Posted by on May 30, 2019 2:51 pm
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Illinois Senator Everett Dirkson is famously supposed to have remarked: “A billion here, a billion there, and pretty soon you’re talking real money.” In the case of state subsidies to three of the world’s most well-known airlines, however, the saying might have to be paraphrased: “Ten billion here, ten billion there…” According to James Lucier’s article on TownHall, “When Open Skies Mean Broken Windows,” the tiny, oil-rich Gulf states of Qatar and the United Arab Emirates have together lavished $48 billion in direct subsidies, not to mention $4 billion of subsidies in kind including underpriced fuel, on their three flagship airlines: Emirates Airlines, Etihad Airways, and Qatar Airways.

 

 

  • Together the airlines have increased their total seating capacity tenfold since 2001, and expansion continues apace: Dubai is preparing to spend $32 billion to build the world’s largest airport, with a passenger volume up to 200 million per year.

 

 

  • Passenger volumes and revenues haven’t grown at anywhere near enough to require such massive expansion, however, meaning the airlines are in effect flooding the regional and global market with excess capacity, lowering profit margins for all the other big players.

 

 

  • Qatar Airways is now expanding into the U.S. via its acquisition/creation of Air Italy, a new airline based in Europe which already has landing rights in 5 big U.S. cities. By extending state-subsidized enterprise deep into U.S. commerce and transportation, the expansion threatens unfair competition to domestic business, Lucier argues.

 

 

  • Lucier recommends revising the United States’ “Open Skies” agreement with Qatar to deal with these issues, citing the need to prevent small trade encroachments elsewhere even as negotiators remain focused on the China trade dispute.