September 17 - BTC Letter To New United Airlines’ CEO


Mr. Oscar Munoz

Chief Executive Officer

United Airlines Holdings, Inc.

233 South Wacker Drive

Chicago, IL 60606


Dear Mr. Munoz,

Congratulations on your appointment as the new United Airlines Chief Executive Officer. Corporate travel managers and their frequent travelers are hopeful that your stated focus of improving your airline’s product as well as relationships with your various publics will succeed and benefit all stakeholders – including United.

A major distraction that has taken management time and attention away from efforts to make United Airlines the competitive powerhouse that it should be has been its membership in the troika endeavoring to foreclose on Gulf carrier new entry. Corporate travel managers – your best hope for moving your business to sustainable and adequate financial returns – are deeply concerned over your airline’s efforts to frustrate foreign carrier new entry whether it is the Gulf carriers or Norwegian Air International’s application to serve the U.S. The antitrust immunity that United benefits from with its global joint venture partners is predicated upon open and robust new entry. The troika is putting this valuable competitive advantage at great risk.

I would strongly recommend that you request satisfactory answers from Messrs Anderson and Parker, of Delta Air Lines and American Airlines respectively, to the questions appended below. I suspect that you will not be pleased with the responses based upon the previously highly misleading statements by them and your immediate predecessor (http://btcnews.co/1Oha1DG). If their responses are indeed not candid and compelling, you may want to consider, as some industry observers are already suggesting (http://btcnews.co/1NzIyvn), disengaging United from that campaign which is harming your company as well as the United States’ reputation as a reliable Open Skies and trade partner and focus instead on the historicity and venerability of United’s heritage in returning the airline to the superlative service provider that it once was.

As I have done at the request of your predecessors, I would be pleased to assemble a group of corporate travel and conference managers so that you could hear early in your tenure, first hand and unfiltered, their concerns and aspirations for your company.  

Sincerely,

Kevin Mitchell

Founder

Business Travel Coalition

OpenSkies.travel


QUESTIONS FOR MESSRS ANDERSON AND PARKER

1. Mr. Parker you claim that there is some intrinsically inviolable Open Skies tenet that correlates a country’s home market size to the amount of acceptable international seat capacity. Question: Can you point to where this is in any Open Skies agreement? On the other hand, is not a key principle of Open Skies the encouragement of innovative new business models and go-to-market market constructs? Are we endeavoring to dictate which innovations are legitimate?

2. Mr. Anderson every country financially supports the establishment of its aviation sector; perhaps no country more than the U.S. Moreover, 69% of the troika’s partners are government owned and your airline recently announced a $450 investment in China Eastern, a heavily government subsidized airline. Every country’s airlines have unique structural advantages; there is no level global playing field in any industry. Question: Isn’t your position hypocritical and harmful to the global Open Skies regime as governments and market participants come to view a potentially eroding U.S. commitment to Open Skies?

3. The troika has argued that government support for the construction of airports in Dubai, Doha, and Abu Dhabi is an illegal form of subsidy for the Gulf carriers.  The Turkish government is now financing what will be the world's largest airport on the Asian side of Bosporus in Istanbul. Question: Is Turkey violating its legal obligations under the U.S.-Turkey Open Skies agreement?  If not, what's the difference?

4. There is only one fifth-freedom service operated by a ME3 carrier to the United States, but we have made Emirates' Dubai-Milan-New York service one of our top targets for attack.  Question: Are we seriously really worried about a proliferation of fifth freedom flights via Europe to the United States?  What's the difference between those flights and the large fifth-freedom hubs that both Delta and my airline operate at Tokyo's Narita Airport?

5. In our 55-page report we do not provide any empirically supported financial evidence of harm to the troika from ME3 entry. Question: Why is that? Are we seeking public policy development based on hypothetical assumptions and self-serving projections?

6. When it comes to Open Skies policy the consumer represents the “North Star.” In the 55-page report there is zero mention of consumer harm from ME3 U.S. entry. Question: Why is that?

7- Antitrust immunity is predicated on open and robust new entry to protect consumers from the most pernicious effects of such immunity. Increasingly there are calls from organizations like OpenSkies.travel and market participants alike for the efficacy of ATI to be reviewed in light of our aggressive campaign to block Norwegian International Air’s (NAI) application and ME3 entry. Question: Are we not concerned that the U.S. government will in fact come to share this same concern and open up ATI renewals to public comment, or worse?

8. Numerous studies have documented the stimulation in demand that occurs when the ME3 enter U.S. markets such as U.S. to India routes. Yet, we continue to assert that the ME3 is “stealing” our passengers. Question: Don’t such false allegations erode our credibility and also portray us as somehow thinking that we “own” U.S. customers?

9. In recent years, the troika settled on a strategy of immunized alliances stressing market control and pricing power. Rather than develop rapidly growing markets to Southeast Asia and the India subcontinent, we and our partners played it safe by handing off passengers to one another, shunning new long-haul routes and limiting consumer choice. Question: How and why did we collectively miss this shift in the global marketplace?  

10. The cargo carriers have raised serious concerns that opening up and modifying these Open Skies agreements would likely lead to retaliation against their interests, and as such, their employees’ and U.S. interests. Question: In devising our campaign did we give a damn about any of the other stakeholders such as those cargo firms or airports and communities that lost international services as we engineered domestic consolidation or consumers who seek greater choices and alternatives?

11. Not one other U.S. airline has joined our campaign against the ME3--not FedEx, not UPS, not Atlas, not Alaska, not Hawaiian, not JetBlue.  The best we have managed is a declaration of strict neutrality by Southwest. Question: How do you explain our failure to convince a single one of those companies to join our lobbying efforts?

12. It has been 19 months since NAI completed its application to DOT for a foreign air carrier permit.  There is still no decision, despite the legal obligation in the US-EU Open Skies agreement to act "with minimum procedural delay."  The troika has opposed NAI.  Question: Don't you agree that DOT's failure to render a decision--either for or against NAI--is a breach of U.S. obligations under the agreement, as the European Commission has publicly stated?  If not, how many more months do you believe the agreement allows DOT to delay?

13. A representative of Air China recently expressed concern that the controversy over the Gulf airlines appeared to be rubbing off on U.S.-China aviation relations.  Gentlemen, please provide a clear "yes or no" answer.  Question: Does the troika support the conclusion as soon as possible of an Open Skies agreement with China?

13. Question: How many millions of dollars have we spent thus far to support the anti-ME3 campaign - the studies and reports we’ve paid for, the Coalition we founded and the massive advertising? I cannot seem to locate the invoices.    

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