Opposing View: ATW’s Karen Walker Misses Bigger Picture in Open Skies Debate
Last week, Jeff Smisek, CEO of United Airlines, gave a speech to a sold-out crowd at the Wings Club in New York City, highlighting the massive subsidies that the governments of Qatar and the United Arab Emirates are providing to their state-owned carriers in violation of Open Skies agreements. In response, Air Transport World’s editor Karen Walker attempted to rebut some of Jeff’s statements, but the logic behind her claims is haphazard and in many cases nonsensical.
Ms. Walker asserts that the Gulf airlines have been profitable in recent years and specifically questions whether Emirates has incurred significant losses. But while Emirates, along with Etihad and Qatar, claims to be profitable, forensic evidence uncovered during a two-year investigation says otherwise. According to their own auditors, without the subsidies, Etihad and Qatar would not be commercially viable, and likely would not exist. Emirates does not release detailed financial statements the way the U.S. carriers do, and Qatar Airways, Etihad Airways and Emirates’ refusal to open their books only further suggests that the Gulf carriers have something to hide.
The Partnership does not take issue with state-owned airlines, as Ms. Walker implies, but rather the sheer magnitude of subsidies granted to the three Gulf airlines in violation of Open Skies policy. The Gulf carriers are expanding at an unprecedented rate and Qatar and the UAE are intervening in the market to help their state-owned airlines radically increase the flow of airline passengers through their hubs in the Middle East.
Additionally, Ms. Walker implies that Chapter 11 bankruptcy restructuring is a subsidy that the U.S. carriers receive. However, bankruptcy proceedings are not subsidies. They are restructurings conducted by an independent judiciary that do not involve any injections of taxpayer funds. The bankruptcy process is not considered a subsidy under international trade laws and is a common feature of many legal systems around the world.
Ms. Walker also implies that the European airlines have not been affected by Gulf carrier expansion. International service in Europe has plateaued in the last decade, while the airports in Dubai, Abu Dhabi, and Qatar see huge international passenger and service growth, despite the lack of a robust domestic market. And European governments are responding to the aggression of the Gulf carriers: France and Germany have already frozen Gulf carrier traffic rights, and the European Commission has asked the United Kingdom to do the same.
Ms. Walker references small countries with whom the U.S. has Open Skies Agreements, but this is a distraction. In our opinion, of the 117 Open Skies Agreements the U.S. has signed, 115 of them are working as intended. There are only two countries – Qatar and the United Arab Emirates – that are violating these trade agreements through unprecedented subsidization. United Airlines and the rest of the Partnership for Open & Fair Skies support Open Skies agreements, which have opened up the world to our employees and our customers. The true threat to Open Skies policy is the flagrant abuse of Open Skies agreements by the Gulf carriers, which threaten American workers, U.S. airlines and service to communities across the country that rely on a strong domestic aviation industry for service and access.
Ms. Walker is right when she says that airlines are businesses: the U.S. airlines are ready and willing to compete with any airline on a level playing field. It is unfair, however, to ask our airlines to compete with unlimited blank checks from the treasuries of wealthy nations. That is why the Partnership for Open & Fair Skies is asking the U.S. government to seek consultations with Qatar and the United Arab Emirates to ensure that all parties to these international agreements are competing fairly.
Jill Zuckman is the chief spokesperson for the Partnership for Open & Fair Skies.