A Dishonest Smear in the Fight Over Gulf Subsidies

Earlier this month, Delta released a “documentary” attacking the Gulf Carriers. I didn’t even write about it because it represents unadulterated propaganda. But now a friend was attacked for criticizing it and I feel obligated to weigh in. Be warned: in the age of the new media, truth is often a victim and has been sacrificed on the altar of very dubious, ethically suspect policy interests at the behest of U.S. airlines.

I want you to spend 15 minutes and watch Delta’s video. In terms of production, it is exceptionally well done. In fact, without a helpful guide, you might be convinced.

But there is so much wrong with this video. Lucky and Gary articulate it nicely: please read both of their pieces if you want a point-by-point analysis of why this documentary is so wrong.

My Attempt to Make Sense of This

I’m going to go about this differently and try to summarize the problem with this documentary in a single paragraph. Here goes-

While U.S. carriers are entitled to question subsidies under Fair Skies, their tactics undermine their argument and expose their true motive: to destroy healthy competition. Gulf carriers create thousands of high-paid U.S. manufacturing jobs and employee tens of thousands of Americans directly and indirectly in the same way Delta does. Economists call this the multiplier effect. Gulf carriers open more markets to more people with lower prices and better service. Furthermore, U.S. carriers take advantage of the same subsidies, tax breaks, and government policies they accuse Gulf carriers of unfairly profiting from. Case in point: U.S. bankruptcy laws. Bottom line, U.S. carriers are afraid of Gulf competition and have used a campaign of deception to promote confusion and mistruth.

There’s so much more to be said, but I think this gets to the heart of the matter. I find it incredible that the U.S. aviation industry, which was built on subsidies and continues to take advantage of tax breaks, government-funded infrastructure, and corporate-friendly labor and biz org laws to reap massive profits, can make the arguments in the video with a straight face. The idea that U.S. carriers will ever go out of business is laughable. The point of these efforts are to protect the bottom line of three airlines by limiting choice and raising prices for the traveling public.

The video offers the following graphic–

Forget for one moment that the China numbers are incomplete or that Qatar is not part of the UAE. What does this graphic show? That Gulf carriers are investing in U.S. manufacturing jobs.

Furthermore, shame on Delta for playing to bigotry by subtly trying to link the Gulf Carriers to terrorism and offering a disgusting, jingoistic section on transporting troops in the video. Quite ironic that Delta is happy to provide government-subsidized troop transport charters that increase its bottom line at the expense of the open market.

And Now They Attack Lucky

Yesterday, a shady lobbying group called Americans for Fair Skies released an article attacking my friend and fellow blogger Ben Schlappig (Lucky). While Lucky certainly does not need me to defend him, I am going to do it anyway.

The article disingenuously accuses Lucky of failing to understand the danger of Gulf Carriers, resorting to the same trite points that have been continually debunked.

Americans for Fair Skies is correct on one thing. It states, “What’s actually on the line here: American jobs and American consumers’ interests.” That is indeed on the line, but in exactly the opposite way this interest group would have you believe. American jobs are on the line if Emriates, Etihad and Qatar are forced out. Thousands will be lost. American consumers’ interests will also be hit when they are forced to pay more for inferior service on older planes.

Why does Delta attack Jennifer Aniston for creating this commercial for Emirates?

Because it is so poignantly true.

The truth hurts and if the U.S. “Big 3” (American, Delta, United) have their way, you will experience less service for a higher price. Fewer American jobs as well…

Conflict of Interest

Who does that benefit beyond the stockholders and executive at the big three? Maybe Americans for Fair Skies, which is run by a former Delta captain named Donald Lee Moak who paid his consulting company over $1MN in 2015 for work on this project. And just where does this money come from? While Americans for Fair Skies calls itself a “grassroots group of concerned Americans” it does not say. My bet: almost exclusively from the checkbooks of AA, DL, and UA.

Lucky asks three questions–

• Why do they continue to accept US government subsidies on many routes?

• Why do they specifically target Emirates, Etihad, and Qatar, and not the dozens of other airlines that are part of the Open Skies agreement and are government subsidized?

• If they truly believe that these airlines are doing business illegally, then why does American continue to partner with both Etihad and Qatar?

These are excellent questions that I would love to see American for Fair Skies or even Delta CEO Ed Bastian answer without first consulting with legal counsel and carefully choreographing a response.

I’m less concerned about the second question — I know that U.S. carriers are attacking the three largest Gulf Carriers because they represent the biggest threat. But talk about hypocrisy on the part of Delta when SkyTeam partners including Alitalia, China Eastern, China Southern, and Saudia are heavily subsidized.

CONCLUSION

The debate rages on with a concerted effort at confusion by the U.S. airlines and the self-interested groups that back them. I’ll end with this: U.S. carriers would not be fighting Gulf Carriers if these carriers did not offer a highly attractive alternative. By all means, prove the harm of subsidies (while simultaneously reporting record profits) but please stop asserting that you are looking out for anyone but yourselves. Stop smearing people far brighter and more honest than yourselves who dare to speak the truth. Your duplicity is detestable.