The Most Hypocritical Complaint About Airline Subsidies… EVER

As most of you probably know by now, there’s a battle going on between the “big three” US airlines and the “big three” Middle Eastern carriers. I’ve shared my thoughts about why the US carriers can’t compete with the Gulf carriers under the current system. And I think the US carriers are right for expressing their grievances, regardless of whether anything comes of it or not.

That being said, unfortunately the political action committees the US carriers are using to make their case are so beyond juvenile that this is just getting laughable. So far:

But this argument has just hit a new low, my friends. A really new low.

The Detroit Free Press published an article today entitled “Keep air travel competitive, fair.”

The story starts as follows:

There’s a once-daily Delta Airlines flight from Detroit to Marquette, in the Upper Peninsula, that wouldn’t seem to have much to do with a fight over the huge expansion of international flights by three Middle East airlines.

But it does.

And that Marquette flight, along with air service to small communities around the nation, is at risk if the Obama administration doesn’t confront — first through negotiation, and then maybe restricted market access — the unfair advantage those foreign airlines have appropriated for themselves.

Okay, so let’s recap. Once daily flights like Detroit to Marquette are at risk because of the unfair advantages given by the United Arab Emirates and Qatar to Emirates Airline, Etihad Airways, and Qatar Airways. What are these unfair advantages, you ask?

A report comissioned by Delta, American and United airlines found that Qatar and the United Arab Emirates have funneled more than $42 billion in subsidies to Emirates, Qatar and Etihad airlines in the last decade, fueling a huge expansion in those airlines’ international business.

Essentially, the report says the foreign governments are coordinating with the heads of the airlines, and are directing government resources toward huge airport expansions, low-cost equipment acquisitions and government-backed or sponsored loans — all to help the airlines grow their international passenger service.

That’s right, the problem is subsidies. Fine, that’s a reasonable enough argument in the context of this debate. At least that’s what the US airlines have been touting all along. After all, there should be no government subsidies in air travel, right?

They further reinforce the point about subsidies:

If Emirates were winning that fare battle without subsidy, Delta would have no complaint. But because of the suspect relationships between the government in U.A.E. and Emirates Airlines, this raises serious fair trade issues.

If the trend continues, U.S. carriers will have to dump more than international flights. The other spokes in the network will be at risk, too, and places like Marquette or Alpena or Lansing — small communities whose air service operates on the thinnest of margins — would likely be hit hardest.

I’m totally with you, Detroit Free Press! These subsidies are ridiculous, and it would be a real shame if government subsidies got in the way of air travel service between Detroit and Marquette or Alpena, right?

Willie-Wonka

Now, this article was written by the “Detroit Free Press Editorial Board,” so you’d think they could have just Googled for 30 seconds to make sure they had a sound argument.

Since they didn’t, I did it for them, and it reveals some interesting information about the financials of Marquette’s airport. Via the 2015 annual report & marketing strategy from Sawyer International Airport:

While it was the hope that the new Sawyer International Airport would be self-sufficient, as with the majority of smaller airports, this goal is unlikely for a variety of industry and economic factors. The Airport’s annual operating deficit is approximately $300,000. Since 2013, Marquette County has contributed approximately $165,000 annually from its General Fund to the Airport’s Stabilization Fund. In 2015, the subsidy has been reduced from $165,000 to $100,000.

And the numbers are similar for the other airports. It would also be a shame if Alpena Airport lost service, right? Interestingly the only reason that airport has service is thanks to the Essential Air Service Program. Via UpNorth Live:

Each year, millions of dollars are funneled from the federal government to commercial airlines, enticing them to serve small, rural airports.

The program is called Essential Air Service or EAS.

Three airports in northern Michigan participate in this program.

But some have wondered if the service worth the price.

At Alpena County Regional Airport, their $2.1 million equals EAS covering $136 for each of the almost 16-thousand passengers last year.

That’s right, at Alpena Airport, the government subsidizes each passenger’s ticket ~$136.

So to sum it up, damn the Middle Eastern airlines and their subsidies, because if this trend continues, routes operated by US airlines and subsidized by the government won’t be able to survive.

phaedra-parks-now-check-that-out-mister-scandal

Bottom line

The arguments US carriers are making are just so embarrassing. They have a valid point which I do believe should be investigated.

But it’s not about US jobs. Or freedom. Or Islamophobia.

The argument should come down to whether the mission statement of the Open Skies agreement is being honored:

Open Skies agreements have vastly expanded international passenger and cargo flights to and from the United States, promoting increased travel and trade, enhancing productivity, and spurring high-quality job opportunities and economic growth.  Open Skies agreements do this by eliminating government interference in the commercial decisions of air carriers about routes, capacity, and pricing, freeing carriers to provide more affordable, convenient, and efficient air service for consumers.

That’s it…

About lucky

Ben Schlappig (aka Lucky) is a travel consultant, blogger, and avid points collector. He travels about 400,000 miles a year, primarily using miles and points to fund his first class experiences. He chronicles his adventures, along with industry news, here at One Mile At A Time.

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Comments

  1. more profitable quarters by US3… = harder for them to justify that ME3 cripple their profit machine. US3 efforts just made me want to puke. Waste of their resources when they could use $ to improve products and compete with intl carriers

  2. “Obama administration confronts…” ?? Seriously?? Is it the president’s job to mediate BS disputes between airlines?

  3. Interesting post and I’m enjoying your coverage of this dispute (as a side-note: this group has bought out practically all the advertising in the Metro stop for Nationals Stadium in DC). One small quibble — Americans for Fair Skies is not a Political Action Committee, but is actually a 501(c)(4) “social welfare” non-profit. These types of non-profits have become increasingly involved in politics, but there’s a difference in terms of who regulates them, what they’re allowed to do and what they’re required to disclose.

  4. And did you see how much Delta charges for a round trip between DTW and MQT? I just picked a random date: $1,128 on coach. I wish I could fly Emirates or Etihad from DTW to MQT. These US airlines are a total joke.

  5. Record profits, insane fees, crappy service. Yet the big 3 US airlines are whining like entitled little brats.

  6. MQT is my hometown airport and it is a real pain to fly out of with DTW and ORD via AA the only flights out. Half the time they are delayed/late and misconnect. They used to have a daily MSP flight but that was cancelled for some reason.

    Most people will drive the 3 hours to GRB and fly out of there. It’ll also save you at least $100/ticket and have many more flight options.

  7. I have gone from merely disgust to outright loathing of this lobbying group and the airlines they represent.

    The sad part is that if their PR campaign is not successful, they’ll merely bribe every thieving Congress critter and Senator necessary to get what they want….just like every other lobbying scum that represents business interests.

  8. Seriously, if they boycott government owned airlines, then they should also boycott Singapore Airlines, Air China, China Eastern, China Southern, Qantas, Turkish Airlines, Air India a bunch of airlines in Africa….
    But the again. Even though that shouldn’t affect us too much, without Singapore Airlines, we still have Cathay Pacific. Without ME3, we still Turkish airlines…

  9. The famous Marquette airport! I still have a business class redemption booked going there this coming summer. Vancouver-Calgary-London-Frankfurt-Marquette 🙂

  10. Delta has a point about it being hard to compete against government intervention. I mean, suppose Airline A had a hard to get slot at an airport, say Haneda, that they rarely used, and Airlines B and C thought they could run more profitable and frequent routes if they had that slot. But the government decides that Airline A gets to keep the slot anyway, thereby choosing winners and losers instead of letting the market choose. How is Delta supposed to compete with that type of government favoritism? Oh… Maybe that’s a bad example .

  11. Slight correction (AP Government teacher here :D): political action committees are groups that have the express purpose of contributing funds towards a candidate’s reelection campaign. They are not the same as lobbyists, and the term does not apply here

  12. Wow, small world Matt. I thought I was the only UP based guy reading Boarding Area. But I’m at Houghton/Hancock airport, not Marquette. just 2 short hours away.

  13. on major issues the rich and powerful have their way and the truth is exactly what they say it is.

    It’s best to understand that and adapt

  14. Maybe the big US 3 treat their First Class with respect, but they treat Economy like dirt. United is the worst. I take many overseas carriers before United.

  15. “Maybe the big US 3 treat their First Class with respect…”

    LOL! No, they treat their 1st class with derision.

    Economy gets contempt.

  16. Maybe someone should remind all 3 CEO’s that they ran and hid under weak bankruptcy laws. They gutted the union contracts (Pilots, FA’s, Mechanics, Ramp Etc) They lied about keeping hubs open (Memphis, St Louis) Northwest/Delta were in fact very profitable. The bankruptcy laws were changing and they filed a few hours before midnight. I find it ironic they are crying about subsidies. Just last night I was booking to go to Singapore in July. AA wants $11,000 Emirates wants $4700 Gee Doug Parker let me book AA! Get int he ballpark I might book AA.

  17. I wonder how much, if any, of the general public is aware of and believes this BS by the airlines?

  18. If I were a US airline CEO, it would occur to me that attacking the wealthier competition from the ME will only make them more creative in eroding domestic profitability for the US3. All Emirates has to do is coordinate timetables with Southwest and JetBlue to bypass feeding pax to the aging US3.

  19. Bravo!!!! Love this. The US big three are embarrassing themselves and glad there are people like you highlighting how stupid they sound with there childish ways

  20. Very enjoyable post. This is why there is so much xenophobia still in the U.S. Propaganda and misinformation. Oh well, I guess it means less competition for award tickets!

  21. Great article! If I was a US airline CEO is keep pretty quiet about government subsidies given all the infections of cash they’ve had via Chapter 11 protections!

  22. We know what they’re doing, people. They’re pandering to the Islamophobia and ignorance that is rife within the US (more specifically, the conservative party). Their stupid little smear campaigns will play really well to the poor schmucks that don’t travel but they’ll back the US 3 because they shudder at the thought of driving anything other than Chevy or Ford because they’re all about “AMERICAN MADE”. Unfortunately, the number of Americans who travel internationally and have true knowledge of the aviation industry aren’t numbered as heavily as that of Americans who have literally never left the country and probably have only flown short distances within the country a handful of times.

  23. :::: waving at Josh and Matt :::::

    Hey, another Yooper reading Lucky’s blog!

    Flying out of MQT is risky at best due to weather, flight cancellations for unknown reasons and cost. $1200 to fly 400 miles hurts, badly(!) and I usually drive to MKE. Have gotten some great (heavily subsidized) fares out of Hancock recently–$145.00 r/t to Nashville.

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