February 17 -  U.S. Airlines Need To Reconnect With Their Customers, Up Their Game

WASHINGTON, DC The Business Travel Coalition (BTC) today responded with disbelief to the statement by Delta Air Lines CEO Richard Anderson made during a CNN interview that drew a causal link between the terror attacks of 9/11, and later U.S. airlines’ bankruptcy proceedings, and the Gulf carriers. Anderson’s statement was: “And it’s a great irony to have the UAE from the Arabian Peninsula talk about that [U.S. airlines’ bailout], given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula. That caused us to go through a massive restructuring.”

“The logical error is breathtaking. Implying that the Gulf carriers were somehow responsible for the acts of 9/11 is as absurd as saying the U.S. carriers are to blame for allowing their planes to be used on 9/11 as weapons of mass destruction,” said BTC chairman Kevin Mitchell. “To bring up a tragic event from a decade and a half ago shows how desperate some U.S. airlines are to get a leg up on successful competitors and stifle consumer choice. Moreover, it’s is just wrong to bring up terrible memories for those families that lost loved ones for the self-serving purpose of changing public policy to your commercial advantage,” added Mitchell.

The overall impression from watching the U.S. airline CEOs is that the big network airlines want to lock out independent airlines that offer lower fares, newer airplanes, faster connections, more destinations and better service. Instead of offering consumers a reason to choose Delta, United and American for their international travel needs, they want to deny consumer choice by eliminating competitive alternatives. U.S. airlines appear to have lost touch with their customers and if they do not step up their game they will continue to lose international market share in a long but slow grind, the Coalition believes.

It's a fact that the Gulf States have policies that are designed to support aviation, which they see as the key sector for economic development. In fact, the US CEOs who now complain about these policies, not long ago publicly said they envied such pro-aviation growth vision and called for the U.S. to emulate them.  Smart policies produce growing airlines and economic growth that boosts the region up-and-above what would normally occur without such policies. Geopolitically, deeper commercial connections around the world, facilitated by air travel, means greater job creation, more opportunities for travelers and shippers and a stronger global economy. There is no place for the type of protectionism being advocated by the U.S. mega carriers. 

Every country has its unique collection of direct and indirect subsidies and structural advantages. The U.S. is no different. Our carriers can reduce expenses in bankruptcy proceedings, shift pension liabilities to the Pension Benefit Guaranty Corporation, benefit from general revenues from the U.S. Treasury that flow into the Airport and Airway Trust Fund and avoid ticket taxes on billions of dollars in revenues through ancillary fees and carrier-imposed charges. What’s more, the industry has been consolidated to the very powerful BIG 3 mega airlines and they operate in and from the largest aviation market in the world and the most important and stable country, and a country whose greenback serves as the world’s reserve currency. The list goes on and on and U.S. airlines have logically and deftly leveraged all these powerful advantages. However, in this instance, asking the government to protect them from new entrants would help only Delta, American and United, the three most profitable airlines in the world, at the expense of the traveling and shipping public.

As The New York Times editorialized today (http://btcnews.co/1EJVuYS): “Governments around the world own airlines and often support them with loans, favorable contracts and other benefits. In fact, the big American airlines have partnerships with several large government-owned carriers like Singapore Airlines, Air India and Air China. But the three American airlines argue that the subsidies being lavished on the three Gulf airlines are so extreme that the Obama administration must act.” BTC would like to see the evidence that the Gulf carriers have received more direct and indirect subsidies than U.S. carriers and that it represents a material amount necessary to create an unfair competitive advantage.


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