On the 18th of July, US airline CEOs met US President Donald Trump to discuss the competitive landscape and the American aviation industry. The meeting came amid a years-long battle between large US airlines and carriers from the Middle East. Unfortunately for the US CEOs, the meeting did not go as planned. Here we explore the events leading up to the event and analyze the meeting itself.
For years, the big US airlines (US3), American, United, and most notably, Delta, have complained that Middle East carriers (ME3), namely, Qatar, have been engaging in anti-competitive practices.
In keeping in line with the old proverb, “the enemy of my enemy is my friend”, the US3 established a collaborative working-group called “The Partnership for Fair and Open Skies”.
The group argues that the ME3 carriers are “exploiting” the existing Open Skies agreements, distorting the global aviation market, and putting US jobs at risk.
Although the US3 are critical of many aspects of the ME3’s business models and strategy, they are categorical about fifth-freedom flights between Europe and the US. Indeed, Qatar Airways’ minority investment in Air Italy added fuel to existing concerns.
July 18th meeting – who, where and why
After months of political lobbying and strategically placed TV advertisements, the CEOs of US3 airlines were invited to a meeting with President Trump and members of the administration.
In addition to the US3 CEOs, executives from JetBlue, FedEx, Qatar Airways, and other US airlines were invited.
While the guest list was long, not everyone was present. While administration officials, as well as the CEOs of Qatar Airways, United, American and other US airlines were present, Delta’s CEO was notably absent.
July 18th meeting – what happened?
While the meeting was technically secret, leaks and a report by Josh Lederman can give us some insights on how the meeting unraveled.
In the simplest terms, the meeting may have not gone to plan for the US3, who had hoped to gain the support of protectionist entities in the White House.
First and foremost, the absence of Ed Bastian, Delta’s chief executive, apparently infuriated the U.S. president. He reportedly brought up Bastian’s non-attendance on numerous occasions, later lambasting Delta for buying European Airbus planes.
Secondly, the American President apparently criticized American Airlines’ stock performance.
Thirdly, a dichotomy between industry attendees became apparent. On one side, the US3 who sought protections against the ME3. And on the other FedEx and the smaller US airlines who either seek the maintenance of the status quo or who are happy to see the ME3 compete against the large US carriers.
While the US3 sought protections under the argument that such measures would secure US jobs, the Qataris made a more successful case. That is, the Qataris, knowing their audience, offered to purchase Boeing jets powered by General Electric engines, eventually winning the President’s favor.
The U.S. President concluded that the US3’s grievance against the ME3 would best be resolved by the Department of Transportation’s complaints process. A process which would likely result in favor of the ME3, according to unnamed officials.
What do you think of each party’s claims and arguments? Let us know in the comments.