Open Skies Campaign Shifts Propaganda Focus Towards Presidential Flattery

Within the past week the United States and United Arab Emirates have reached an agreement in their Open Skies battle that lasted for several years. The way I view it, the resolution is a victory for Emirates and Etihad, and a loss for the US carriers:

  • Emirates and Etihad are agreeing to publish annual financial statements consistent with internationally recognized accounting standards
  • Emirates and Etihad have stated that as of now they have no plans to add additional fifth freedom flights to the US; Emirates currently operates these flights from New York to Milan and Newark to Athens

In other words, it’s business as usual for Emirates and Etihad, and they must be thrilled about it, as they should be. The US is doing nothing to stop the “billions of dollars of government subsidies” (as the “big three” US carriers like to call it), and is doing nothing to limit the capacity these airlines can offer between the UAE and US. The “playing field” is no more or less level than it was before.

Of course the “big three” US carriers have spent millions of dollars lobbying for reform, and they don’t want to come out of this looking like losers. After all, some middle managers have to justify the way in which they spent money. The deal was structured in such a way that both sides can feel like they won (or at least didn’t lose). We haven’t heard a whole lot from Emirates and Etihad, while the leaders at the big US carriers have been engaged in a delusional victory lap.

Their latest victory lap was today, as the Partnership for Open & Fair Skies (funded by American, Delta, and United) took out full page ads in the New York Times and New York Post thanking President Trump. My first issue here is that they don’t seem to know their audience very well. Is the “failing New York Times” really the place to take out an ad that you want Trump to see?

Here’s the full text of the ad:

Thank You President Trump For Standing Up For American Jobs

President Donald J. Trump
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear President Trump,

With your new agreement to stop trade violations by the United Arab Emirates, you have shown the world that your administration will not stand for unfair trade deals that hurt American jobs and businesses. On behalf of the men and women of the U.S. airline industry, thank you for taking decisive action.

For over a decade, the UAE and Qatar have provided billions of dollars in subsidies to their government-owned airlines (Emirates, Etihad Airways and Qatar Airways), violating Open Skies trade agreements with the United States, and blocking fair competition with American businesses. By acting to enforce our agreements and restore a level playing field, your administration has again shown that you stand with American workers and will fight for our jobs and economy.

As with your successful agreement with Qatar earlier this year, this new agreement with the UAE will save American jobs. More than 310 members of Congress, more than a dozen governors, and hundreds of local elected officials and business leaders from both parties agree with you that the U.S. must enforce its Open Skies trade deals. Now we look forward to working with you to hold the UAE and Qatar to their word.

Thank you for your leadership and your commitment to the American people.

Sincerely,
The Partnership for Open & Fair Skies

Here’s a picture of the ad, which oddly shows a picture of a Cathay Pacific A330 with the tail blurred:

To be clear, this isn’t supposed to be a pro or anti-Trump post. Personally I commend the president for not acting on this issue and for continuing to give the Gulf carriers unrestricted access to the US under the Open Skies treaty. It’s an area where the Obama and Trump administrations clearly came to similar conclusions. The administration did the right thing, even if the above letter doesn’t reflect what the agreement states. But the degree to which the “big three” are rewriting history and self-congratulating themselves is a bit much…

Comments

  1. …Or, maybe it’s just that they understand filing audited financial statements is going to stop the subsidies and they genuinely are thankful this was achieved.

  2. Misplaced ad showing an Asian airline operating a European aeroplane? Well at least they got one thing right by flattering 45. He’s known to be quite the narcissist..

  3. @Rob – it doesnt matter that they were subsidized or not. Our open skies agreements dont prohibit subsidies on either side. And if we’re going to talk subsidies, we should talk about the Chinese and European carriers that our US carriers work closely with and invest in. Most of those carriers receive / have received subsidies on a far larger scale than the Gulf carriers ever have.

  4. Are PWC not globally recognized auditors? Have they been helping EK cook the books all these years??

  5. “Personally I commend the president for not acting on this issue”

    Lucky, I think this sentiment is misplaced (and I say that as a Trump supporter). If Trump thought he could’ve gained some advantage by hitting the ME3 with a sledgehammer, he would’ve done it in a heartbeat.

  6. Is it really clear that the US airlines “lost” so badly, as @Lucky and @Gary Leff seem to suggest? The White House released a statement that claimed that the Gulf carriers had made a commitment not to add new fifth freedom flights. While I realize there’s not like a binding treaty (and the Middle East carriers did not explicitly make such a commitment in their own public announcement), to some extent, what the US airlines were really worried about was the possibility that Gulf carriers would over time massively expand their routes to the US beyond flights to their own hubs — and thus take a big chunk of the transatlantic premium traffic. If there’s some sort of agreement, however vague, that that won’t happen, it might assuage the key concern that US carriers had.

    Incidentally aren’t some gulf carriers cutting back on capacity to the US? The legacy US carriers would probably consider that a victory, even if it flows from market changes that have nothing to do with their lobbying efforts.

    Yes, there is a lot of posturing here, but it’s not entirely clear that the legacy US carriers didn’t get something of value at the end of all of this. Since they weren’t really entitled to *any* remedy under the relevant treaties, getting some sort understanding that there won’t be more fifth freedom flights might be enough to legitimately make them feel like they accomplished their objectives.

  7. Emirates operates without subsidies and I say this as I have reliable sources (I live in Dubai since 14 years). I also know that Emirates more than once distributed dividends to the Emirates. EK has grown so big that the Emirate probably couldn’t even afford to subsidize the airline. It’s simply a success story. So well managed that people fly it, prefers it and pays for that.

  8. Lucky, I know this blog is not political, but I think that, as a member of a minority group, you should on occasion be able to stand with some of the minority groups Trump constantly offends (if his name or administration comes up in a travel-related post)

    Not that everything has to be about politics, and I commend you for leaving the toxic US political scene out of the blog. I just think that it would be nice to see an occasional condemnation of the racist, bigoted, and hateful actions of this President.

  9. @Lucky @ Gary
    I really think you should spend some time reading Charles Anderson’s analysis at Capital Trade. One of the things that has always stood out in my mind is how Emirates offloaded their hedging losses to their government entity I think called ICD or something, at the height of the financial crisis. They defend that move by saying they wanted to exclude the large mark to market losses from their operating results because it would just show a big loss in one year and a big profit in the next year, so it would be confusing.

    Anderson points out that there was no way to know back then in the height of the crisis that the value of the contracts would swing back the other way someday and show the large profit they claimed would be misleading. Large U.S. Banks during that time suffered similar mark to market meltdowns that forced them to raise massive capital at the very worst time leading to dilution and shareholder value dilution that has never recovered, despite most of the underlying problem loans being resolved much more favorably than feared. Too bad they couldn’t park all of their bad assets off the books for a while, then bring them back when the coast was clear.

  10. @Rob, the way the UAE helped Emirates with hedging losses and profits — even if everything in your post is true — is not really relevant to this analysis. The financial-crisis-related losses of DL, UA, and AA were all wiped out by the chapter 11 bankruptcies of those companies. So in essence, U.S. government action and UAE government action both assisted their respective airlines in the financial crisis.

    The fact is, the Emirati carriers (and many others) actually provide superior premium products and build their reputations on this fact. United, for example, is still trying to get over Dr. Dao and the fact that it kills more dogs than all other US carriers put together. Is there any wonder that the discerning business passenger prefers the ME3 to the US3?

  11. the domestic excuse of the airline industry needs competition. I also don’t care for the Polits and FA unions acting like its about American Jobs, when they were silent when tens of thousands of mechanics got laid off due to the airlines sending heavy maintenance out of the country

  12. @David – Your timeline is off. United and Delta both emerged from Chapter 11 before the financial crisis. Only American’s came after.

  13. The biggest subsidizes are collected by the Chinese 3. Let’s wait for the US3 to start foaming about that… (won’t hold breath…).

  14. @ John – I really would love to hear what the ‘racist, bigoted, and hateful actions of this President.’ are and have been. And please don’t spew mainstream media drivel.

  15. @David What everyone always misses about the argument you are making about the US carriers going bankrupt being a subsidy is that every time one of them goes bankrupt, the owners lose all of their money. The reason subsidies are an issue is only if they incentivize anti-competitive behavior like undercharging so your competitors can’t make money. Going bankrupt and losing all shareholder equity is the exact opposite of that incentive.

    And no, it is no wonder that they provide superior service for less of a price than US carriers because they are under charging. If that under charging is due to a real competitive advantage they built, like better systems, better people, better technology, then great, all is fair. But is that really the case? Is getting to offload losses whenever they are threatening liquidity really a fair advantage? Is being able to pay slave wages to phillipino migrants who’s passports they hold for leverage over them really a fair advantage? Is discriminating against older women because they aren’t attractive enough to be flight attendants really a fair advantage? I mean, I get that its a better product for cheaper to enjoy as a customer. But so are blood diamonds.

  16. And by the way, Emirates doesn’t deny the labor issue, they just say labor issues aren’t covered by the Open skies agreement so they have no obligations on that front and then go on to blah blah about how many applications they get as being some kind of proof that they treat employees well.

  17. The senders of this ad are not delusional at all. They are completely aware that with 45, flattery will get you everywhere.

  18. @John – leave your hate of Trump & insecure ‘minority’ drivel at the door. Shame on you for dragging dirty politics into this amazing travel blog. Half the country voted for Trump (same with Obama)…so deal with it, ‘most’ of us don’t want to hear your ‘fake whining’.

  19. Wow, Janet Thomas. One need only watch footage from today’s remarks by 45, when he called immigrants “animals, not people.” Open your eyes and unplug your ears.

  20. @John well done.

    Trumpeteers are like ISIS. They can’t be reasoned with and can’t see anything from any one else’s view point. So no point engaging them. Just like ISIS we need to destroy them.

  21. @JanetThomas

    Absolutely. DT has:
    called Mexicans drug lords and rapists,
    called to ban an entire religion in the US
    Made fun of a disabled journalist on national television
    Derided John McCain and saying that he is not a war hero because he was captured
    Calling certain African and Caribbean countries ‘shithole countries’
    And the list goes on

    @JanetThomas please do not call me some crazy liberal from the ‘fake news media’. I am not. In fact, there are many conservatives I have a profound amount of respect for (J McCain, Kasich, Lindsey Graham). And no, not all of Trump’s policies are terrible- simplifying the tax code and getting rid of the visa lottery were both good steps.

    But, that does not excuse the unconscionably prejudiced and bigoted words and actions that this president and his cronies spew with glee.

  22. @Nate

    I am not bitter. In fact, I think our country deserves the best, and I applaud Pres Trump if he makes a good decision (no matter how rare I find this occurrence to be)

    However I will not let his racist and prejudiced actions be forgotten or normalized- and that’s not being called bitter. It’s called not letting a liar trick an entire population and get away with it.

  23. @John Rosson

    If it bothers you so much then don’t read it.

    But I agree this is a great travel blog- at least we can agree on something

  24. @John Rosson

    Please rise above DT and when you take issue with what I am saying attack it substantively, not by calling it ‘insecure minority drivel’. That’s not helpful.

    Let me give you an example. I take issue with the Trump/Obama 50/50% ratio you gave above because A) Obama won the electoral college vote and the popular vote B) more people voted for Hillary Clinton than Donald Trump in 2016 C) Barack Obama did not collude with a foreign adversary to undermine the integrity of the United States election process and in doing so compromise national security.

    But if you disagree, I respect that. Just don’t attack others with racist jabs like ‘minority drivel’. That’s what isn’t OK.

  25. @John Rosson – 65 million is a bigger number than 62 million. And 69 million is a much bigger number than 62 million. And 62 million is not even close to “half the country”. If you are going to use numbers to make your point it’s best to verify that they support your conclusion first .

  26. “I really would love to hear what the ‘racist, bigoted, and hateful actions of this President.’ are and have been. And please don’t spew mainstream media drivel.”

    You don’t need to look at the mainstream media for that, just follow POTUS’ own twitter account and/or all the times he was caught on video/tape.

  27. LOL, what a bunch of losers who wants to save their faces. Such hypocrisy in a grand scheme!
    And this ad should make me fly with them? I just pity anyone who believes this ad is right and appropriate. This is just fake news and pure propaganda on their own behalf!

  28. @Rob let me correct you. I am based in Dubai and I avoid Emirates J class to Asia or US because it could cost up to 70% more compared to other carriers. So I am not sure where and how you evaluated the superior service under cost. In my last trip to Dallas I made my ticket with AA (in JV with BA) and the leg from LHR to DFW with an AA 777 was awesome, within or above standard, and because of the stopover involved I paid almost half the price. Emirates renders an excellent service. Not sure if the best. But those flying outbound like me most of the time tickets are inaffondabile. So please allow me to dispute your statement in part.

  29. “PWC not globally recognized auditors”

    No! PWC and other legal auditors are not globally entities: they are local and independant entities responding to local laws, and paying royalties and fees to use “global=US” auditors’ brand.

    The official name of Arthur Andersen in France was for instance Barbier & Frinault Fiduciaire. You will not write a cheque in the name of Arthur Andersen to pay their invoices.

    Although a better practice is to follow international (=most of the time US centric ones likes “sub-primes” ^^ or Iranian authorisations to do business) standards, on a day-to-day basis the legal auditors have to comply with local laws and report to the local courts of Justice if in trouble.

    So not everything is fully global…

  30. When Rob said “Is being able to pay slave wages to phillipino migrants who’s passports they hold for leverage over them really a fair advantage?”

    I’d like to weigh in by starting with the fact that someone in my family works for Emirates since the last 20 years and not ONCE have they been asked to keep their passports as leverage/denied pay/etc.

    Get your head out of the Fox channel, travel to Dubai (on Delta code-shared with Jet perhaps?), speak to real people that work here and then form your view. And for one, stop painting a whole region of millions of people with a single goddamn brush.

  31. People, put the energy you exert on pointless online name calling into the elections coming up in November. Trump will either be crippled legislatively or will get two more years of a mainly supportive Congress. I think both parties are abysmal right now.

  32. So the U.S. airlines take out a full-page ad showing an Asian (Cathay Pacific) airline flying an Airbus A330 aircraft? What’s the airplane doing, sending American jobs overseas?

    The irony of the ad is hilarious. The U.S. carriers (and their marketing/ad people) must be either playing dumb or sending an underhanded cynical message.

  33. @John
    Upon reflection, did not mean to offend you or anyone, politics are a tough subject. My apologies. I guess my point was I just did not feel like this awesome travel blog was a good place to critisize current or past administrations…
    Having said that, I am indeed a conservative, but also proud that I have both liberal & conservative close friends.

    On an actual travel note – flew Lufthansa 747-8 F last night (1L), MEX-FRA. Excellent service, had the fish (snapper), food seemed much better than usual. The champs was CH Blanc des Millenaires, good stuff.

    Happy travels to all

  34. @John Rosson

    No problem

    I will be flying LH 747-8 in a couple of weeks but only as a lowly business class passenger=)

    At least I snagged a seat on the upper deck

  35. Gob – If you profit from the slave economy Dubai is built upon, the very least you deserve is being “painted with the same brush”. I’m terribly sorry your feelings were hurt, but is that really as bad as the hundreds of people dying from working in horrific and unsafe working conditions or the thousands held in quasi-servitude with withheld wages and confiscated passports? I think not.

    While most people return home from Dubai rabbiting on about the vast wealth and luxury surroundings, it’s the image of migrant workers slumped outside a building site in sweltering temperatures (I felt like I was close to fainting walking merely 500m down the street…) that will forever be etched in my brain from that city.

Leave a Reply

Your email address will not be published. Required fields are marked *