Global Airlines and the unfair playground

The US Department of State defines the open skies agreement as, “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.” (US State Dept.) It basically allows the airlines of both countries to freely serve the other country’s airports without having to get individual permission for each and every airport. The United States and The United Arab Emirates have this agreement. The Open Skies Agreement between the United States, and the United Arab Emirates is currently experiencing issues. The three big US airlines, (Delta, American and United) complained that the Gulf carriers are at an unfair advantage due to the fact that they are supported by the government. They also argued that (Emirates, Etihad, and Qatar) all combined have received over $42 billion in subsidies since 2004. (Sumers, 2016) Emirates and Etihad deny receiving any unfair subsidies, due to the fact that American companies receive government subsidies as well. The government subsidizes the airlines is trough Essential Air Service, which is a Federal program that provides airlines subsidizes to fly less profitable routes to prevent a certain location from losing air travel all together. (U.S Department of Transportation, 2016)

The Import-Export Bank allows foreign carriers to purchase US aircraft at favorable interest rates that are lower than the rates that US carriers can obtain.  The reason for this is to encourage foreign companies to purchase American products. Since the Import-Export Bank came to be, it basically allows a foreign carrier to purchase an American aircraft like any Boeing aircraft for example below what the markets interest rates are, which allows them to save millions of more dollars then the domestic carriers. (Weisman & Lipton, 2015)

After reading many articles, I think that the playing field is fair. I believe that with the Export-Import Bank that it helps with the US Economy. It is cheaper for the foreign carrier to purchase the aircraft and since they can, they are able to purchase more. So more money for us, “YEY” I think that since there is more competition out there the big airlines are just being selfish because now people have many more options to go now. I think though, one thing the major airlines want to do is to shut down the Export-Import bank so that the foreign carriers have to pay more. Although in the end, both the US Airlines and the Middle Eastern Airlines are very successful businesses. I think everyone just needs to get along and help each other out because we all fly the same sky.

Refrences:

U.S Department of Transportation. (2016, May 17). Essential Air Service . In Department of Transportation. Retrieved November 4, 2016, from https://www.transportation.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service

Weisman, J., & Lipton, E. (2015, April 6). Boeing and Delta Spend Millions in Fight Over Export-Import Bank’s Existence. In New York Times. Retrieved November 4, 2016, from http://www.nytimes.com/2015/04/07/business/boeing-delta-air-lines-export-import-bank.html?_r=1

Sumers, B. (2016, June 28). U.S. Airlines Set to Lose Major Battle Against Gulf Carriers in Open Skies Debate. Retrieved November 4, 2016, from https://skift.com/2016/06/28/u-s-airlines-set-to-lose-major-battle-against-gulf-carriers-in-open-skies-debate/

Kane, F. (2016, January 30). Open skies dispute between US and Gulf airlines escalates.
Retrieved from http://www.thenational.ae/business/aviation/open-skies-dispute-between-us-and-gulf-airlines-escalates

Open Skies Agreements. (n.d.). Retrieved November 04, 2016, from

http://www.state.gov/e/eb/tra/ata/