There's a trade war, high in the skies involving the big three U-S air carriers and three middle-eastern rival airlines owned and operated by Qatar and the United Arab Emirates. The foreign airlines have captured business here in the US resulting in attractive, lower fares for passengers. But the American three call it cheating and a threat to their survival. Scott Thuman covers the air wars.
They pride themselves in soaring smoothly above the clouds, but on the ground and behind the scenes, some turbulence for the big three American carriers.
Scott: Do you think that the average flyer has any idea this is going on?
Peter Carter: you know, I would say probably not. Most people getting on a plane they just want to get to where they're going and go to business, or vacation or whatever it is they're traveling for.
What most people don't know, says Peter Carter an executive Vice President of Delta Airlines is that they, United and American, are faced with what they call unfair competition from two tiny Persian Gulf nations, are being driven out of international markets, and losing American jobs.
Scott: Some people call this the nastiest feud in the aviation industry.
Carter: It's the only issue that Delta, American, United, and all of our unions agree on because it's existential. If it weren't addressed it would put our entire aviation industry at risk in this country.
The UAE and Qatar are two of the smallest nations in the world, but combined own three of the biggest names in aviation, each now flying to more countries than any U.S. carrier. But how did these small Gulf states build award-winning airlines known for their service and competitive prices? Money and lots of it. Billions in gifts, loans, and discounts from rich Gulf-state governments. The U.S. Big Three say these are unfair subsidies and they're pushing back with a slick campaign.
Narrator: "..using the immense wealth of their countries, they're illegally pouring billions of government dollars into luxurious new aircraft, selling cheap seats and unfairly crushing the competition."
The Big Three American carriers say they'd rather be focused on moving people around the world, not arguing with other countries. So they asked President Trump and Secretary of State Mike Pompeo to step in.
Pompeo: Make no mistake about it. Uh, American jobs are impacted when other countries subsidize the airlines. It's not fair. It's not right."
Open skies agreements between the U.S., Qatar, and the UAE call for "fair and equal opportunity." The U.S. Big Three say that means any government subsidy is a violation.
Scott: Are those other nations taking America's message seriously enough?
Pompeo: I think so. Uh, look, there's always a jostle in the competitive space and when, uh, when subsidies are out there, they are devilishly hard to get rid of. But we're determined. We're determined to achieve this outcome. It matters a lot. It matters to American transport, American jobs in the aviation industry as well.
At the giant Delta Techops facility in Atlanta, workers carefully rebuild jet engines. Fixing this problem may be more complicated, others in the American travel industry say the highly-profitable Big Three need to compete, not complain.
Jonathan Grella, who is with the U.S. Travel Association, says the Gulf carriers brought 1.7 million passengers to the U.S. in 2016 who spent $7.8 billion dollars while here. And those ticket prices were 32% or lower on some routes.
Jonathan Grella: Right now, we're the winner when we can get people from around the world to come to America safely, spend their money, and go back home again. We should be encouraging more of that, not less of that.
Scott: Even if it's on a carrier from the Middle East?
Grella: Right. The beneficiary is America, regardless of what the name is on the side of the plane. When more people come to America safely and then go back home again, minus a few dollars from their wallet, that's a winner for America.
A win now though could be a loss in the future, warns James Burnley, former Secretary of Transportation, now an advocate for Delta, American and United.
Burnley: Yes for some period of time you may be able to buy cheap tickets. But once the U.S. carriers are driven out of a market, then it's almost inevitable that the prices are gonna go up because the competition has been eliminated.
Full Measure reached out to Qatar Airways and Emirates for comment, only Emirates responded, saying "Emirates is not subsidized. We operate on a fully commercial basis and have been profitable for the past 27 years." Qatar Airways has also denied receiving unfair subsidies in the past. Scott: Are you saying that people would be naive to look at this situation and say, "There is no way they're going to have a major impact on Delta or United or American? They're not going to
run them out of town." Carter: So unchecked, there's no question that this has the potential of destroying the U.S. industry. Emirates and Qatar and Etihad had something like 496 wide bodies on order. So what are they going to do with those aircraft? Well they've already flooded the Asian market. They've already flooded the European market. They've already flooded the African market. If you were to look it up at a map, really the only market left for them to flood is the U.S."