WASHINGTON, D.C.-- Today, Ranking Member of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR), sent letters to Secretaries Anthony Foxx and John Kerry, urging them to protect U.S. jobs and immediately act to restore a fair, competitive balance between U.S. air carriers and Gulf state subsidized airlines. The letters were sent after a recent report uncovered anti-competitive practices of the three largest airlines of the Gulf states of Qatar and the United Arab Emirates (“the ME3”).
“Based on the analysis released last week, I am concerned that state subsidies and other special favors bestowed upon the ME3, combined with those carriers' blatant disregard of fair labor practices, have created a particularly pernicious anti-competitive situation that adversely affects U.S. air carriers and their stakeholders, including the hundreds of thousands of U.S. airline employees who depend on the industry for stable, long-term employment,” DeFazio wrote.
The report, released by three major U.S. air carriers, found that Qatar Airways, Etihad Airways, and Emirates Airline have received tens of billions in state subsidies and other special favors. DeFazio urged the Departments to thoroughly review and consider the analysis released by U.S. carriers and to take all appropriate action to ensure that open skies remain truly open, free, and fair.
March 9, 2015
The Honorable Anthony Foxx
Secretary
U.S. Department of Transportation
1200 New Jersey Avenue S.E.
Washington, D.C. 20590
The Honorable John Kerry
Secretary
U.S. Department of State
2201 C Street N.W.
Washington, D.C. 20520
Dear Secretary Foxx and Secretary Kerry:
I am writing to express my growing concern over the anti-competitive practices of the three largest airlines of the Gulf states of Qatar and the United Arab Emirates (“the ME3”). I strongly urge the Departments of Transportation and State to consider all appropriate action to restore a competitive balance between U.S. air carriers and the ME3 and to stop letting foreign airlines use the open skies regime to trample on fair labor standards and fair competition.
As you know, recently three U.S. carriers released an analysis finding that the ME3 have received substantial government subsidies while competing directly against U.S. carriers and their European joint venture partners on connecting routes between the United States and the Middle East, India, and Africa, in particular. Although the global airline industry’s business model is theoretically based on robust free-market principles, one cannot deny that many foreign air carriers, some of which serve the United States, also receive state subsidies and other assistance. But few global airlines, even those that receive subsidies, also engage in unfair labor practices to the extent of the ME3. Based on the analysis released last week, I am concerned that state subsidies and other special favors bestowed upon the ME3, combined with those carriers' blatant disregard of fair labor practices, have created a particularly pernicious anti-competitive situation that adversely affects U.S. air carriers and their stakeholders, including the hundreds of thousands of U.S. airline employees who depend on the industry for stable, long-term employment.
Pilots, flight attendants, and other employees of the ME3, for example, do not have the opportunity to form unions and engage in collective bargaining. Many are housed in company accommodations with regressive restrictions on their social and personal activities. Most flight and cabin crewmembers are expatriates who may be summarily dismissed and deported without the same opportunities available under modern labor laws for grievance and due process. When I read, therefore, the U.S. carriers' serious allegations of substantial subsidies and state support to the ME3, I am particularly troubled by the possibility that the combination of unfair subsidies and a lack of fair labor standards among the ME3 has created an anti-competitive situation that must be investigated vigorously and remedied.
Privileges under an open skies agreement are not a license to subvert fairness, open competition, or the principles of free markets and fair labor. The U.S. government must fully use the mechanisms available under open skies treaties to challenge unfair practices, and the Department of Transportation furthermore possesses clear statutory authority to take appropriate action to remedy behavior that contravenes these principles. See, e.g., 49 U.S.C. § 41310(c). I respectfully urge the Departments to thoroughly review and consider the analysis released by U.S. carriers and to take all appropriate action to ensure that open skies remain truly open, free, and fair. I intend to remain focused on this issue and will ensure through vigorous oversight that global competition remains fair.
Sincerely,
PETER DeFAZIO
Ranking Member
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