Emirates, Etihad and Qatar are leading in the international aviation industry right now but it is because those companies are receiving around 42$ billion in government subsidies(The Daily Signal, 2015). By receiving this money the gulf carriers are violating the open skies agreement. The sprit of the open skies is letting each carrier determine the cost, routes and frequency of the flight but receiving money allows them to not base anything on the market value.US airlines like Delta, American Airlines and United have also received around $71.5 billion in government subsidies according research done by Etihad. The US airlines received money after 9/11 to make up for the loss in the industry.
The import export bank’s purpose is to export aircraft goods to other countries. They pretty much give loans to companies to purchase the aircrafts. The buyer gets a lower interest rate since the buyer is not paying the full amount for the aircraft. Emirates received close to $3.7 billion from Ex-Im and Etihad received close to $1.3 billion. Allowing them to purchase these boeings at low loan allows them use the leftover money for other investments.
Do I think all this is fair? Yes and no, It’s not fair because you are screwing over other companies to make money by receiving government subsidies allowing you have routes no what matter what the market value is but at the end of day it is a business and the companies are doing what they have to do to be the best and make the most money. I feel like it sounds a little childish to say that they are not playing fair because it is a business.
References:
Gulf Airlines Win Big With Subsidies, Taxpayer-Backed Loans. (2015, April 13). Retrieved October 28, 2015, from http://dailysignal.com/2015/04/13/bank-rolled-how-foreign-airlines-win-big-with-government-subsidies-and-u-s-taxpayer-backed-loans/
Etihad Airways: U.S. airlines get billions in government help, too. (n.d.). Retrieved October 28, 2015, from http://aviationblog.dallasnews.com/2015/05/etihad-airways-u-s-airlines-get-billions-in-government-help-too.html/
It maybe childish but the fact of the matter is foreign carriers are given a bigger break than U.S. carriers. Foreign carriers are given everything they need to succeed by their government as well as by the U.S. government. The U.S. is so focused on ensuring that everyone else succeed they forget about their own and what they need.
ReplyDeleteIt's true that foreign airlines receive a lower interest rate on loans from the import export bank, but you have to keep in mind that they are buying american made jets. If the gulf carriers didn't receive low interest rates on loans, they wouldn't buy Boeing aircraft but instead would buy Airbus jets.
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ReplyDeleteThis was a very interesting discussion and I feel it can go both ways so when you stated yes and no I believe that was a good point to make because it can both way it all depends on how you view the government subsides.
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