The open skies agreements exist in a very basic sense to provide a free market for airlines for international routes and fair market competition.
"Open Skies agreements have vastly expanded international passenger and cargo flights to and from the United States, promoting increased travel and trade, enhancing productivity, and spurring high-quality job opportunities and economic growth. Open Skies agreements do this by eliminating government interference in the commercial decisions of air carriers about routes, capacity, and pricing, freeing carriers to provide more affordable, convenient, and efficient air service for consumers.
America's Open Skies policy has gone hand-in-hand with airline globalization. By allowing air carriers unlimited market access to our partners' markets and the right to fly to all intermediate and beyond points, Open Skies agreements provide maximum operational flexibility for airline alliances." (US Dept. State)
However, domestic carriers in the US have been lobbying to restrict access to the US market by middle eastern airlines such as Emirates and Etihad Airlines due to the fact that they receive government subsidies, which in the opinion of US carriers, gives them a distinct advantage over US airlines. These middle eastern airlines argue that the bailouts and bankruptcy laws that some US carriers have taken advantage of are just the same as a government subsidy, so there is no unfair advantage held by airlines like Emirates or Etihad.
"The chief executives of American Airlines, Delta Air Lines and United Airlines recently joined together to quietly lobby the Obama administration to restrict access by fast-growing rivals based in the Persian Gulf. They cited unfair competition from the Middle East carriers Emirates, Etihad Airlines and Qatar Airways, which they say receive large government subsidies that put domestic carriers at a disadvantage." (Mouawad, 2015)
American and United, and may of their subsidiaries have taken advantage of US bankruptcy laws in the past, specifically chapter 11 bankruptcy which allow airlines many advantages under the auspices of "reorganization" These laws are not necessarily available to foreign carriers, causing them to see this as a government subsidy.
The Export-Import Bank is a credit agency that exists to "help American businesses sell their goods and services abroad". (Weisman & Lipton, 2015) Essentially, it guarantees loans at a low rate to foreign entities for the purchase of US products. Domestic companies such as Delta are unhappy with this arrangement, as it allows foreign airlines to buy Boeing aircraft at lower borrowing costs, and then use the saved money to slash ticket prices, giving them an unfair advantage over domestic airlines purchasing the same aircraft. However, if the Export-Import bank was to go away, many foreign companies would switch to purchasing Airbus products, which currently have 3 such banks providing financing, cause Boeing to lose billions in sales, and resulting in the loss of thousands of US manufacturing jobs.
Looking over what I have seen and read, I honestly feel that the playing field is generally level. One entity may have an advantage over another in a specific area, like fuel costs, or terminal access, but the other has the advantage in a different area, such as the Export-Import Bank, or risk free fuel hedging. These are massive corporations that we are talking about, companies that exist to create the most revenue possible for their stockholders and the health of their corporation. It only makes sense that they would try and ensure that the political landscape is ideal for their needs and requirements.
References:
Open Skies Agreements. (n.d.). Retrieved November 04, 2016, from http://www.state.gov/e/eb/tra/ata/
Mouawad, J. (2015, February 6). Open-Skies Agreements Challenged - The New York Times. Retrieved November 4, 2016, from http://www.nytimes.com/2015/02/07/business/us-airlines-challenge-open-skies-agreements.html
Weisman, J., & Lipton, E. (2015, April 6). Boeing and Delta Spend Millions in Fight Over Export ... Retrieved November 4, 2016, from http://www.nytimes.com/2015/04/07/business/boeing-delta-air-lines-export-import-bank.html
This whole open skies agreement/disagrement really looks like companies pointing out another company's unfair advantages while ignoring their own. US carriers crying foul on the Gulf airlines while ignoring their bailouts and bankruptcy protection. US airlines have been getting subsidies since the Air Mail Act of 1925. Talk about the pot calling the kettle black!
ReplyDeleteI agree that the playing field is level, while the manner of subsidies that have been received by the U.S. carriers is not the same as the overseas carriers, there have still been bailouts and bankruptcy help that the companies in America have received. Sounds to me like they just can't handle the competition so they are trying to eliminate it.
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