June 8 - A Million Plus Reasons To Claim Victory


INDUSTRY ANALYSIS 

By Kevin Mitchell 

A Million Plus Reasons To Claim Victory

Former Department of Transportation Secretary Jim Burnley has 1,330,000 reasons to trumpet the recently announced US-UAE aviation deal as a victory for his client, American Airlines.  According to the Clerk of the House of Representatives’ lobbying disclosure website, from Q1 of 2015 through Q1 of 2018, while American was battling against the US-UAE Open Skies agreement, American paid Mr. Burnley and his law firm $1.33 million in lobbying fees. 

Not surprisingly, the former Secretary wrote a May 17, 2018 op-ed for the Washington Times hailing the recently reached informal US-UAE aviation understandings as a “historic agreement.”  What else could one expect, certainly not an op-ed accurately bemoaning the fact the number one priority of Doug Parker, the CEO of American, was not achieved?

Mr. Parker left no doubt what American’s number one priority was and what he expected his lobbying horde to achieve.  Mr. Parker desperately wanted a prohibition on Fifth Freedom flights offered by UAE carriers Emirates Airline and Etihad Airways.  In a September 15, 2016 interview of Mr. Parker the publication The Street left no ambiguity, and the title of its article says it all  – “American CEO Says Mideast Carriers Should End Europe-U.S. Flights: For American, Delta and United, the bottom line in the dispute with the big three Gulf carriers is an end to ‘fifth freedom’ Europe-U.S. flying.” To emphasize that point, Mr. Parker pointedly told the reporter “[o]ur biggest concern is flights outside the Gulf, flights from outside the Gulf region to U.S.”

Not surprisingly, therefore, former Secretary Burnley’s op-ed repeatedly boasted that priority had been met.  Look, boss (Mr. Parker), we got it!  However, post-publication developments undeniably show that claim regarding a freeze on future Fifth Freedom flights is totally inaccurate.

To support his claim, twice former Secretary Burnley gleefully cited comments by Peter Navarro, Director of the White House National Trade Council.  But, Mr. Navarro’s characterization has been rejected by the White House.   The same day the former Secretary’s op-ed was published, the White House Press Office issued a correcting description of the US-UAE deal.  In that White House statement, the word “freeze” is tellingly, and conspicuously, absent.  Instead, like the State Department, the White House indicated the UAE Government stated only that its carriers have “no current plans” to start new Fifth Freedom flights.  In other words, the UAE Government’s statement on Fifths is solely a snapshot in time regarding current plans, and it is nothing more than that.

The State Department was equally clear and emphatic that former Secretary Burnley’s description of the status of future Fifth Freedom rights is not accurate.  State issued two separate statements correcting Mr. Navarro’s mischaracterization.  Like the White House, the phrase “freeze” is nowhere to be seen in the State Department’s releases.  Instead, State put an exclamation point on the fact that all future Open Skies rights, including Fifth Freedoms, are fully preserved and remain freely and fully exercisable. Specifically, State emphasized “all rights and provisions of [the 2002 US-UAE Open Skies agreement] remain in force” and “nothing in their [the UAE] communication amends or otherwise changes the 2002 Agreement or any rights therein.”

The Associated Press (AP), in its May 22 report, then left no doubt the comments by Mr. Navarro were not accurate and do not reflect the Trump Administration’s view of the US-UAE deal.  AP indicated it had seen a copy of the side letter from the UAE Government to the US Government on Fifths. According to AP, that letter contains “no talk of a freeze or commitment not to change those [current] plans in the future.” Moreover, AP further reported it obtained a copy of the State Department’s talking points “to be used by government spokesmen if asked whether the deal included a freeze. ‘No,’ said the [State Department] talking points.”

In sum, the sole basis for former Secretary Burnley’s claim about a freeze on future Fifths has been thoroughly and undeniably rebutted.  In fact, American’s number one priority was not met.  It was a very expensive failure for American shareholders.

Former Secretary Burnley’s concern about US airline workers is admirable but misplaced.  The greatest threat to US airline jobs and the families who depend on airline workers is not competition with UAE carriers.  That simply was a hollow political sound bite that obviously failed.  The true threat to US workers is American, Delta Air Lines and United Airlines’ accelerating practice of outsourcing international flying to foreign airline partners, and the resulting off-shoring of US crew jobs.  Where’s the former Secretary’s outrage at this very real, ongoing and growing threat to US jobs?

For instance, American has a joint venture agreement with British Airways where transatlantic revenues are split 50-50.  Accordingly, it doesn’t matter to American’s bottom line if transatlantic passengers fly on US-crewed American aircraft or foreign-crewed partner aircraft.  American has no economic incentive to fly “fly American, crew American.”  It banks 50 percent of the revenue either way.

Given the former Secretary’s laudable concern about US airline workers, it would be very welcome were he to raise grave concern about off-shoring US jobs to foreign alliance and joint venture partner airlines.  That’s a US worker issue that is worthy of a champion, and in fact is crying out for one.  Somehow, however, I can think of 1,330,000 reasons that is unlikely.

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Mitchell is the founder of the Business Travel Coalition and OpenSkies.travel.

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