I've worked in and around the airline business for 31 years. I have witnessed firsthand how fair competition drives down prices and makes airlines nimble and more efficient. On a personal level, I'm proud to have helped foster the democratization of air transportation which was once available only to the rich, and to have played a small part in the industry's difficult but necessary restructuring. Thus, I am offended by recent remarks made by Danny Sebright, President of the U.S.-UAE Business Council, and Roger Dow, President of the U.S. Travel Association (USTA).
During the past several months, both men have repeatedly made inflammatory and knowingly false statements to justify the huge subsidies that the three Gulf mega-airlines - Emirates, Etihad, and Qatar Airways - receive from their governments that grossly distort international competition. These three airlines all enjoy significant access to the U.S. market through "Open Skies" aviation agreements between the U.S. and both the United Arab Emirates (UAE) and Qatar, which permit Emirates, Etihad, and Qatar the ability to fly to and from any U.S. city, with no limits on flights or prices. Under U.S. government policy, however, countries that agree to the Open Skies arrangement must not distort the marketplace by subsidizing their airlines. However, the UAE and Qatar have provided more than $42 billion in subsidies and other unfair benefits in the past decade alone that tilt the competitive playing field and contradict Open Skies policy.
Mr. Sebright said in May that U.S. airlines were "making a mountain out of a molehill," in raising the subsidy issue with the U.S. Government. $42 billion in subsidies and other unfair benefits is hardly a molehill. But more problematic was his suggestion that if U.S. airlines spent money "on improving the service, making their seats better, making their flight attendants more polite, nice and friendly, we believe they could compete head-to-head with UAE airlines." In fact, after emerging from an extremely challenging decade-plus of losses, U.S. airlines are now investing enormous sums in service improvements, including better seats. But the "polite, nice and friendly" is simply offensive. Every one of my friends and colleagues who are flight attendants for American, Delta, and United are all those things and more. Their employers treat them fairly and humanely, and unlike their counterparts in the UAE and Qatar they enjoy the legal right to organize themselves into a union.
The Gulf carriers' labor strategy is straightforward and cynical: hire young, attractive women from poor countries, give them a short, fixed-term contract, treat them badly, dismiss them easily, and then hire more.
In the case of Qatar Airways, this pattern has led to what the International Transport Workers' Federation found to be "flagrant abuses of aviation workers' labour rights." Qatar's policies are especially egregious. Until recently, their contracts with cabin crewmembers allowed the airline to fire women who became pregnant (and crewmembers who hid their pregnancy were also liable to be terminated), and required company permission to marry. Female employees cannot be dropped off or picked up from company property by anyone other than their father, brother, or spouse. What if the man is back in the Philippines or India? They can be fired if they a) get tattoos, even if they are not visible beneath a uniform; b) use too much hair gel or position their hats incorrectly; or c) post something to Facebook that Qatar Airways finds objectionable.
The USTA View
It's not surprising that USTA President Roger Dow echoes the same misinformation as the Gulf carriers on the issue of subsidies: his member hotels are expanding massive in the Gulf and are increasingly dependent (like the Gulf carriers) on the largesse of the state treasuries of the UAE and Qatar. But Mr. Dow is wrong on at least four points. Worse, his errors appear to be willful, but he and Mr. Sebright believe that repeating the falsehoods will make them true.
First, Mr. Dow claims that the Gulf carriers are stimulating traffic, when the data shows that they are actually stimulating virtually no traffic and instead using subsidies to divert traffic from others. Second, he claims U.S. airlines are against Open Skies. But American, Delta, and United have said unequivocally and repeatedly that they support Open Skies and have acknowledged that they have benefited from Open Skies. What the U.S. airlines don't support are massive subsidies that distort the marketplace and undermine fair competition, in violation of the Open Skies policy I supported and worked towards in my many years at American Airlines. The U.S. airlines are the ones defending Open Skies while Mr. Dow, Mr. Sebright and others assail it trying to justify the Gulf carriers' subsidies. Third, USTA suggests that the U.S. airlines' arguments are undermined because they went through Chapter 11 restructuring. But the U.S. bankruptcy process is not a subsidy; among other reasons, there is no financial contribution by the U.S. government through the provision of taxpayers' money, or otherwise.
Finally, Mr. Dow claims that Gulf carriers are promoting growth in small- and medium-sized cities like Portland, Oregon, Lubbock, Texas, and Dayton, Ohio. But Emirates, Etihad, and Qatar will ultimately damage air service to these and dozens of other comparable markets because the diversion of traffic from U.S. carriers' international flights weakens their domestic networks. This assertion by Mr. Dow is especially troubling because USTA should represent the whole of this country and not ignore the vulnerability of non-gateway cities and its members in those cities that rely on the U.S. airlines' continued ability to maintain their domestic hub-and-spoke networks.
Mr. Sebright and Mr. Dow owe it to their respective organizations, their members, and the U.S. government officials charged with addressing subsidies and unfair competition to keep their willful mischaracterizations and insults out of this debate.