The two-and-a-half-year-old trade dispute between the three massively subsidized Gulf airlines – Emirates, Etihad Airways, and Qatar Airways – and the coalition of American Airlines, Delta Air Lines, United Airlines, and associated trade unions took an interesting turn this week. The government of the United Arab Emirates – which in reality is a set of ruling families – started defending its efforts in ad sponsorships and social media. Previously, the UAE had relied on its two big carriers, Emirates and Etihad, and its U.S. supporters and apologists to attempt to respond to the overwhelming evidence that the state-owned Gulf trio have received more than $50 billion in government subsidies and other unfair benefits since 2004. But in starting their own public relations campaign, the UAE just provided further evidence of its massive, market-distorting trade cheating.
These subsidies violate the terms of the Open Skies agreement between the U.S. and the UAE, a pact that gives Emirates and Etihad unlimited, unrestricted access to the U.S. market, the largest in the world. This lawbreaking threatens thousands of good-paying jobs at U.S. airlines, their suppliers, and the communities they serve. The United States has over 120 Open Skies agreements with entities as large as the entire European Union and Japan, and the pacts have greatly aided the international growth of all U.S. airlines, notably American, Delta, and United, which have added dozens of new global routes. Only two Open Skies deals, with the UAE and Qatar, have caused major problems. Gulf-airline domestic supporters – the U.S. Travel Association, the one-man Business Travel Coalition, and U.S. Airlines for Open Skies (consisting of FedEx, Atlas Air, jetBlue, and Hawaiian Airlines) – falsely claim the three U.S. network airlines are against Open Skies.
This week, the UAE Embassy here in Washington began tweeting messages, and launched a week-long sponsorship of POLITICO Morning Transportation, an influential online newsletter covering federal transportation policy. The messaging was basic: the UAE’s airlines spend billions on Made-in-USA Boeing jetliners, and “[T]he UAE-US commercial aviation relationship is a win-win deal.” It’s specious logic to argue that purchasing lots of American-made jets makes it okay to violate the law. It’s evident that a large portion of the wheelbarrows of state cash that the Dubai and Abu Dhabi rulers lavish on Emirates and Etihad has been used to buy new planes. And let’s be clear: those jets fly on scores of money-losing routes, because when you’re Etihad and Emirates you don’t have to run your business like real airlines. Profit is not important to these state-owned entities and commercial realities don’t matter. In the UAE, it’s all about diversifying their energy-focused economies, regardless of impact on the rest of the world.
In addition, it’s important to note that Boeing has a long history of fighting against foreign government subsidies exactly like those given by the UAE to Emirates and Etihad. The Boeing-Airbus trade dispute involved $19 billion in European subsidies to Airbus. That was the largest trade dispute in history, and the World Trade Organization found in favor of the United States and Boeing. Why? Because foreign government subsidies violate international agreements and kill American jobs.
Further, contrary to the UAE “win-win” assertion, the commercial aviation relationship has a huge win-lose aspect: the real damage that their subsidized expansion has on U.S. airlines and their European partners. American, Delta, and United, all investor-owned, cannot compete with carriers based on fantasyland economics, and have already been forced off routes in the Middle East and almost all of India. It’s estimated that each long-distance U.S. airline flight foregone or lost to unfair Gulf competitors results in the loss of 1,500 American jobs. Moreover, because airline networks are interconnected, when long-haul flights are axed, the domestic flights that “feed” them connecting passengers become less viable. Thus, this dispute matters to everyone everywhere in the United States, especially small and medium-sized cities, and not just to folks in New York, L.A., and Chicago.
U.S. airline employees, their many suppliers, the destinations they serve and the traveling public are counting on President Trump to deliver on his promise to end trade cheating. American, Delta, and United seek no “protection,” only a level competitive playing field. They seek fair play.
One final note: The UAE’s ad copywriters should keep in mind that for nearly a century, U.S. airlines have bought far more Boeing jets than have the airlines from the Gulf.