May 15 - Open Skies Policy Creates U.S. Jobs

U.S. communities that have lost jobs and connectivity to global business and leisure destinations - because of Big 3-engineered consolidation - support Open Skies policy and foreign carrier entry. However, new entry is also the premise upon which antitrust immunity was granted to the Big 3 and their partners. Robust entry is not an Open Skies goal or option, but rather, a fundamental requirement central to 20 years of U.S. policy designed to foster economic opportunity, especially job creation.  

In 2000, major U.S. carriers flew 3,732 planes versus 3,434 in 2013, a 9 percent decline. Airline employment dropped by 150,000. Now as Labor raises concerns about Gulf carriers and employment, are they blind to the fact that the “capacity discipline” now preached by the Big 3 is a major reason there are fewer jobs? What’s more, the Big 3, per their joint venture agreements with European partners, limit American crews’ international flying opportunities because they are allocated among partners. If it costs 800 jobs each time a U.S. carrier doesn’t launch a flight due to Gulf carrier competition, as alleged by the Big 3, does Delta voluntarily give away 800 U.S. jobs each time it defers to Air France to launch flights Delta would operate itself but for the joint venture agreement?

Open Skies policy and foreign airline entry have ameliorated this airline industry employment contraction since 2000 by supporting millions of travel and tourism jobs. For example, Emirates announced daily service from Dubai to Orlando that will create 1,460 jobs and pump $100 million into Central Florida’s economy. Overall, the economic impact from foreign visitors to Orlando is estimated at $2 billion a year. Likewise, Dallas/Fort Worth airport values Gulf carrier flights at $600 million in annual economic benefit. For perspective, the Big 3 employ 250,000 while travel and tourism employs 15 million. Hundreds of thousands of jobs in the aerospace and all-cargo industries are similarly tied to Open Skies policy. The Big 3’s gambit recklessly places the Open Skies job-engine at risk.

The Administration should be applauded for emplacing a thoughtful, deliberative process to consider the views of all stakeholders as well as broader geopolitical and trade ramifications. However, as evidenced by the Big 3’s desperate Capitol Hill campaign, they want a rush to judgment that (a) ignores all interests but their self-interest in less competition, (b) denies the Gulf carriers fundamental American fairness to have a meaningful opportunity to respond to allegations against them, (c) disregards the interest of consumers and the consequences for them of less competition and choice and (d) ignores potential aviation and non-aviation related collateral costs of what the Big 3 are demanding.

The American Gold-Standard model for aviation market liberalization has been embraced worldwide. The U.S. Open Skies brand has been jealously guarded and is now being tarnished. The threat is not that agreements would be cancelled. Rather, should the U.S. seek consultations with Gulf partners, the only reason likely accepted by the rest of the world would be to protect the Big 3, the most powerful airlines on the planet.

Airlines worldwide would observe this protectionism, and abdication of American leadership, and seek their own advantages in renegotiated Open Skies agreements with the U.S. and other countries. The danger is that the painstakingly created international system for aviation liberalization would unravel. This is too big a risk to take for one self-interested stakeholder that in its 25,670-word white paper mentions “consumer” just once and that cannot calculate economic harm from Gulf carrier entry. In fact, an unraveling of Open Skies agreements would injure innovators such as JetBlue and Alaska Airlines, and their customers – further benefiting the Big 3.

Finally, the Big 3 are too-clever-by-half in asserting that their concern is not with Open Skies, that they are big Open Skies supporters. The demand for a unilateral freeze on Gulf carrier capacity would unquestionably constitute a breach of the U.S. Open Skies agreements with the UAE and Qatar. The Big 3 are serial spinners but even that one -- we support Open Skies so much that we are demanding the Administration take the unprecedented step of violating two Open Skies agreements -- stretches credibility too far.


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