February 21 - Hypocritical U.S. Airlines Reject “Buy American, Hire American” 


Hypocritical U.S. Airlines Reject “Buy American, Hire American” 

Gulf Carriers Generate Thousands of U.S. Jobs

In December 2016, full-time equivalent employment (FTE) at U.S. scheduled passenger airlines increased 3.7% over December 2015, according to the U.S. Department of Transportation (DOT). December was the 38th consecutive month that FTE for U.S. scheduled passenger airlines exceeded the previous year’s and was the highest monthly total since March 2008.

Importantly, Emirates Airline, Etihad Airlines and Qatar Airways (the “Gulf Carriers”) codeshare with partners such as JetBlue and Alaska Airlines that saw their December FTE year-over-year grow 8.6% and 5.5% respectively compared with 2.4% for the combined 4 network airlines.

Beyond creating airline jobs, the success of the Gulf Carriers has also generated tens of thousands of U.S. aerospace jobs, including Boeing and its numerous suppliers. Moreover, by bringing in hundreds of thousands of tourists annually, U.S. job growth is turbocharged for the travel and tourism industry among airlines, airports, hotel companies, rental car companies, travel agencies and scores of other industries dependent on tourism.

BIG 3 HYPOCRISY

These positive economic outcomes, and DOT employment findings, demolish claims by Delta Air Lines, American Airlines and United Airlines (the “Big 3”) in their political scorched-earth war against Gulf Carrier success in U.S. markets. The Big 3 claim that Gulf Carrier success is harming them and killing aviation jobs. However, it is the Big 3 that is outsourcing their own employees’ sustainable, middle-class jobs.

When the Big 3 transfers a flight to an antitrust immunized alliance partner (e.g., Delta giving U.S. flights to Virgin Atlantic or Air France) high-paying U.S. jobs are lost. Using their own number, 1,500 jobs are lost for every Big 3 flight abandoned. How many good paying American jobs have been sacrificed at the altar of global alliances and antitrust immunity?

It would appear that the only jobs the Big 3 are truly concerned about are those purportedly lost to competitors. If the Big 3 transfer those jobs to antitrust immunized alliance partners, that’s all right! As such, it’s not really “Buy American, Hire American” – it’s more like “Buy Foreign, Hire Foreign.” What bold-faced hypocrisy for the Big 3 to claim they care about U.S. jobs!

A most glaring impact of U.S. Government grants of antitrust immunization is collusion and price fixing that would otherwise be highly illegal. In the context of Big 3 efforts to block foreign airline entry into U.S. markets, it is time for the U.S. Government to seriously reexamine the efficacy and continuation of antitrust immunized airline alliances given, for example, the anti-consumer, supracompetitive pricing in the transatlantic market and because the Big 3 use that immunity as political cover to directly outsource their own jobs and indirectly outsource manufacturing jobs for Boeing aircraft not purchased to operate such flights by the Big 3’s foreign partners.

Indeed, when the Big 3 does order aircraft, it appears they are more often choosing Airbus. For example, Delta in 2014 placed an order for Airbus widebodies with a market value of $14.3 billion dollars foreclosing on support for more than 80,000 high-paying American middle-class jobs. According to the Department of Commerce, every $1 billion dollars in U.S. aerospace manufacturing creates or supports 5,747 U.S. jobs, many throughout Boeing’s nationwide supply chain of small and medium-sized companies. Indeed, 14 months earlier Delta ordered 40 additional Airbus planes no doubt costing tens of thousands of additional American jobs. In December 2016 Delta cancelled an order for 18 Boeing 787 Dreamliners.

If the Trump administration wants to pursue “Buy American, Hire American,” then it should reject the Big 3 calls for government protection from Gulf Carrier competition and consider the elimination of antitrust immunization to ensure U.S. workers and manufacturers get the largest possible share of the market and to guarantee competition is promoted to the fullest for consumer benefit.

The pro-competition, pro-consumer, pro-growth U.S. Open Skies policy is a Made-in-America success story, representing the Gold Standard for bilateral trade agreements. It provides consumers new and better competitive choices; drives a better balance-of-trade through foreign tourists’ dollars; and provides the marketplace discipline necessary to encourage efficient, innovative commercial air transportation services.

For U.S. Open Skies policy foundational documents, analyses and statements, please visit http://OpenSkies.travel.

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