Octoner 30 - Open Skies: The Great Hoax That US Airlines Jobs Are At Risk


Business Travel Coalition

INDUSTRY ANALYSIS


Open Skies: The Great Hoax That US Airlines Jobs Are At Risk

 

By Kevin Mitchell

To hear the CEOs of Delta Air Lines, American Airlines and United Airlines (Big Three) tell it, competition from Emirates Airline, Etihad Airways and Qatar Airways (Gulf Carriers) is an existential threat to their employees and their families. They claim that jobs already are being lost. In fact, Ed Bastian, the CEO of Delta, shamefully appeared in a slick 15-minute video targeting his employees with the obviously clear intent to scare them into lobbying against Open Skies with the Grim Reaper message that Gulf Carriers are coming for their jobs.

Facts are stubborn things. What do they show? In January 2015 the Big Three oligopoly first launched its anti-Open Skies political campaign to limit consumer choice. According to the US Department of Transportation’s (DOT) Bureau of Transportation Statistics (BTS), in January 2015 the US scheduled passenger major airlines, including the Big Three, had 560,361 full and part-time employees. According to most recent BTS figures, in an apples-to-apples comparison, US major airline employment has soared to 662,811. That is an increase of 18 percent since the Big Three’s anti-Open Skies political campaign began!

Don’t take my word for it. Here is a link to BTS’s US airline employment data tracker by month -- https://www.transtats.bts.gov/Employment/. This is US Government data, not funny numbers purchased and spun by the Big Three.

One of the Big Three’s favorite apocalyptic talking points is that Gulf Carrier competition threatens 1.2 million American jobs. To underscore how nonsensical that political soundbite is, according to BTS data, as of August 2017 there are only 699,110 total airline employees (i.e. all scheduled passenger airlines, including majors) in the United States. So, even if every US airline job vanished, where do the other half million American workers, who are purportedly at risk, come from!? 

Perhaps the explanation is the same one as for their politically expedient, ever-changing figure for purported per flight job losses. The Big Three numbers are pulled out of thin air with no factual basis whatsoever. During the Obama Administration, the Big Three made the unsupportable claim that for each US flight foregone due to Gulf Carrier competition 800 US jobs are lost. Having failed to convince the Obama Administration there was any merit to their case, the Big Three decided to inflate its job loss figure to try to grab the Trump Administration’s attention. Now they claim that number is 1,500 US jobs, nearly doubling overnight to embellish the political sound bite. Comically, at one point Americans for Fair Skies, the lobbying arm of Delta, was tweeting Bogus Factoid 2.0 – 1,500 jobs – while simultaneously still having Bogus Factoid 1.0 – 800 jobs  – prominently posted on its website. Fake facts.

Simply put, the Big Three’s airline jobs argument is a great hoax, a total political fabrication. You need to look no further than the October 23, 2017 edition of the Atlanta Journal-Constitution to confirm that conclusion and put an exclamation point on it. The publication describes how hometown Delta is in the process of hiring “more than 1,000 flight attendants.” What happened to Mr. Bastian’s Grim Reaper prediction made in the Delta employee scare video?

Frankly, the magnitude of BTS’s 18 percent US airline job growth figure and extent of Delta’s hiring spree is surprising. Given the huge number of US airline jobs the Big Three outsource to their foreign alliance and joint venture partners, I would have guessed those numbers would have been lower. Yet, even in the face of off-shoring a significant number of US airline jobs such as Delta’s decision to give its Seattle-London Heathrow flight to British JV partner Virgin Atlantic (and all the US crew jobs too), US airline job growth is indisputably strong.    

Is it surprising that the job loss argument - a key pillar of the Big Three’s case - is bogus? Of course not!. The other pillar of their case, commercial harm, is a total hoax too. That is why they don’t have the courage to file an International Air Transportation Fair Competitive Practices Act (IATFCPA) complaint with DOT. With their pockets bulging with record-setting profits, they know that they cannot make the required showing of commercial harm to sustain an IATFCPA complaint.

Just as facts are stubborn, so too are admissions against interest. On July 15, 2015 during an earnings call Delta’s EVP and Chief Revenue Officer Glen Hauenstein, who since has been promoted to President, was asked if Delta is suffering any commercial harm due to Gulf Carrier competition. Mr. Hauenstein’s honest, clear and unequivocal answer – “we are not.” More recently, Doug Parker, the CEO of American, audaciously predicted the state of the US airline industry is so good “I don’t think we’re ever going to lose money again.” Well, so much for hollow political arguments the Big Three make that they are under siege from Gulf Carrier competition and suffering commercial harm as a result.

If you cannot believe the Big Three’s commercial harm or job loss claims, what can you believe? One thing is for certain – the Big Three oligopoly hates competition and consumer choice. Whether it is spending tens of millions of dollars to lobby against the consumer choice the Gulf Carriers provide or new entry by Norwegian Air International and Norwegian Air UK in the US-Europe market, they are on a mission to restrict competition wherever possible - – its in their corporate DNA.

Consolidation run amok has given them, along with Southwest Airlines, an 80 percent lock on the US domestic market. The story for consumers is even worse in the US-Europe market. Along with their alliance and JV partners, and with antitrust immunity-related permission to fix prices and artificially constrain capacity, the Big Three control nearly 85 percent of US-Europe frequencies. How dare independent interlopers like the Gulf Carriers and Norwegian respond to consumer demand in what the Big Three regard to be “their” markets and offer choice to “their” passengers!

Perhaps most shocking of all is that this anti-Open Skies/anti-consumer choice charade masquerading as a legitimate public policy debate has lasted for nearly three years and continues to go strong. It is time for the Trump Administration to call this what it is – a cartel trying to use the US Government to thwart competition and eliminate consumer choice – and put an end to it.            

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