Is Boeing Neutral in Fight Over Gulf Carrier Open Skies Violations?
Boeing (BA) - Get Report has said repeatedly that it is neutral in the battle over rapid U.S. expansion by the subsidized Gulf carriers, but advocates for limiting that expansion contend Boeing is not quite so neutral as it ought to be.
At the Dubai Air Show, which concluded Wednesday, Boeing played a prominent role as usual although it did not announce any new orders. It did, however, announce its intent to establish its Middle East headquarters in Dubai, it forecast continuing strong Middle East demand and its executives met with Middle East leaders.
Speaking to reporters, Boeing CEO Dennis Muilenburg reiterated the company's support for Open Skies treaties, declaring, "We're very hopeful the governments will continue to work together to create an open skies frame work," according to a report in Dubai-based Gulf News Aviation.
"We see free trade and freedom of the skies as key economic enablers and we see that as good for our airline customers here in the Middle East and in the U.S.," Muilenburg said.
In a story headlined "Boeing Co. Hopeful Open Skies Regime Won't Be Change," Gulf News Aviation said Boeing "is hopeful the United States government will not change its policy of allowing foreign airlines to fly freely to the country, despite calls to do so from the US' largest carriers."
The U.S. plane maker is caught in the middle of back-and-forth tit-for-tat that started {when} United, Delta, American asked the U.S. government earlier this year {to prevent} Emirates, Etihad Airways and Qatar Airways from launching any more flights to the country," Gulf News reported.
Jill Zuckman, spokeswoman for The Partnership For Fair and Open Skies, which represents the three global U.S. carriers and their unions, said, "Of all the players in the aviation industry, Boeing knows better than anyone that foreign government subsidies are a toxin that destroys competition and erodes American jobs.
"Rather than 'trying' to be neutral, they should support American, United, Delta and 300,000 aviation professionals in their request that the Obama administration enforce its Open Skies agreements with the UAE and Qatar," Zuckman said in a written statement.
The partnership contends that the subsidized Gulf carriers' rapid U.S. expansion violates Open Skies agreements and has asked for enforcement of the agreements. But the Gulf States' role in U.S. diplomatic and military efforts in the region complicates that request. Also, the U.S. Justice Department has warned of higher fares and fewer choices for consumers if the Obama administration blocks new flights, Reuters reported last month.
Moreover, Boeing is a powerful voice in Washington, such that whatever position it takes or doesn't take or seems to take is meaningful.
Middle East airlines currently have 560 orders for Boeing aircraft. Included are 225 of the 336 orders for Boeing's newest aircraft, the 777X, scheduled to be available in 2020.
Just before the Dubai Air Show, Boeing forecast that airlines in the Middle East will need 3,180 new airplanes valued at an estimated $730 billion over the next 20 years. Additionally, Boeing noted that Middle East countries are customers for its defense business.
At the air show, Qatar, the first airline in the Middle East to fly the Boeing 787 Dreamliner, celebrated delivery of its 25th aircraft.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.