Tuesday, 17 February 2015

Government subsidies to airlines, revisited

An editiorial in the New York Times today discusses demands by the dominant troika of USA-based airlines (American, Delta, and United) that the US government should intervene in their behalf to renegotiate international aviation treaties with countries such as the UAE and Qatar which, the US-based airlines allege, are subsidizing airlines based in those countries (Etihad in Abu Dhabi, Emirates in Dubai, and Qatar Airways) more than the US government is subsidizing US-based airlines.

The Times is right to be skeptical of US-based airlines' claims to need even more protection from the US government for their oligopoly and against potential foreign competion.

But the Times is dead wrong to point to airline alliances as beneficial to travellers. And the Times fails to mention any of the more significant ways that US-based airlines benefit from government subsidies.

A true "open skies" policy would allow foreign ownership of US-based airlines and the operation of flights within the USA by foreign airlines, just as airlines owned and based anywhere in the European Union are now allowed to operate flights within or between any EU member states. Current so-called "open skies" agreements between the USA and other countries that deny foreign carriers access to the US domestic market are protectionist and misleadingly labelled

As I pointed out in a letter to the editor published by the Times almost 20 years ago, and in more detail in an article in my newsletter and blog a decade later, "Americans who can afford to fly rarely ... are subsidizing the frequent-flying elite." That's as true today as it was when I wrote it in 1996.

Frequent flyers and airlines grumble about taxes, but US aviation tax policy remains profoundly regressive.

Link | Posted by Edward on Tuesday, 17 February 2015, 08:58 ( 8:58 AM) | TrackBack (0)
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