By Sarah Townsend
Competition from “subsidised” rivals is unfair but they bring in crucial investments, president says
US President Donald Trump has warned US airlines that foreign rivals “bring big investments” while pledging to support them amid tough competition, in the latest indication of his stance in the ongoing dispute between Gulf and US carriers.
The new president told a White House meeting with the country’s largest airlines, air freight companies and airports on Thursday that he would support the US aviation industry in its drive for growth and expansion.
In particular, he made reference to allegations spurred by US campaigners since 2015 that the three biggest Gulf carriers – Emirates, Etihad and Qatar Airways – have received billions of dollars of subsidies from their respective governments that has fuelled their expansion in the US. If true, said Trump, “it’s a pretty unfair situation”.
However, he tempered this with a reminder to US airlines that foreign players bring crucial investments to the nation, by sustaining jobs and supporting the tourism industry.
He told the meeting: “I know you're under pressure from a lot of foreign elements and foreign carriers. I've been hearing that a little bit.
“At the same time, we want to make life good for them also. They come with big investments – in many cases, those investments are made by their governments. But they are still big investments.”
Trump appealed to US players to suggest policy measures to support industry growth. “Let me ask you – what can we do to make your airlines better, to make your balance sheet better, to have you get more jobs and create more jobs, to have you win competition worldwide so you can start doing more business worldwide?” he said.
“Because I know you have a lot of competition, and a lot of that competition is subsidised by governments, big league.
“I’ve heard that complaint from different people in this room. Probably about one hour after I got elected I was inundated with calls from your industry, and many other industries, because it’s a pretty unfair situation.
“What can we do? Give me suggestions that we can make your life easier and that you can employ a lot more people.”
Lobby group the Partnership for Fair and Open Skies – on behalf of the three biggest US carriers, Delta, United and American Airlines – has been calling on the government to redraw open skies policy to curb Gulf rivals’ growth in the US.
However, industry body the US Travel Association has urged the Trump administration to affirm its support of the country’s Open Skies aviation agreements, arguing that the policy aligns with the president’s stated priorities of supporting domestic jobs, correcting the US trade imbalance and reducing regulatory meddling.
In a letter sent to secretary of state Rex Tillerson on Thursday, the association’s president and CEO Roger Dow wrote: “By reducing government interference in air travel, [Open Skies] agreements have led to hundreds of thousands of new American travel and manufacturing jobs, billions in US economic growth, lower airfares for travellers, more flights to airports to and beyond major gateways, and new opportunities for US airlines.”
He added: “While their arguments are couched in compelling terms, the Big Three [US airlines] are not seeking a level playing field to compete.
“Instead, they are lobbying for government intrusion that would benefit themselves, but hurt American manufacturing jobs, threaten US economic growth and undermine US national security interests.”For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Trump has got a juggling act between making life easier for the US based airlines and preventing the loss GCC business in airframe and engines from the likes of Boeing & GE that would inevitable result in a redrawing of the open skies agreement. My guess is that he will let the airlines squeal and maintain the status quo.
Given that the real driver for travel demand is the economic growth in Asia, the role of Middle East carriers is actually not so critical. Emirates, Etihad, Qatar Airways did not create the demand for travel, they were the first to act on it.
People will travel, maybe not in such large numbers, paying somehow more, and probably in worst conditions. But overall Boeing is fairly safe as long as China / India keep moving ahead and things do not go kaboom.
Airbus may suffer given its dependency on Emirates for the A380.
Somehow I do not see the Donald losing sleep neither for worsening travel conditions for the hoi polloi nor for Airbus' problems-