What Ails Our National Carrier – II
By Rajeewa Jayaweera -March 26, 2015
Rajeewa Jayaweera
The writer wrote some weeks ago urging the government and national carrier to consider withdrawing from its European routes. The main purpose of my essay was to high light the contradiction in government policy of pouring millions of dollars into a national carrier on the one hand and following an ‘open skies’ aviation policy since 2001 resulting in the massive injection of capacity by Middle Eastern carriers on the other hand thus undermining the government’s own investment. From some of the comments observed, I felt that further expansion on the subject would help better understand the current situation.
The national carrier is unable to compete with carriers from the Middle East on its European routes. Even large carriers such as US carriers, British Airways, Lufthansa, Air France to name a few are being gradually eased out of some of their traditional markets. Agence France-Presse (AFP) recently carried the following news item. It was also published in one of the local leading dailies.
Quote;
Three top US airlines groups called on the US government and urged changes to the bilateral commercial aviation agreements between the United States of America and Qatar and the United Arab Emirates.
According to the groups, $42 billion was given to UAE and Qatar based airlines, including Qatar Airways, Etihad Airways, and Emirates to push US carriers out of this lucrative market, and make competing impossible.
The US carriers together with workers’ groups issued a 55 page report detailing how “unfair” subsidies given to Gulf rivals Qatar Airways, Etihad Airways and Emirates have allowed them to wrest market share from the US industry.
Airlines from the United States are escalating their rhetoric against Emirates, Etihad Airways and Qatar Airways, even suggesting the near unprecedented action of rescinding open skies agreements, which the US has with the UAE and Qatar. The refrain is loud and echoes much of the European airline resistance – but US airlines cannot seem to agree on their target.
United CEO Jeff Smisek at one time said Gulf airlines are not subsidised, but then said they are “heavily subsidised”. American Airlines CEO Doug Parker said they are “perhaps” subsidised. Delta CEO Richard Anderson bemoans the role of state-owned airlines despite having many national carriers (Saudia, China Eastern etc.) as partners in SkyTeam.
“The multi-billion dollar subsidies… have allowed Qatar Airways, Etihad Airways and Emirates to rapidly expand their fleets and international routes, distorting the commercial marketplace to the severe detriment of US employment, the US economy and the US airline industry,” the US group said.
