There has been a lot of contention between the ”big three” U.S. carriers and the ”big three” Gulf carriers for a couple of years now, regarding the Open Skies agreement. The U.S. carriers argue that the Gulf carriers are unfairly subsidized, and there’s no way the U.S. carriers can compete.
Continue reading: Etihad Says They Won’t Add More Flights To The U.S., But…
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Donald Trump = no meaningful competition, protectionism for US airlines, and higher fares with no decent service.
Wouldn't be surprising if he purchases US airline stock before cuts competition.
US carriers have to operate extensive domestic networks that are not very profitable, while foreign carriers get to pick and choose only the most profitable long haul flights they want. In addition, US carriers have to pay the highest corporate tax rate in the world and a highly unionized and overpaid workforce, while other carriers enjoy massive subsidies, or even huge ownership stakes, from their respective governments.
Of course this is not a fair fight. You and your readers only care about being able to continue to enjoy premium first class service at below market prices. You're so biased that you can't even recognize the validity of the US carriers' claims.
Granted, I think there is an argument to be made that the US is better off accepting the charity of these other countries that are giving us cheap first class air service, but that doesn't make the US carrier's objections invalid. In the end, the best solution is what I hope Trump will do, and that is to reduce the US corporate tax rate and regulatory burden, which will better allow US carriers to compete.
Can barely figure out where to start with WR's comment.
US carriers don't "have" to operate extensive domestic networks, and in fact they regularly cut unprofitable routes very quickly.
US domestic flying is some of the most profitable flying in the world, due to the fortress hubs and limited competition through mergers on most routes not touching NYC, LAX, or SFO. When they actually have to compete internationally, they have a hard time making money.
Statutory corporate tax rates are not a good barometer. Effective corporate tax rates are in the single digits.
Essentially all the US majors have used the US bankruptcy process to shed obligations to their workforce. Gary Leff has done a decent job listing the many ways the US government has subsidized US airlines.
Unfortunately, the most likely scenario is probably that WR gets his wish for even fewer taxes and less regulation. What he may be surprised by is the much higher fares and even worse service and product that the US majors will inflict on US domestic flyers, and internationally if they manage to stifle competition there too.
@Jig +1
Some people keep ignoring the good old Chapter 11 process by which US carriers' debts magically disappear. American, for example, can only afford to invest billions in its "biggest ever" fleet renewal because it managed to cast off the debts from previous lousy investments and piss-poor operating.
The US government already insists its own staff may only fly US carriers since their staff, given the chance, would actively choose the better service offered by furrin carriers.
So much for a free market and a commitment to competition, eh?
Not to mention how easy it's for competition to enter the domestic US market and start offer proper service, just look at Virgin America's history..
Funny how the US airlines never complain about the state-owned FinnAir, also government owned