Global Airlines: Is it a Fair Playing Field?

The USA-UAE open skies agreement was created in the year 2002. This agreement aimed at encouraging a global aviation system based on competition among carriers in the industry with minimal government regulation and interference (AFS, 2017).  It also aimed at facilitating the expansion of global air transport opportunities, allowing airlines to provide traveling and shipping public numerous service alternatives at reduced costs and desiring to ensure a high degree of safety and security in global air transport, and reaffirming their great concern about actions against the security of flights (AFS, 2017). The agreement comprised twelve articles that include definitions, grant of rights, designation and Authorization, revocation of authorization, application of laws, safety, Aviation security, commercial opportunities, customs duties and charges, user charges, fair competition, and pricing. The two airlines include Etihad and Emirates Airways. The U. S aviation industry alleges that both airlines received more than fifty million dollars (50M USD) as subsidies from the United Arab Emirates and Qatar governments.

There are allegations that the three U.S giant carriers namely American Airlines, Delta Air Lines, and United Airlines once received subsidies during the early 2000s due to bankruptcy and subsidized fuel costs (Snoj, 2015). For instance, Delta Airlines received 84.8 million loan guarantees from the Export-Bank in 2012 and significant fuel tax breaks. Based on the alleged 2009 WikiLeaks report, the Federal government funded various aviation participants including airports, the FAA, and various airlines.

The major challenge, in this case, is the increased demand for aircraft. The UAE carriers order planes in bulk which might result in reduced overall costs compared to the American Airlines (Snoj, 2015). Furthermore, increased demand for airplanes also increases their costs making most American airlines to spend additional resources in acquiring the planes. Consequently, the American Airlines purchase planes at higher costs compared to the UAE carriers.  

Norwegian International Airlines (NAI) has some controversies in its operations that threaten the United States’ aviation industry. The Norwegian Air is based in Dublin instead of Norway. Critics argue that NAI’s operations in Dublin enable the airline to take advantage of Ireland’s employment regulations that are less stringent compared to the Norway’s regulations. Consequently, they argue that NAI can employ lower-cost pilots and cabin crew members from Asia to operate the trans-Atlantic routes. Some aviation experts consider the NAI policy as a strategy of dodging laws and taxes. These alleged issues have brought a lot of pressure after the U.S Transport Department established an open skies agreement with the airline. The aviation participants view the move of granting NAI the permit to operate in the USA as a betrayal to the America’s aviation employees. They further argue that the move threatens a generation of US airline jobs and communicates a negative image of America worldwide. NAI violates the labor protections by evading Norwegian taxes and planning to hire crews based on Asian contracts. As such, Trump’s administration might cancel the agreement to protect the American aviation industry from exploitation.

I believe the playing field is fair. It is the responsibility of airlines to improve their operations and services as a strategy for attracting more travelers. It is evident that all governments usually establish open skies agreement with the aim of building their economy. For instance, the three UAE carriers are the major clients of the Boeing manufacturing firm, and they also create suitable and job opportunities business ties between UAE and America. Consequently, the United States gains a lot from such agreements, and it is very difficult to cancel all the open skies agreements due to unfair competition. It is advisable for airlines to develop alliances or establish additional sources of finances to expand their operations to compete with the foreign carriers.  

References

AFS, (2017). The U.S- U.A.E Open Skies Agreement. Retrieved from

 http://fairskies.org/uaeopenskies/

Snoj, T. (2015). Open Skies Indeed. Retrieved from

            http://www.bq-magazine.com/industries/2015/05/the-open-skies-agreement