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Top 3 Ways the U.S. Favors Middle East Airlines Over U.S. Airlines


Airline industry leaders led by Delta  (DAL - Get Report) CEO Richard Anderson frequently decry the U.S. government's failure to pursue a coherent aviation policy. In fact, various government agencies often seem to work in direct opposition to U.S. airlines' interests. Moak provided three examples.

First, through its Ex-Im Bank, the U.S. government subsidizes the purchase of Boeing aircraft by foreign carriers including Emirates and Etihad.

Boeing spokesman Tim Neale said the "Middle East carriers' use of export credit has been below the historic global average," and added: "The cost of government export credit doubled earlier this year and is now in line with what's available from commercial lenders without government loan guarantees. In fact, U.S. airlines have been getting better rates this year in the commercial bond market than foreign airlines have been getting using government export credit."

Moak said that if Ex-Im Bank's export credit "isn't that great, people wouldn't be using it." ALPA, Delta and Hawaiian (HA) have filed three lawsuits challenging Ex-Im Bank transactions with various foreign carriers.

At the Dubai Air Show last month, the three Middle East carriers announced plans to buy 225 Boeing 777X aircraft, a symbol of their global aspirations, with Emirates taking 150 aircraft, Qatar taking 50 and Etihad taking 25. Neale said he expects the carriers will likely fund the purchases in the commercial financing market.

A second problem is that the U.S. has Open Skies treaties with 111 countries. That means carriers from those countries can fly to the U.S. and U.S. carriers can fly to those countries. The problem is that U.S. carriers don't want to fly there, so access to U.S. markets is negotiated away for nothing.

According to statistics compiled by ALPA, only 12% of the passengers between the U.S. and Abu Dhabi, Doha and Dubai fly on U.S. airlines. The rest fly on Middle East airlines. Among U.S. carriers, only three fly to the Middle East. Delta flies Atlanta-Dubai and JFK-Tel Aviv. United (UAL) flies Dulles-Dubai, continuing to Doha; Dulles-Kuwait, continuing to Bahrain, and Newark-Tel Aviv. US Airways flies Philadelphia-Tel Aviv.

Meanwhile, the Abu Dhabi pre-clearance facility would allow passengers to the U.S. from Abu Dhabi to quickly clear customs before arrival. It appears that the State Department wants to enable the facility in return for unknown concession in other areas. "There's no rational explanation for this," Moak said.

Written by Ted Reed in Charlotte, N.C.

To contact this writer, click here.

Follow @tedreednc

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