American Airlines criticizes airline subsidies when government support is consideredAmerican Airlines criticizes airline subsidies when government support is considered
Gary Leff at the age of 11. March 2021.
American Airlines has joined forces with Delta and United to eliminate three major Middle Eastern airlines that have been guilty of xenophobia over the past five years. They argued that Emirates, Etihad and Qatar are subsidised by their governments and the US should prevent them from flying here despite treaty obligations. They wanted higher prices and less choice for consumers.
They were willing to say anything to argue against subsidies to public airlines, while the U.S. airlines themselves were subsidized from the beginning and remained so before the pandemic began. However, it did not work with the Obama administration, a fig leaf at the beginning of the Trump administration, and they eventually left each other.
American was already losing money on its flights before the pandemic, while Emirates was even profitable. And when American realized it had finally lost the government’s attempt to shut down flights to Qatar, it agreed to a code-share.
With U.S. airlines receiving $79 billion in subsidies last year alone, Molly Wilkinson, vice president and head of regulatory affairs and international governments, is getting a little defensive and trying to explain why these subsidies are different from the ones they lobbied against for so long.
You can’t even compare them… That’s comparing apples and oranges… First of all, it’s a black swan, once every 100 years, and it’s hit the whole area….. IN THE UNITED STATES…over 100 airlines have applied for assistance…. and] it comes with conditions, you must provide the necessary air service, you must meet other criteria, you must be transparent with the U.S. government, and under certain circumstances you must repay the grant you received.Also, it was a direct resource, it was money to pay the salaries of your frontline employees….. It was literally about keeping your employees on the front lines and continuing to receive health benefits.
Let us examine these arguments one by one.
- First, it’s a once every 100 years black swan that affects the entire area. The airlines explained this by arguing that their first rescue under CARES and their second rescue in December were one-off events, and argued that they were on their third rescue in a year.
But U.S. airlines have not resisted future bailouts every time they’ve asked for them, and they’re not doing so now. In fact, US airlines were subsidized from the beginning (like Gulf airlines are now) when the Postal Service became their biggest customer and determined which routes they would fly. The United States is an anomaly in a world where most airports are owned by airlines, where airlines dominate governments and have direct control over safety and air traffic control. By 1998, U.S. airlines had received $150 billion in subsidies, according to the Congressional Budget Office.
The subsidies are now greater because the airlines’ losses were greater, but they are not unique. And, of course, Gulf airline subsidies have followed their own losses.
The Americans’ argument is that we have a compelling reason for the subsidies and they do not, so it is a matter of judging whether the government has a compelling interest or not.
The creation of a free space in world trade and tourism, as well as the prospect of expanding air traffic, is of paramount importance to the U.S. and Qatar governments – and is consistent with the U.S. open skies treaties.
- IN THE UNITED STATES… …more than 100 airlines have asked for support… You must provide the necessary air services, you must meet the other criteria, you must be transparent with the U.S. government, and in some circumstances you must repay the grant you received. The money was offered by the federal government, and everyone who was eligible wanted it. Exactly how do US subsidies differ from those of other countries? She doesn’t say, but apparently that’s okay as long as all US airlines take money.
The Gulf Carrier Funds are also subject to conditions. The US required airlines to operate unprofitable flights in support of what it considered vital to the country, which is precisely why other governments subsidize their own airlines.
- It was also a direct pass, it was money that had to be spent on the salaries of your front line staff. It’s extremely misleading. Take the second bailout, PSP2, in which American Airlines received $3 billion and said it needed to spend $100 million a month to pay out four months’ wages to employees it had sent on unpaid leave, and even found a way to retain many of the laid-off workers so it wouldn’t have to pay them.
In other words, the network for them has exceeded $2.5 billion. Although they had to spend the money on labor, the money only covered the labor costs they were incurring anyway, so it went directly to the creditors and shareholders.
Doug Parker testified before Congress in 2001 in favor of subsidies for airlines.
By the way: Before the pandemic, the Americans accepted the largest Israeli subsidy in history for their scheduled flight from Dallas to Tel Aviv.
The CEO of American Airlines went from receiving Air Transport Stabilization Board subsidies for America West to taking over US Airways, subsidized by the government, to having American Airlines taken over by a government pension guarantee company in bankruptcy. Then he spent all his time in Washington, D.C., and realized that by taking tax money, he had more income than if he sold it to customers.
As I said about the airline’s coalition member against Gulf Delta, American Airlines has always believed in subsidies for me, but not for you.
Frankly, American Airlines has not been as hypocritical in its campaign to restrict Emirates, Etihad and Qatar flights (but not the other subsidized airlines it partners with) as United Airlines, which literally lost its CEO in a government interference scandal during the campaign.
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