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  • 33

Protectionism Won’t Work Against New Competition

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If there was any need to show how serious a threat the Gulf carriers have become to the club of legacy airlines, then the Big Six airline groups in the U.S. and Europe could not have come up with more impressive action: In December, Air France-KLM and Lufthansa Group wrote a letter to the European Commission (EC) asking it to ensure fair competition. While they did not exactly specify what they wanted, it was clear they want traffic rights withdrawn from Emirates, Etihad Airways and Qatar… (aviationweek.com) 更多...

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mayhemtrip
I do have 2 questions to all of you. Have you seen the diffrence in the level of service between the Gulf Carriers and the US ones? Even in cattle class we are treated like almost humans. The second point how many miles a day are the big US carriers having vs the Gulf ones? Are the big boys mad because there is someone else in the sandbox now? They can't compete because of many things, geography, vision of customer service, priorities of investments and pressures from shareholders who want the quick buck vs the long term investments.
ColinSeftel
Based on my traveling experience in the past year, when it comes to passenger service, the Gulf airlines lead, followed by the Far-east and Pacific, then Europe, and the US airlines in last place. Those who delight their customers deserve to win.
Johnso28
I agree. However, this isn't about customer service. That's NOT the beef of US Carriers. The issue at hand, is that their own government is willing to provide financial assistance to their direct competitors, but NOT US Airlines. When I read complaints about ocean crossings by air, a lot of them are about the condition of the airplane and the lack of amenities provided. Well, airplanes cost money to buy, operate, and maintain. Customers like new, clean, airplanes. Unfortunately, they cost billions of dollars when used to construct an international fleet. So much that US Carriers buy new jets infrequently. Actually, that's the case world wide. Yet somehow.....the Gulf Carriers are buying them all the time. How? The USA Export Import bank. They provide BILLIONS of dollars in interest savings through low interest loans. That's how. Those BILLIONS in savings can be used for fuel, shiny interiors, lavish amenities both on and off the plane, etc. Provide those same loans to US Carriers, and let's see what happens.
pthomas745
Pa Thomas 1
The head of Boeing’s commercial aircraft division said on Sunday that he was optimistic that the United States Congress would ultimately agree to reauthorize funding to the Export-Import Bank, which guarantees billions of dollars in loans to foreign buyers of its airplanes.

The Boeing executive, Raymond L. Conner, argued that failure to keep the bank running would risk American jobs and place Boeing at an unbeatable disadvantage to Airbus, which receives similar support from European governments.
avanha
Andre Vanha 1
Wow, Boeing customers really do receive a huge amount of loans and guarantees from the Export-Import bank. See: http://www.exim.gov/about/library/reports/annualreports/2013/FY2013-long-term-guarantees-auth.pdf
But it's damned if you do, damned if you don't, because Airbus receives EU subsidies. And it's not just the middle east - pretty much any country buying Boeing aircraft is on there.

If the goal of this financing is to support Boeing, and we cut it off, then more of these routes will just be serviced by Airbus Aircraft.
joelwiley
joel wiley 1
So, would part of the solution be to open the Ex/Im bank loans to American firms?
WALLACE24
WALLACE24 1
You drinking today??
joelwiley
joel wiley 1
Not yet. Just made the suggestion as several people lamented the lack of a level playing field.
WALLACE24
WALLACE24 1
Just kidding ya. I have no idea the finance terms ex-im imposes but we saw how easy financing worked wonders in the housing market. Lol
joelwiley
joel wiley 1
Well, I think the way the game is played, it that you rent a few legislators to write the rules you want. You get your pile, no matter what destruction.
preacher1
preacher1 -2
Well, it is a twofold problem and a lot is to be said for attitudes of people, both the workers and the pax. Pax in general overseas tend to treat flying as a privelege or something halfway special and the American looks at everything as WalMart. There is still a service, aim to please attitude in some parts of the world. Those attitudes are governed by personal feelings rather than union contracts.
ColinSeftel
I don't think it's a cultural issue. In general, American businesses (even Walmart) give excellent customer service. So why not airlines? I suspect that it's because they're obsessed with cost-cutting and they view customer service as a cost. There's two types of costs, value-adding, which is worth paying, and non-value-adding which is wasteful. Cut out the wrong costs and you lose customers, so you cut more and lose more. We know where that spiral ends.
weecosse
David Burns 1
The real driver in the U.S. is the investors/shareholders. They are the ones demanding that the airlines finds ways to generate more revenue so that the shareholder can reap a higher return in their investments. It is at the point where the U.S. customer has few options available in the cutthroat aviation business. The airlines know that they have two customers to satisfy - the shareholder and the traveler - and we all know who comes first. Europe at least has a good amount of low-cost airlines that give the traveler cattle-class seats at a decent price. The Gulf carriers and far eastern carriers provide far superior service.
Johnso28
The Gulf Carriers provide that "great service" at a huge loss. Those losses are then covered by their government. Please explain to me how carriers that aren't funded by their government are to compete with that? Do some research. Gulf Carriers have been losing money for years. The losses are disguised by their respective government. These Gulf Carriers are growing faster than their countries GDPs. At this pace, their WB fleets will be larger than all of the US Carriers WB fleets combined. Even though their population is 4% less. The math doesn't work. The Gulf Carriers are a sham. They're finally being exposed.
preacher1
preacher1 -2
Well, union membership puts most folks in an adversarial relationship with what provides the bread and butter. Some folks actually like their job and like to go to work.
Johnso28
Yup. I know lots of unionized airline workers who actually like their job and that provide their customers with amazing service. This debate isn't about service. It's about US airlines being stabbed in the back by their own country. I see a lot of people scream about fair competition, yet these same individuals refuse to acknowledge the un level playing field that leads to a disadvantage for US airlines.
Johnso28
1) No. I haven't. Unless you're speaking of the ridiculously lavish elite suites that are available only to those that have exorbitant amounts of disposable income. Suites, that exist on new airplanes, and are funded by millions of dollars saved in interest. Interest saved by loans provided by the "big boys" own country. Loans that aren't available to them. The shiny jets, and all of their amazing amenities are funded by loans that the "big boys" aren't even allowed to apply for. That's one of the many reasons Emirates is the only airline in the WORLD that can make money with the A380. Take away all of the subsidizes, and watch the A380s true identity be revealed.

Spare us the garbage, and lets cut right to the point. This is about a level playing field. Give all airlines the same kinds of favorable loans, aircraft deals, landing fee breaks, tax breaks, government support, and let the competition begin.
pilot62
and sheik sponsored aircraft - no we can't -
pilot62
state sponsored ... how can we not want to stop them, but wait we gave them the money in the first place so we could drive cars cheaply.. never mind
ftldave
So much for free markets and globalization, something the corporates regard as a religion. Confronted by competition from countries where business, government and, yes, unions, work together, now they don't like it, do they? And, yes, there are great cultural differences between American airline/airport staff and those around the world. In Europe and, heck, even in Russia, my wife and young son are often told, "Mother, go to the head of the line" by other fliers and airport staff. The proverbial cold day in hell would occur before that will ever happen in an American airport. Sad fact is, Americans really don't care much about each other anymore. That's clear to see from the scorn shown towards unions and the employees, the working class, and can clearly be observed even in the comments here. So, it's no surprise that service from Gulf airlines is much, much better than what we get from our own.
WALLACE24
WALLACE24 2
Some of that may be the fact that a growing percentage of people here ( born and immigrant) don't care about America or being an American. They only want what they can get. Best example is a lady in DC. Friction between individuals and groups has always existed but in the past most were proud to be Americans first.
AWAAlum
AWAAlum 1
I think most are probably still proud to be American, however, it can't be denied that America has done some things the past few years known globally and that are shameful. Things probably most Americans are ashamed of, but that doesn't equate to being ashamed of being an American. Just ashamed of the actions, wishing other avenues had been taken.
WALLACE24
WALLACE24 2
I did say a growing percent not most. A majority of the people I'm talking about don't even know what America has or hasn't done. Others lean on some ancient wrongs or perceived persecution today or even worse their allegiance is to a foreign flag. I can say that I'm not ashamed of anything America has done, even if I don't agree with it.
joelwiley
joel wiley 2
I wonder how many Americans are to apathetic to be ashamed - 2014 voter turnout was 36%. 2/3 couldn't be bothered.
AWAAlum
AWAAlum 1
Maybe 2/3 couldn't decide who was the lesser of two evils.
joelwiley
joel wiley 3
There was more than one election on the ballot. IMHO voting gives you the right to complain about the system. If you don't vote, don't kvetch.
joelwiley
joel wiley 1
That should be 'too apathetic' (maybe I'm to apathetic to proofread before hitting post)
Johnso28
You do realize unions are ILLEGAL in the UAE, right? The UAE where Emirates is based, and where there isn't a government?
WALLACE24
WALLACE24 2
I don't care if it is airlines, airplane builders, or any other business. The U.S. should treat foreign business just like their home country would treat a US business in their country. Do our carriers have open sky access in those countries?
layman85
layman85 5
Of course. The very definition of Open Skies agreements is that they are reciprocal, allowing two (or more) countries equal access to each others' markets without protectionist regulations.
Johnso28
Oh boy! What a deal! US Carriers can fly to Dubai or Abu Dhabi. While Emirates and Qatar can fly to Los Angeles, New York, Chicago, Atlanta, Seattle, Boston, and Dallas just to name a few!

It's less about the destinations, and more about the ridiculous financing that the Gulf Carriers get from the EX-IM Bank. The interest rates alone save them MILLIONS of dollars a year in interest. Millions that can be spent on lavish business class suites, disposable young flight attendants, and expensive food. This is about a level playing field. People really need to ask themselves how these Gulf carriers can be so profitable, while flying around extremely expensive airplanes, providing ridiculous amounts of amenities, while no one else in the world can.
preacher1
preacher1 1
No doubt they'll be treated the same Jimbo, but what is hard to prove or compete against is the government involvement and lower operating expenses as far as wages and things like fuel. You probably can't prove any government money and it may not be, but I would think that even knowing it was there for the asking would make a hellacious difference in how one operated.
WALLACE24
WALLACE24 1
I kinda worded that wrong. Left out "really". We have all kinds of agreements but that don't always mean the spirit of them are really adhered to. Just seems like any agreements, trade or otherwise, leaves US on the short end. Guess they are bigger or better liars than us. Lol
preacher1
preacher1 -5
Our problem is that on such as that is that we treat everybody as honest. There are some folks that will lie and take advantage of that naievette, especially when you have a weak leader as we have now.
preacher1
preacher1 -3
He ain't particular, he'll throw anybody under the bus if it's convenient for him.
WALLACE24
WALLACE24 -3
Well he is interested in government not business. It's all he has ever known. If the biggest liar gets the best of an agreement you would think we could excel but he chooses to negoiate with the worlds best liars. I expect to see Iran National Airlines plying US skies soon.
zurismith
Zuri Smith 1
Agree completely
Johnso28
Once again, it's about the aircraft loans the US provides to these Gulf Carriers. Loans that are not available to the US Carriers. Not loans provided by Boeing, but rather the US govt.
AWAAlum
AWAAlum 1
Although there are a lot of praises being sung here for the Gulf carriers, I can't help but think back to how many have talked about SOME of those carriers seemingly not operating to the safety standards set by the U.S. So - what would be your priority ... safety? or customer service? (No fair saying both!)
preacher1
preacher1 0
Well, just for talking points and I don't know if it would make that much difference or not, but during the Asiana 214 debacle, everybody seemed shocked to find out that foreign carriers were subject to FAA part 129 rather than 121. Don't really know how much of a difference that is but part of it was on site inspection and monitoring. That would require some travel money to the FAA but it bears mentioning as long as they are talking to the DOT.
Johnso28
Mr. Underwood, your argument is flawed. No employee of Emirates is unionized. Unions are illegal in the UAE. That's simply one of the many flaws in your argument.
zurismith
Zuri Smith 1
... As in US and Australian airlines do not have the same access in the Middle East or Asia. Not do they get the same service. They get treated like lepers. Even sequencing at Chek lap Kok is a joke. Western airlines somehow get slotted at the back of the sequence (you might not have realised).
zurismith
Zuri Smith 1
Sorry, that was a reply to layman85 below
Moviela
There are ways to level the playing field without protectionism. Since the cost of aircraft is not the major expense to operate an airline, we need to zero in on the cost of fuel and labor.

Since Gulf States charge us roughly 25 times the cost of crude oil, we should charge them the same markup when purchasing fuel.

Gulf carriers pay pitiful wages, so we add a tax to landing fees to make up the difference. The money would be used to finance airport amenities for passengers. Free baggage carts, comfortable waiting rooms, 25 cent coffee, faster customs, and staffing to insure no lines.
WALLACE24
WALLACE24 1
You can sell me on the idea but I'm sure somebody will call you a Muslim racist. Lol
zurismith
Zuri Smith 1
The western airlines need a fair go, not protectionism.
Given that the gulf airlines are all heavily financed by their governments and western airlines are not, how is that fair???
jcartlidge
Airlines should sink or swim by the number of passengers and their reaction to the service provided for the cost.
Most U.S. airlines,the service is not the best.We flew Delta premium economy last year.Whilst the service was acceptable,it does not compare with Virgin Atlantic,who are getting our cash this time round.The best service on a U.S. carrier we've ever had was US Airways Envoy class.The problem was the only way we could afford it was their (what they now call)GoUpgrades,which are only available 24hours before flying,and are not always available.
Also is not the bankruptcy protection U.S. airlines get just the same as getting government cash?
More competition should be good for travellers,and as long as everything is by the book as far as safety goes,whats the problem?
Johnso28
Virgin Atlantic? Isn't that interesting considering they were bleeding money until Delta bought 49% of them. While flying one of the most lucrative routes in the world? So how do the Gulf carriers magically make so much money providing even better service, on less profitable routes? Hmmmmmm.....
pilot62
maybe the state sponsored aircraft
ohmycaptain
Fair Competition is not protectionism. Either the game rule is the same for everybody or our western society have to be worry for their children.
pilot62
hey Alice ? wood you not please
preacher1
preacher1 -1
Well, like it or not, Boeing has legitimate completion from Airbus now. It has taken awhile but it has got there and must be dealt with.
CaptJohn1
CaptJohn1 2
Just an FYI. Emirates is the largest operator of Boeing 777's in the world.
Johnso28
That's great. How do they afford it? Loans provided by the US govt.
WALLACE24
WALLACE24 0
Actually the U.S. taxpayer. Lol
joelwiley
joel wiley 0
Or rather, the U.S. taxpayers' grandchildren
Johnso28
Exactly. US Airline employees are essentially FORCED to fund their direct competition
layman85
layman85 3
The article talks about airlines, not airframe manufacturers.
preacher1
preacher1 -5
I can read smart aleck, and an aeronautical multi national corporation is just that. Anyone that had any common sense would see that it was a comparison. I am sorry you are in that group that cannot think for yourself and must have everything explained to you.
honzanl
honza nl 0
the problem is that the Gulf carriers get their fuel so cheap they have an unfair advantage. One guy here who is in the fuel business at the airport told me that oil company X from Europe wanted get permission for a project in the Gulf region, Gulf region government told X: OK, but then you have to deliver jet-A fuel at your airport to our carrier for price Y (where Y is about 95% discount price!!). This way this Gulf carrier gets fuel here and at home for rock-bottom prices and can compete unfairly....
WALLACE24
WALLACE24 0
Their little kingdoms in the sun might lose some appeal shortly if their brothers from ISIL drop by.
preacher1
preacher1 0
Kinda makes you wonder why they haven't stopped in. Reckon that's where some of their money is coming from?
CaptJohn1
CaptJohn1 3
When I was in Saudi Arabia one of the things that really surprised me was basically slums. I would have thought that a country with that kind of wealth, everyone would be doing well, the exact opposite was true. What they lack in much of the Middle East is an economy based on many differant types of businesses. One which creates jobs, and some level of prosperity for everyone. But they just don't have that, your either part of the ruling family, part of the oil and gas economy, or you work for the government. If your not part of one of those, your living hand to mouth, it's the reason why the area is such a breeding ground for nut jobs. Who's fault is it, it's their governments fault for not working to create a vibrant economy. Now when I went to the UAE, completely differant story, the government was investing heavily in creating as many differant types of businesses as possible, and it really shows. Do they have their poor areas, absolutely, but there tiny by comparison. The end result being, most people are pretty happy, they have no time, or need, for extremeism. The money that they have put into their airlines is very impressive, the facilities, top of the line. Only problem is most of the locals would rather not have jobs where they get their hands dirty, they want to run the show, so there are lots of outsiders doing the heavy lifting. Not that I blame them, we would all rather make our living with our brains than our backs. As far as competition, yes, they have an advantage that needs to be dealt with. If not, more carriers will end up out of business, and be replaced by those with deep pockets, at some point, when they dominate the market, guess what will happen to ticket prices.
WALLACE24
WALLACE24 0
I think it's pretty well documented that our "friends" have walked both sides of the street.
preacher1
preacher1 0
Yep, and what fearless leader don't realize is that they walk the side that is best for them, not caring about anybody else unless it is to their advantage. Then they smile to your face and stab you in your back.
WALLACE24
WALLACE24 -1
And that was my point about open skies. Ain't worth the paper it's written on.
joelwiley
joel wiley 0
I ran across an article on world-wide jihad that listed their priority areas. That kingdom is up near the top of the list.
WALLACE24
WALLACE24 2
Why not! Lot of money and infidels there.
Johnso28
Don't forget the ridiculously low interest loans provided by the US EX-IM Bank. Loans that are NOT available to the US Carriers, yet are provided to direct competition. Essentially, US airlines and their employees are forced to indirectly provide funding to their own competition.
Johnso28
People need to realize the issues at hand here go waaaaaay beyond customer service. This is about the Gulf Carriers collusion with their governments who help hide losses, and also use landing fees to subsidize their operations. The dirty little secrets of the Gulf Carriers are finally being exposed. It's about time.
avanha
Andre Vanha 2
I'm gonna play devil's advocate. If the UAE wants to subsidize my travels abroad, at their expense*, is that really so bad?

Downsides:
- US carriers lose international business, that hurts aviation jobs.

Upsides:
- Passengers get better service, cheaper.

Losing these jobs sucks, but there's some mitigating factors: Foreign carriers can't service our domestic market, so while US carriers might need to downsize their international operations, they don't need to go out of business. I'd also add that unlike manufacturing, or other sectors, there's less strategic value in these international operations. They can be spun down, and in the future, should the international competition no longer offer a better value, started up again.

* Not counting the subsidies provided by the US Import Export Bank. Those primarily help Boeing compete.

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