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The battle over the Open Skies Agreement is being fought through the media.
Two days after Delta Air Lines CEO Richard Anderson made his case on a national television appearance on CNN to repeal or amend the Open Skies Agreement – making a bit of a faux pas in the process – Business Travel Coalition Chairman Kevin Mitchell spoke at the National Press Club in Washington, D.C. on Wednesday pleading for the government to leave Open Skies as is.
“The major airlines have worked overtime in the media, on the Hill, at the White House and at the Transportation, State and Commerce Departments to communicate that they feel threatened by foreign carrier new entrants and disadvantaged by new customer-service oriented business models and by airlines in whom governments hold equity stakes,” Mitchell said. “The overall impression is that the big U.S. network airlines want to lock out independent airlines that offer lower fares, newer airplanes, faster connections, more destinations, and better service.”
At issue is the ever-growing market share being won by Middle East-based carriers Etihad, Emirates and Qatar – all of whom are subsidized by their respective governments and, some believe, also get discounts on fuel prices. The three major U.S. airlines believe that gives the Gulf region carriers an unfair competitive advantage.
Mitchell said every country has its unique collection of direct and indirect subsidies and structural advantages, however subtle they might be.
The U.S. is no different, he said.
“Our carriers can reduce expenses in bankruptcy proceedings, shift pension liabilities to the Pension Benefit Guaranty Corporation, benefit from general revenues from the U.S. Treasury that flow into the Airport and Airway Trust Fund, and avoid ticket taxes on billions of dollars in revenues through ancillary fees and carrier-imposed charges,” Mitchell said.
The Open Skies Agreement, forged in 1994, “eliminates 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,” according to the U.S. State Dept.
“The benefits of U.S. Open Skies policy have been stunning for airlines’ shareholders and employees, for travel and tourism jobs, airports, cargo carrier customers, community and economic development and for consumers,” Mitchell said. “However, if those benefits are threatened, the antitrust immunity granted to U.S. airlines should be reconsidered. The antidote to normally anti-consumer agreement among competitors is new entry. Antitrust immunity is serious business; airlines should not take it for granted.”