The campaign by Delta, United, and American to limit consumer flight choices and raise prices by enacting protectionist policies against Emirates, Etihad, and Qatar went nowhere with the Obama administration.
However Delta’s CEO declared that thanks to Donald Trump they’d get another bite at the apple to build a wall on the border with Qatar and make Akbar al-Baker pay for it. Delta’s CEO declared himself very encouraged by Donald Trump.
Major US airline lobbyists have been hard at work on this. Their team even fabricated the evidence to make their case. And US airlines were born in subsidy and continue to be heavily subsidized to this day.
But it’s not about truth, it’s about using the government to redistribute money from consumers to large airlines. In the process carriers like Alaska and JetBlue (which partner with Emirates) and Fedex (which has a hub in Dubai) get hurt. And so does Boeing, which sells large quantities of planes to the Gulf airlines while Delta buys used and Airbus.
However they appear to be making progress with the Trump Administration whereas they were unable to persuade the Obama administration (which privileged cooperation with the UAE and Qatar in the fight against ISIS over mercantilist trade policy).
Politico reports that while the Trump Administration has “not yet reached a consensus about what they should do, if anything, and a final decision is not imminent” they are seriously considering:
- “informal talks with the UAE and Qatar to limit the number of flights into the U.S. or restrict certain routes”
- “terminating the [Open Skies] agreements with those countries and using the one-year period before the termination goes into effect to negotiate” new terms.
National Security Council, Transportation Department and other agencies huddled for the latest strategy meeting on the aviation agreements last week while Trump’s senior aides were in Europe.
…The internal debate comes amid a broader discussion within the administration on trade that has sometimes divided Trump’s team, with [Trade advisor Peter] Navarro and other nationalists pushing for aggressive trade restrictions and others, like [National Economic Council Director Gary] Cohn, urging caution.
I continue to believe that the Administration overplayed its hand during the President’s trip to Saudi Arabia, emboldening the Saudis and the UAE to isolate Qatar, and that as a result they need to resolve Qatar’s isolation before launching any new attack.
— gary leff (@garyleff) May 21, 2017
It’s clear that the administration is divided on issues of trade, with hard liners failing to win on significant trade issues to date. The administration hasn’t withdrawn from NAFTA or made headway in advancing a ‘border adjustment tax’. That could suggest proponents of more open trade who disagree with subsidizing large profitable companies at the expense of consumers are likely to win. Or it could suggest giving a courtesy victory to the other side in this instance.
However the geopolitical situation in the Mideast suggests if the Trump administration were to pursue a protectionist stance against the Gulf carriers, it would hold off until relations with Qatar normalize.
(HT: Paul H.)