1) Describe the US-UAE Open Skies Agreement. List and describe two long-haul carriers that are a part of this agreement that also receive government subsidies.

     The Open Skies Agreement is a policy that eliminates the governments involvement in the airline decision-making process. These decisions are routes, capacity, and pricing for international markets. (State Department) Two of the long-haul carriers in the Open Skies Agreement are Etihad Airways and Qatar Airways. Both airlines are based in the middle east and receive government subsidies.

2) Do any long-haul US carriers receive subsidies or have received subsidies in the past? If so, which airlines? Why?

     The answer is yes. According to Kevin Mitchell, Business Travel Coalition chairman, every airline is funded by its’ home government. (McGee, 2015) When you fly commercially there are taxes and fees on that ticket. These are used to fund commercial aviation. This is not a new idea. The government was instrumental in the formation of the legacy airlines through the Contract Air Mail Contract Act of 1925. These legacy long-haul carriers are Delta, United, and American.

3) Another complaint is that long-haul foreign carriers have made aircraft purchases at "below market interest rates" that are unavailable to US carriers. How is this possible? Please discuss the Export-Import Bank.

     The foreign long-haul carriers can secure better financing by going through the Export-Import Bank in other countries, as well as the U.S. Export- Import Bank. This enables them to get reduced borrowing costs which is then used to lower ticket prices to the U.S or even purchase new aircraft. (Weisman, Lipton, 2015) This is accomplished through the fact that Boeing’s main rival, Airbus, is in Europe This allows the German and French credit agencies to offer purchase guarantees.

4) Are there any current issues with Norwegian International Airlines (NIA) and the Open Skies Agreement? What about with carriers such as Emirates or Qatar?

     There are issues with Norwegian International Airlines and the Open Skies Agreement. The Department of Transportation approved the request from NIA to serve the U.S. This approval was granted in 2016. The issue is that Norwegian Long-Haul AS is based in Norway, but NIA is based out of Ireland. This give NIA the right to request permission to service the U.S. (Cranky Flier, 2016) The issue with Emirates and Qatar is that they are heavily subsidized by their home government and therefore have an advantage over the U.S. airlines.

5) Finally, critically analyzing the above information, do you feel that the global "playing field" of long-haul carriers is fair?

     I believe the players in the Open Skies Agreement are playing on a field that is even as it is going to get. Both the U.S. and the international players are receiving some sort of subsidy from their home governments and they are working within the ground rules of the Open Skies Agreement. Long haul carrying of passengers internationally, after all, is a business and each airline involved is using the rules to the best of their advantage.

REFERENCES
U.S. Dept of State. Retrieved March 16, 2018 from https://www.state.gov/e/eb/tra/ata/

Mcgee, Bill. (September 2, 2015) How much do taxpayers support airlines? Retrieved March 16, 2018 from https://www.usatoday.com/story/travel/columnist/mcgee/2015/09/02/how-much-do-taxpayers-support-airlines/71568226/

 

Cranky Flier. Retrieved March 17, 2018 from http://crankyflier.com/2016/12/05/if-you-dont-like-norwegian-air-international-being-approved-to-fly-to-the-us-blame-the-authors-of-the-open-skies-agreement/
Weisman, Jonathon and Lipton, Eric. (April 6, 2015) Retrieved March 17, 2018 from https://www.nytimes.com/2015/04/07/business/boeing-delta-air-lines-export-import-bank.html

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