United Airlines, American Airlines and Delta Air Lines now have a bipartisan group of 17 members of the Illinois's congressional delegation on board urging President Donald Trump to address (and crack down on) alleged trade violations by three Middle East-based carriers — Emirates, Etihad Airways and Qatar Airways, all of which fly from their respective hubs in the Middle East region to Chicago's O'Hare International Airport.
United, Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL) have been very vocal in their claims that the three Middle East airlines are violating their Open Skies agreement with the United States — a situation exacerbated, United and other U.S.-based carriers claim, by the fact that the governments of the United Arab Emirates (UAE) and Qatar have pumped more than $50 billion in illegal subsidies into the three Middle East carriers.
United and its two U.S.-based competitors also claim the subsidies and the flaunting of the Open Skies agreement have distorted competition in the global aviation industry, potentially putting 1.2 million American jobs in jeopardy, including more than 25,000 jobs in Illinois.
In a letter dated June 28, and addressed to U.S. Secretary of State Rex Tillerson, Secretary of Transportation Elaine Chao, and Secretary of Commerce Wilbur Boss, the 17 Illinois congressional delegates said "the subsidies from the governments of the United Arab Emirates and Qatar have enabled their airlines to rapidly increase capacity at the expense of U.S. carriers and their employees by pushing U.S. airlines off key routes."
The Illinois delegation pointed out that the Middle East carriers have started to launch trans-Atlantic routes that do not originate in the UAE or Qatar, including new routes from New York to Milan, Italy and Newark, New Jersey to Athens, Greece. United, American and Delta all have a major presence in the New York/Newark market.
Looking closer to home in Illinois, the congressional delegation said that "unlike their subsidized Gulf carrier competitors, U.S. airlines serve smaller markets in Illinois such as Champaign, Moline, Peoria and Springfield." The delegation went on to suggest that "air service and economic development in small communities will be jeopardized if subsidized competition weakens U.S. airlines' ability to maintain robust hubs in our state."
What the letter neglects to note, however, is that the traffic brought into Chicago by the dreaded Middle East carriers sometimes connects on to destinations such as smaller Illinois markets — thereby benefiting the U.S. carriers and the smaller markets they serve.
The letter ended with the observation that "President Trump has repeatedly stated that the United States will not tolerate unfair, subsidized foreign competition" and urged the Trump cabinet members to "enforce our trade agreements and protect American jobs and the U.S. economy."
So far in his term, Trump has been mum on the matter addressed by the Illinois congressional delegation. And for the past couple of years, the Middle East carriers have pushed back hard against allegations they are unfairly benefiting from government subsidies.
United Airlines is a unit of United Continental Holdings (NYSE: UAL).
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