Airlines accused of hypocrisy on international flight subsidies

U.S. airlines are being accused of hypocrisy for arguing that foreign carriers’ subsidies are ruining competition for international flights.

The Washington, D.C.-based U.S. Travel Association said Wednesday that domestic airlines received $155 billion in subsidies from 1919 to 1998, citing a report from the Library of Congress’s independent Congressional Research Service (CRS). 

The group’s executive vice president for public affairs, Jonathan Grella, said the report shows the companies have other motives.

{mosads}”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,” Grella said. 

“This exposes the fiction that the U.S. airline cartel’s furious and expensive assault on Open Skies is about subsidies,” he continued. 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.” 

At issue is a claim by airline industry unions that Qatar Airways, Etihad Airways and Emirates Airlines, which are owned by the governments of Qatar and the United Arab Emirates, have received more than $42 billion in subsidies since 2004. The airlines say the subsidies violate the spirit of the Open Skies agreements between the U.S. and Middle Eastern countries and should be reviewed by federal officials.

The travel industry and consumer groups say airlines are trying to prevent competition for international flights, but domestic aviation groups have said the subsidies are preventing fair competition between U.S. airlines and foreign carriers. 

“This subsidized support includes interest-free government ‘loans’ with no repayment obligation, government grants and capital injections, free land, airport fee exemptions and more,” a coalition of U.S. aviation groups known as the Partnership For Open and Fair Skies says on its website. 

“These subsidies are a clear violation of Open Skies policy, which is based on the principle of fair competition in a marketplace free of government distortion,” the airline coalition continued. “$42 billion in subsidies and unfair benefits is the very definition of government distortion.” 

Grella said the research service’s revelation that airlines had received similar subsidies in the past pokes a large hole in the domestic carriers’ argument. 

“We have long known that the subsidy argument for breaking Open Skies agreements was thin if not downright foolhardy, and now we have strong evidence of that from an unbiased source, the Congressional Research Service,” he said. “This development, coupled with the inarguable harm rolling back Open Skies would inflict upon American travelers, economic productivity and job creation, should end any discussion over selectively abrogating the agreements.”

The Americans for Fair Skies group, which is separate from the Open Skies partnership, said Wednesday the comparision between current foreign airline subsidies and older payments to U.S. carriers is unfair because the distributions to domestic carriers were made before the Open Skies agreements were signed. 

“To compare these current subsidies to a nearly 20-year old report on the founding of aviation in the United States as we first took to the skies with early test-flights is like comparing a Boeing 777 to a paper airplane. The comparison is actually laughable,” the Fair Skies group said in a statement that was provided to The Hill.  

“Any comparison of the evidentiary findings regarding the current Gulf subsides, which have been presented to the U.S. government and made available to the public, to the massive subsidies coming out of the Middle East is an absurd and desperate attempt to distract from the real fact-based evidence on the Gulf subsidies,” the Fair Skies group continued.

The Fair Skies group added that “the subsidies provided by Qatar and the United Arab Emirates to their airlines represent the largest trade violation in history and the worst form of protectionism.

“The United States government must immediately engage these two countries in the formal consultations process, outlined and made available to all parties in Open Skies Agreements, to bring about an end to these subsidies, which threaten U.S. aviation jobs by distorting the international marketplace,” the group said. 

-This post was updated with new information at 1:44 p.m.