American and Delta argue for level playing field globally

Washington DC
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American Airlines and Delta Air Lines are arguing for a more level playing field with foreign carriers, especially those that receive some form of support from their national governments.

“National champions are emerging to become serious global competitors,” says Ben Hirst, executive vice-president and chief legal officer of Delta Air Lines, quoting US under secretary of state for economic growth, energy and the environment Robert Hormats at an Airlines for America (A4A) event in Washington DC on 24 September. “It is very much a US concern if the playing field is not level between them and their American competitors.”

Hirst says that this competition from largely Asian and Middle Eastern carriers is just beginning to impact US airlines, citing as an example Emirates planned launch of daily nonstop service between Milan and New York’s John F. Kennedy airport on 1 October. This is a result of the US government’s push for open skies agreements that has allowed foreign carriers unlimited access to US markets, he adds.

“We feel at Delta that we, like other US carriers, have become very efficient and able to compete with anybody anywhere in the world on a level playing field,” he says. “The concerns that we have is that these airlines are state-owned, state-supported and have economic objectives instead of private objectives driving them.”

Will Ris, senior vice-president of government and regulatory affairs at American Airlines, adds: “When natural gas runs out for the government of Dubai, their explicit intention is that their economy is going to be based on an air transportation hub.”

Hirst and Ris are vague about what the US government should do encourage a level playing field among airlines.

One limited attempt to equalise competition is Delta’s lawsuit against the Export-Import Bank of the US (US Ex-Im) over widebody aircraft loan guarantees to foreign carriers. The Atlanta-based carrier, joined by Hawaiian Airlines and the Air Line Pilots Association (ALPA), claim negative economic consequences from these guarantees to airlines including Emirates, Etihad Airways, Korean Air and LATAM Airlines Group.

Hirst says that the case is focused in just the aircraft financing issue and is not a push for a broader policy by the US government towards balancing competition with foreign airlines.

“Our objective in dealing with Ex-Im has always been very limited,” he says. “It is to encourage the US government to negotiate a détente on widebody finance with the Europeans.”

Ris says that American has not taken a position on Ex-Im’s widebody financing but notes that all carrier’s benefit from export credit. He cites loans from Brazilian development bank BNDES for Embraer jets at its regional subsidiary American Eagle Airlines.

Delta received between Canadian dollar (C$) 500 million ($485.8 million) and C$1 billion in export credit financing from the Export Development Canada (EDC) for its order for up to 70 Bombardier CRJ900 aircraft, including options, in December 2012.