Gulf Airlines: “We Buy Your Stuff, We Can Do What We Want”

For almost three years, the massively subsidized Gulf airlines – Emirates, Etihad, and Qatar Airways – and their U.S. supporters and apologists have tried to respond to the clear evidence that they are breaking the law. They don’t have facts on their side, so like the boxed-in often do, the three carriers resort to misrepresentations and flawed logic. They wrongly accuse U.S. network airlines American, Delta, and United of being “protectionist” and “afraid of competition,” when in fact the three U.S. companies are a textbook case of learning how to compete after a half-century of U.S. government-imposed protection and managed competition. The Gulf side falsely says U.S. airlines are against the Open Skies agreements that open global routes to market forces, when in truth these pacts have enabled U.S. airlines to steadily expand internationally. And one of the true whoppers of illogic – increasingly dished out in recent months – is that the Trump administration ought to give the Gulf airlines a free pass on trade cheating because they buy a lot of Made-in-USA Boeing jetliners.

If you’re new to this dispute, a little background: the United States has signed more than 120 Open Skies agreements, which give foreign airlines unlimited rights to fly from their homeland to anywhere in the U.S., and vice-versa. But the Open Skies pacts (similar to treaties, but do not require Senate approval) are very clear on a key point: in order to receive these valuable rights, your airlines cannot be subsidized. The Gulf carriers deny that they receive government cash, but the U.S. airlines have proven, in a massive investigation, more than $50 billion in subsidies and other unfair benefits since 2004 (the short version is here).

The notion that “lawbreaking is okay because we buy a lot of stuff” is bogus for at least two reasons. First, Emirates, Etihad, and Qatar Airways choose to buy Boeing aircraft using the same simple criterion that for almost a century American, Delta, United, and scores of other airlines around the world have used: Boeing jets are high-quality products. (As an aside, U.S. carriers, not just the above three, have through the years been Boeing’s best customers; during the 22 years I worked for American, I always felt happy and proud when I got on a brand-new 737, 757, 767, 777, or 787.)

Here’s another way to look at this first point: an administration decision to enforce these aviation trade agreements would not be a logical reason not to buy U.S.-made aircraft.

Second, it’s curious at best for the Gulf carriers to lift up Boeing as a reason not to enforce trade agreements, because almost no U.S. company has been as aggressive as Boeing in insisting on global rules to ensure fair competition in the wake of government support. For decades, Boeing has fought against foreign government subsidies exactly like those that the ruling families of the United Arab Emirates and Qatar lavish on Emirates, Etihad, and Qatar Airways. It took more than a decade of legal proceedings at the World Trade Organization, but Boeing proved that several European governments provided some $19 billion in subsidies to Airbus – the largest trade dispute in history. The winning argument was the same one that American, Delta, United, and related trade unions have put forward since 2015: foreign government subsidies violate international agreements and kill American jobs (another aside: unhappily, WTO rules do not apply to the airline industry).

Just before the holidays, the Trump administration indicated that it would begin talks with the Emirati and Qatari government owners of the three airlines. U.S. airlines, their employees, and retired cheerleaders like me were grateful for this news. American, Delta, and United can compete in the global marketplace, but not against airlines that have received, and continue to get wheelbarrows of government cash. On the other hand, the president’s strong stance on trade seems to have put the Gulf carriers’ supporters in a bad mood – Kevin Mitchell, whose Business Travel “Coalition” is a staunch defender of the Gulf carrier misbehavior, has now dialed up his strident rhetoric to accuse American airline workers of having “failing products” and of somehow “embarrassing our great country.”

Every day, we are pelted with arguments for or against a current law, a policy proposal, a new idea – in the mass media, on social media, even on the sides of buses and subway platforms. Whether or not we agree, thinking citizens appreciate a position built with logic and verifiable information. So when we see a doozy like “we buy your stuff, we can do what we want,” we cry foul.

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