State-Owned/Supported Enterprises

Per the U.S. Trade Representative, “SOEs [state-owned enterprises] are increasingly competing with U.S. businesses and workers . . . in some cases distorting global markets . . . and undercutting U.S. workers with subsidies . . . ” The U.S. airline business is no exception to this rule. Airlines and their workers face increasing competition from SOEs. The resulting loss of market share is costing the United States thousands of good airline jobs. The largest and most threatening of these SOE air carriers are located in China, Qatar, and the United Arab Emirates (UAE).

The Chinese government’s support for their national industries is well known. The Chinese government owns and financially backs Air China, China Southern, and China Eastern, all of which do business across the globe. Until Chinese carriers operate without any government support, we must not allow them access to the whole U.S. market via an Open Skies agreement.

As referenced above, the United States has signed bilateral Open Skies agreements with Qatar and the UAE. These two countries have given their three national airlines (i.e., Emirates Airline, Etihad Airways, and Qatar Airways) more than $50 billion in documented subsidies since 2004. Subsidies on this scale clearly violate the Open Skies agreements’ provisions regarding the fair and equal opportunity to compete.

The harm to the U.S. economy from these subsidies is evident, and it is increasing. Every widebody route lost or forgone because of this illegal competition costs the United States more than 800 jobs. Delta and United both recently had to cut their service to Dubai from the United States because of this subsidized competition. Over the past year, the Gulf carriers have increased their capacity to the United States by more than 40 percent, putting further pressure on U.S. airlines and their workers. In fact, as a direct affront to President Trump and his fair trade agenda, Emirates Airline announced a new Athens-to-Newark flight on the first day of the new administration.


Action

  • In order to uphold the principles of our Open Skies agreements, the U.S. government should immediately terminate the bilateral Open Skies agreements with Qatar and the UAE until they end all government subsidies going to carriers of Qatar and the UAE.
  • The U.S. government should not negotiate any Open Skies agreements with China until their airlines are operating without government subsidies.

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