FedEx, Boeing join fray over open skies

As the rhetoric heats up between the top three American and Persian Gulf-based carriers over competition and alleged abuses of government subsidies, FedEx and Boeing have stepped into the war of words to defend the use of open skies agreements between the carriers.

Earlier this month, representatives from legacy carriers American, Delta and United met with U.S. administration officials to express their discontent with Emirates, Etihad and Qatar Airways, complaining that these “Big Three” Gulf carriers have been getting an unfair advantage by receiving US$40 billion in government subsidies from their home countries of United Arab Emirates and Qatar since 2004.

In retaliation, the U.S. carriers proposed action to alter the government’s current open skies agreements with the Gulf carriers to limit their ability to operate in the U.S. market.

The actions of the U.S. airlines raised the ire of FedEx and Boeing. The Gulf carriers’ orders from Boeing have been robust, mainly because of the open skies agreements they have negotiated. FedEx pointed out to government officials that the air cargo industry is an essential component of a rebounding American economy that would be impossible without the use of open skies agreements.

“The connectivity we provide for U.S. businesses, both small and large, is critical for their global expansion,” said David Bronczek, president and CEO of FedEx Express in a powerful letter sent to the U.S. secretaries of State, Transportation and Commerce.

He points out that the U.S. carriers that are complaining don’t fly as extensively between foreign points as FedEx, so they believe they have little to risk by limiting foreign carrier access to the U.S.

What the carriers really want, Bronczek said, is for the U.S. government to protect them from competition. “The U.S. should not capitulate to the interest of a few carriers who stand ready to put their narrow, protectionist interests ahead of the economic benefits that Open Skies provides to the people of the United States,” he wrote in the letter.

As reported in our sister publication, Cargo Facts, the U.S.-based carriers, while making these accusations, have also ignored the question of whether they are just as effectively subsidized through their access to Chapter 11 bankruptcy protection, which each of them have sought in the past.

No other major carriers have voiced an opinion on the matter, but Jet Blue had expressed general opposition to any changes in open skies.

Emirates, Qatar and Etihad have repeatedly denied charges that they receive illegal subsidies, saying they are run as completely independent businesses despite the fact that they are state-owned.

Reuters reported that Emirates President Tim Clark has hinted at legal action over potential harm that could be done by the U.S. carriers’ complaints. Clark said the service provided by his American rivals is “shoddy,” suggesting that perhaps they should focus instead on improving their own product.

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