Last updated: 02:27 PM ET, Thu July 30 2015

Report: Gulf Airline Expansion Could Harm US Like Shipping Industry

Airlines & Airports | Rich Thomaselli | July 30, 2015

Report: Gulf Airline Expansion Could Harm US Like Shipping Industry

Photo courtesy of Thinkstock

In a 14-page report, an economist says if the U.S. government doesn’t act on Persian Gulf airlines that receive alleged subsidies, the domestic airline business will go the way of the U.S. shipbuilding industry.

The paper, entitled, “Decline in U.S. Shipbuilding Industry: A Cautionary Tale of Foreign Subsidies Destroying U.S. Jobs,” examines the systematic elimination of the U.S. domestic shipbuilding industry through the 1980s and 1990s as a result of subsidized foreign competition.

The research report was authored by Aaron Klein, director of the Financial Regulatory Reform Initiative at the Bipartisan Policy Center and a former deputy assistant secretary for economic policy at the U.S. Treasury Department.

“The effects of foreign subsidization on our economy are substantial and deeply detrimental,” said Klein. “Jobs that are lost do not come back. Portions of the industrial base can be eroded, devastating companies, communities, and significantly impacting our national defense. The end of a level playing field in aviation, with U.S. companies facing direct competition from subsidized foreign carriers, is remarkably similar to what happened to U.S. shipbuilders in the 1980s. If these foreign carriers are indeed successful in shifting traffic from American companies to their own, then American aviation will suffer.”

Klein said that since 1980, 40 percent of all jobs in American commercial shipbuilding have disappeared.

The big three U.S. airlines have alleged that that their counterparts in the Persian Gulf – Emirates, Etihad and Qatar – have received $42 billion in government subsidies over a 10-year period, altering the international travel marketplace.

Klein also estimates that the effects of continued inaction could put 200,000 American jobs at risk.

“If this foreign, subsidized capacity remain unregulated, the U.S. aviation industry will be decimated by a loss of almost 200,000 jobs, when considering losses from passenger traffic and those jobs supported by passenger aviation,” said.

Klein’s full report can be found here.

“This analysis underscores what airline employees, Members of Congress, and business and community leaders have been saying for months: the subsidized Gulf carriers are distorting the global marketplace, harming the U.S. airline industry and threatening U.S. workers’ jobs,” said Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies. “The U.S. government must act immediately to open consultations with the governments of Qatar and the United Arab Emirates and address these Open Skies violations now.”

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