Fairness of Global Airlines

     (1)There are a multitude of airlines that receive massive amount of government aid in order to maintain their operations.  There are three that are being accused, by a group of American based airlines, of taking an unfair advantage of these subsidies to continue operating with prices and services that other airlines can't compete with.  Etihad, Emirates, and Qatar airlines are all under fire for potentially violating the Open Skies agreement that governs international airline competition. Etihad airlines is based near Abu Dhabi international airport and is the second largest airport in the United Arab Emirates, behind Emirates Airlines.  Both of those two are government owned air carriers that are allowed to fly to and from American cities for international air travel competition.  Qatar airlines is owned by the Qatari government and provides flights to and from Doha, as well as to other parts of India, Asia, and Africa.  They all receive subsidies such as fuel hedges, interest free loans, and cheap landing fees in their home airports (Yglesias, 2015).

     (2)In the past, the big three legacy airlines (Delta, American, and United) have taken "subsidies" from the US government too.  The vast majority of these came after 9/11, in the form of interest free loans and debt relief from chapter 11 bankruptcy, which they were allowed to file when the industry all but crashed after the terrorist attacks.  While it seems like comparing apples to oranges, this is one of the counter arguments based on a study funded by Etihad, who claims that this is proof that the legacy airlines play ball the same way they do (US Carriers, 2015).  The study claims the US carriers have received as much as $71.5 Billion.  Specifically, it cites:

$761 million was granted to Delta by Minnesota to build a fleet maintenance facility
$80-85 million received by American Airlines for redevelopment funds from Missouri in 2003
$6.3 million received by United Airlines in tax credits from Colorado

     (3)The secondary claim that the foreign long haul carriers have had access to "cheaper than market value" aircraft comes from an excessive use of the US export-import bank.  The US export-import bank is an institution established by the government that gives loans to countries or firms that wouldn't have easy access to capital by other means, in order for those countries or firms to purchase US made tools or equipment (Bhaskara, 2014).  The complaint by the legacy airlines stems from the excessive purchases made through the export-import bank by Emirates, Etihad, and Qatar airlines, all of whom have relatively easy access to capital through regular commercial lending institutions.  They have purchased more Boeing aircraft than any other airlines in the world, including our own, and they've used over $3 billion each in export-import authorizations between 2004 and 2013 (Bhaskara, 2014).  This is an over use of the export-import bank by companies that are more than qualified to get loans at commercial interest rates, and it's a form of US government subsidized money that's given directly to US based airline's competition.

     (4)From the viewpoint of a capitalist, it's hard to say what's fair and what isn't.  If your company has a capability of turning a profit, that's all that really matters and you are free to go for everything you can get away with.  As an American, it's terrible practice to give foreign competition better access than our own industry professionals to top notch American equipment.  It is true that American, Delta, or United can't provide the same services for a better or equal price when the middle east airlines are getting a steal of deal on gas and airport fees, meaning travelers are going to spend their money with the companies that can provide the better deal.  It is estimated that each time a flight is lost to competition this way, the legacy airlines lose up to 800 American jobs (U.S. airlines, n.d.).  That shouldn't be acceptable, regardless of what air travelers want.  Travelers are either vacationing with extra money they've already earned in some other career field that's not affected by this issue, or their traveling on company money for business.  Limiting their options for travel doesn't equate to a single grain of rice on the scale to me.  Losing jobs that are supposed to be middle class and family supportive by selling out to the competition is heart breaking, and we shouldn't be allowing it to happen to our own countrymen.

     That being said, the situation gets more complex because cutting off the export-import access throws Boeing under the bus as a manufacturer.  Therefore, the only option might be to cut off the access given to the middle east airlines by the open skies agreement, the opposite of what the legacy airlines claim that they're trying to do, and the opposite of what being fair means.

References:

Bhaskara, V. (2014, September 2). The Fight Over the Export-Import Bank Has No Easy Answers.
     Retrieved October 22, 2015, from http://www.forbes.com/sites/airchive/2014/09/02/the-fight-
     over-the-export-import-bank-has-no-easy-answers/

Noakes, G. (2015, May 15). US carriers 'have received $71.5 billion in state-aid' - Business Traveller.
     Retrieved October 22, 2015, from http://www.businesstraveller.com/news/101647/us-carriers-
     have-received-dollar-71.5bn-in-stat

U.S. airlines, unions reveal evidence of $42 billion in subsidies. (n.d.). Retrieved October 22, 2015,
     from http://www.openandfairskies.com/press-releases/u-s-airlines-unions-reveal-evidence-of-42-
     billion/

Yglesias, M. (2015, March 27). America's biggest airlines are accusing Persian Gulf carriers of
     cheating. Retrieved October 22, 2015, from http://www.vox.com/2015/3/27/8296495/gulf-airline-
     subsidies