U.S. must not allow the Gulf carriers to continue their subsidy-fueled expansion

Thank you for calling attention to the threat that the Gulf airlines’ unfair practices pose to Minnesota jobs in “The not-so-friendly skies.” Although the article accurately summarizes this threat, I would like to refute author Sam Brodey’s assertion that airline consolidation has caused higher fares.

In fact, fares decreased significantly following airline deregulation in 1978. When I worked at a travel agency in Minneapolis 45 years ago, it cost eight times more to fly to Dallas than it does today (adjusted for inflation). Prices (including fees) have steadily declined, and in 2017 are comparable with those in 2008, when the most recent wave of consolidation began. The price of jet fuel has had far more impact on fares in recent years than have other factors. Moreover, consolidation has enabled airlines to offer broader networks, and a wider range of “product,” from basic fares to premium services.

The bigger threat to consumer choice is not consolidation, but rather trade-cheating by foreign airlines. The three Gulf carriers have received over $50 billion in government subsidies since 2004, allowing them to expand into the U.S. without regard for profit or customer demand. This creates an uneven playing field that fairly-competing U.S. airlines cannot match, and that threaten U.S. jobs – as Brodey’s article mentioned, for every U.S. route ceded to a Gulf carrier, 1,500 American jobs are lost. The longer game is clear: Once Gulf carriers drive out competitors, their fares will clearly rise. That’s basic economics.

Our government must not allow the Gulf carriers to continue their subsidy-fueled expansion. It is time we enforce our Open Skies agreements with the U.A.E. and Qatar to preserve Minnesota’s thousands of airline jobs.

Rob Britton, a native Minnesotan, is an aviation industry expert and an adjunct professor at Georgetown University’s McDonough School of Business. 

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Comments (1)

  1. Submitted by Raj Maddali on 09/22/2017 - 08:57 am.

    Proof ?

    Mr Britton. along with Sam Brodey provides absolutely no proof of these subsidies. What counts a subsidies. If low interest loans are counted as subsidies, then those airlines could argue that the Fed’s quantitative easing program is a subsidy.

    Simply put, those airlines provide really good service. I flew Emirates and it was awesome. On the other hand flying a local code sharing flight to Paris was like flying in cattle transport. The plane was like a plastic bucket. And the food was horrid.

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