This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

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

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BA $148.52 -1.00%
DAL $43.23 -3.80%
AAPL $123.96 -0.38%
FB $81.34 -1.10%
GOOG $540.96 -1.30%


DOW 17,656.64 -119.48 -0.67%
S&P 500 2,056.38 -11.51 -0.56%
NASDAQ 4,865.2190 -35.6660 -0.73%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs