Delta’s CEO calls Middle Eastern carriers the “greatest challenge” to the airline industry and decries privatization of air-traffic control in the U.S.
Comparing the ongoing Open Skies situation to trade inequities that the auto industry faced in the 20th century, Delta Air Lines CEO Richard Anderson called Middle Eastern carriers one of the greatest challenges to the airline industry. The remarks came during Anderson’s speech at the Detroit Economic Club Tuesday morning, where he spoke openly on a number of issues facing the American airline industry today, including Open Skies and the proposed privatization of air-traffic control.
When asked about the greatest challenge to the American air transport industry by moderator Bill Emerson, Anderson pointed the finger at Open Skies and the Arabian carriers involved. The CEO went on to directly compare the situation to trade inequities faced by American auto makers throughout the 1970s and 1980s.
“The facts are pretty straightforward,” Anderson told attendees. “We all remember, 20 or 30 years ago, the inequities of the trade regime between the U.S. and Japan around automobiles and the devastating effect that trade imbalance had on the automobile industry had here in Detroit. We’re facing a similar situation with the United Arab Emirates and Qatar Airways — they really aren’t airlines, they’re governments.”
Anderson reinforced allegations raised by Delta and fellow legacy carriers American Airlines and United Airlines in February, claiming the “Middle East Three” — Emirates, Etihad Airways and Qatar Airways — accepted over $42 billion in illegal subsidies. The executive illustrated the accusation by comparing the growth of the ME3 to that of his own airline.
“Typically, our industry grows at [Gross Domestic Product] rates,” said Anderson. “Delta Air Lines will grow at about where GDP will grow. These carriers grow at four-times GDP, because governments write billion-dollar checks to put a direct subsidy in to distort the marketplace.”
While Anderson was careful to state that his airline supports trade, he made a point of reinforcing his argument that the problem lies solely in agreements with Qatar and the UAE, extolling the strength of a similar agreement the U.S. maintains with the Netherlands and accusing Middle Eastern governments of violating the tenets of the policy.
“We’ve signed 115 of those Open Skies agreements over the past 23 years and all but two of them work really well,” said Anderson. “We support Open Skies. We support open and free trade, but in this instance we have bilateral agreements that are being violated right now by those countries.”
Anderson also used Tuesday’s speech to express his opposition to the proposed privatization of air-traffic control in the U.S. As chairman of the RCTA NextGen Advisory Committee, Anderson insisted that air-traffic control is a “non-delegable government service.”
“I think the FAA does a good job and I think, oftentimes in this day and age, we’re very quick to criticize government; it’s a pretty popular thing to do,” Anderson began. “But if you ever stood in the tower at [Detroit Metropolitan Wayne County Airport (DTW)], or sat in the cockpit on the jumpseat of one of our airplanes with headsets on, when we’re pushing a big bank out of [DTW], you’ll see how well that system works and how safe that system works.”
Instead of privatizing the air-traffic control systems, Delta’s CEO suggested an alternative solution lies in technology. Anderson said his airline’s plans include supporting the FAA, as well as installing upgrades to GPS and ADS-B technologies.
When asked about Delta’s competitive advantage in the aviation industry, Anderson spoke to the values of his company, comparing it to the longevity of Detroit’s auto makers. However, he added, the company could only be compared when on a level playing field in the industry.
“What we’ve discovered at Delta Air Lines, we compete against a lot of state-owned and state-subsidized enterprises, when the playing field is relatively level, we win,” Anderson said. “But when the playing field is so far tilted, it’s difficult in any industry to compete against governments.”
[Photos: Detroit Economic Club/Lawrence Technological University]