by Matt Alderton | April 09, 2015
The travel-industry conflict over the United States' "Open Skies" agreements took another twist yesterday when the Business Travel Coalition unearthed via WikiLeaks a government report showing that U.S. airlines in the past have received government subsidies.
The conflict between the U.S. Travel Association and the "Big 3" U.S. airlines -- American Airlines, United Airlines, and Delta Air Lines -- began in February when executives from the latter met with the Obama Administration to request that the federal government renegotiate its Open Skies agreements with the United Arab Emirates and Qatar, limiting the ability of carriers like Emirates, Etihad Airlines, and Qatar Airways to operate flights to and within the United States.

Supported by government and industry for more than two decades, Open Skies agreements are broad international commitments designed to facilitate increased competition, lower fares, and more flights in the international air travel marketplace. In the case of Persian Gulf airlines, however, U.S. airlines argue that they're at a disadvantage in their domestic markets because Middle Eastern carriers receive subsidies from their sponsoring governments.

The government report made public by the Business Travel Coalition -- published in 1999 by the Congressional Research Service and released in 2009 by WikiLeaks -- reveals that U.S. airlines received $155 billion in federal subsidies between 1919 and 1998.

According to the U.S. Travel Association, which argues that Open Skies agreements are critical for keeping air travel competitive, the revelation renders U.S. airlines' position moot.

"The Big Three U.S. airlines have constructed themselves an enormous glass house, and their amnesia about their own subsidies has now cost them the credibility of their own core argument for breaking Open Skies agreements," U.S. Travel Association Executive Vice President for Public Affairs Jonathan Grella said in a statement. "This exposes the fiction that the U.S. airline cartel's furious and expensive assault on Open Skies is about subsidies. We hope this prompts policymakers and the public to ask: OK, what's really motivating the campaign to break these agreements? We hope there is something else to dissuade us from by far the most likely conclusion: The Big Three airlines hate competition, and rather than cope with it in the marketplace they will undertake extreme means to stamp it out politically."

Airlines React

The Partnership for Open and Fair Skies, which represents U.S. airlines and their unions in the Open Skies debate, called the Congressional Research Service report "laughable."

"It is laughable that a two-decade-old unpublished paper examining U.S. aviation since 1918 is being trumpeted as 'evidence' that U.S. airlines are supported the way that the United Arab Emirates and Qatar routinely subsidize their airlines," spokesperson Jill Zuckman said in a statement. "This is a case of distract and dissemble … The vast majority of the so-called subsidy includes the entire annual budgets for the Federal Aviation Administration from 1958 to 1998 and the cost of building air traffic control towers decades ago. Calling FAA funding a subsidy for commercial airlines is akin to calling paved roads and traffic lights a subsidy for the taxi industry. In fact, U.S. airlines send billions of dollars to the federal government every year to cover the cost of aviation services.

"It is a shame that the U.S. Travel Association and the Business Travel Coalition are acting at the behest of funders friendly to the Middle East carriers and their governments, rather than in the best interests of American jobs, consumers, and companies.

"It is time to ensure U.S. airlines and their workers are operating on a level playing field with their state-funded competitors in the Middle East. U.S. airlines shouldn't have to compete with the treasuries of foreign governments who offer their state-owned carriers blank checks."


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