Final Blog - US Airlines vs Foreign Airlines
In our blog for Global Airline Issues we discussed the how airlines overseas receive government subsidies and whether or not this is fair or within the lines according to the partnership for open and fair skies agreement. In this final blog I will discuss other issues that relate to this topic and what actions the US carriers could make to compete better against rich government subsidized airlines. The following questions will be addressed:
1) Besides the Chapter 11 bankruptcy law that US airlines used to bail themselves out, can they receive any other sort of subsidy from the US government? If so, how?
2) If US airlines receive subsidies, can they still be a part of the Partnership for Open and Fair Skies agreement?
3) If all airlines were subsidized by their government, would this be good or bad for the aviation global market? In what ways?
4) Do US carriers participate in the export import banking system?
5) Besides subsidies, what do other foreign airlines have that make them a better choice for the public and employees? Do US airlines have any of the same offers?
US Airlines vs Foreign Airlines
For quite some time now there have been many articles flooding the internet criticizing the Persian gulf carriers for being subsidized by their governments. Many aviation associations and organizations have taken a stance against this and think that this is bad for the global market.I too think that in some ways this can be unfair to airlines that do not have this same benefit however I believe airlines receiving government funding is something all companies should focus on. Whether or not this can be negative for the industry world wide, surely these airlines that are being subsidized are showing a tremendous amount of success and plenty of their success has to do with their government funding.
Airlines such as Etihad have been causing issues for US jobs because of their growth. Their companies have been growing for over a decade now, especially in states such as Texas and New York. "When the UAE government signed its open skies agreement with the United States back in 2002, it agreed to play by the rules of fair competition in exchange for open access to U.S. markets - these rules do not allow for subsidized support." (Open and Fair Skies, 2015). Which brings me to the question, why don't US carriers request government funding so they can compete against foreign companies? They don't receive government subsidizing mainly because it will violate their partnership for open and fair skies agreement. I believe they can still receive government funding however it will most likely only be authorized for the use of weather and mail servicing such as the way it used to be in the past. "The $155 billion in federal aviation-related spending, including funding for air mail, the national weather service and the federal aviation administrations annual budgets from 1958-1998, does not compare to the $42 billion in "direct subsidies" and other state support that Gulf carriers receive, according to a statement from the partnership." (Jean, 2015).
If US carriers solve this issue instead of terminating the partnership they can be able to build more routes if they find a way to receive government subsidies. "UAE airlines are the biggest international buyers of U.S. manufactured commercial aircraft and engines, with over 400 airplane deliveries and orders in the last 15 years ," Sebright Said. " And with 252 non-stop flights a week to the U.S., UAE airlines are bringing millions of visitors a year to cities across America, filling local airports, hotels, attractions and restaurants."(Jansen, 2015). According to this, I can't see any reason someone would be against subsidizing a company through government funding if it s going to contribute this much success all around. I see more benefit overall to many different business outside of the aviation industry than I do with negative because with more tourism is a healthier economy. Considering the U.S. is already the largest aircraft manufacturing country especially because of Boeing, this would be a great start to kick the number of jobs up and create more opportunity world wide. I believe the best way to compete with Gulf carriers is to do the same exact thing they are doing. Using their subsidies to build more routes worldwide, creating more stops will definitely demand more jobs.
I believe if all airlines were government subsidized this would be a great this for the entire aviation community globally. Of course one government being subsidized against other companies who aren't is going to make it tougher for competition. However if major airlines all requested and received government funding they would be able to market themselves and grow nationally the same way the Gulf carriers have been. According to a spokesman person from a U.S. Airline, "The governemnt needs to play its role in ensuring U.S. commercial aviation is operation on a level playing field with foreign competitors, enabling carriers to respond with maximum effectiveness to global competition." (Karp, 2014).
Besides being subsidized, companies like Etihad Airways offer other programs that will make them recognized by nations worldwide. One of their most productive programs is the world class flight training college Etihad is is in the process of establishing. "As a first step in establishing this college, Etihad airways is in the process of acquiring the fixed wing training division from Horizon International Flight Academy (Horizon), a wholly-owned subsidiary of Mubadala Development Company." (Mubdala, 2014). One thing I would truly appreciate as a working citizen living here in America would be programs such as this. Etihad Offers a cadet training program, fully funded by the airline and guarantee a position with the company. While here in America we are now seeing a growth in tuition reimbursement programs, it still doesn't compare to how much it would help to be offered a fully funded flight training program.
Programs like this wont be found in the U.S however what does exist now is that more and more airlines such as express jet and jet-blue offer first officer positions to newly graduate from certain schools. The flight training in this country is costing students far too much to the point that it is driving people away from being inspired to become a pilot. "To assist cadets with the cost of pilot training, Etihad is making a contribution to each trainee, investing a total of over one million Euros, Previously, pilot trainees were expected to shoulder the cost of training without sponsored assistance. The airline has also entered into an agreement with UniCredit to offer cadets a bespoke loan scheme." (ETB Travel News, 2015). These are the actions I wish to see US carriers begin to make. I believe it's these decisions that will help American Carriers succeed internationally and even domestically. With the retirements we'll be seeing in the upcoming years, this would be a great opportunity for our nation and to be able to breed more pilots and create more routes around the world.
Cited Sources:
Jean, S. (2015, April 11). U.S. government starts investigation of alleged subsidies to Gulf airlines. Retrieved April 22, 2016, from http://aviationblog.dallasnews.com/2015/04/u-s-government-starts-investigation-of-alleged-subsidies-to-gulf-airlines.html/
Karp, G. (2014, August 13). U.S. carriers not thrilled with influx of foreign airlines. Retrieved April 22, 2016, from http://www.seattletimes.com/business/us-carriers-not-thrilled-with-influx-of-foreign-airlines/
P. (2015, May 26). Etihad Airways tries to redefine “subsidy”. Retrieved April 22, 2016, from http://www.openandfairskies.com/blog/etihad-airways-tries-to-redefine-subsidy/
Jansen, B. (2015, March 6). U.S. airlines contend Gulf rivals are subsidized unfairly. Retrieved April 22, 2016, from http://www.usatoday.com/story/travel/flights/2015/03/05/airline-treaties-american-delta-united-emirates-etihad-qatar-gulf/24422137/
E. (2015, September 24). Participants selected for the Alitalia-Etihad Cadet Pilot Program. Retrieved April 22, 2016, from http://australia.etbtravelnews.com/264349/participants-selected-for-the-alitalia-etihad-cadet-pilot-program/.
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