It's all over?
Please. It's just beginning.
The docket for public comment on the debate over Open Skies Agreements closed this week, but the real fight is yet to come. Now it's in the hands of the Obama administration to decide:
Do the U.S. airlines have a case against their Persian Gulf counterparts in alleging they have flouted the spirit of the Open Skies Agreements and used government money as subsidies?
Or not?
From a pure business standpoint, this has been the story in aviation so far this year. And I have my own theories and questions here. For instance… I'm curious, why now?
American, Delta and United commissioned the now-famous 55-page report that it handed over to the Obama Administration allegedly showing that the three major Gulf airlines accepted $42 billion in subsidies from their respective governments between 2004 and 2014. That took place earlier this year.
You mean to tell me it took this long for the big three U.S. airlines to have an inkling that their rival Middle East carriers might have been accepting handouts from their governments?
Or did they not care in 2004, or 2005, or '06, '07, and so on, back before the Gulf airlines started to grow and started to offer incredible amenities and customer service?
Did they not care in 2004, or 2005, or '06, '07, and so on, back before the mergers consolidated U.S. airlines into what is now the big three and has created a virtual lock on domestic competition?
The U.S. airlines are alleging they lost 800 jobs for every Gulf carrier flight that lands in the U.S. Did they not care in 2004, or 2005, or '06, '07, and so on, that jobs were supposedly lost to the Gulf carriers?
You know, it's funny. I used to work for a daily newspaper when I first started my journalism career and one year the paper decided it needed a tagline. It invited employees to submit a catchy moniker, something akin to the famous "All the news that's fit to print" kind of thing.
As a joke, somebody submitted: "We're the only game in town - you have no choice but to read us." It wasn't far from the truth, however, as the paper had no other print competition.
And that's how American, Delta and United are treating this. "We're the only game in town - you have no choice" is what they are telling their customers, at least in domestic service. But now competition has come along on some international routes, and suddenly the marketplace is "distorted?"
Unless he's flat-out lying - and I don't believe he is, given his position - U.S. Travel Association Roger Dow makes an interesting point. According to a study by Oxford Economics, the Gulf carriers brought 1.1 million international visitors to the U.S. in 2014. Of the 1,700 routes flown by the Big 3 and the Gulf carriers combined, they compete head-to-head on exactly two routes.
Two.
This is definitely a divisive issue, one that comes down to splitting hairs, if you want to be blunt about it. The Gulf airlines say whatever they get from their governments is not "subsidies" but rather "investments." The U.S. airlines say they money they received from our government post-9/11 wasn't "subsidies" but rather "bailout loans" that had to be paid back.
Judge for yourself.
The U.S. airlines say they are in favor of Open Skies Agreements but against unfair competition. For my part, to be frank, I think they are against competition, period.
If I were a member of the Obama administration, I would keep the status quo.
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