There are a lot of vested interests in this debate and each side tries to advance its commercial case, including by hiring experts to represent them in the court of public opinion. There are also facts.
I was sickened to read Delta’s response to an admitted partisan on this issue, however, because it was so disingenuous. Nearly every word of their email warps the space-time continuum of truth.
- Delta begins by noting “Kevin represents and is being paid handsomely by companies that benefit from the subsidies” but aren’t themselves transparent about the people featured as
independent experts’ in their video who are themselves paid handsomely by companies that stand to benefit from protectionism.
Take, for instance, former Transportation Secretary James Burnley whose bio notes his role as outside legislative counsel to American Airlines.
For avoidance of doubt I have never been paid by Emirates, Etihad, or Qatar and have never done any consulting work on the issue of US Open Skies treaties. Nor to the best of my knowledge have I ever met Kevin Mitchell.
- Delta claims that when Mitchell points out the Open Skies treaties do not prohibit subsidies (because they only mention the word subsidies once and don’t prohibit them, and even contemplate traffic rights for airlines owned entirely by governments), he’s “parsing words” and notes that the treaties seek a “fair and equal opportunity to compete in the international market.”
That’s Delta parsing words, or rather taking them out of context, because the fair and equal opportunity to compete that the treaties provide for is that government shouldn’t do anything to stand in the way of the preferred service airlines from either country wish to offer.
Delta, in calling for limits on air service by Emirates, Qatar, and Etihad, is calling for an end to the “fair and equal opportunity” that the treaties seek to provide.
- Delta claims that Gulf carriers are ‘dumping’ capacity “at prices that are too low to allow economical services.” But major US airlines have always responded to upstart competitors by dumping capacity into markets where to entrants seek to compete. They lower prices. And they use their sales agreements and frequent flyer programs to drive competitors out of the market.
These same US airlines have successfully argued for a standard that it isn’t ‘dumping’ if the carrier could make money filling all its seats at the prices offered. Anything other than that is business judgment.
And the major US airlines have exercised poor business judgment, offering uneconomical services, for the majority of their existence — Delta has lost as much as $9 billion in a single year. Still the idea that Gulf carriers offer fares lower that US airlines is strange (are these US airline fares from U.S. airlines artificially low?), yet rebound to the benefit of consumers in any case.
- Delta claims that the Gulf carriers “are breaching their obligation under Article 11 of the agreements to allow U.S. airlines a ‘fair and equal opportunity’ to compete.” However article 11 doesn’t mention subsidies at all.
Article 11 requires that,
neither Party shall unilaterally limit the volume of traffic, frequency or regularity of service, or the aircraft type or types operated by the designated airlines of the other Party, except as may be required for customs, technical, operational, or environmental reasons under uniform conditions consistent with Article 15 of the Convention.
If the US were to act on Delta’s complaint they would be abrogating not enforcing the treaty. Delta gives away the entire game, though, when they don’t even claim the Gulf carriers violate the only treaty article that mentions subsidies.
- I nearly spit out my coffee when Delta claims not to be asking the government to impose a freeze on flights by Emirates, Etihad, and Qatar to the U.S. in spite of their rights under the ratified treaty, because Delta is merely asking for a voluntary freeze — a voluntary freeze under threat by the U.S. government.
- Delta claims that if the US limited flights otherwise allowed under these Open Skies treaties, we shouldn’t expect retaliation, and Fedex could continue operating its Dubai hub — but that “[t]he impact of unfair Gulf carrier competition on the cargo sector is not our concern” in any case. This is about Delta’s interests only, not national interests.
- Bizarrely, Delta claims it “strongly supports the U.S. Government’s open skies policy” but then explains what it supports are the things that benefit Delta like allowing for anti-trust immunized joint ventures which reduce competition.
The idea that their position helps consumers is laughable when they’ve said what they want is “new rules on price-lowering.”
So much for Delta “reach[ing] out directly to set the record straight.”