Are domestic airlines being put at a competitive disadvantage?

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Capitalism fundamentally depends on open and fair competition backed by the rule of law. Fair international competition demands a level playing field.

Our aviation sector is critical to American jobs, the economy and our overall global competitiveness. The global success of domestic airlines is a win for our entire country, and that’s why I’m alarmed by an issue that could pose a direct threat to this industry.

{mosads}“Open Skies” agreements, as they’re known, seek to promote benefits for airlines, workers and consumers by allowing each member country’s airlines free and open access to the markets of other countries. Within the Open Skies deals are tough provisions meant to ensure fair competition that is not tainted by market distortions.

Unfortunately, there is mounting evidence that those provisions are being ignored in certain cases, putting American workers at risk and our domestic aviation industry at a competitive disadvantage.

Between the United States and China — nations with a combined population of 1.7 billion — there are 262 wide-body aircraft on order. These jumbo jets are designed to carry up to 500 passengers for ranges up to 8,000 miles. However, the United Arab Emirates and Qatar, nations with a combined population that roughly equals South Carolina’s, have 544 wide-body aircraft on order. Airlines based in these countries — Etihad, Emirates, and Qatar Airways (Gulf carriers) — are growing at a faster rate than one dictated by a normal and competitive market.

At best, this massive discrepancy merits suspicion. At worst, it could be another sign that fair and free-market forces are not at play, potentially as a result of direct subsidies from the UAE and Qatar.

Additionally, in three different markets — Europe, Australia and Singapore — Gulf carriers have gone in and dominated in a way that cannot be understood through the traditional lens of capitalism.

In the 1990s, Lufthansa, Air France/KLM and British Airways were the top airlines for travel between Europe, the Middle East and Asia. Today, the Gulf carriers occupy those top three slots. Emirates Airline alone offers more seats than those three European airlines combined.

Since 2008, domestic carriers in Australia, most notably Qantas, have suffered, seeing their bookings between Australia and Europe, Africa and the Middle East decreased by 42 percent.

At the same time since 2008, Singapore Airlines’ bookings between Asia Pacific and Europe have fallen by almost 25 percent. Even worse, their bookings have fallen by 68 percent for bookings between the Indian subcontinent and the western United States.

In each of these markets, the decline in bookings for domestic carriers has corresponded with massive increases in bookings for the Gulf carriers.

We can’t afford for domestic airlines to meet a similar fate because of unfair competition created by foreign governments.

Every route lost by an American airline to Gulf carriers costs more than 1,500 jobs, so it’s imperative that we do all we can to ensure a level playing field. It’s also imperative that the do-nothing approach taken by the Obama administration when it comes to possible trade violations comes to an end. Today, the Gulf carriers are seeking to expand access to the American air market. I believe this should not be allowed until questions of subsidies or unfair competition are resolved by the State Department and Department of Transportation.

I know President Trump shares this sentiment. In his inaugural address, he said, “Every decision on trade … on foreign affairs, will be made to benefit American workers and American families.” All this president has ever asked for is a level playing field internationally.

In the 1980s, the federal government stepped in and protected America’s steel industry from anticompetitive dumping by foreign governments that was going on at the time. Today, the question is whether or not foreign governments are assisting their airlines in a way that creates an unfair competitive advantage for them in foreign markets. What is needed is a complete stay on any additional international flights to and from the United States until a full investigation is made to determine whether there are any unfair and anticompetitive practices at work. 

Perdue is the only Fortune 500 CEO in Congress.

The views expressed by this author are their own and are not the views of The Hill.

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