malgudi

Exactly. Not to mention defaulting on pensions, accepting subsides from the Govt ...

sinoflyer

One can blame QF's savage losses last year in large by pointing at the effect of ME3 on the Kangaroo Route. AA/DL/UA are different. They are not as exposed as QF is (also EU carriers for that matter) to ME3 competition. But AA/DL/UA nevertheless face limitations in terms of growth potential in far-flung markets.

So, overall, I am ambivalent. I don't blame AA/DL/UA for trying to curb ME3's growth here in the U.S., but I also don't think it's so bad that the ME3 states are so willing to subsidize U.S. consumers. For example, at last check, EK is carrying 40% LF on DFW-DXB, and it is willing to continue with it. ME3 represent more choices for U.S. consumers, which is a good thing. And in the end, ME3 do not threaten the livelihoods of AA/DL/UA like they have threatened QF, which is also a good thing.

porciuscato

OP here. I have very keen sense of capitalism and you are quite wrong that companies will do this anywhere. The simple truth is, they will only do it where they have a chance of succeeding. Capitalism isn't a problem. Government pandering to capitalism's basest tendencies is the problem.

If we petition our representatives to stop pandering to the legacy domestic carriers, we can change things. I've written my congressmen to ask that we Americans be allowed the freedom to choose which airlines we fly on. If enough others do the same, we can stop the nonsense.

Unfortunately, as your response reflects, there are many who would rather whine about Smisek and the evils of capitalism rather than actually doing something about govt. policy that brings out the worst in capitalism.

RealFan

I agree with this completely and know many who feel the same. I don't know about the minority question but you are definitely not alone.

fastair

Very interesting opinion. Americans do have the freedom to choose who they fly on, provided you buy your ticket. If your employer puts restrictions, as long as they're paying, that isn't anti-capitalistic, he who spends the money gets the choice, the basic foundation of capitalism. An employer may restrict you for incentives they get, be it a discount, extra perks, or if the person buying your ticket happens to be the government, it has many self serving reasons to buy on a IS flagged carrier, taxes, job growth, stability of a vital industry free from foreign control. I'm curious as to how the govt panders to the legacy carriers. Surely not in taking away slots from them and giving them to LCC/startups, surely not in avoiding following the laws of the Wright Ammendment. The list goes on and on (surely not in regulating a passenger bill of rights vs letting economic forces regulate the industry...)

Indelaware

Many foreign carriers already carry USG traffic. Besides the codeshare loophole (US flight number with foreign metal is a US carrier), international agreements have made a major impact into the safeguards US airlines had under Fly America:

Australian airlines can compete for USG traffic on US-Australia-US flights. http://www.gsa.gov/graphics/ogp/Aust..._Agreement.pdf (page 14)

EU airlines can compete for USG on US-EU-US flights, US-EU-third country, as well as flights wholly outside the US. http://www.state.gov/e/eb/rls/othr/ata/e/eu/114768.htm (Annex 3).

Japanese airlines can compete for USG traffic on US-Japan-US routes. http://www.state.gov/e/eb/rls/othr/ata/j/ja/133510.htm (Part XI).

Saudi airlines can compete for USG traffic US-Saudi-US traffic. http://airlineinfo.com/treaties/saudiarabia1.pdf (Annex 4, page 36).

Swiss airlines can compete for USG traffic on US-Swiss-US flights as well as flights wholly outside the US. http://www.gsa.gov/graphics/ogp/Swit..._Agreement.pdf (page 22).

porciuscato

No, I don't have the freedom to choose. I can't fly Lufthansa from JFK to ORD, for example, because the govt. won't let Lufthansa fly there. I can't fly on a domestic airline that is majority owned by Richard Branson, because the govt. prohibits it.

Let's start with this:

http://www.slate.com/articles/busine...air_heads.html

Europeans and Australians are a little wiser on this, only limiting foreign ownership to 49%, which may explain why it costs me $400 to fly 350 miles from MFR to SFO, but only $150 to make a similar flight in the EU.

Why not give Richard Branson a chance to develop an American airline without hamstringing the effort? It might motivate the legacies to shape up.

Then there's this:

http://www.afacwa.org/congress_takes..._norwegian_air

fastair

The govt sees that airlines are vital to the infrastructure of America, just as railroads, hence the RLA which makes it near impossible to strike. Similar to utilities. Foreign control of these is not what the govt wants for stability, say in a time of war. The CRAF fleet (airliners that are reconfigured for fed use) are routinely used even in this day of age. Just look at all the countries that have allowed foreign investment in things they consider infrastructure, that have been "nationalized" over the years. Try to buy gas from anyone other than Pemex in Mexico. There is a strategic purpose of a country that sometimes puts restrictions on complete free market conditions. This is far from unique to the U.S.

And to use the EU as an example of free market economics is a joke. That wS the promise before it was created, the reality is closer to a cartel.

washeelers747

government should remember that they made a mistake by let mergers happen, which hurt than help customers. I hope that they don't repeat mistake by letting US-based CEOs dictate competition, and actually can't wait for EK's potential 5th freedom TPAC flights if it ever happens.

porciuscato

That was the reason back in 1938 when the law was passed. It hasn't been a valid reason for 50 years. And it's certainly not the reason the airlines and their congressional supporters are citing. They justify their market interference and the screwing of the U.S. flyer because it will "save American jobs."


Both prohibiting foreign investment and nationalization are extremely bad policy and the hallmark of banana republics. In a 21st Century democracy, we don't need to choose between them. We can resist them both.

lilpisher

I'm half-inclined to write my congressman and the DOT and include some articles about what Jeff already is doing to "good aviation jobs", maybe with a CC to the Sears Tower. Think it would be a fun little protest.

fastair

And I mentioned the jobs (as well as tax base) earlier. As to part two, every day, I hear H Ross Perot's warning of that "sucking sound" that NAFTA would create. I thought he was an idiot then, I've chdnged my mind now that I've seen the results. The U.S. doesn't prevent foreign I vestment, it encourages it. It does prevent foreign control. Investment and control are completely not equivocal. I didn't reject the idea of investment, I gave a few reasons why control would have some negative impacts. Taking money to take risks snd share in our abundance isn't prohibited, in fact many US airlines have large overseas shareholders, so foreign investment shouldn't be a question at all, the issue asked is about foreign control.

And I really think that the US policy of "screwing the U.S. flyer" is also a baseless arguement. Not toosny countries allow U.S. carriers to fly their wholly domestic routes on local basis, which, if I understand you correctly, is what your implying is somehow screwing us. If that's the case, most of the world is screwing us, not just our government.

bocastephen

If Congress allowed 6 airlines to merge into 3, thus eliminating any fair competition and permitting the level of collusion that exists today, they should permit cabotage for foreign carriers.

Regardless, the issue with the superior products of foreign carriers vs the junk US carriers offer comes down to this key difference: foreign carriers invest and reinvest for the benefit of their customers - shareholders be damned. US carriers, acting at the behest of such obnoxious gasbags as Hunter Keays, focus on shareholder value at the expense of customers and employees.

That's the fundamental flaw in the American service business, and only WN had a leader who was willing to tell shareholders "this is the way we are and the way we do business, take it or leave it" vs the silly, sad shareholder pandering that people like Smisek and Anderson engage in today.

GeP

That is what I have been doing for years (on my own money in addition to company paid travel).

However as benefits dwindle (CPUs barely working, RPUs becoming nail-biters, GPUs on LH becoming harder on top of more expensive base fares, RDMs being vastly reduced and award trips more expensive) soon what is going to be left is *A Gold status and its benefits, E+, and some fees waived.

*A Gold will come once it hit 1MM and the rest can be addressed with a little bit of money, not more than what I might have been using to earn status. At which point I'll become very "flexible". Does United not realize that this holds for (tens of) thousands of us, or do they simply not care?

BearX220

And Boeing commercial aircraft development is de facto subsidized by taxpayer-supported military aerospace contracts.

It's cheaper and easier for an oligopoly to suppress new threats than improve its own game.

How do you figure? The whole point of the last round of mergers was to consolidate pricing power and reduce competition. A bought-and-paid-for DoJ and Congress will never allow cabotage.

Because MP is now a much less sticky "glue" binding repeat customers to a bad airline, and they appear to be defecting in droves to better competitors, UA's fallback play is to campaign against those competitors. They will try a lot of things before attempting to actually be "flyer-friendly," which is more costly.