JetBlue Airways defends open skies

Jun 2, 2015 – JetBlue Airways is hitting back hard against the U.S. carriers seeking to limit the Persian Gulf airlines’ access to the U.S., urging the Transportation Department (DOT) not to bow to pressure to curtail open skies.

In a letter to the secretaries of State, Commerce and Transportation obtained by Aviation Daily, the New York-based carrier forcefully defended open skies as a policy and said the three U.S. carriers—Delta Air Lines, United Airlines and American Airlines—are attempting to stifle competition through favorable and restrictive government policies.

The three carriers have alleged that Emirates Airline, Etihad Airways and Qatar Airways have benefited from subsidies paid out by the governments of the United Arab Emirates (UAE) and Qatar, creating a market in which the U.S. airlines cannot compete. Delta, United and American have called on the U.S. government to freeze the Gulf carriers’ capacity to the U.S. at their Jan. 28 level, and have asked for the government to begin consultations with the UAE and Qatar (Aviation Daily, April 22).

The three network airlines were able to grow thanks in part to favorable government policies that allowed transnational joint ventures, a prerequisite for which is an open skies agreement between the U.S. and the foreign carrier’s home country. Now that those airlines and their joint-venture partners have grown to carry more than 80% of transatlantic traffic, they are seeking to limit new entrants to the U.S. market, JetBlue Senior Vice President-Government Affairs Robert Land said in the letter. “Left unchecked, this U.S. government-sanctioned collusion will continue to stifle innovation and competition in international aviation and will directly harm JetBlue and consumers,” he added.

Land points to similar strategies the legacy carriers employed in the U.S. market, where fares in markets dominated by legacy airlines are substantially higher than those where there is LCC competition. When LCCs exit such a market, fares immediately rise, Land noted, warning that a similar dynamic could occur in international markets.

“Just as the three U.S. legacy carriers currently alleging unfair subsidies have exhibited anti-consumer behavior domestically, they have relied upon their immunization from antitrust laws, granted by DOT, to thwart competition internationally,” Land said.

JetBlue is urging the DOT to ensure competition by reviewing both antitrust immunity and joint ventures periodically, every 3-5 years. This is standard practice in other countries, and ensures “promises made by immunized airlines are kept and that immunized alliances are truly benefitting the traveling public,” the New York-based carrier argues. Where consumers are shown to be losing through reduced competition and higher fares, “immunity should be withdrawn,” Land said. “JetBlue calls upon the Department, long a champion of increased competition in aviation, to mandate a periodic review of consumer benefits as a condition for allowing joint ventures to continue their immunization from U.S. antitrust laws.”

JetBlue is not addressing the subsidy issue, but said it is leaving that to “the airlines and governments the allegations have been levied against.” However, in his letter Land said it is “ironic” that Delta, United and American have “complained about the growth of these Gulf carriers,” when they do not serve the Gulf region, Africa or India substantially.

“Although they have elected not to provide meaningful service levels or competitive services to these growing regions, which are and have been available for them to serve under existing open skies agreements, they now complain about the success of those who do compete in these markets under the premise that it is somehow wrongly achieved,” he noted.

JetBlue’s growth has been in part due to its own access, via open skies, to international markets and through the expansion of its more than 40 partner airlines. “Our partners’ growth equates to JetBlue’s growth and their success is our success,” Land wrote.

Throughout the debate on the Gulf carriers’ access to the U.S., JetBlue has been a staunch supporter of open skies. In January, JetBlue CEO Robin Hayes expressed his “unwavering support” for the policy that allowed the carrier to expand in the Caribbean and Latin America (Aviation Daily, Jan. 29).

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