USQBC President Pens Letters to 21 US Senators on Open Skies

In June 2015, twenty-one US Senators from both parties penned a letter urging the US Government to request consultation with the UAE and Qatar over alleged airline subsidies. The Partnership for Open and Fair Skies and the Americans for Fair Skies campaigns claim the Arabian Gulf carriers (Emirates, Etihad, and Qatar Airways) receive government subsidies that put the Big Three American carriers (American Airlines, Delta, and United) at risk, and put American jobs in jeopardy. The President of the US-Qatar Business Council, Ambassador Patrick N. Theros, wrote individual letters to each Senator to correct many misguided claims, and to urge that the lawmaker reconsider their requests to alter the Open Skies Agreements with the UAE and Qatar. In these letters, the Council explained that the Open Skies Agreement signed with Qatar makes only one reference to subsidies when it cites the practice of dumping. Dumping is the export of goods and services at prices lower than the price in the home market or below the cost of production. Qatar Airways is clearly not dumping; its ticket prices are mostly more expensive than those of the complaining carriers. The Council also asked the Senators to consider the difference between a subsidy and an investment. Qatar and the UAE have made large, at-risk investments in their respective airlines to develop their fleets and services. The two governments expect returns for these investments. On the other hand, the Council asked the Senators to note the complex set of US government subsidies given to US carriers like the Air Transportation Safety and System Stabilization Act. This act alone gave the US carriers nearly $15 billion in 2012. As a result of subsidies like this, US carriers have made record profits. The letters call on the Senators to question the risks of attacking the Arabian Gulf carriers when our own carriers enjoy very large subsidies approved by the Senate. The Council’s letters dispel the baseless claims of unfair competition between US carriers and Gulf carriers. In fact, the route structures of the US carriers rarely intersect with those of the Gulf carriers. Gulf and American carriers only directly compete on two routes out of the hundreds flown by both groups. Not only do the Gulf carriers not operate more than two routes worldwide that compete with the American carriers— they offer a completely different quality of service, marketing to an entirely different customer base. The Gulf carriers market to passengers who seek a higher quality of travel at a price greater than most other carriers. The US carriers, on the other hand, cater to passengers who prefer cheaper fares, albeit with a lower quality of service. Most importantly, the Council demonstrated that contrary to claims made by the twenty-one Senators, Gulf carriers aren’t risking American jobs— they’re creating American jobs. Gulf carriers buy hundreds of billions of dollars worth of American-made aircraft creating thousands of direct and indirect American jobs. And, when Gulf carriers start service to underserved US ports of entry, they bring international visitors to these American cities. Tourists spend money and business travelers open new opportunities. The Council’s letters urged the Senators not to take further action to alter the Open Skies Agreement with Qatar. The Open Skies Agreement seeks to preserve an open market. This is no place for the US government to rework trade agreements. Changing the Open Skies Agreement will limit the freedom of choice for American travelers, reduce access to the US for foreign visitors, and hinder both tourism and business opportunities. Further, it may lead the US down a slippery slope of protectionism and retaliation, threatening important exports from all the states the Senators represent.