Anyone who has been walking around Washington, DC, recently can be certain that the Arab Emirates are ready to destroy the American workforce by subsidizing their own airlines. Nationals Park feeds baseball crowds with ad after ad of unfair competition. Metro riders stride past poster after poster about unfair competition.
The most amazing thing about this political push is that US airlines aren’t even competing directly with the big carriers from the Middle East, the Gulf Carriers — Emirates, Etihad and Qatar Airlines. The main claim of Fairskies.org, an organization subsidized by the Big Three US airlines — Delta, American and United — is that government subsidies are distorting the market place.
What we are seeing is a shift in the center of the economic world. The fastest growing middle class is now in southern Asia — India, Pakistan, Bangladesh — and in southern Africa — South Africa, Kenya, Tanzania, Angola, Mozambique, Ghana, and Botswana.
Fairskies.org and the Big Three Airlines claim that the Gulf carriers are receiving unfair subsidies and that is the only reason that the Gulf Carriers are expanding rapidly. They claim $2.4 billion in fuel hedging subsidies, $2.3 in airport infrastructure and $2.2+ in related activities with other United Arab Emirates companies. (Note also: All Gulf carrier routes are between the Middle East and the USA. Even in their ads, the Big Three ignore southern Asia and southern Africa.)
When speaking of subsidies, the Big Three US airlines and their cohorts fail to mention that all airports in the United States are subsidized for airline service. Airports are built with municipal bonds and maintained with passenger facility charges that are all paid for by the American people. None of the airlines, especially Delta and United, that foisted their retirement benefits on the US government, consider the billions that they received by abrogating their responsibilities to their workers. And, no one mentions the subsidies paid to airlines to make them available in times of war.
We can go on forever with a tit-for-tat discussion of subsidies. But that is not the important consideration here. As the world has been changing, the US airlines have been sleeping. Now, they find themselves losing market share, not because of subsidies, but because of a change in geography and a dramatic change in the world economy that will only become more pronounced and continue shifting to the southern hemisphere.
South Asia and southern Africa are places of which Americans have little knowledge. Most Americans think about Africa in terms of a state in our country. In fact, Africa is larger than the USA, Europe, India, Japan and China put together. The continent is truly massive.
And, what about the US carriers that claim they are being damaged by competition? How many US-operated flights ply the skies between Delhi, India, and New York City? None. How many fly from New York City to Abu Dhabi? None. How many fly from New York City to South Africa? Delta has one flight that it operates per day and American and United operate none.
This is a battle over subsidies when it should be a discussion about vision. The Gulf carriers saw the future and they have created airlines that will be in position to take advantage of the ongoing shift in the middle class and economies of the world.
The US carriers have been focused on survival and their creation of airline alliances that have reduced competition across the Atlantic to the equivalent of three airlines. To the rapidly growing worlds of southern Asia and southern Africa, they have been blind. That is not a problem with subsidies, it is a problem with management and vision.
Here is the Emirates route map. Note: Abu Dhabi and Dubai sit at the crossroads of the fastest growing middle class populations in the world. They will rule that part of the world for some time, since US airlines are now finding themselves on the periphery.
Finally, as the Big Three Airlines and their unions whine about perhaps losing jobs that they have never had, there will be millions of workers laid off should the Gulf carriers be forced to cut back their service to the US. The economic impact of their operations is enormous at Boeing, at scores of avionics companies, for American tourism that makes up 20 percent of our trade, and at airports where Gulf carriers pay landing fees and bring passengers.
What airline workers may gain, many others will lose. And, they will keep losing, because the US carriers have no answers and no plans to fill the gap left by the departure of the Gulf carriers, should it come to that.
Just like King Canute could not stop the tides, American airlines cannot stop the shift in the economic focus of the world.
Lead photo is from Hans Rosling’s BBC presentation about shifting populations. It shows population in billions as of 2100. One billion in the Americas, one billion in Europe, four billion in Africa and five billion in Asia.
Africa map courtesy of http://www.visualizalos.com/
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
