Airlines ask Trump to revisit Gulf deals

The dispute over a travel agreement between the United States and Gulf carriers is heating up, with the three largest U.S. airlines pushing the Trump administration to revisit the deal.

The United States has roughly 120 so-called Open Skies agreements with countries all around the world; each allows almost unfettered access to locations in each country.

{mosads}The largest American carriers, including Delta, United and American Airlines, say that airlines in the Middle East are not holding up their end of the Open Skies agreements by accepting billions of dollars in subsidies from their governments.

“No normal business can do what the Gulf carriers are doing; the airlines would not exist if not for these subsidies. That’s trade 101. These are issues that the administration understands, they addressed how they feel about trade cheating during the campaign,” said Jill Zuckman, spokeswoman for the Partnership for Open & Fair Skies.

“Two countries are breaking their agreement with the United States. If we don’t enforce our agreements, then other countries can feel like they can do whatever they want,” she said.

The foreign carriers deny the accusations and point the finger back at the U.S. legacy airlines, saying they’ve taken in billions of dollars in tax breaks from the government and bankruptcy protections.

The debate over the agreement started in 2015, generating an acrimonious lobbying and public relations effort that is coming to a head with the dawning of a new administration.

The foreign airlines in the crosshairs are state-owned Emirates and Etihad Airways in the United Arab Emirates (UAE) and Qatar Airways in Doha, Qatar.

The “big three” American airlines, along with pilots and flight attendants, say Gulf carriers threaten U.S. jobs and artificially drive down prices.

But they are facing pushback not only from the Gulf airlines, but also from the U.S. travel industry, smaller American airlines and cargo carrier FedEx. They argue the Open Skies agreements promote competition and bring revenue to the United States.

“The travel and tourism industry relies on growth and connectivity, and Open Skies agreements are key to future growth,” said Jonathan Grella, the U.S. Travel Association’s executive vice president of public affairs. The group’s members include hotels, visitors bureaus, car rental companies, airports and cruise lines, among many others.

Grella says the agreements help stimulate economic activity in “unserved or underserved markets,” and that any increase in spending from those visiting the United States benefits the industry.

Zuckman, on the other hand, questions whether the deal has had an economic impact.

“They’re not creating direct jobs, and they also like to say that they’re bringing all these new people to the United States. What they’re doing is stripping market share from American [Airlines], United and Delta,” Zuckman said, citing a recently discontinued route to India by American Airlines and Delta. Altogether, the three legacy airlines employ 300,000 people.

Although there are only two direct routes where the Gulf airlines overlap with the large U.S. carriers, the Partnership for Open & Fair Skies says the Gulf and large U.S. carriers have 9,000 city pairs.

Another coalition — the U.S. Airlines for Open Skies Coalition — is pushing back against the idea that the agreement is harmful for the airline industry.

“One of our big messages is the three legacy carriers don’t speak for all U.S. airlines,” said Andrea Christianson, a spokeswoman for the group. The coalition says the U.S. airlines not aligned with United, Delta and American Airlines employ more than 940,000 people.

The coalition includes JetBlue Airways, Hawaiian Airlines, and cargo carriers Atlas Air and FedEx, the latter of which says it benefits from having access to global delivery networks.

“JetBlue’s success in delivering low fare competition across our network of 90 markets, including more than two dozen international destinations, has not only been enabled by our deregulated domestic aviation market but also by America’s liberalized and innovative Open Skies aviation policy which is intended to foster the same competitive benefits in the international aviation arena,” wrote Robert Land, JetBlue’s senior vice president of government affairs and associate general counsel, in a 2015 comment letter in favor of the U.S. agreement with Qatar and UAE.

The fight has taken a bitter turn, with the Air Line Pilots Association writing a letter to the Justice Department accusing the U.S. Travel Association of violating both domestic and foreign lobbying laws.

Etihad and Emirates recently became members of the U.S. Travel Association, though they were not members two years ago during the last time the issue flared up. U.S. Travel has not changed its stance since then.

“The American public deserves to know whether U.S. Travel is acting on their behalf or is funded by a foreign government with a direct financial interest in ensuring that Emirates Airline and Etihad Airways receive special treatment from the U.S. government,” Tim Canoll, president of the pilots association, said in a statement.

Compliance experts say there’s no precedent for this kind of complaint, though they add it’s a murky area of the law.

The Foreign Agents Registration Act, which dictates foreign lobbying rules, has a couple of portions that two compliance attorneys told The Hill would likely apply in this case, exempting the association from registration.

The U.S. Travel Association also pushes back on the accusation, saying that even though Etihad and Emirates are among its top-paying members, their dues make up less than 1 percent of their upwards of $30 million in revenue.

Those opposing the legacy carriers say the claims are baseless.

“The big concern of our coalition is the direct and indirect threat posed by the legacy carriers’ attempt to go around regular procedure to get the administration to do something based on very narrow, protectionist concerns that threatens U.S. jobs and exports,” Christianson, of the U.S. Airlines for Open Skies Coalition, said, referring to a seldom-used complaint process with the Department of Transportation (DOT).

Going through other avenues, the Partnership for Open & Fair Skies says, is unnecessary and could take an unknown amount of time.

“At the end of the day, the Open Skies agreement allows any issue, or any problem, to be raised government to government. It does not require a team of lawyers to file a complaint with DOT,” Zuckman said.

The Obama administration opened a docket and sought public comment on the Open Skies matter, but his term ended before the government made any actions.

The Department of State, the Commerce Department, the Department of Transportation take the lead on the claims.

Both sides are now banking on President Trump’s experience with aviation and the tourism industry to work in their favor.

“You can use some rhetoric, but we have plenty of arguments to counter that.

“This is a deal [the U.S. carriers] agreed to, they signed it and now they want to renege on it because they think they can get a better deal,” said a lobbyist working on the issue who is not authorized to speak on the record.

— This story was updated at 9 a.m.