Last updated: 03:11 PM ET, Fri September 18 2015

BTC Pens Letter To New United CEO On Gulf Debate

Airlines & Airports | United Airlines | Rich Thomaselli | September 18, 2015

BTC Pens Letter To New United CEO On Gulf Debate

Business Travel Coalition chairman Kevin Mitchell has wasted no time in penning a letter to new United Airlines CEO Oscar Munoz, asking that the carrier reconsider its involvement with American and Delta in waging the Open Skies debate against Middle East airlines.

Munoz took over last week when Jeff Smisek resigned under pressure. United, American and Delta claim that Emirates, Etihad and Qatar airlines have received more than $40 billion in government subsidies, swaying the international travel marketplace.

The three U.S. airlines sent a 55-page report to the Obama administration outlining their allegations.

- Corporate travel managers – your best hope for moving your business to sustainable and adequate financial returns – are deeply concerned over your airline’s efforts to frustrate foreign carrier new entry whether it is the Gulf carriers or Norwegian Air International’s application to serve the U.S.,” Mitchell wrote to Munoz. “The antitrust immunity that United benefits from with its global joint venture partners is predicated upon open and robust new entry. The troika is putting this valuable competitive advantage at great risk.”

Mitchell called on Munoz to “request satisfactory answers” from fellow CEOs Richard Anderson of Delta and Doug Parker of American to a series of 14 questions, including:

- Mr. Parker you claim that there is some intrinsically inviolable Open Skies tenet that correlates a country’s home market size to the amount of acceptable international seat capacity. Question: Can you point to where this is in any Open Skies agreement? On the other hand, is not a key principle of Open Skies the encouragement of innovative new business models and go-to-market market constructs? Are we endeavoring to dictate which innovations are legitimate?

- Mr. Anderson every country financially supports the establishment of its aviation sector; perhaps no country more than the U.S. Moreover, 69% of the troika’s partners are government owned and your airline recently announced a $450 investment in China Eastern, a heavily government subsidized airline. Every country’s airlines have unique structural advantages; there is no level global playing field in any industry. Question: Isn’t your position hypocritical and harmful to the global Open Skies regime as governments and market participants come to view a potentially eroding U.S. commitment to Open Skies?

- In your 55-page report we do not provide any empirically supported financial evidence of harm to the troika from ME3 entry. Question: Why is that? Are we seeking public policy development based on hypothetical assumptions and self-serving projections?

- The cargo carriers have raised serious concerns that opening up and modifying these Open Skies agreements would likely lead to retaliation against their interests, and as such, their employees’ and U.S. interests. Question: In devising our campaign did we give a damn about any of the other stakeholders such as those cargo firms or airports and communities that lost international services as we engineered domestic consolidation or consumers who seek greater choices and alternatives?

- Not one other U.S. airline has joined our campaign against the ME3--not FedEx, not UPS, not Atlas, not Alaska, not Hawaiian, not JetBlue.  The best we have managed is a declaration of strict neutrality by Southwest. Question: How do you explain our failure to convince a single one of those companies to join our lobbying efforts?

- Question: How many millions of dollars have we spent thus far to support the anti-ME3 campaign - the studies and reports we’ve paid for, the Coalition we founded and the massive advertising? I cannot seem to locate the invoices.

A decision on whether to reopen talks on the Open Skies Agreements is expected late this year or early in 2016.

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