x

Abu Dhabi, UAETuesday 19 June 2018

Arabian Gulf aviation industry must remain vigilant even after nixing of US tax bill

Senator Isakson’s proposal alarmed Middle East carriers by hinting at new tack in campaign by US ‘Big 3’

It was the biggest concern expressed by regional airline representatives at the Arab Air Carriers Organisation’s annual general meeting in Sharjah last month: a “regressive” proposal to tax foreign airlines operating in the US.

That proposal – submitted as an amendment to the US tax reform bill by senator Johnny Isakson of Georgia – was ditched over the weekend, causing international carriers, including those from the Middle East, to breathe a sigh of relief.

While this amendment has been dropped, it has shaken the Middle East aviation industry as indication of a possible change of tack by the ‘Big 3’ largest US carriers – Delta, United and American Airlines – as they continue their anti-competition campaign against Emirates, Etihad and Qatar Airways.

It has been a while since sensational, strongly worded press releases were issued on behalf of the US Big 3, slamming the Arabian Gulf carriers’ alleged “unfair” expansion in the US , which the carriers deny. Now, we have US parliamentarians such as Senator Isakson – whose Georgia constituency is home to Delta – quietly tabling motions that, if passed, would have had a damaging impact on the Gulf, and other, airlines’ international business.

Senator Isakson could not be reached for comment, but Danny Sebright, the president of the influential US-UAE Business Council, said the amendment was “an attempt by US carrier Delta to destroy competition”.

If this is the case, it calls for increased vigilance on the part of all stakeholders working to prevent the Big 3 from eroding the Open Skies agreements that permit free market expansion in the US.

Mr Sebright said he was confident his council had “inoculated against” efforts by the US carriers to find a champion within Donald Trump’s administration. But he admitted there remained work to do to prevent legislative action not supported by the Trump administration from going through.

Maintaining Open Skies agreements is important not only for the sake of Emirates, Etihad and Qatar Airways, but for the entire global aviation industry, whose passenger flows, route networks and aerospace-related trade and jobs are intrinsically linked.

The US airlines must recognise they are competing not only against their counterparts in the Gulf, but against airlines all over the world and that some of their proposals risk coming back to bite.