Global Airlines

-       Describe the US-UAE Open Skies Agreement. List and describe two long-haul carriers that are a part of this agreement that also receive government subsidies.

The US-UAE Open Skies Agreement is an Air Transport agreement to promote an international aviation system with minimum government interference or regulation. Wanting to facilitate the expansion opportunities of international air transport, by offering options at the lowest prices that are not discriminatory and do not represent any abuses of a dominant position, to develop competitive prices and to ensure safety and security to the aircraft or people (US Dept.,2002). Within this agreement some of the outliners of the agreement consist of the following:

-       The right to fly across its territory without landing

-       The right to make stops in its territory for non-traffic purposes

-       Each party shall have the right to designate as many airlines as it wishes to conduct international air transportation and to withdraw or alter such designations. Any changes must be done in writing through diplomatic processes

-       Either party may revoke, suspend or limit the operating authorizations or technical permissions of an airline designed by the other party

-       While entering, within, or leaving the territory of one party, its laws and regulations relating to the operation and navigation of aircraft shall be complied with the other party’s airlines and regulations relating to the admission to or departure from shall be complied with

-       The airline of each party shall have the right to establish offices in the territory of the other party for the promotion and sale of air transportation

It was interesting to find out from my research that US Open Skies treaties with other countries do not forbid airlines subsidies (Leff, 2017). This was something that I was unsure about until I started this blog. At first, it can be unclear from all the back and forth animosity about subsidies I have been reading about. Anderson states, Emirates is accused of receiving billions of dollars in government subsidies, but a study also says that Emirates supports more than 100,000 US jobs and contributes $21.3 bn. in revenue (2017). Emirates president Sir Tim Clark, stated that, Emirates is the “world’s largest purchaser of U.S. –built Boeing aircraft” (Anderson, 2017). I was unclear if Etihad or Qatar Airways were receiving any subsidies from my research.

-       Do any long-haul U.S. carriers receive subsidies or have received subsidies in the past? If so, which airlines? Why?

The data from a chart from the Washington Post showed that Delta Air Lines received $0.9 Billion dollars’ worth of subsidies (Chokshi, 2015). I also discovered that American Airlines received federally subsidized loans for its first big aircraft order (Leff, 2017).  

-       Another complaint is that long-haul foreign carriers have made aircraft purchases at “below market interest rates” that are unavailable to U.S. carriers. How is that possible? Please discuss the Export-Import Bank.

The Export-Import Bank provides financing and loan guarantees at below-market rates to foreign purchasers who are looking to buy products from American exporters (Export, n.d.). So, foreign companies that purchase airplanes from American companies will get a lower export tax placed on them and then they can charge a lower rate to the customers.

-       Are there any current issues with Norwegian International Airlines and the Open Skies Agreement?

Norwegian Air has been waiting a few years for the approval for its Ireland registered sister company, Norwegian Air International (NAI), to start direct flights from Cork and Shannon to Boston. This agreement should be an easy approval because of the ‘open skies’ agreement that allows flight between each other’s jurisdiction, but the U.S. seems to be stalling and if this continues these delays could threaten EU-US trade talks (Posaner, 2016). There are opponents that argue that Norway is not an EU member and they are just trying to gain access to the U.S. market but because the NAI is based in Ireland, this is the loophole that they needed. On the other hand, NAI was given approval to operate out of Ireland so should be treated as an Irish company with full rights to fly to the U.S. under ‘open skies’ (Posaner, 2016). I would love to see these flights approved with the rate of a one-way of only $69 dollars.

-       Finally, critically analyzing the above information, do you feel that the global “playing field” of long-haul carriers is fair?

I do not feel that the global “playing field” of long haul carriers is fair. Flights scheduled in 2016 by the big three U.S. carriers – American, Delta and United, covered 43 percent of all transatlantic flights, and the top three European airlines – British Airways, Lufthansa and Air France, accounted for 22 percent and competition from government-backed Middle Eastern and Asian airlines will soon stiffen once new agreements are negotiated with the EU (Posaner, 2016). I am for having more options for the consumers. Norwegian Air International’s proposal to sell flights for only $69 dollars one way is propaganda to bring more tourist from North America to Ireland and Europe. I would be booking a flight at that rate for sure. The whole point of “open skies” was to bring more opportunities to carriers and customers, so other carriers located in other countries should receive the same opportunities that the top carriers in the world gets.  

Anderson, R. (2017). Emirates president accuses US airlines of seeking to preserve long-haul market “domination”.  Gulf Business. Retrieved from http://gulfbusiness.com/emirates-president-accuses-us-airlines-of-seeking-preserve-long-haul-market-domination/

Chokshi, N. (2015, March). The United States of subsidies: The biggest corporate winners in each state, The Washington Post. Retrieved from https://www.washingtonpost.com/blogs/govbeat/wp/2015/03/17/the-united-states-of-subsidies-the-biggest-corporate-winners-in-each-state/?utm_term=.d8e5ad4168c9

Export-Import Bank of the United States. (n.d.). Get the basics: Check out the EXIM bank overview. Retrieved from https://www.exim.gov/learning-resources/publications

Leff, G. (2017, October). More hypocrisy by US airlines on subsidies: Where’s the outrage over the last bailout? Retrieved from https://viewfromthewing.boardingarea.com/2017/10/30/hypocrisy-us-airlines-subsidies-wheres-outrage-latest-bailout/

Posaner, J. (2016, September). Norwegian airline clouds open skies. Politico. Retrieved from https://www.politico.eu/article/norwegian-airline-nai-ireland-us-open-skies/

US Department of State. (2002, March). Air transport agreement: U.S. UAE air transport agreement of March 11, 2002. Retrieved from https://www.state.gov/e/eb/rls/othr/ata/u/