Global Airlines: Is It a Fair Playing Field?

March 17, 2018 

By - Kalan Foster 

Global Airlines: Is It a Fair Playing Field?

Implementing the US-UAE open skies agreement was a way to reduce the amount of responsibility and the involvement of the US government. The international air transportation sector is a very lucrative part of our industry and to avoid and political corruption it's best if they stay out of this part of the industry. The agreement, signed by the U.S. Department of State, permits the other country’s airlines to establish offices in the territory of the other Party for the promotion and sale of air transportation  (US Department of State. 2002, March 11). 

These are the rules listed under the open skies agreement (US Department of State. 2002, March 11):

• 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 in accordance with this Agreement and to withdraw or alter such designations.
• On receipt of such a designation, and of applications from the designated airline, in the form and manner prescribed for operating authorizations and technical permissions, the other Party shall grant appropriate authorizations and permissions with minimum procedural delay.
• 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 by the other Party's airlines. 
• Either Party may request consultations concerning the safety standards maintained by the other Party relating to aeronautical facilities, aircrews, aircraft, and operation of the designated airlines.
• The airlines 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.
• The airlines of each Party shall be permitted to pay for local expenses, including purchases of fuel, in the territory of the other Party in local currency.

The dispute between the US's three largest airlines and their overseas counterparts has been ongoing for years. The government has decided not to intervene and revoke the open skies agreement because of the dispute. There are no provisions anywhere in the open skies agreement regarding subsidies, the goal for US air carriers seems to be to create and issues to create reform for the open skies agreement. The case they have brought to the UAE Ambassador is that these air carriers should be considered unfair competition and removed from the agreement (Townsend, S. 2017, December 04). Fly Emirates and Qatar Airways do in fact receive subsidies from their government, but because there aren't any provisions in place to negate the increase in competition US air carrier have been lobbying the UAE Ambassador stating that these practices are unfair. 

There are several US Air carriers that receive subsidies from our government. Delta, JetBlue, and American airlines all receive subsidies, but it's not as nearly as much as their middle eastern counterparts (Flows, C. 2016, November 17). Delta has decided to target these airlines specifically because they are funded by their government, but they also partner with Chinese competitor that provide unfair rates. Unfortunately, our government can't pay these airlines huge subsidies because we have plenty of other issues outside of the aviation sector.

The Export-Import bank allows air carriers to take out loans and finance projects and these rates are guaranteed to be below market values to foreign buyers. Foreign companies buy their aircraft from here and export them back overseas because its cheaper and they receive a lower export tax (Export-Import Bank of the United States. n.d). Buying these aircraft at a cheaper rate allows them to sell cheaper faires making it more difficult for US Carriers to compete.  This option is unavailable to US air carriers become they pay US taxes anyways and its suppose to increase the profit of these manufacturers. 

Norwegian Air Internation (NAI) has gone years without being approved by the US to participate in the open skies agreement. They want to provide direct flights from Cork and Shannon to Boston for more affordable rates, the average cost of a round-trip ticket is about $400, NAI has projected around trip flight would cost around $140 (Posaner, J. 2016, September 02). Emirates and Qatar are a huge threat to the industry and they have the potential to ruin international trade between the US and the middle east and that's another reason why Delta has been trying to create more pressure. 

These issues are like walking on a tightrope, I want to say that they aren't playing fair but they aren't breaking any laws. I think its safe to say that these international air carriers don't have a business code of ethics and they aren't professional on that level of thinking but they are within their rights. I think the US Government should do what they can to ensure that our industry continues to thrive if these impacts are industry enough to cause job shortages or the loss of businesses I believe at that point they should intervene. Its very important to put America first in that regard but until it gets to that point I believe the answer to this question lies in the future. 

References

US Department of State. (2002, March 11). Air transport agreement: U.S. UAE air transport agreement of March 11, 2002. Retrieved March 17, 2018, from https://www.state.gov/e/eb/rls/othr/ata/u/ 

Townsend, S. (2017, December 04). US-UAE Business Council optimistic Open Skies Agreement will remain. Retrieved March 17, 2018, from https://www.thenational.ae/business/us-uae-business-council-optimistic-open-skies-agreement-will-remain-1.68099

Flows, C. (2016, November 17). Government Airline Subsidies... So What? Retrieved March 18, 2018, from https://www.forbes.com/sites/realspin/2016/11/17/government-airline-subsidies-so-what/#5dc514671f5f

Export-Import Bank of the United States. (n.d.). Export Finance Solutions to Increase Sales for U.S. Businesses [PDF file]. Retrieved march 17, 2018, from https://www.exim.gov/learning-resources/publications

Posaner, J. (2016, September 02). Norwegian airline clouds open skies. Retrieved March 17, 2018, from https://www.politico.eu/article/norwegian-airline-nai-ireland-us-open-skie

March 4th, 2018 

By - Kalan Foster 

FAA Administrator 

Donald Trump has nominated his private pilot to be the next FAA administrator, and his credentials are based on an article published in news week: “He’s managed airline and corporate flight departments, certified airlines from start-up under FAA regulations,” they said, pointing out Dunkin “oversaw the Trump presidential campaign’s air fleet, which included managing all aviation transportation for travel to 203 cities in 43 states over the course of 21 months. (News Week)”. This article was released on multiple platforms, once he’s seriously considered I believe his credentials will be officially questioned. Based on the evidence provided online there's no evidence indicating that he isn't fit for the position, I don't believe fair to introduce a biased opinion this early. 

Daniel K. Elwell is the Acting Administrator of the Federal Aviation Administration (FAA). Mr. Elwell was the Deputy Administrator of the FAA prior to his temporary promotion. He was also the assistant administrator for policy, planning, and environment for two years. Most recently he was also the Senior Advisor on Aviation to the secretary of transportation (FAA).

The previous FAA Administrator was Michael Huerta. He was the Associate Deputy for the U.S. Transportation Secretary, he was the Chief of Staff for the U.S. Transportation Secretary, and he was also the deputy administrator of the FAA prior to being the FAA administrator.

Randy Babbit was the FAA administrator prior to Michael Huerta. He had flown with Eastern Airlines for 25 years, and he also was acting president of ALPA for 8 years.

Bobby Sturgill is also in the running to become the next FAA Administrator. Sturgill has been a pilot in both civil and military positions, Sturgill is now in charge of a company Rockwell Collins in which he’s the Vice President of operations. Sturgill created a bad rep earlier in his career introducing legislation that left ATC exhausted and overworked while he was acting as the FAA administrator.

The FAA Administrator is responsible for the safety and efficiency of the United States airspace system. He’s in charge of managing the budget which is $16.4 billion dollars, approximately 47,000 employees, and is responsible for ensuring that the airline industry is complying with all the federal laws.

NextGen is a very delicate project, I believe this next milestone within the Aviation industry should be led by someone who already has experience within the FAA or the NTSB. The FAA Deputy seems like the position that prepares candidates to accept this role, I believe they should hire someone within the industry to ensure these projects receive the much-needed attention they require.


Sources
Lanktree, G. (2018, February 26). Who is John Dunkin? Trump wants his personal pilot to head America's aviation regulator. Retrieved March 04, 2018, from http://www.newsweek.com/who-john-dunkin-trump-wants-his-personal-pilot-head-faa-819300

Daniel K. Elwell. (2018, January 10). Retrieved March 04, 2018, from https://www.faa.gov/about/key_officials/elwell/