Updated to clarify Byerly's relationship with Emirates
Executives from American Airlines, Delta Air Lines and United Airlines have met with senior Obama administration officials to discuss limiting the access of the Gulf carriers to the USA, says former deputy assistant secretary of State John Byerly.
Speaking as an independent consultant whose clients include Emirates and Norwegian at the Routes Americas conference in Denver today, he denounced the meetings by the three mainline carriers, calling them: “Anti-consumer, anti-growth and anti-competitive.”
“It’s disturbing to me to learn that a troika of the CEOs of Delta, United and American met on Wednesday and Thursday of last week [28 and 29 January] with two members of President Obama’s cabinet and other senior Obama administration officials for a reported further salvo in their war against open skies,” says Byerly citing multiple people close to the meetings.
The three carriers are understood to want the Obama administration to either freeze the number of flights that Gulf carriers – Emirates, Etihad Airways and Qatar Airways – can operate to the USA, re-negotiate the USA’s open skies agreements with Qatar and the UAE or to simply throw the agreements out entirely.
Byerly argues that this would set a bad precedent and create a “contagion” that could see the roll back of other open skies agreements. “If you start undoing open skies and the principles of free markets… it will take us back to where we were in 1985, when we were bickering with the French over one more frequency for United Airlines.”
A spokesman for Delta says: “Along with American and United, we have started a discussion with US government officials about the impact of more than $40 billion of government subsidies and unfair benefits to state-owned Gulf airlines, specifically Emirates, Etihad and Qatar."
"We welcome global competition on a level playing field and in accordance with the open skies agreements with the United Arab Emirates and Qatar.”
The comments are echoed by spokesmen for American and United.
The meetings have been expected. In October, the chief executives of the three airlines postponed planned meetings with senior White House officials to discuss the Gulf carriers to the new year due to the US elections that November.
All three mainline carriers have publicly called for “fair skies” with the Gulf at different times, citing among other factors the subsidies that the airlines receive from their governments that give a competitive advantage in the market.
"A number of those [Middle Eastern] carriers are not airlines, they're governments," said Richard Anderson, chairman and chief executive of Atlanta-based Delta, last July. He added that the Middle Eastern carriers have "huge subsidies and huge structural advantages".
Asked about the purported subsidies received by the three Gulf carriers, Byerly says that the argument has little base citing the funds US carriers received after the 11 September 2001 terrorist attacks, the Fly American requirement for government travel and the availability of Chapter 11 bankruptcy reorganisation that does not exist outside the USA.
“It is true that the UAE and Qatar believe in aviation, they believe in aviation [and] it’s a value to their country,” says Byerly.
He did not touch on reports last year that Etihad had received a $3.53 billion interest-free loan from the UAE government in 2003. In response to the story, the carrier, which is a wholly-owned subsidiary of the Abu Dhabi government, denied at the time that it received government subsidies but said that it did receive "financial support from our shareholder, in the form of equity capital and shareholder loans".
American, Delta and United have all cut routes in markets where they compete with Gulf carriers. American ended its Chicago O'Hare-Delhi flight in 2012 and United its service to Doha - a continuation of its Washington Dulles-Dubai flight - in 2014. The latter cited the expansion of Qatar to the USA as a reason for its decision to discontinue the route.
Delta will end its Amsterdam-Mumbai flight due to weak performance this March.
Byerly is known for his work negotiating early open skies agreements between the USA and Canada in 1995 and the USA and countries in Central America in the late 1990s. These stimulated new air service and have driven significant traffic growth.
“I’m a firm believer that open skies and vigorous competition are the best way to secure for American consumers, airports and communities the benefits of more international routes, more tourists, lower prices and enhanced quality of service,” he says.