Allegations of unfair subsidies for three Persian Gulf airlines have touched off a massive lobbying push for a federal investigation into their participation in the U.S. government’s Open Skies program.
The fight has brought together competitors United, American and Delta, which want the Obama administration to evaluate an agreement with Qatar and the United Arab Emirates, which own Emirates, Etihad Airways and Qatar Airways.
The foreign carriers are firing back, registering in-house lobbyists and outside firms that include lobbyists including former Sen. Norm Coleman (R-Minn.) at Hogan Lovells.
“The fact that these [U.S.] air carriers have singled out these foreign carriers for subsidies — it’s the pot calling the kettle black, it’s the coal mine calling the oil field dirty,” said one lobbyist working on the issue, who asked for anonymity due to a lack of authorization to speak publically.
However, the Gulf providers and those siding with them — including the travel industry, smaller airlines and shipping companies — are coming late to the fight.
“We are attempting to build the plane as we are trying to take off,” said Jonathan Grella, the executive vice president of public affairs at the U.S. Travel Association. “The other team knew this was coming, obviously, and was able to organize and pass the hat for months, if not longer, than when we got into the game.”
In January, the chief executives for the three largest U.S. airlines came to Washington and met with officials at the White House, the Commerce Department, the Transportation Department and the State Department to present their case.
The $42 billion in subsidies at issue were allegedly given to the Persian Gulf carriers by their home governments over the last decade. The U.S. carriers say the funds give the foreign companies an unfair advantage, violating the terms of the Open Skies agreement between the countries.
U.S. airlines hired private investigators to get at the figure, because some of the companies’ accounting is not public.
The airlines’ findings, detailed during the U.S. companies’ January meetings in Washington, was the opening salvo in an immense lobbying and public affairs campaign that has reached a fever pitch for both sides in recent weeks that’s featured dueling advertisements, hired guns — including opposition researchers — and harsh public statements.
Next Friday, the companies’ CEOs, backed their pilots and flight attendant unions, will be back in Washington to continue their advocacy efforts.
They are pushing back against claims that their motive is to limit competition in U.S. markets while the Middle Eastern airlines are rapidly opening up transit to new cities.
“We’re for Open Skies agreements and we always have been,” said Jill Zuckman, spokeswoman for the U.S. airlines’ coalition, called the Partnership for Open & Fair Skies.
“With any treaty, there are rules. And if you break the rules, you have to work that out,” she added. “We’re not trying to break the treaty, it’s the most minimal request there can be — we’re asking our government to have a conversation with their governments.”
The battle has caused Etihad Airways and Emirates to each bring on new lobbyists, fighting back against requests from opponents to restrict the opening of new routes to the United States.
More than 100 countries have Open Skies treaties with the United States. The agreements aim to promote competition in the international aviation marketplace and require minimal government intervention in the industry.
Some advocates say the claims against the Middle Eastern airlines are distorted, arguing that many governments make investments in equipment, air traffic control and security that could be counted as subsidies.
Still, the Obama administration is looking into the complaints, opening a docket for public comment through the month of May. The U.S. carriers are hoping for a more formal review.
Last week, 262 House lawmakers signed a letter sent to Secretary of State John KerryJohn KerryCongress, Trump need a united front to face down Iran One year ago today we declared ISIS atrocities as genocide Trump’s realism toward Iran is stabilizing force for Middle East MORE and Transportation Secretary Anthony FoxxAnthony FoxxToll roads poised to boom under Trump plan Transportation chief urges Trump to press forward on self-driving cars Five transportation issues to watch under Trump MORE that sided with the U.S. airlines, while other unlikely bedfellows have also jumped into the fight to defend the foreign carriers.
“These U.S. passenger carriers do not fly extensively between foreign points like FedEx does,” wrote FedEx CEO David Bronczek in a letter to Obama administration officials. “They believe they have little to risk by limiting foreign carrier access to U.S. markets. What they want is for the U.S. government to protect them from competition from able, attractive new entrants.”
Fourteen individual companies and unions are working on the Open Skies issue, according to lobbying reports covering the first three months of this year — and both sides have enlisted former high-level officials to plead their case.
Among them, for instance, is former acting Federal Aviation Administration Administrator Linda Daschle, whose firm is working for American Airlines.
The strategy now, for lobbyists trying to guard the Persian Gulf carriers from more scrutiny, is to turn the battle into one about trade and foreign policy, rather than one about a wonky transportation issue.
One lobbyist said the firms representing the foreign carriers must direct their efforts toward lawmakers on the Senate Finance and House Ways and Means committees involved, because the U.S. airlines have more sway with the transportation committees.
“When people realize that this is an attack on free trade, at a time when we’re trying to find a path forward on trade promotion authority and other deals, it sends completely the wrong signal,” the lobbyist added.