a. US carriers
Despite the claims of economic harm advanced by the Big Three, the fact is that Qatar Airways contributes revenue to US carriers. For example, Qatar Airways has a broad codeshare arrangement with American Airlines, and transfers its traffic arriving at US gateways to onward services operated by American. Although the amount of interline revenue that changes hands may vary from year to year, the total value of the traffic transferred by Qatar Airways has been in the neighborhood of $60 million per year. Of course, this feed traffic enhances, not reduces, the viability of American’s domestic services.
Qatar Airways’ other US codeshare partner, JetBlue, has been quite forthcoming about the fact that it derives direct financial benefit from feed generated by foreign carriers. In a letter to Secretaries Foxx, Kerry and Pritzker, JetBlue Airways CEO Robin Hayes emphasized the enormous benefits created by Open Skies and emphasized the importance of this policy to maintaining the competitiveness of smaller US carriers:
Against the backdrop of America’s windfall of increased flights bringing overseas visitors and generating economic activity and US travel and tourism jobs, it is concerning that America’s three largest airlines have joined to urge a rush to judgment based upon their allegations while they seek an immediate extra-bilateral freeze on further Open
159 Centre for Aviation, Gulf airlines under fire - Aside from the rhetoric and dust, what’s the underlying
agenda? (Apr. 15, 2015), http://centreforaviation.com/analysis/gulf-airlines-under-fire---aside-from-the-
Skies sanctioned growth. The views of the three complaining US carriers, one of which, Delta, ironically enjoys a tremendous fifth-freedom franchise of its own in Japan, do not represent the views of entire US aviation industry. JetBlue and several other passenger and cargo airlines have a different perspective on Open Skies and the competitive benefits they produce.
Each time one of our 35 international partners operates a flight to the United States, JetBlue benefits with new customers. For example, when Emirates, Turkish Airlines or Japan Airlines arrive at JetBlue’s focus city at JFK and customers connect onto our network, JetBlue increases traffic flow, has a need to add capacity and as a result, adds direct jobs just as others (taxi operators, hotels, restaurants etc…) add indirect jobs. At our focus city in Boston, many of our international partners have launched or announced new services including Turkish, Hainan, Japan Airlines, Cathay Pacific, El Al and Emirates. Each of these new international flights not only adds direct aviation sector jobs in Boston and indirect travel and tourism jobs in the region, but also strengthens JetBlue’s ability to launch new competitive domestic routes such as Boston- Detroit based on the large flow of arriving international connecting customers. In the year since JetBlue entered the former Delta monopoly route BOS-DTW, fares have fallen nearly 40 percent and daily passenger traffic has more than doubled. All of this activity increases job growth. Similarly, at our Orlando focus city, our domestic network has grown as we have added international connecting partners including Emirates, Icelandair and others.160
JetBlue is not the only US passenger carrier that opposes a rollback in the open skies arrangements with Qatar and the UAE. Alaska Airlines noted that feed traffic it receives from carriers such as Emirates strengthens its ability to compete with much larger domestic competitors.161 Similarly, Hawaiian Airlines signed a joint letter that highlighted the important competitive alternative offered by Qatar Airways and other Gulf carriers, as well as the direct financial impact created by Gulf Carrier services.
160 Letter of Robin Hayes to Secretaries Foxx, Kerry and Pritzker, dated Apr. 29, 2015.
161 See Letter of Brad Tilden, CEO, Alaska Airlines to DOT Secretary Foxx and Secretary of State John
Oxford Economics has estimated that in 2014, Gulf carriers transported 1.1m overseas visitors to the United States spending more than $4 billion,162 and generating some $2.6 billion labor income and $1.1 billion in federal, state and local taxes.163 Oxford Economics goes on to estimate that the Big Three received approximately 350,000 arriving transfer passengers from Gulf carriers in 2014, and that other US carriers similarly received approximately 270,000 transfer passengers. These 620,000 passengers in total generated a conservative amount of $140m transfer revenue for US carriers.164
All-cargo carriers such as Federal Express are providing extensive service to the Gulf region, and are exercising traffic rights made available to the United States solely as a result of Open Skies. FedEx has warned of the risks to its business if the US-Qatar and US-UAE Agreements are altered.
Recently, several U.S. passenger carriers have questioned Open Skies, specifically as it relates to Middle Eastern carriers. These U.S. passenger carriers do not fly extensively between foreign points like FedEx does. They believe they have little to risk by limiting foreign carrier access to U.S. markets. What they want is for the U.S. government to protect them from competition from able, attractive new entrants.
For FedEx, the Open Skies agreements with the Middle Eastern countries are very valuable. Under the agreement with the U.A.E., we have established a hub in Dubai, where FedEx flights from the U.S. crisscross with our flights from India and Asia in order to move U.S. products into local markets. This hub also acts as our gateway to Africa. Presently, FedEx alone operates almost two-thirds more flights to the Middle East than all the U.S. passenger carriers combined. Modifications to this agreement might spell the end of these opportunities, closing off those markets to our customers.165
162 Oxford Economics Study, at 17.
163 Oxford Economics Study, at 18.
164 Oxford Economics Study, at 14-16.
165 Letter of David Bronczek, President and CEO, FedEx Express to the Hon. John F. Kerry,
Atlas Airways and the Cargo Airline Association have also voiced strong concerns about the prospect of any change to the US’ bilateral arrangements with Qatar and the UAE, and note that the route flexibility that they enjoy both in the Gulf region and elsewhere in the world is directly attributable to open skies.166
b. Direct contribution to US employment
In addition to benefitting US carriers, Open Skies has enabled Qatar Airways to establish a presence in the United States, opening offices at airports and at downtown sales locations. Qatar Airways plans to have more than 250 direct employees in the United States by the end of its current financial year. Furthermore, almost half of passengers on Qatar Airways flights to USA are overseas visitors who spend in the local economy on, for example, hotel accommodation, car-rental, and general spending thereby contributing significantly to the national economy. Qatar Airways estimates that its services help to sustain more than 27,000 jobs, and that the visitors it carries contribute $900 million to the US economy.167
Moreover, as a significant purchaser of Boeing and Gulfstream aircraft, and of engines manufactured by General Electric and Pratt & Whitney, Qatar Airways contributes significantly to employment in the US aerospace industry, which supports hundreds of thousands of US jobs.168
c. Direct benefits to airports, travel and consumer groups
Key aviation players, including airports and travel groups, also oppose the effort to roll back or freeze Open Skies agreements. The United States Travel Association, which represents airports, travel organizations and hotels, said: “This is one of many efforts where the Big Three U.S. carriers are trying to set the rules of who can do
166 Comments of Atlas Air Worldwide Holdings, Docket No. OST-2015-0082, at 3 (May 29, 2015);
Comment of the Cargo Airline Association, Docket No. OST-2015-0082, at 2 (May 29, 2015).
167 See Appendix 14.
168 The US Travel Association observed that the Boeing aircraft orders of just one of the Gulf Carriers
business here” . . . “This is about stamping out competition, not about levelling the playing field.”169 Various airport directors have raised similar concerns.170
And perhaps most importantly, major consumer groups such as Consumer Travel Alliance and the Business Travel Coalition have strongly opposed the efforts to suspend the open skies agreements in force between the United States, Qatar, and the United Arab Emirates, noting not only the value to consumers offered by Qatar Airways and other Gulf carriers, but also the importance of creating important price and service competition to the offerings of US carriers and their European alliance partners.171 Indeed, US consumer groups and passengers have lauded the high standards of service provided by Gulf carriers, and have urged US carriers to compete on service instead of seeking to block the services of Qatar Airways and other Gulf carriers.172