10 May, 2015

U.S. airlines’ “subsidies” allegations show American corporations cannot be trusted

Imtiaz Muqbil

The U.S. airlines’ dossier pointing fingers at the Gulf airlines over alleged subsidies and anti-competitive actions is so parochial and pathetically flawed that it does not deserve the respectability being showered on it. Indeed, it is a reflection of U.S. corporate hypocrisy, a clear indicator of how the Americans react when they get beaten at their own game. Rather than seek explanations from the Gulf carriers, it is the U.S. airlines which owe the world an explanation about the real agenda behind such a poorly-argued White Paper.

Emirates Airlines President Tim Clark was right when he said that the entire open-sky concept is in fact a U.S. creation. In Asia in the 1990s, it was a hugely controversial issue, championed by Singapore, getting only guarded backing from other Asian countries and vehemently opposed by others. This editor covered the intense open-sky discussions between the U.S. and Thailand, the only country that abrogated the bilateral aviation agreement rather than buckle to U.S. demands. That forced U.S. airlines to fly to Bangkok for years on a temporary operating permit. The U.S. wanted open-sky fifth freedom rights from Japan to Thailand. That would have hurt Thai Airways international, as Japan was one of its most profitable routes at the time. In their media-massaging campaigns, all the U.S. airlines were pushing the benefits of open skies for Thai tourism and job-creation.

Indeed, all through the 1990s, aviation was only one part of the U.S. government’s agenda to push free trade and open markets under the marketing buzzword “globalisation.” The real agenda was to facilitate the global expansion of U.S. corporations, from pharmaceuticals to aerospace, banks to insurance companies. That has clearly worked. Today, U.S. corporations dominate most of these economic sectors. Phase II is now in progress. The U.S. government is seeking to further advance the cause of its corporations by negotiating a new round of global agreements known as the Trans-Pacific Partnerships and Transatlantic Trade & Investment Partnerships.

Today, the dynamics of globalisation are under scrutiny. It is under fire for promoting imbalanced growth, exacerbating the rich-poor income gap and environmental problems. Furthermore, the dominance of U.S. corporations is under siege from emerging corporations in India, China and eventually worldwide. On the flip side, globalisation certainly has generated positive economic returns. The rapid emergence of the Gulf airlines is one example of how open-markets and open-skies can benefit travel & tourism, one of the world’s great success stories.

Rather than applaud this success, the U.S. airlines’ dodgy dossier reflects the attitude of a sore loser. When open-markets serve their purpose and allow them to maintain market dominance, it’s fine. When they get beaten at their own game, they run wailing to mama-san for protection.

The flaws in the White Paper are easy to identify:

(+) It does not make a single reference to any specific damages suffered by the U.S. airlines. Complaining about lack of transparency and corporate inter-connectivity amongst the Gulf countries’ ruling elite is all very well, but entirely irrelevant if the White Paper cannot prove how its has actually damaged U.S. airlines.

(+) It does not mention Boeing all at. It mentions several times that the Gulf airlines are buying enormous amounts of wide-body aircraft but always prominently mentions the Airbus A380. Never once does it mention the huge number of Boeing aircraft Gulf carriers have bought over the years, and still have on order, including the 787 Dreamliner. To mention that would undercut their entire argument about job-losses. In fact, by avoiding mentioning it, they have achieved the same result.

(+) Look at the cities Emirates, Etihad and Qatar Airways fly to in the United States. All the key metros are covered. This is helping prop up U.S. tourism arrivals by the thousands. How many jobs does that create? How would the U.S. Travel Association react if the Gulf airlines were to pull out?

(+) Look at the number of jobs created by purchasing of products and services in the U.S. itself. How many room-nights are generated in U.S. hotels by crew layovers. How many jobs are created by purchasers of their in-house tour packages? How many outbound U.S. tour operators and travel agents survive by selling tickets on the Gulf airlines? How much do the airlines spend on advertising? How many local staff do they hire? None of that is factored into the argument.

(+) If the owning government entities of the Gulf airlines pump in money to keep them going, so what? When U.S. corporations such as General Motors, Bear Stearns and AIG Insurance all failed in the wake of the 2008-09 economic crisis, they were bailed out via billions of U.S. taxpayer dollars.

(+) At a wider level, how many U.S. companies have benefitted from the huge number of contracts to build airports and keep the Gulf aviation sector humming. The primary contractor for engineering, project management, and construction management for Doha’s new Hamad International Airport was the U.S. construction giant Bechtel. Thousands of Americans are employed across the Gulf aviation sector from pilots to security consultants.

There is an even bigger issue at stake.

The boom in the Gulf airlines helps keep the world safe for travel & tourism. It prevents Israel from starting another misguided adventure by attacking Iran, or pressuring the U.S. to do its dirty work for it.

Should an attack take place, all flights through the Gulf hubs will be affected. That will hit millions of travellers worldwide. The costs in terms of tourism downturn and cargo backlogs worldwide would be catastrophic, potentially triggering a global meltdown. It would also affect the millions of people working in the Gulf and the remittances they send back. Thousands of businesses worldwide would land up holding unpaid bills totalling in the billions.

The blame for this debacle would be placed entirely at the doorstep of U.S. and Israel. The world has not forgotten the role played by the U.S. and its well-known Jewish lobby in launching the 2003 attack on Iraq in pursuit of weapons of mass destruction that were never found. That triggered a global economic ripple-effect. Governments, already mired in economic doldrums, have no appetite for another lie-based military adventure. As long as the flights continue to operate through the hub-and-spokes centres in the Gulf, Israel and its backers in the U.S. Jewish lobby have no choice except to keep their guns holstered.

That does not stop America’s legions of Arab-haters from trying other strategies to undermine the Gulf countries. If the U.S. airlines succeed in curbing capacity by Gulf airlines, other airlines will immediately rush to seek similar curbs. Over time, curbing the open-sky rights of the Gulf airlines will strangle the economies of the entire Gulf. That is exactly what America’s Arab-haters would like to see happen.

The U.S. government can ill afford to play judge, jury and executioner in this case. In fact, it needs to be very wary about any hypocritical attempt to shift the goalposts. The Gulf airline CEOs should not even bother to dignify it by wasting their time travelling to the U.S. to rebut the report. Let the U.S. government officials fly to Dubai or Doha instead. Perhaps they could fly Emirates or Qatar Airways First Class to Dubai and/or Doha and take Delta First Class back, and then decide which product Mr. Joe Traveller prefers, and why.