U.S. Airlines Seek Government Protectionism Over Competition
WASHINGTON, DC – OpenSkies.travel today sent the following letter to Secretaries Kerry, Foxx and Pritzker at the State, Transportation and Commerce Departments respectively after reports of meetings where airline CEOs urged the U.S. government to perversely reinterpret U.S. Open Skies agreements with foreign governments with a clear goal of foreclosing on new foreign competition.
Via Fax and Electronic Mail
February 3, 2015
The Honorable John Kerry
U.S. Department of State
2201 C Street NW
Washington, DC 20520
The Honorable Anthony Foxx
U.S. Department of Transportation
1200 New Jersey Ave, SE
Washington, DC 20590
The Honorable Penny Pritzker
U.S. Department of Commerce
1401 Constitution Avenue NW
Washington, D.C. 20230
Dear Secretaries Kerry, Foxx and Pritzker,
OpenSkies.travel and its members from the U.S. and 16 other countries write to express deep concern regarding reports that U.S. airline CEOs in meetings last week urged the federal government to institute draconian measures that would freeze out competition in international air service and undermine the decades-long advances resulting from the successful policy of Open Skies.
According to reports, the U.S. legacy carrier CEOs have encouraged senior administration officials to implement an immediate freeze on further expansion of flights to the U.S. by Gulf carriers and to request formal consultations to renegotiate the UAE and Qatar Open Skies agreements with the purpose of introducing a cap on flights to the U.S.
It has been reported to OpenSkies.travel that if Qatar and the UAE are unwilling to renegotiate, these U.S. airline CEOs would have the U.S. government terminate the two agreements and introduce a rule that the Gulf carriers may increase flights to the U.S. only if a U.S. carrier wishes to increase or introduce operations to their territory.
Despite the undeniable benefits to consumers and communities across America as well as U.S. economic output and growth, these requests seek to rekindle the debunked practice of overregulation in international aviation markets and turn back the clock on decades of successful international aviation policy.
If these reports are true, then the WAR on Open Skies has opened precipitously on all fronts. The U.S. legacy airlines appear to be focused on the Gulf carriers, but for the past 12 months they have been waging an aggressive campaign against a licensed carrier of the European Union – Norwegian Air International. All these battles are tied together by the desire to block new competition.
With the support of the U.S. government, these carriers received antitrust immunity for their global alliances and achieved a radically consolidated domestic airline industry. The U.S. Open Skies policy model anticipated such an evolution of the U.S. competitive structure and was designed to ensure foreign and domestic carrier new entry and robust competition. Open Skies was thus carefully designed by policy makers as the needed antidote to replace the competition lost when two carriers that had previously competed against one another head-to-head combined to operate as one under an immunized global alliance.
In 2005 eleven airlines controlled some eighty percent of the domestic U.S. market; today just four airlines control eighty percent as well as vital connectivity to foreign business centers and leisure destinations. Domestic and foreign airline new entry is necessary for monopolized U.S. markets to be properly contested. What’s more, foreign carrier new entry is required to replace lost air services to hub airports due to industry consolidation and non-hub leisure travel oriented airports to support local economic growth and our national goal of one hundred million foreign tourists per year by 2021.
Now that U.S. airlines have secured antitrust immunity, industry consolidation and concomitantly rising airfares and ancillary fees, and are achieving record unprecedented profits, some carriers shamelessly seek to close off U.S. markets to competition from foreign carriers. We appeal to you to reject this proposal, which would harm consumers, local economies and much needed middle-class job growth.
Indeed, if U.S. airlines continue to seek closed markets and commercial protectionism through changes to Open Skies agreements, we urge you to remind them that their valuable antitrust immunity will be at risk. These alliances have been a welcome development in the marketplace. However, their existence is predicated on Open Skies and open markets. If the carriers seek to change that bargain, the U.S. needs to reconsider its policy.
Chairman, Business Travel Coalition
See OpenSkies.travel December 2014 letter to U.S. government officials at http://btcnews.co/1tPWdHH.
The mission of OpenSkies.travel is to bring significant organization to the task of maintaining aviation liberalization agreements in accordance with the intent of the signatories to such accords. Members include corporate, university and government travel managers, travel management companies and distributors, travel industry suppliers, consumer groups and travel organizations from around the world.
Founded in 1994, the mission of Business Travel Coalition is to interpret industry and government policies and practices and provide a platform so that the managed travel community can influence issues of strategic importance to their organizati