June 19 -  Big 3 Risk US National Security In Arabian Gulf Region


INDUSTRY ANALYSIS


Protectionist anti-Open Skies agenda undermines US interests, and they don’t care

You don’t have to be Henry Kissinger to know it is a dangerous time in the Arabian Gulf region. With tensions escalating between the United States (US) and Iran, there is universal agreement that our relationships with key Arabian Gulf allies such as the United Arab Emirates (UAE) and Qatar are more important than ever. 

However, there are three outliers who disagree. They believe now is the perfect time to breach international agreements with the UAE and Qatar and to thereby antagonize both key allies by inflicting economic harm on them. The Three Stooges of US foreign policy are Delta Air Lines, American Airlines and United Airlines (Big Three). 

The Big Three believe their protectionist lobbying campaign to thwart competitive choice offered to consumers by Emirates Airline, Etihad Airways and Qatar Airways (Gulf Carriers) supersedes US national security interests. In their extraordinarily narrow, selfish and greedy view, all that is important is their longstanding anti-consumer battle against US Open Skies policy and Gulf Carriers-provided competitive choice.

Who cares if the Trump Administration damages diplomatic relationships with key Arabian Gulf allies - blocking competition by Gulf Carriers should be the Administration’s paramount policy imperative. For good measure, at a time that the US needs to coalesce with partners against the Iranian threat, the Big Three believe it is a fine time to strain relations with Europe by breaching the US-EU Open Skies agreement because of Qatar Airways’ permitted minority investment stake in Air Italy. 

Ridiculous.  Ludicrous.  And, downright dangerous.

So how do the Big Three justify such dangerous and greedy advocacy? How do they rationalize putting their narrow commercial interests ahead of US national security interests? 

Somehow, with a straight face, the Big Three argue that US national security interests must be ignored because they are “suffering” commercial harm and, they claim, US airline employment is being ravaged by alleged unfair Gulf Carrier competition.   

Really? Let’s look at the facts. As to their claim of suffering commercial harm, according to the International Air Transport Association, North American carriers will earn a $16.6 billion net profit in 2019, up from $14.7 billion in 2018. That is more than half the collective profits of the world’s airlines. 

No need to worry about Uncle Sam taking a big tax bite out of the Big Three’s multi-billion profits as 2019 will be yet another Federal tax-free ride for the Big Three. Yes, multi-billion profits and not a penny of cash Federal income tax paid. In fact, The New York Times recently declared Delta the second most profitable US corporation that did not pay a cent in Federal cash income tax in 2018, trailing only Amazon on the tax-free rider list.

What about the Big Three’s claim that US airline employment is being decimated by Gulf Carrier competition, and therefore, national security interests should be overridden? According to the Department of Transportation’s (DOT) Bureau of Transportation Statistics (BTS) data, that is total bunk. In January 2015 when the Big Three launched their lobbying campaign against Open Skies, BTS data show that major US airlines employed 560,361 workers. BTS’s most recent data - April 2019 - show that number has soared to 701,080 major carrier employees, an increase of 140,719 employees, or 25.1 percent!   

Could it be that the Big Three’s employment ranks have sunk while other US major carriers’ have risen dramatically? No, nice try. The explanation is that the Big Three are not telling the truth. Between January 2015 and April 2019, according to BTS data, Delta’s employment has grown by 9,052 workers  (11.1 percent), American’s has increased by 9,105 employees (9.2 percent) and United’s is up by 6,132 (7.3 percent).

So, having obliterated the Big Three’s justification for the Trump Administration sacrificing our national security interests in the Arabian Gulf region, let’s take a look at the stakes of doing so with the looming Iranian crisis. 

Qatar is a case in point. The Big Three are urging the Trump Administration to breach the US-Qatar and US-EU Open Skies agreements. In January, the Big Three CEOs wrote US Secretary of State Pompeo and DOT Secretary Chao urging the Administration to deny Qatar Airways new flying rights to the US unless it urged Air Italy, in which it is a minority 49 percent shareholder, to terminate its Milan-US flights. 

That remedy unquestionably would breach the US-Qatar Open Skies agreement.  Separately, the Big Three also are urging the Administration to take direct action to take down Air Italy’s Milan-US flights. Given that the European Commission has concluded Air Italy is a European carrier with full and unlimited US-EU Open Skies flying rights, such action would violate the US-EU Open Skies agreement.

So​,​ how does US national security interest in maintaining a cordial and cooperative relationship with the Government of Qatar compare with the Big Three’s competitive concerns about the supposed commercial threat posed by Air Italy’s five (5) - yes just five - aircraft capable of long-haul operations to the US? 

It is silly in the extreme to even apply a weighing-of-interests test. Qatar is a critical Arabian Gulf ally. Its Al Udeid Air Base hosts a forward headquarters of  the US Central Command and the US Air Force’s Central Command. When the Pentagon recently released photos of B-52H Stratofortress bombers that President Trump deployed to the region in response to rising Iranian tensions, the photos were attributed to Al Udeid Air Base where at least some of those aircraft are based.

Similarly, the UAE is a key strategic, military and trade partner in the Arabian Gulf region. The US Air Force relies on its Al Dhafra Air Base and the US Navy on its Jebel Ali Port. In addition, for the last decade, the UAE has been the largest trading partner of the US in the Middle East and North Africa. Of the few countries with whom the US enjoys a trade surplus, the UAE is the third largest global partner. 

So, it boils down to this question: What’s more important to the US - maintaining good, strong and mutually beneficial relationships with the UAE and Qatar, as the Iranian threat looms, or dangerously harming them by cowing to the Big Three’s political pressure fueled by lavish lobbying spending, and based on fictitious arguments?   

The answer is obvious.  It is time for the Trump Administration to emphatically tell the Big Three it is rejecting their dangerous demands to harm our national security interests in the Arabian Gulf region.  While the Big Three believe there is nothing more important than boosting their tax-free multi-billion profits by thwarting competition, the US​, in fact, has much bigger, more important and real strategic interests in the Arabian Gulf region that should be protected. 

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