June 11 - Curbing exorbitant anti-Open Skies lobbying expenses


Mr. Francis S. Blake

Chairman of the Board

Delta Air Lines, Inc. 

1030 Delta Boulevard


Re: Curbing exorbitant anti-Open Skies lobbying expenses in the face of rising fuel costs

Dear Chairman Blake:

Congratulations on the continuing success of Delta. That is important to business travelers as well as the US travel and tourism industries.

Each day consumers are bombarded with dire and worrisome media predictions that rising fuel prices soon will result in higher airfares.

The CEO of one of Delta’s main competitors recently made public comments to this effect feeding that frenzy and inadvertently leaving would-be travelers with the likely perception that air travel will no longer be affordable.

That brings me to the purpose of this letter. In the face of this significant cost pressure, the Business Travel Coalition (BTC) urges Delta to end its substantial, and frankly wasteful, anti-Open Skies lobbying expenditures and thereby mitigate some of the cost pressure and rhetoric to raise fares.

The Wall Street Journal reported that Delta, American Airlines and United Airlines have spent an astounding $50 million in the past three years alone lobbying against competition from Emirates Airline, Etihad Airways and Qatar Airways. A significant portion of this $50 million reportedly was funded by Delta shareholders who are lavishly and unknowingly supporting two separate anti-Open Skies lobbying surrogate groups - the Partnership for Fair and Open Skies and Americans for Fair Skies.

As you no doubt are aware, the US Government recently reached deals with both the United Arab Emirates and Qatar reaffirming both Open Skies agreements. Despite exuberant spin by your senior management team, facts are stubborn things. In this case, the facts clearly show that Delta shareholders received virtually no meaningful commercial return on this extravagant multi-million dollar adventurous investment.

For instance, in your Q3 2016 earnings call, Ed Bastian told Wall Street analysts that, at a minimum, victory for Delta would require nothing less than a prohibition on future Fifth Freedom flights for the Gulf carriers. Not surprisingly then, Delta senior management claims that happened. In fact, it did not.

A May 22, 2018 Associated Press article, which the Trump Administration does not dispute, undeniably shows that claim is false for UAE carriers and Delta failed to achieve its number one priority. As to other claims of victory, they too have been compellingly rebutted.

For instance, your management team touts a “new” financial transparency commitment by Emirates. It argues this is extremely significant because once financially transparent, Emirates no longer will be able to hide alleged subsidies. However, in the US-UAE Record of Discussion (ROD), the US Government acknowledged that financial transparency has never been an issue for Emirates.

According to the ROD, for many years Emirates has released annual audited financial statements fully consistent with international accounting standards, just like Delta and other US carriers. It follows, therefore, that Emirates could never have hidden subsidies as Delta management has been alleging for more than three years.

Simply stated, Delta management has invested tens of millions of shareholder dollars in its anti-Open Skies lobbying campaign but it has delivered virtually no meaningful return for them. Indeed, to the delight of many of your customers, the Gulf carriers ignored the political bullying and continued to add sorely needed competitive services to the US. The past is the past.

Going forward, BTC hopes that the Delta Board will learn from this costly misadventure and redirect management accordingly. In the face of soaring fuel costs, can Delta shareholders and your passengers afford for management to continue squandering tens of millions of dollars on this anti-Open Skies failure? BTC strongly believes that they cannot.

Accordingly, we urge the Board to step-in to fully curb further wasteful investment in anti-Open Skies lobbying. Your legion of generously paid lobbyists, lawyers, consultants and public relations firms no doubt will disagree. For them, for over three years, it has been Christmas 365 days a year. For obvious reasons, they want the Delta shareholder money faucet to remain fully open. However, Delta passengers, who are facing higher fares, and Delta shareholders who are funding this junk-bond level investment, likely believe enough is enough.

It is time for the Board’s voice to be heard. Without personal intervention by you, and explicit Board direction, this wasteful spending will continue. In fact, it already is. Even though the US-UAE deal was signed more than four weeks ago, to the sole benefit of your well-paid lobbyists, with their insatiable appetite for ever more and higher fees, the Delta shareholder-underwritten lobbying groups remain active, including sponsoring at least one public event.

Thank you for considering BTC’s views on this important issue. The less money Delta lavishly spends opposing Open Skies, the less cost-related pressure Delta will face to raise passenger airfares. I hope you agree that would be a very good and worthwhile trade-off. It certainly would be from the perspective of our members and other consumers.

Sincerely,


Kevin Mitchell

Chairman

Business Travel Coalition


Copies to:


Edward H. Bastian

Daniel A. Carp

Ashton B. Carter

David G. Dewalt

William"bill" Easter

Mickey Foret

Michael P. Huerta

Jeanne P. Jackson

George N. Mattson

Douglas R. Ralph

Sergio Rial

Kathy Waller

©2001 to 2018 Business Travel Coalition, Inc..