I love following airline filings with the Department of Transportation. Stuff is filed almost every day, and it’s interesting to see the arguments that airlines make to justify why they should be granted a route over another airline, etc.
While most of the support I saw from airline CEOs during the election was in favor of Hillary Clinton, many airline CEOs have come forward to say that they’re looking forward to working with Donald Trump to “protect American jobs,” which many airlines interpret as the U.S. taking a protectionist approach of their businesses, including airlines.
For example, the Partnership for Open & Fair Skies (the U.S. lobbying group against the Gulf carriers) released the following statement after Emirates announced a new flight between Athens and New York:
“We look forward to working with President Trump and his team to enforce these agreements and protect American jobs – something that the Obama administration failed to do.”
Similarly, American and Qantas had their expanded joint venture request denied under the Obama administration. Rather than appealing it immediately, they decided to wait until Trump was in office to apply again.
Well, Aeromexico and Delta recently had a joint venture approved, and as part of that, they’re forced to give up some slots at Mexico City Airport. The DOT argued that they had too much power with so many slots, so now they’re being given away to other airlines. Several airlines are requesting these slots, including JetBlue, Southwest, and vivaAerobus.
What’s especially interesting is how airlines have changed the way they’re framing their requests with the DOT. This isn’t surprising — after all, they’re trying to appeal to their audience, which varies based on who is in office. For example, here’s part of Southwest’s argument to the DOT about why only U.S. carriers should be granted these slots at Mexico City Airport:
Southwest urges the Department to grant all U.S. carrier requests in full before allocating any MEX slots to Mexican carriers. Not only would this be consistent with the Trump Administration’s clearly stated goal to put America’s interests first, but there is no basis for depriving U.S. carriers of scarce MEX slots in order to increase the holdings of Mexican carriers that already have vastly more slots than all eligible U.S. carriers combined.
It is the responsibility of the United States Department of Transportation to act in the United States public interest. In this case, that responsibility would be achieved by putting American carriers’ interests first.
So Southwest is arguing that Mexican airlines shouldn’t get any of the slots, which JetBlue isn’t even arguing. Instead JetBlue argues that U.S. carriers should get 50% of the slots, while Mexican carriers should get 50% of the slots.
vivaAerobus agrees with Southwest that the airline offering the lowest fares adds the greatest good for consumers, but they say they’ll beat Southwest on fares by a long shot, and therefore should be granted the rights to some of these slots:
As Southwest recognized in its application, its low fares have and will stimulate passenger growth in their market, by offering existing passengers lower fares and giving an opportunity to new passengers who would not fly absent the low fares (i.e. Southwest Effect). viva concurs with this analysis, and highlights that viva fares are even lower than Southwest and every other carrier which submitted an application. With the lowest fares in the market, viva will be able to significantly stimulate passenger growth in the seven markets it wishes to enter.
There’s no denying that who is in office can have a big impact on how the DOT grants routes. We’re already seeing airlines take a different approach with how they request routes, like from Southwest above.
Now the big question is whether the DOT actually radically changes their decision making process. If so, I wouldn’t be surprised to be see some reciprocal protectionist policies from other countries as well for their own airlines.