Last updated: 12:09 PM ET, Fri December 11 2015

Did The Administration Tip Its Hand On Open Skies?

Airlines & Airports | American Airlines | Rich Thomaselli | December 11, 2015

Did The Administration Tip Its Hand On Open Skies?

Photo courtesy of Thinkstock

Did the Obama administration just tip its hand as to where it is leaning in the Open Skies Agreement debate between the big three U.S. airlines and Middle East Gulf carriers?

It sure seems that way.

As both sides continue to await a decision on whether to open consultation between the U.S. and the governments of Qatar and the United Arab Emirates, the administration this week awarded a government travel contract between Washington and Dubai to JetBlue and its codeshare partner, Emirates.

Emirates and fellow Gulf airlines Etihad and Qatar have been accused by American, Delta and United airlines of accepting $42 billion in subsidies from their respective governments from 2004-2014 to help grow their airlines. The U.S. big three carriers say that has distorted the international marketplace and they want the Obama administration to open consultation on the Open Skies Agreement, the deal that allows airlines to enjoy landing rights in other countries without government interference.

Combined, the three Gulf carriers have more than 200 flights to more than a dozen U.S. cities, even though their U.S. counterparts have alleged that the majority of the routes are unprofitable.

The debate has been going on since January, when American, Delta and United presented the administration with a 55-page report detailing the alleged subsidies. The respective Gulf airlines have denied the charges, saying their governments have merely taken an ownership stake in the airlines and all investments must be paid back as if it were a loan.

Both sides were hoping to have a decision before the calendar year, but now it seems as if a decision will not be made until early next year. But as far as United is concerned, the awarding of the government travel contract to JetBlue/Emirates might as well be an early indicator of which way the administration is leaning – a day after the contract was awarded, United canceled its flight from Washington to Dubai.

United’s last flight on that route will be on Jan. 25.

“It is unfortunate that the [General Services Administration] awarded this route to an airline that has no service to the Middle East and will rely entirely on a subsidized foreign carrier to transport U.S. government employees, military personnel and contractors,” Steve Morrissey, the airline’s regulatory and policy vice president, said in a statement. “We believe this decision violates the intent of the Fly America Act, which expressly limits the U.S. government from procuring commercial airline services directly from a non-U.S. carrier. For the Washington to Dubai route, JetBlue merely serves as a booking agent for Emirates.”


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