Competing on a Level Playing Field

Competing on a Level Playing Field

© David Burton 2015

Emirate Airlines

     In international business, the United States has long had a policy of encouraging fair and open competition. With respect to international air travel “Since 1992, the U.S. has signed 114 Open Skies treaties with countries around the world, designed to promote growth in international air travel by allowing each country’s carriers free and open access to the other country’s market. Importantly, Open Skies agreements are premised on fair competition free of government distortion.” (Ref. 1)

     American air carriers are now claiming that such is not the case with the state own owned international airlines of the of the Persian Gulf region. The Chief Executive Officer (CEO) of United Airlines says that some $42 billion dollars in Gulf government subsidies provided to the Gulf airlines over the past decade “are an abuse of the Open Skies agreements, and have permitted the Gulf carriers’ massive growth (almost four times the rate of growth of demand) at the expense of U.S. airlines. . . .
     “The massive government subsidies that Qatar Airways, Etihad Airways and Emirate Airline receive are in direct violation of the fundamental underpinnings of the Open Skies agreements and distort the international aviation market.
      - - -
     “U.S. airlines can and will compete on a level playing field, but we’ll only have that if we compete against airlines, not against the treasuries of Gulf nations.” (Ref. 1)

     Here in Boston, both Qatar Airways and Emirate Airlines have been conducting radio and other media advertising campaigns touting their high quality service and foreign destinations. This week Qatar Airways announced that it would “start nonstop daily flights next year (2016) between {Boston’s} Logan International Airport and Doha, Qatar’s capital city.” (Ref. 2)

     This announcement was expected to elicit a strong negative response from affected U.S. airlines which “accuse Qatar Airways, Emirates and Etihad Airways of competing unfairly through more than $40 billion in subsidies from their home governments in the last decade, allowing them to drive down ticket prices and begin pushing competition out of key markets.
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     “Delta Airlines, United Airlines and American Airlines are pressing for a temporary freeze on new Gulf airline service to the U.S. While the Obama administration said it would begin reviewing Comments of subsidy claims by the end of this month {May 2015}, the U.S. airlines have charged their Gulf rivals with taking advantage of the waiting period by adding new flights.
     “’These additional flights and capacity increases will exacerbate the existing harm to U.S. airlines by diverting even more passengers away from U.S. airlines’ service to Gulf carriers’ subsidized services,’ the CEOs of the three U.S. airlines said in an April 17 {2015} letter to the {Obama} administration.” (Ref. 2)

     “Subsidies would violate . . . Open Skies agreements between the countries that call for unhindered access for airlines. In more than 1,000 pages of reports and financial documents, U.S. airlines contend that Gulf carriers get interest-free government loans and cheaper access to airports and services such as fuel and ground handling that make it impossible to compete for lucrative international travelers.” (Ref. 3)

     “Under the ownership of Dubai’s government, Emirates has become the world’s biggest airline by international passenger traffic, helping it to generate the sort of money that many of its more established rivals can only dream of.
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     “US concerns have also been echoed by European officials who are {also} growing increasingly concerned that Gulf carriers have an unfair trading advantage.
     “. . . {T}he French transport minister pitched into the intensifying row . . . by saying that airlines in the region benefited from ‘significant public subsidies and guarantees’.” (Ref. 4)

     In addition to the American complaints, “France and Germany are leading a call for the European Union to ensure fair competition between EU airlines and those from the Gulf region that are accused of receiving major state backing.
     “The French and German transport ministers said in a statement . . . that they want their EU partners and the executive Commission ‘to adopt a common strategy to bring an end to these practices.’ . . .
     “Austria, Belgium, the Netherlands and Sweden have backed the Franco-German call . . .” (Ref. 5)

     Another complaint against the Gulf airlines concerns their treatment of women employees. “Cabin staff working for two major Gulf airlines face losing their jobs for falling pregnant and are even required to get permission before they marry . . .
     “According to the International Transport Workers' Federation (ITF), carriers based in Qatar and the United Arab Emirates are guilty of 'flagrant abuses of aviation workers' labour rights'.
     “The worst offender, according to ITF, is Qatar Airways - which employs over 31,000 people and is the world's tenth largest airline with a modern fleet of over 100 aircraft.
     “According to ITF, Qatar Airways currently operates a draconian hiring policy insisting:

  • Flight attendants must ask permission before getting married
  • Female flight attendants can only be hired if they're single
  • They must remain single for at least five years after starting work
  • Female flight attendants must notify the airline immediately if they fall pregnant
  • Pregnancy can be considered a breach of contract and can lead to firing.
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     “{The} civil aviation secretary at the international grouping of transport unions, said: 'The treatment of workers at Qatar Airways goes further than cultural differences.’
     “ ‘They are the worst for women's rights among airlines.' ” (Ref. 6)

     So where will these complaints against the Gulf airlines lead? Only time will tell. Simple economics and equal rights for women may not be the deciding factors. International politics, oil diplomacy and even religion will likely play a significant, if not deciding, role in determining the final outcome. But, for now, the process of shedding light on the operation of the Gulf airlines has begun and that may prove to be highly significant in the end. Transparency in the tightly controlled autocratic Gulf region is not common. International fliers may want to express their opinions in the matter through their choice of carriers when making travel arrangements.

  1. Open and Fair Skies, Jeff Smisek, Hemisphere Magazine, Page 12, May 2015.
  2. Daily nonstop flights to Qatar coming to Logan in March, Donna Goodison, Boston Herald, Page 17, 5 May 2015.
  3. Airline, travel execs clash over subsidy allegations, Bart Jansen, USA Today, 4 May 2015.
  4. Gulf airlines are winning the battle for the skies, Andrew Critchlow, The Telegraph, 21 March 2015.
  5. France, Germany urge EU action against state support for Gulf airlines, Associated Press, Fox Business,
    13 March 2015.
  6. Forced to stay single and facing the sack if they get pregnant, the staggeringly sexist rules for female cabin crew on Gulf airlines, Daniel Miller, Daily Mail, 24 February 2015.

  15 May 2015 {Article 219; Whatever_39 }    
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