US airline CEOs accuse legacy Carriers of jeopardising open skies

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The three major US legacy carriers are making demands that would jeopardize Open Skies and reduce competition, the CEOs of four US airlines tell the newly appointed US Secretary of State and Transportation Secretary.

In letters to Secretary of State Rex Tillerson and DOT Secretary Elaine Chao, the heads of Hawaiian Airlines, New York-based JetBlue Airways and cargo carriers Atlas Air and FedEx appeal collectively under the banner of the Airlines for Open Skies (USAOS), a coalition formed to counter the anti-Gulf airline campaign led by American Airlines, Delta Air Lines and United Airlines.

That campaign alleges Emirates Airline, Etihad Airways and Qatar Airways operate on the back of large government subsidies not allowed under terms of the US Open Skies agreements with the UAE and Qatar. The campaign was much quieter in 2016 after not being able to persuade the Obama administration to hold formal government-to-government talks, although some informal, technical meetings were held. But there is movement this year to get the issue reignited under the new Trump administration and to freeze access to the US by those three Gulf carriers.

The USAOS letter, signed by Hawaiian president and CEO Mark Dunkerley, JetBlue president and CEO Robin Hayes, Atlas president and CEO William Flynn and FedEx president and COO David Bronczek, is an attempt to head off that renewed campaign effort.

The CEOs point out that the more than 100 Open Skies agreements negotiated over the past three decades have been signed under Republican and Democratic administrations.

“These agreements eliminate government interference in commercial decisions about the routes, frequency, pricing, and capacity of airline service, both passenger and cargo. They also assure the ability of all US airlines to create comprehensive international networks,” their letters state.

“Regrettably, three large legacy US airlines—Delta, United, and American—are making demands that would jeopardize Open Skies and reduce competition in an already overly concentrated US airline market.”

The USAOS letters say the legacy carriers have failed to cite a specific violation by the Gulf carriers.

“By contrast, freezing US routes would indisputably breach Open Skies, harm US airline passengers and endanger US jobs,” the CEOs say. “It would reduce competition not only on international routes where the legacy carriers and their joint venture partners already predominate, but also in the domestic market by stemming the flow of passengers into the United States that has enabled smaller US airlines to expand service and compete with the legacy carriers.  It would also endanger the global networks of US cargo airlines that deliver high-value US exports and vital supplies for the US military around the world.”

The renewed campaigns come as the Gulf carriers are expanding their US networks. Etihad, for example, upgraded its 3X weekly service to Dallas/Fort Worth to daily service from Feb. 2, although the Abu Dhabi carrier has said it has no immediate plans to add more US city destinations.

More contentiously, Dubai-based Emirates has announced it will begin Dubai-Athens-New York Newark service in March, a route that uses fifth-freedom rights permitted by the Open Skies agreement. Emirates’ president Tim Clark has made clear that the Athens-US market is under-served, that the route is legal, and that aviation liberalization has driven growth in jobs, economies and airline competition in all countries that participate.

 

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