September 22 - Open Skies.travel Statement Re Kerry Meeting


OPENSKIES.TRAVEL

Press Statement

OpenSkies.travel issued the following statement after major U.S. airlines met with U.S. Secretary of State John Kerry on Thursday, September 17 to pressure him to take action against the Gulf carriers.

STATEMENT

The CEOs of American Airlines and Delta Air Lines are, as expected, continuing their efforts to apply political pressure on President Obama's Administration to retreat from Open Skies policy and slam the door shut on the Gulf airlines. The announcement from the U.S. State Department (http://btcnews.co/1NJdglL) shows that Secretary John Kerry is not buying this protectionist line.  Secretary Kerry affirmed America's commitment to Open Skies and made clear that the interagency review of the materials submitted by stakeholders and members of the public will continue. 

OpenSkies.travel recently developed questions that regulators should ask the U.S. CEOs. A sample of those questions follows. 

QUESTIONS FOR AIRLINE CEOs

1.     The Big 3 U.S. airlines often 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? Is the US3 endeavoring to dictate which innovations are legitimate?

2.     Every country financially supports the establishment of its aviation sector; perhaps no country more than the U.S. Moreover, 69% of U.S. carriers’ partners are government owned and Delta 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.     You have 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 the US3 has made Emirates' Dubai-Milan-New York service one of the top targets for attack.  Question: Are you 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 United operate at Tokyo's Narita Airport?

5.     In your 55-page report you do not provide any empirically supported financial evidence of harm to the US3 from ME3 entry. Question: Why is that? Do you seek public policy development on hypothetical assumptions and projections?

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

7.     ATI is predicated on open and robust new entry to protect consumers from the most pernicious effects of such immunity. Increasingly there are calls from consumer groups and market participants alike for the efficacy of ATI to be reviewed in light of your aggressive campaign to block NAI’s application and ME3 entry. Question: Are you not concerned that the USG will in fact come to share this same concern and open up ATI renewals to public comment?

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

9.     In recent years, the US3 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, the US3 and their partners played it safe by handing off passengers to one another, shunning new long-haul routes and limiting consumer choice. Question: Tell us how and why you missed this shift in the global marketplace

Also see the 22 September 2015 CAPA report: IAG opposes "subsidy" of US airlines, AF-KLM on 5th freedom at http://btcnews.co/1V7KziR.

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