controlled and managed competitor, is questionable. \n Maybe Bastian\u2019s absence was more deliberate than a scheduling issue.<\/p>\n\n\n\n Also absent from the meeting, despite one of the main topics being an\n EU airline (Air Italy): the European Commission. DG MOVE Director \nGeneral Henrik Hololei has made it amply clear that Air Italy is an EU \nairline and not, as the Big US 3 claim, a proxy airline for Qatar \nAirways. According to Bastian, Munoz and Parker, Qatar Airways is using\n its subsidies from the government of Qatar to finance the airline and \nfund services to the US and therefor it infringes the January 2018 \ncommitment made by the Qatari government not to launch fifth freedom \nroutes.<\/p>\n\n\n\n Incorrect, Hololei pointed out in recent correspondence with his US \ncounterpart. Air Italy is 49% owned by Qatar Airways, but the majority \nof the shareholding lays with EU interests. Thus the airline is allowed\n to operate between the EU and the US under the Open Skies. Moreover, \nAir Italy\u2019s flights to the US do not even carry the QR code. The \nshareholder set-up is no different than, for instance Virgin Altantic. \n Delta owns 49% of this airline and it owns 8.8% of Air France-KLM, \nwhich is set to take 23% in Virgin Atlantic. If the UK does not leave \nthe EU soon, DG MOVE will need to look into Delta\u2019s direct and indirect \nownership of the London-based carrier and verify whether maybe Virgin \nAtlantic is a proxy airline for Delta.<\/p>\n\n\n\n Expect Hololei to throw a couple of public punches when he delivers \nhis\u2014by now almost yearly \u2013 speech at the International Aviation Club in \nWashington, DC on Tuesday.<\/p>\n","protected":false},"excerpt":{"rendered":" Another round in the unending boxing match between the three biggest US carriers and the three biggest Middle East carriers about alleged subsidies and unfair competition played out on Thursday July 18. In the ring were the self-styled Partnership for Open & Fair Skies, represented by American Airlines CEO Doug Parker and United Airlines CEO […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29],"tags":[],"class_list":["post-862","post","type-post","status-publish","format-standard","hentry","category-air-services-agreements"],"_links":{"self":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/862","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=862"}],"version-history":[{"count":1,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/862\/revisions"}],"predecessor-version":[{"id":863,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/862\/revisions\/863"}],"wp:attachment":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=862"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=862"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=862"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}