Global Airlines- From U.S. to Gulf to Asia

When you bring up open skies, some may have no clue what that means while to others this is a big deal. In the aviation industry if someone brings up open skies they will immediately think of airlines flying to different countries freely. According to the U.S. Department of State, “Open Skies agreements between the United States and other countries expand international passenger and cargo flights by eliminating government interference in commercial airline decisions about routes, capacity and pricing. This frees carriers to provide more affordable, convenient and efficient air service to consumers, promoting increased travel and trade and spurring high-quality job opportunity and economic growth. Open Skies policy rejects the outmoded practice of highly restrictive air services agreements protecting flag carriers. (Open Skies Partnerships)” These new agreements have made it much easier to travel around the world, and have opened the door to a different variety of airlines that weren’t present before. Now over seventy percent of international departures from the United States fly to open skies partners and not just too large countries (Open Skies Partnerships). However are all countries/airlines playing fair when it comes to the open skies agreements?

            A lot of competition has recently grown out of what are called the Persian Gulf carriers. These airlines have been rapidly growing all over the world especially in the United States taking advantage of open skies. These carriers have began new routes from all different cities across the United States to there main hubs in the gulf. The three gulf carriers that I am talking about our Emirates based in the United Arab Emirates, Etihad also based in the United Arab Emirates, and Qatar Airways which is based in Qatar.  Recently these airlines have come under scrutiny that they are receiving unfair government subsidies which gives them an unfair advantage over are United States based carriers. According Bart Jansen of USA Today, “representatives of American, Delta and United airlines told a news conference at the National Press Club that Gulf carriers Emirates, Etihad and Qatar have received $42 billion in subsidies since 2004. The subsidies make it impossible to compete for lucrative international travelers, according to domestic airlines joined by unions for pilots and flight attendants. (Jansen)”  Jansen  goes on to say, “the U.S. allegations focus on benefits such as interest-free government loans, cheaper access to airports and services such as fuel and ground handling that are governed by airline officials. (Jansen)” However all of the gulf carriers will all deny that ever received any of this money and got this unfair advantage.

            After looking to see if I could find any evidence to support the case of gulf carriers getting an unfair advantage I found a very interesting article. According to this article published on the PR newswire these airlines have actually confirmed in fact some of the unfair subsidies they have received. “Qatar Airways confirmed it received free land worth $452 million from the government of Qatar. Its submission to the U.S. government clearly states that the State provided Qatar Airways with parcels of land to ensure that the carrier had enough real estate for office and residential space, and in 2013, appropriated the land for the public interest at its then market value. (Emirates Confirms)” The article also says that, “ Emirates confirmed that it allowed its parent company, the Investment Corporation of Dubai (ICD) to assume its fuel hedging contracts, explaining that it had the option to pursue a different approach, one that made it unnecessary to report its hedging losses. The result is that Emirates shifted costs off its books and artificially increased its profits all without the typical risk a commercial enterprise would encounter in the marketplace. (Emirates Confirms)” This just shows that indeed the gulf carriers have received unfair subsides from there home countries while they claim they don’t get any money.

           

Furthermore the Gulf carriers have opened up travel to places that would be possible without them operating the route. So while they may receive an unfair advantage is that really a bad thing. I see why US airlines want to fight back, because at the end of the day they are loosing customers and therefore loosing money. Recently I have heard the US airlines are dropping routes that compete with the carriers. A good example of this is Delta Airlines dropping their Atlanta to Dubai route, which directly competes with Emirates. According to the Delta website the route was dropped due to overcapacity on the route due to unfair government subsidies (Modolo). Was that the real reason or where they just simply not making money on the route and this way they could close the route and blame it on someone else?

            Another region of the world that needs to be looked at is the United States to China/Asia market. This part of the aviation industry has been growing very fast including routes from multiple US cities to different parts of Asia, including multiple times a day. According to CAPA, “For years the US has wanted open skies, while China, whose airlines were smaller than America's, wanted gradual expansion. But now the tables are turning. In summer 2015 Chinese airlines for the first time in history will be larger than their US counterparts between the US and China. The rapid change of pace and with more growth clearly to come, is giving US airlines cause to reflect on their experience with Gulf carriers. (Chinese airlines)” Which puts us in the same situation that the US carriers are currently involved with the gulf carriers. Simply put now that Chinese carriers are bigger than US carriers to open the skies would be a horrible idea. In order to keep competition in the market they need to leave it how it is.

           

            Another thing is that Chinese carriers are all supported by the governments and have all received subsidies and are not afraid to hide this information. “This includes USD162 million at Air China, USD589 at China Eastern, USD276 million at China Southern and USD82 million at Hainan. Notably, most of the subsidies USD865 million were to China Eastern and China Southern, partners with Delta, which is leading the US crusade against Gulf airlines. (Chinese Airlines)” Therefore I would find it very hard to believe that any US carrier would support opening the skies between the countries. If anything the US carriers should be trying to restrict the growth of Chinese carriers before they begin to take more market share away from them. However I personally think the US carriers are still going to be more concerned with the Gulf carriers, which could allow the really heavily subsidized airlines to fly more routes in the United States if they are approved.         

However are United States airlines really that innocent when it comes to receiving government subsidies? In 1957 to 1984 US airlines received 928 million dollars from the federal government (Schaal).  This is just one instance of US airlines receiving money from the federal government to help them out. Other instance I can think of is the essential air service program, which provides US airlines money to fly to airports in parts of the country that would not really have air service otherwise. So for US airlines to say that they don’t receive any money from the government would be a false statement. They might not be directly owned by the governments like in Asia and the Gulf but in the end, money is money.

After looking at this topic broader including Asian carriers and are own US based carriers, it makes me wonder how fair the open skies agreement is really. I think all airlines receive some sort of money from their governments and if they want to share they information that is up to them. However I do agree that the unfair part comes to play when some receive more than other which can give them an unfair advantage in the industry. If you have money it is easier to grow and really advance the company to a good profitable airline. The open skies agreement has really opened the world to many new places, but as also caused problems that US airlines will continue to fight as they don’t forget the threat of the Chinese carriers. As always the aviation industry is always growing and changing, so we will have to see what the future brings.

Resources

Chinese airlines overtake US carriers across the Pacific. The big dilemma: US-China open skies? (2015, May 4). Retrieved from, http://centreforaviation.com/analysis/chinese-airlines-overtake-us-carriers-across-the-pacific-time-for-us-china-open-skies-222454

Emirates Confirms Billions in Government Subsidy for Airport Terminal. (2015, August 27). Retrieved from, http://www.prnewswire.com/news-releases/emirates-confirms-billions-in-government-subsidy-for-airport-terminal-300134208.html

Jansen, B. (2015, March 06). U.S. airlines contend Gulf rivals are subsidized unfairly. Retrieved from, http://www.usatoday.com/story/travel/flights/2015/03/05/airline-treaties-american-delta-united-emirates-etihad-qatar-gulf/24422137

Modolo, K. (2015, October 28). Subsidized Gulf carrier competition forces Delta to cancel ATL-Dubai. Retrieved from,http://news.delta.com/subsidized-gulf-carrier-competition-forces-delta-cancel-atl-dubai

Open Skies Partnerships: Expanding the Benefits of Freer Commercial Aviation. (2011, March 29). Retrieved from,http://www.state.gov/r/pa/pl/159347.htm

Schaal, D. (2015, April 09). WikiLeaks Disclosure Shows U.S. Airlines Received Billions in Subsidies. Retrieved from https://skift.com/2015/04/09/wikileaks-disclosure-shows-u-s-airlines-received-billions-in-subsidies/

NTSB's Most Wanted

After reading about the NTSB’s most wanted list I don’t necessarily agree with the ranking they provided. The NTSB’s raking was first cockpit image recorders, second prevent loss of control in flight, third fatigue related accidents, fourth reducing distractions, and fifth medical fitness (Bellamy). This is the raking of the NTSB thinks the improvements are needed to that specific area in the aviation industry. My personal ranking would be first reducing distractions, second prevent loss of control in flight, third fatigue related accidents, fourth cockpit image recorders, and fifth medical fitness. I placed reducing distractions at the top of the list because I think this may be a larger problem than we really know. According to a Flying article by Jay Hopkins, distractions are causing problems, “A NASA study of crew error accidents and ASRS reports determined at least 34 different types of competing activities preoccupied or distracted pilots, causing them to neglect an important task at a critical moment. More than half of the incidents involved a failure to monitor the current status or position of the aircraft or failure to monitor the actions of the pilot who was flying or taxiing. (Hopkins)” It really doesn’t matter what pilots are doing in the cockpit if it is something other than focusing on flying they can be considered distracted. The article goes on to say, “People in aviation are just as susceptible to distractions, have more opportunities than most people to lose their focus on the most critical areas at the time and suffer more drastic consequences when it happens. (Hopkins)” Distractions are a real problem and I think we don’t know about them because they are not reported to agencies or airlines. I also moved cockpit image recorders down to number four because while I think that they could beneficial it would take a lot of new technology and we are not really learning anything new that the other recorders are reading. I did find an article by Brian Zinchuk which said “It is recommended that the European Aviation Safety Agency introduces a requirement for the installation of cockpit image recorders, in aircraft required to be equipped with flight data and cockpit Voice recorders, to capture flight crew actions within the cockpit environment. (Zinchuk)” Which goes to show that other aviation agencies have brought up this idea also, which means it could become a new global standard.  I left the other improvements in the same places because I think they are all equally important should all be addressed in the order it is needed.
An item that I don’t think needs to be on the list is medical fitness. Overall I think that medical issues are not really a major topic of improvement and what can be done to improve the area. Overall I think that the FAA has established a pretty good system of testing for medical fitness as there hasn’t been many problems in the past. In the medical area if something needs to be tested or changed I would think a directive could just be sent out to medical examiners, not necessarily make the most wanted list.
An item that I think needs to be addressed would be enforcing regulations or operating producers.  After looking at different aircraft crashes and using my own opinions most have in common that a regulation was broken or standard operating procedure is not followed. If the FAA put stronger emphasis on pilots following the rules per say I think a number of accidents could be reduced.
Overall I actually think the FAA will respond to the cockpit image recorders because they see the benefit side of them, and answers in crashes or incidents could be found. Also like the article I found about the European agency discussing it shows that it is on the radar of more than just the NTSB. I think that if the FAA would to pursue the issue though, they are going to have a strong negative response from pilots so they might take some convincing to prove these cameras are worth while. So we will have to wait and see if they respond to any of the issues, but I would expect to hear about cockpit image recorders in the near future.

Resources
Bellamy, W. (2016, January 04). Avionics Today. Retrieved April 07, 2016, from http://www.aviationtoday.com/av/commercial/NTSBs-5-Most-Wanted-Aviation-Safety-Improvements-in-2016_86948.html#.VwcSOaQrLIV
Hopkins, J. (2013, March 8). The Human Factor: Dangerous Distractions. Retrieved April 07, 2016, from http://www.flyingmag.com/technique/proficiency/human-factor-dangerous-distractions
Zinchuk, B. (2016, March 29). Dash cams for cockpits. Retrieved April 07, 2016, from http://www.preecevilleprogress.com/news/local-news/dash-cams-for-cockpits-1.2219617

Aviation Organizations

There are many associations that involve the aviation industry all serving different purposes and having different missions. Two organizations that I plan to belong to are the American Association of Airport Executives (AAAE) and the International Association of Machinists and Aerospace Workers (IAM). I am currently involved with the IAM as the airline I work for is covered by this association as the covering union for customer service agents.

The AAAE was “founded in 1928, and is the world's largest professional organization for airport executives, representing thousands of airport management personnel at public-use commercial and general aviation airports. (About AAAE)” The AAAE has many different local branches throughout the country with the main branch located in Washington D.C. the AAAE also a Canadian chapter. According to their website the “AAAE serves its membership through results-oriented representation in Washington, D.C. and delivers a wide range of industry services and professional development opportunities including training, meetings and conferences, and a highly respected accreditation program. (About AAAE)” The AAAE advocates in Washington D.C. for may different things including how airports operate, new locations for airports, and security challenges facing airports today in the future.  The association also helps airports in the regulatory process and keeps all airports in mind when new legislation is proposed (Advocacy).

The IAM was founded in 1888 and represents many different industries. Within the different industries they represent different department. I am personally in the aerospace wing of the organization with is constantly growing (History of the IAM). Some of the main goals of the IAM according to their website are: “Cost-of-living raises so that wage rates rise with living costs, increased purchasing power to provide a higher standard of living, equal pay for equal work regardless of sex, race, or national origin, shorter work week with double time for voluntary overtime and portable pensions with optional early retirement benefits. (Goals of the IAM)” The IAM association advocates for different things in Washington D.C. and varies for each different work group. Looking at the activist section currently the IAM is fighting to make sure flight attendants get a good amount of rest.  Another current action they are advocating is to make it illegal to assault a customer service agent at U.S. airports (IAM activist center).

It is important to me belong to these organizations and really any organization to help support my career. Everybody knows that the aviation industry is all about who you know and what relationship you may have with them. Belonging to these organizations allow me network, and remain current with events and what is really going on in the industry. There are lots of things that organizations lobby for that people would never hear about on the news, so if you are not involved you will also not know. Professionally these organizations offer many different conferences, and events which can help me remain current. These organizations also have many resources to take advantage of like resume writing and simply job hunting. Therefore belonging to these types of organizations are very important and may even help you advance in your career.

Resources

About AAAE. (n.d.). Retrieved March 31, 2016, from https://www.aaae.org/aaae/AAAEMBR/About_AAAE/AAAEMemberResponsive/About_AAAE/About_AAAE.aspx?hkey=17fa23bc-bfe6-4589-9c8b-c362c1e7c303

Advocacy. (n.d.). Retrieved March 31, 2016, from https://www.aaae.org/aaae/AAAEMBR/Advocacy/AAAEMemberResponsive/Advocacy/Advocacy.aspx?hkey=733ba842-ea4f-4fad-980f-425b0cfcb03b

GOIAM - Take Action. (n.d.). Retrieved March 31, 2016, from http://www.congressweb.com/goiam

Goals of the IAM - 21st Century Labor Union - IAMAW. (n.d.). Retrieved March 31, 2016, from http://www.goiam.org/index.php/headquarters/goals-of-the-iam

History of the IAM - 21st Century Labor Union - IAMAW. (n.d.). Retrieved March 31, 2016, from http://www.goiam.org/index.php/headquarters/history-of-the-iam

Competition to Boeing and Airbus

I personally do no think that the C 919 will ever receive certification by the FAA.  I don’t really see why the aircraft would get certified as we have a great American made company that airlines can choose from. Therefore the whole concept of “Made in China” may stop the certification right in its tracks if the company even tries. The push in the US as we all know is too buy American made products and bring jobs and companies back from China therefore I don’t think the American citizens would perceive our airlines flying these aircraft's.

If the C 919 would to receive certification in the US I would hope that they would not purchase the aircraft. I think public perception like I mentioned before, would be a big deal as the push is to buy American and support the economy. I personally think that I would try to avoid this type of aircraft, do the fact that it does come from China. I think it would be interesting to see how much they might sell the aircraft for, if they price it low enough that is what US carriers might go for.

COMAC is the acronym of the Commercial Aircraft Corporation of China, Ltd. According to the COMAC website, “COMAC is a state-owned limited liability company, which is formed with the approval of the State Council and jointly invested by State-owned Assets Supervision and Administration Commission. (Introduction)” Since this a state owned company it was built to support the Chinese carriers. Therefore Chinese carriers can purchase an aircraft that is made in their countries, instead of having to buy from Boeing and Airbus. The company has created another aircraft the ARJ21 which should begin flying sometime this year. The C 919 has not been a smooth ride which was supposed to be released this year. However the aircraft has had many setbacks and which could mean big problems for COMAC.  According to Scott Cendrowski, “that means after the delayed delivery, maybe in 2020, the C 919 will face even stiffer competition from Boeing and Airbus when they roll out new variants of their world’s best-selling planes in the 737 and a320. (Cendrowski)”

I think that if the aircraft would to get certification it would be possible that other companies may try and enter the market. Any company that would try and enter the market will probably wait to make sure other carriers expect those in China purchase the aircraft especially the US carriers. However do to Airbus and Boeing being so dominant in the industry and company will face stiff competition.

While researching this topic I could not find any direct response from Airbus or Boeing. I personally think there may not be a response from them because they do not see COMAC as a threat yet.

Resources

Cendrowski, S. (2016, February 16). China's Answer To Boeing Loses Shine. Retrieved from, http://fortune.com/2016/02/16/china-comac-c919-delay-delivery/

Introduction. (n.d.).COMCAC.  Retrieved from, http://english.comac.cc/aboutus/introduction/index.shtml

Professionalism in the Regional Carriers

The looming pilot shortage has been the talk of many in the industry. From trying to find the cause, to trying find a solution to the looming problem. Some say the shortage is due to pay and other says it is due to the actual number of new pilots compared to those retiring. I personally think that the pilot shortage will be real and will happen in the near distant future, due to the lack of new pilots to replace the ones retiring. An article by Brian Prentice on Forbes shows just how important finding new pilots are. “Unless airlines find ways to work with partners to cultivate a pilot pipeline, they could face difficult, even volatile, competition for experienced pilots because the current regulatory and industry situation can only yield about two-thirds of the pilots the U.S. will need in the next 20 years. (Prentice, 2016)” The article goes on to state, “airlines are adding more airplanes just as a wave of pilots nears retirement and regulations on pilot duty times have tightened. (Prentice, 2016)” The regulations released in 2013 have made it harder for pilots to become certified commercial pilots, by raising the amount of hours required to 1,500. This has made it more costly for new pilots, and also a longer process which may have turned people away from being pilots. When the huge wave of pilots does retire, that will lead to the looming pilot shortage. (Prentice, 2016)” However on the other side of the issue some think that the pilot shortage is due to low pay according to an article by Bill Carey, “the average starting pay for a first officer at a regional airline is $23,000, according to ALPA. The five lowest-paying airlines combined operate more than half of all regional flights each day, it says. Meanwhile, candidates entering the field by the academic route face excessive debt, having spent $150,000 to $200,000 for a university degree and flight training. (Carey, 2015)” Which, from what I understand is the truth, pilots fresh out of school are barely making any money, including any extra money to help payoff the student loan. However I think that if someone wants to be a pilot, that is their dream and money is really not an object, which leads to lean on the other side of the argument.

The new regulations for pilots have put a great strain on the regional carriers to get pilots. From talking to other pilots in the airport, as soon as pilots get hired with the regional airlines and get the required amount of hours they are hired to the mainlines which puts the regional carriers needing more pilots again. However regional carriers have to hire out of a smaller pool of candidates with just the required amount of hours. Also these pilots are coming fresh out of school and have great amounts of debt which makes these pilots want to look for higher paying jobs which the regional airlines cannot offer. Possible solutions to widen the hiring pool would be for regional airlines to pay higher starting pay or even lobby to lower the amount of flying hours required if they can prove safety hasn’t been compromised.

ALPA is a union organization that represents most regional pilots, and completes lots of lobbying in order to make pilots lives well. Other parts of the industry are also covered by organizations mainly depending on the company. Some companies have unions and organizations for certain groups, and some just fall in to large organizations like ALPA. Most management positions are not covered by any specific group from what I found. Two big organizations that support the industry is the International Association of Machinists and Aerospace workers, and the Transport workers union which both cover large groups of people in the airline industry (Labor Relations). Each organization helps a variety of people including some management for a variety of different reasons. Another organization that supports mainly just regional carriers is the Regional Airlines Association.

Professionalism is something that is very important for any person in any career. Professionalism means to me to act in your best, showing good conduct and being able to successfully complete your job. In order to act your best, you understand your job and what your expectations our and have the required skills to successfully complete the job.

In the documentary “Flying Cheap” there were several instances when professionalism was lacked by Colgan airways and their pilots. First Colgan was willing to change a pilot’s flying schedule by shortening the amount of time he had already flew by 15 minutes for then legally he could fly the last flight, which would have taken him home to Albany. The company proceeded to try and convince the pilot that he wanted to go home, and this would be his quickest way, however the pilot already understood that he had flew too many hours for the day. Another instance of lacking professionalism was when the pilot changed a loading schedule to make the aircraft under weight and safe to fly. After the first officer stated that the aircraft was too heavy to fly and something would have to be changed like removing passengers, instead the captain altered the loading schedule changing the weight of the flight. Both are examples of lacking professionalism which should have not taken place.

Yes, I do think that pilot pay and the way regional airlines are paid for flights contributed to the way professionalism was lacked in the documentary. The pilots at Colgan did not make much money and were only compensated when the aircraft door is closed. This pushed pilots to fly lots of flights every day, at fast paces, which could require bending the rules. According to the documentary Colgan was paid by the mainline carrier based on the completion of flight. This would push Colgan to do whatever it takes to complete every flight, which means safety could be compromised and choices would be made not in a professional manner.
            I think that it is very important for my self to display professionalism in every job that I have. First I plan to always stick to the rules and regulations that are set forth by the company, including everything in the employee handbook and it is never okay to deviate away from these standards. Second I will continue to expand my learning to help enhance my skill and make sure that I am on the top of my game everyday. If that requires me took go back to school and take refresher courses or take other workshops and seminars to help enhance my knowledge and skill.

Resources

Carey, B. (2015, June 25). Airline Pilots: Low Pay Drives Disputed Pilot Shortage. Retrieved from, http://www.ainonline.com/aviation-news/air-transport/2015-06-25/airline-pilots-low-pay-drives-disputed-pilot-shortage

Labor Relations - Labor Relations - Southwest Airlines Newsroom. (n.d.). Retrieved, from,http://swamedia.com/channels/labor-relations/pages/labor-relations

Prentice, B. (2016, January 28). Pilot Shortage Threatens To Slow U.S. Airline Growth. Retrieved from, http://www.forbes.com/sites/oliverwyman/2016/01/28/pilot-shortage-threatens-to-slow-u-s-airline-growth/#121e9a81bb6e

Commerical Space Industry

Space tourism has been a thought of many for a long period of time. However making it a reality has been less than easy. When you think of what is trying to be accomplished it is quite a task, and that only certain companies and agencies have reached space for real business, like the international space station. On April 28, 2001 that all changed. American businessman Dennis Tito bought himself a space flight. In which he hopped on a Russian spacecraft and went up to the international space station (Wall, 2011). This became the first official space tourist to outer space without the objections of NASA and other programs. According to the article by Wall there has been at least 6 more space tourists between 2001 and 2011 who were supported by NASA one of the main hurdles for Tito (Wall,2011). Now Private companies have begun the process to offer space flights for the public, most notably Richard Branson's Virgin Galactic and SpaceX (Wall, 2011).

 

Mostly the commercial space industry is unregulated and there not many rules in place that have to be followed. According to article on RT.com, space regulation in United States will not happen until 2023 because of bill HR 2262 which was signed into law by President Obama (Commercial Space). Therefore would expect to see regulations coming out around this year. Mostly I think that regulations are not in place because technology is advancing the industry very fast, and we may be years away before this type of space flight is a reality. Furthermore when the regulations do come out I would think that they would be really strict, and may even model the commercial aviation industry.

 

Space tourism is here to stay that is for sure. I do see the possibility of space tourism actually becoming a reality but in the future many years away. The process seems to be a very slow one but the two main companies are remaining persistent to make commercial space travel a thing. However it is going to be very expensive to take one of these trips which goes to think that they have to make this type of travel more affordable. The bigger thoughts that I had was even if commercial space travel is around and working, why would we use it? Just because it is cool to go into space? Therefore I would think that mostly it would be a bucket list type of event, because what is really the purpose of visiting space if you are not working?

 

To work in the space tourism industry is not an easy thing, and usually not just anyone can try and do the job. When looking at the Virgin Galactic website there are lots of jobs that they are hiring for in many different locations. Most all of them require some sort of degree in aerospace and management business degrees. To become an astronaut with NASA for example you must have “Bachelor's degree from an accredited institution in engineering, biological science, physical science, or mathematics. Degree must be followed by at least three years of related, progressively responsible, professional experience. An advanced degree is desirable and may be substituted for part or all of the experience. (Requirements)”  According to the NASA website you must also be able to pass  and  space physical, measuring vision and blood pressure, an you must be between the height of 62 and 75 inches (requirements).A candidate must also have 1,000 hours of being pilot in command of a jet aircraft (requirements). I would assume when the space tourism industry starts really hiring new pilots they would follow the same standards.

 

 

Resources

 

Commercial space industry avoids regulation until 2023 once Obama signs new bill. (2015, November 17). Retrieved from, https://www.rt.com/usa/322375-commercial-space-industry-faa-regulation/

 

Requirements. (2004, January 29). Retrieved from, http://www.nasa.gov/audience/forstudents/postsecondary/features/F_Astronaut_Requirements.html

 

Wall, M. (2001, April 27). First Space Tourist: How a U.S. Millionaire Bought a Ticket to Orbit. Retrieved from, http://www.space.com/11492-space-tourism-pioneer-dennis

Global Airlines

Government subsidies in the airline industry are something that cannot usually be hidden. There are many airlines who receive subsidies from various different places including governments. Two long-haul foreign carriers who are said to have received subsidies are Emirates and Qatar Airways (Jansen, 2015). Both of these airlines are Persian Gulf carriers, Emirates being from the United Arab Emirates and Qatar, being based in Qatar. Both carriers are fast growing and have expanded rapidly into the United States with direct routes to their Middle Eastern hubs. “The advantages have allowed substantial growth in the last decade despite almost no growth in overall passengers, with Emirates reaching the top capacity in the world last year, with Qatar 10th and Etihad 13th, according to the U.S. airline argument” Jansen said in his article. Which goes to prove that these airlines are exceling with their subsidies. Jansen also mentions that these gulf carriers often get benefits like “interest-free government loans, cheaper access to airports and services such as fuel and ground handling that are governed by airline officials” (Jansen, 2015). Therefore three major United States carriers American, Delta, and United have all began to fight back and have been bringing these subsides up in court (Jansen, 2015).

Once Gulf carriers came under fire for them having an interest in government subsides, Etihad Airways decided it will do its own research against United States carriers. According to an article by Peter Fricke, Etihad found what it was looking for. According to Fricke’s article, “American Airlines, Delta Airlines, and United Airlines have received a combined total of $71.48 billion in government benefits over the last 15 years” (Fricke, 2015). I can see how Etihad airways could get upset because if they are getting accused of getting money lets show the truth about the US carriers, but in the end I am not sure that this will really prove anything. At the end of the day all airlines get money from the governments and how they use the money it was really matters.

Foreign carriers have been able to purchase aircraft for less than market rates mainly because of the export-import bank here in the United States and a similar program with Airbus overseas (Drew, 2014). The export-import bank was created part of the new deal in the 1930s, “which backs loans to foreign companies seeking to purchase goods and services made in the United States” (Bordelon, 2013). The biggest beneficiary of these program in the United States is Boeing, and these how foreign carriers are now involved with this program (Drew, 2014). Using these bank for carriers like Emirates purchase the aircraft from Boeing, in which this bank program backs and supports the purchase. According to the article the biggest user of the program is Irish airline Ryanair, which doesn’t even fly to the United States, but purchases the Boeing product made in America (Drew, 2014). Therefore US carriers are buying Boeing products but are not being backed by the bank because they are not exporting the goods.  

Overall I think that the global playing field for long haul carriers is unfair. I think that the airlines that choose to fly to the United States should be happy that they are able to fly to this country. Whether or not these companies get money from various governments to do so, may be right or wrong. But competition is what drives the economy and is some aspects it can be good for US carriers as long as they hold the majority of flights, which they are starting to lose. I think that this special export bank does need to be revaluated because this is definitely unfair to US carriers. On the other side if US carriers continue to post these record profits I would think that they would be able to compete and fly these long flights as well and make a profit.

References

Bordelon, B. (2013, October 30). Bangladeshi airline set to receive loan guaranteed by US government. Retrieved from, http://dailycaller.com/2013/10/30/bangladeshi-airline-set-to-receive-billion-dollar-loan-from-us-taxpayers

Drew, C., & Mouawad, J. (2014, June 27). Airlines’ Rivalry Amplifies Fight Over Bank Guarantees. Retrieved from, http://www.nytimes.com/2014/06/28/business/airlines-rivalry-amplifies-fight-over-bank-guarantees.html?_r=0

Fricke, P. (2015, May 05). Gulf Airline Blasts US For Aviation Subsidies. Retrieved from, http://dailycaller.com/2015/05/15/gulf-airline-blasts-us-for-aviation-subsidies/

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