Global Airline Issues

Global Airline Issues

 Etihad Airways receives government subsidies along with other airlines such as Emirates and Qatar. At the time of this becoming a topic talked about around the nation, "Etihad Airways was the first of the three Persian Gulf companies to call the claims 'inflammatory and inaccurate'".(Jansen 2015). The reason this is an issue isn't because the US airlines care about domestic or even international flights to Bangalore, India or Colombia. "But when Emirates flies from New York to Qatar, they got worried". (Zhang 2015). So US Airlines decided they need to make their case to prevent this to get worse. "Partnership for Open and Fair skies claims that Emirates, Etihad, and Qatar have received roughly $42 billion in subsidies over the past decade from the governments of the UAE and Qatar. (Zhang 2015)

All three US legacy carriers have taken some sort of subsidy from the government. "Further, both Clark and Qatar Airways GCEO Akbar Al Baker have cited US Chapter 11 bankruptcy laws as a form of government subsidy to US airlines. Chapter 11 bankruptcy laws allow US companies to shed debt as well as unfavorable business and labor contracts through strategic bankruptcy filings. This is something that all three US legacy carriers have taken advantage of in the past 15 years. (Zhang 2015). The reason these companies are taking and using these subsidies is to pay for their way out of debt in order to be able to operate. Over the years the companies have been considered profitable and have been generate money "organically". 

Foreign long-haul carriers have been able to purchase aircraft at below market interest rates because this systems helps allow airlines overseas to be financed with cheaper rates. Because Boeing is the largest and major company that uses the export-import bank they are guarantees them 15% of their sales. However this isn't something that is being done illegally. "Boeing is America's largest manufacturing exporter, with more than 150,000 employees nationwide. Overall, counting the thousands of smaller companies in Boeing's supply chain, the US aerospace sector creates 1.5 million American Jobs." (Crawford 2015). To me this shows that there is good and bad in foriegn companies being able to purchase aircraft's at a lower interest rate because its employee many jobs within the states and helping export. However it hurts our Legacy carriers when competing internationally among state-sponsored airways. 

I personally do think it is extremely fair. Why should other carriers be held accountable for being blessed by the sponsorship of their state. Of course its going to be nearly impossible for our legacy carriers to compete against basically other governments rather than companies that generate profit solely from their services and revenue. But when your government helps subsidize the carrier that just shows how much money their own government is willing to spend on increasing their fleet and market their country by opening flights to large and small cities all around the world. In my opinion the US legacy carriers should do what they can to receive the same benefit from our government and our government should be looking to see what is possibly to be able to compete against Persian gulf airways. 

References:

Crawford, J. (2015, October 26). Boeing CEO: Lousing Export-Import Bank "Means Loss of Jobs". Retireived from CBS News:  http://www.cbsnews.com/news/boeing-ceo-losing-export-import-bank-means-loss-of-jobs/

Simon. M. (2014. August 8). The Ex-Im-Bank is Hurting My Business. Retrieved from Chicago Business: http://www.chicagobusiness.com/article/20140808/OPINION/140809833/the-ex-im-bank-is-hurting-my-business

Zhang, B. (2015, July 28). The middle East's 3 Best Airlines Have Infuriated Their US Competitors. Retrieved from Business Insider: http://www.businessinsider.com/middle-eastern-us-airlines-dispute-future-of-air-travel-2015-7