Transportation & Logistics

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U.S. Travel Association Argues Delta, American and United Stifle Competition to the Detriment of U.S. Travelers

31 May, 2015

By: Tracey Schelmetic

U.S. air carriers are seldom welcoming to competition. The so-called U.S. “big three,” which includes American Airlines, United and Delta, regularly oppose expansion plans proposed by foreign airlines into U.S. markets. The three airlines are currently lobbying the U.S. government to oppose expansion by middle eastern airline companies Etihad, Qatar Airways and Emirate, citing state sponsorship of those airlines, which would lead to them experiencing lower operating costs and fuel costs compared to U.S. carriers.

A recent study commissioned by Etihad, Qatar Airways and Emirates, however, has found that since 1999, American, United and Delta all received considerable subsidies from the U.S. government. Research by the independent Risk Advisory Group found that the "big three" US airlines have received almost $71.5 billion in government subsidies in the last 16 years: $44.4 billion for United, $15 billion for Delta and $12 billion for American Airlines.

“The Gulf airlines claim their U.S. rivals were granted billions in state aid after the September 11, 2001 attacks and that this counters any argument that they have about the Middle East airlines being state sponsored and receiving beneficial fuel rates,” blogged Gary Noakes for the Web site Business Traveler recently. “All three US airlines were allowed to reorganize under Chapter 11 bankruptcy protection after 9/11.”

The study claims that the airlines received federal benefits in many different ways:

  • United benefited from bankruptcy debt relief totaling $26 billion;

  • Delta’s bankruptcy amount to $4.6 billion in debt relief;

  • American Airlines received government guarantees worth $6 billion;

  • The Big Three were provided with a lower rate of federal jet fuel tax — 4.4 cents per gallon instead of 21.9 cents for non-commercial carriers;

  • A total of $761 million was granted to Delta by Minnesota to build a fleet maintenance facility;

  • American Airlines received $80 to $85 million in redevelopment funds from the State of Missouri in 2003;

  • United Airlines received another $6.3 million in tax credits from Colorado;

  • Finally, the report underscores the fact that U.S. law bars foreign airlines from its domestic market and stipulates that government-paid air travel must be on U.S. carriers.

Many U.S. travel associations are actually siding with the Gulf airlines, point out that while the Big Three carriers like to talk about “open skies,” in reality, their business practices are anything but open.

OpenSkies.travel, founded by veteran business travel advocate Kevin Mitchell and his for-profit organization, the Business Travel Coalition of Radnor, Pennsylvania, says it opposes efforts by Delta, American, United and seven labor unions to halt the expansion of the Gulf carriers into the U.S. OpenSkies.travel has 56 founding members, including FedEx and Lockheed Martin, large travel management companies, tourism boards and airports, according to Dennis Schaal for the travel business Web site Skift.

In addition, the U.S. Travel Association (USTA), a national non-profit membership organization of more than 2,000 organizations including companies, tourism boards and educational institutions, is opposing the U.S. “Big Three” actions. The U.S. Travel Association has argued that Delta, American and United are trying to stifle competition to the detriment of U.S. travelers, jobs and economic growth.

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