In aviation today, long haul carriers are a big part of traveling. And there is a big dispute from the American Airlines saying international airlines are receiving subsidies. The big 3 international airlines competing for government subsidies Emirates, Qatar as well as Eithad airlines. American Airlines, Delta Airlines as well as United Airlines all had their executives meet with the Obama Administration to talk about how the big three international airlines are receiving these subsidies. According to an online article, "They allege that since 2004, Emirates, Qatar Airways and Etihad Airways have received $40 billion in hidden subsidies from their governments." 40 billion dollars is no small number especially when you think about how many passengers fly these airlines every year.
Airlines based in the united states are no strangers to receiving subsidies either. Boarding Area.com says that, "Between 1918 and 1998 the federal government spend $150 billion in support of aviation." $150 billion spread over 100 years is not on the same scale as $40 billion spread over the last few years but its still money to consider. Another topic of discussion in this debate is when aircraft are purchased under market interest rates. Selling aircraft through the Export-Import Bank is something both American as well as international airlines do. "Boeing, which has sold hundreds of large jets to Emirates and other Middle Eastern airlines, strongly defends the Ex-Im Bank." So it is possible for American airlines to sell through the bank, but purchasing aircraft via this option is not as available. All in all, I don't believe that the global playing field is fair. I do feel like the field is tipped in the international favor as they are more susceptible to receiving larger amount of government subsidies. This is a very controversial subject that has been an ongoing issue for years and will probably continue to be an issue for years to come.
References
1. LINDENBERGER, M. (n.d.). American Airlines leading fight against three foreign rivals. Retrieved October 26, 2015, from http://www.dallasnews.com/business/airline-industry/20150304-american-airlines-leading-fight-against-three-foreign-rivals.ece
2. US Airlines Have Received More Subsidies than Middle East Ones - View from the Wing. (2015, April 8). Retrieved October 26, 2015, from http://viewfromthewing.boardingarea.com/2015/04/08/us-airlines-have-received-more-subsidies-than-middle-east-ones/
I am glad I read your blog because in my research I did not find that the U.S. carriers had recieved subsidies other than the 9-11 bailout.
ReplyDeleteRegarding the EXIM Bank, I think the ability to sell aircraft by both U.S. carriers and foreign carriers has a minor effect on things, but the BUYING of aircraft by foreign carriers that is not afforded to U.S. carriers, that is something that will have a very serious effect. Buying your aircraft at heavily discounted rates will keep your overall cost of doing business down. Add to it also that the foreign carriers are also sharing some of the routes that were held exclusively by U.S. carriers, and it leaves a much smaller opportunity for the U.S. to make money.
ReplyDeleteIt is very true that the international airlines scale is tipped more in favor of the foreign carrier side of things. There is also a problem with the US side as well not just the foreign carriers. In order for there to be a level playing field I think that all government subsidies should stop going to companies that already have there feet under them and have shown substantial profit in the past 10 years.
ReplyDeleteIt seems that the playing field will never be fair because that is just the way that politics and business are. I do think that the U.S. has a responsibility to protect its business interests but any other country would feel the same about their business interests.
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