Focus: Gulf airlines face looming growth threat from 'protectionist' Trump government

Election of Donald Trump, one-time owner of now-defunct East Coast airline Trump Shuttle, to the US presidency could revive nationalistic attitudes to air access

Already fragile ties between US and Gulf carriers could weaken with the election of Donald Trump as president of the United States this week, analysts have warned.

An ongoing campaign by the three biggest US carriers claiming Gulf airlines’ global expansion has breached Open Skies policies has so far failed to deter Emirates, Etihad and Qatar Airways. All have launched new flights to the US in the past 12 months.

The US carriers, American, United and Delta Air Lines, claim their Middle East rivals have received $42 billion in government subsidies to unfairly spur their growth.

Emirates, Etihad and Qatar Airways have repeatedly denied the claims, while talks with the US government in June aimed at resolving the dispute were reported to have been “constructive” and ended without any formal action being taken.

However, last month, Delta CEO Ed Bastian reignited the row, reiterating that the alleged government subsidies had made it uncompetitive for US airlines to fly to GCC countries.

While Trump has not publicly taken sides in the dispute, it is feared his protectionist stance could force US lawmakers to revisit lobbyists’ claims.

In a statement on Wednesday night, the Partnership for Open & Fair Skies, which represents the US airlines in the campaign, said: “We look forward to briefing President-elect Donald Trump and his new administration on the massive, unfair subsidies that the UAE and Qatar give to their state-owned Gulf carriers.

 

“The Gulf carrier subsidies threaten the jobs of 300,000 US aviation workers and the American aviation industry as a whole, and we are optimistic that the Trump administration will stand up to the UAE and Qatar, enforce our trade agreements and fight for American jobs.”

Will Horton, Hong Kong-based senior analyst at the Centre for Aviation (CAPA), said:  “[Trump’s] campaign’s combination of populism, nationalism, protectionism, racism and anti-Muslim rhetoric does not bode well for an industry such as aviation that flourishes on the free flow movement of people and goods.

“Mr Trump suggesting he would ban Muslims, entirely or partially, is a direct concern for Middle East aviation: Gulf airlines are making America their single largest market. Impacts to airlines could provoke a wider realignment of diplomacy.”

In a paper responding to the election results, CAPA warned that “Open skies, already clouded, could darken further”.

It said: “Following a lengthy softening-up process by the US over the past year, seemingly against any foreign airline that might threaten the status quo, a Trump administration may well revive that populist course.

“The publicity that the Big Three[US] airlines attracted globally has created a belief outside the US that ‘open skies’ agreements [to regulate competition in the market] are a thing of the past; that liberal attitudes to air access have passed their zenith.

“Mr Trump’s ascension may be seen by many as a signal to revive that movement and a confirmation that these attitudes are mainstream.”

Ed Bastian, CEO of Delta Airlines. (Getty Images)

The paper added: “Aviation policy typically does not feature high in the priorities of prospective presidential candidates. Yet the nationalistic appeal of the airline pilots’ unions struck a chord with both populist candidates –Trump’s and [Bernie] Sanders.

“The often-misplaced arguments fell squarely into the category of appealing to voters concerned for their jobs, and who see all the perceived negatives of foreign trade - without recognising the positives.”

Conversely, any protectionist, nationalistic approach by the new Trump administration with regard aviation policy could result in slower growth and less foreign airline competition, CAPA said.

IAG chief executive Willie Walsh has previously warned over increasing protectionism in the US aviation industry, and said it is in the new US government’s interest to ensure pro-competition bilateral air services agreements – although he was speaking in the context of US-UK relations.

“If [Trump] is to deliver on the promises he gave – growing employment and strengthen the economy – aviation is going to be a key facilitator to achieving those goals,” Walsh told the International Aviation Club in Washington DC.

Emirates declined to comment on the possible impact of Trump’s win on Gulf aviation, while Etihad did not immediately comment when approached by Arabian Business.

Flight Global reported that Qatar Airways CEO Akbar Al Baker has previously shrugged off any concerns that Trump could back the Gulf carriers’ US opponents.

Willie Walsh, CEO of International Airlines Group (IAG).

He previously said his relationship with Trump “goes way back”, according to the website. “I have always said that the rhetoric that surrounded Mr Trump’s campaign with respect to our region is only political in nature, and I am certain that the road ahead will clearly demonstrate that Qatar and the US have enjoyed a longstanding partnership and are close allies,” Al Baker was quoted as saying.

“We are confident that this relationship will only continue to grow, and will forge stronger ties across the Middle East region as a whole.”

Industry body the International Air Transport Association (IATA) declined to provide a statement to Arabian Business, saying it is “still too early to tell if anything will change as Trump has yet to appoint a transportation secretary”.

Trump’s prior aviation experience is limited to his brief stewardship of Trump Shuttle, the US airline he owned from 1989 to 1992.

He acquired a fleet of planes in 1989 from the defunct Eastern Air Lines shuttle business, which was initially transformed into a glitzy service with champagne and tuxedoed waiters. However, he was forced to give up the venture after just three years.

Trump has since been quoted in the Boston Globe as saying: “It was a great experience. I enjoyed it. [The business] was incredibly well financed. That was the days where banks put up more than 100 percent of financing. I ran it really well.

“But the markets collapsed. The whole thing collapsed. For airlines, real estate. Everything. It was the depression.”

Said CAPA’s Will Horton: “Aviation has changed substantially [since then], but at least Mr Trump has a better idea of the hurdles and risks involved in running airlines. Yet it is unlikely a Trump administration will benefit aviation.”

Akbar Al Baker, CEO of Qatar Airways.
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Posted by: baba

If the Trump Administration toes the line of the US 3 Airlines, the following will be the impact to the US economy & GDP.

1. Over a million jobs will be created, as the US 3 can employ over a million people in the ME.
2. ME Airports will gain Billions a year, which they earn from the US 3, for operating into ME Airports.
3. Over half a million ground handling personnel, across ME, will have jobs.
4. Flight caterers will have to recruit hundreds of thousand workers, across ME, who supply millions of meals to the US 3.
5. Hotels across ME will gain 50% occupancy, if flight crews and passengers, of the US 3 occupy them.
6. Billions upon Billions of Dollars will be gained by the ME, as tourists, and business travelers will be visiting ME, from across the world.

Mr. Trump better think twice before passing any restrictions on the US 3 Airlines. The impact goes further, than what is stated above.

Posted by: Phiroze K. Cama

Further to my above posting, the oil companies will lose business, All 3 of the ME 3 Airlines fly the Super Jumbo the A380 and the B777-300's, which are refueled by USA based fuel and oil companies.

Most Important: Emirates Airlines are the World's largest operator of the Boeing B777's, with a fleet of over a 150 of these aircraft and another 100+ on order for the B777X. Etihad Airways has a large pending order for the B777's and other Boeing aircraft. Qatar Airways, has placed a large order of a 100+ aircraft, for the B737MAX. If the Middle East Big 3 are denied access to US Airports, they might cancel these very large orders worth 100's of Billion Dollars. Can Boeing afford to lose this business? Can America afford to lose this income? Mr. Donald Trump needs to think about this.

Posted by: jack sparrow

Good, now the 'premium' airlines will cater more to the hard-working expats, then useless Hollywood stars for mere brand promotion (do they even need it??)

Posted by: MT3

Sadly hubris is not a concept particularly well comprehended in Gulf business circles but I feel one or two companies' may well be becoming acquainted with it fairly soon. It will do them good and as long as the lessons are learned they will re-emerge stronger.

Posted by: Phiroze K. Cama

If the Trump Administration toes the line of the US 3 Airlines, the following will be the impact to the US economy & GDP.
1. Over a million American jobs will be lost, as the ME 3 employs over a million US citizens in the USA.
2. US Airports will loose Billions a year, which they earn from the ME 3, for operating into US Airports.
3. Over half a million ground handling personnel, across USA, will be jobless.
4. Flight caterers will have to lay off hundreds of thousand workers, across USA, who supply millions of meals to the ME 3.
5. Hotels across USA will lose 50% occupancy, if flight crews and passengers, of the ME 3 do not occupy them.
6. Billions upon Billions of Dollars will be lost by the USA, as tourists, and business travelers will not be visiting USA, from across the world.

Mr. Trump better think twice before passing any restrictions on the ME 3 Airlines. The impact goes further, than what is stated above.

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