View Single Post
Old May 2, 04, 9:03 am
FlyerTalk Evangelist
Join Date: Feb 2000
Location: London, UK and Southern France
Posts: 16,135
Hfly, I come clean. You have unmasked my 'anti-americanisme primaire'
I refered to the US because your post implied that AF only operates OK thanks to rigging market rules. What I was trying to say is that the suggestion that the airline industry operates on strict free market principles is a joke, even in the US, whose government is keen to embrace a free market rhetoric and lecture the rest of the world about it but quick to set aside its principles when it is in the interest of US industry. Nothing fundamentally wrong with that, but then, you can hardly complain about the rest of the world not complying with the rules when you don't yourself follow them.

You are 150% right about subsidies to the airline industry in the first half of the 1990s and before. However, that is not the question. The question is whether AF can operate as a profitable airline when deprived, as it now is, of the backup of state aid. And the evidence, to date, is that it is not doing too badly. Faced with the same challenges as other European airlines, it has done rather better than most of them and certainly infinitely better than I suspect most posters here would have expected.
What I was trying to do is redress the balance on what seemed to me to be comments based on anti-AF bias rather than based on objective analysis.
In truth, I would not personally invest in the European (or US for that matter) airline industry: over the long term, the industry has provided poor returns. The no-frills are (or rather were) an exception. I did invest in Ryanair a few years back as it was too good an opportunity to pass, pulled out last year (that was rather nice, thank you) and have no intention of returning in the short-medium term.
However, if I did feel like putting money in a European airline, I would not dismiss AF out of hand.
As to cabotage and EU-US negotiations. Well, the EU did put forward a proposal for a common aviation area a few years back, which would have involved the mutual removal of restrictions on ownership and cabotage rights. I did not see the US government jumping with enthusiasm at that. The US prefers bilateral Open Skies negotiations with individual EU Member States. One of the beauties of a network of Open Skies agreements, from a US perspective, is that it gives US carriers (through 5th freedom rights) traffic rights for intra-EU routes, whereas European airlines do not get the corresponding intra-US traffic rights. OK, they have 5th freedom rights beyond the US but this is of virtually nil value, whereas intra-EU routes are of value to US airlines. Not so much on pax traffic but on cargo traffic. Fedex and UPS use these rights. Compare that to the difficulties encountered by DHL in the US.
I don't criticise the US government for doing so. Quite right that they should be looking after the interests of US industry. But let's not pretend that we are talking here of a fair, principled free market approach. It is about extracting more rights for US airlines than are available to European ones.
NickB is offline