Opinion: How President Trump Can Make U.S. Carriers Competitive Again

Harrison Fukuji

EDITOR’S NOTE: The views expressed by the author in this opinion piece do not reflect any positions taken by Layoverhub as an entity.

Option 1-Stop Norwegian from Expanding with in the US

United States President Donald Trump has the chance to help domestic airlines on the east coast significantly by implementing some small policies regarding the expansion of low-cost, long-haul carrier such as Norwegian, as well as heavily government-subsidized carriers such as Emirates.

Emirates is one of the “ME3” carriers, who are heavily subsidized by their respective governments. (Photo: Max Trimm / Layoverhub)

Norwegian is currently in the process of expanding service to Stewart Airport in New York with flights to secondary European cities, such as Belfast. Thankfully, four of the five flights will be from the EU countries of Ireland and Norway. Norwegian also operates a handful of Caribbean flights from Boston, Baltimore, and Milwaukee Airports, and these flights are affecting multiple American airlines that thrive on Caribbean routes, such as jetBlue and American.

President Trump can refer to the Open Skies Agreement, which is an agreement between the United States and European Union that allows any airline to fly between the two entities without restriction. The EU can significantly help control Norwegian as they are flying from EU cities, but unfortunately the EU will not be able to control flights from the UK as they are in the process of leaving the European Union in the huge event referred to as “Brexit.”

Major U.S. carriers such as Delta have had to reduce and even cut flights to both Europe and the Middle East due to the likes of Norwegian and Emirates offering far cheaper prices. (Photo: Max Trimm / Layoverhub)

Norwegian’s main “money-maker” routes fly to major airports in the U.S. such as New York’s JFK International Airport and Los Angeles International Airport. These routes heavily affect major airlines such as United and Delta, as their prices are significantly higher than Norwegian’s, who offer dirt cheap fares. The only competitive advantage the US3 have is their alliance route networks within Europe, but Norwegian also has similar alliances with carriers such as RyanAir, which offer extremely low fares.

Sadly, if changes are not made quickly, Norwegian may be able to steal too much of the US3’s market share to Europe, resulting in virtually no profitability for the already frugal American majors.

Option 2-Stop the ME3 and restrict to weekly flights

In 2010, as the Middle Eastern carriers such as Emirates, Etihad, and Qatar Airways began to gain momentum, adding many flights to the United States, the Canadian Government restricted the expansion of these airlines from flying into Canadian airports. I believe the Canadian government made the right decision and should uphold it for the coming years. President Trump should instruct the Department of Transportation to do the same thing by putting strict restrictions on the Middle Eastern carriers that get billions of dollars from their respective government to expand. The Canadian’s restrictions have allowed national carrier Air Canada to expand tremendously in India and the Middle East.

Recently, Air Canada has added service to Dubai from Toronto and New Delhi from Vancouver. This kind of expansion is unheard of from the national carriers in the United States, due to the low prices being offered by the ME3. United is the currently the only U.S. airline operating to Mumbai and New Delhi from the US. Restricting flights (ex. From daily to 3x weekly) would allow the U.S. airlines to reconsider and maybe restart services to the Middle East. The only airport within the U.S. the US3 have been able to win out against the ME3 is San Francisco, but only with the help of Air India, a Star Alliance partner with the main carrier at SFO, United. United and Air India have been able to take enough India traffic from Etihad that they will be fully pulling out of SFO in October, the first time a ME3 carrier has dropped a US airport in nearly 10 years. More airlines may follow in dropping United States destinations as President Trump’s Travel Ban has resulted in a large decrease in load factors for the ME3, only resulting in Emirates reducing seven weekly flights to Seattle and New York’s JFK Airport.

Thanks to the Canadian Government restricting flights from the ME3 carriers into Canada, flag carrier Air Canada has seen incredible success in Middle Eastern and Indian markets. (Photo: Max Trimm / Layoverhub)

Despite what seems like a step in the right direction, in 2018, Qatar Airways will start SFO service aboard their high density 777-300ER offering flights to India with competitive prices and a stopover in the multi-billion dollar facilities at Hamad International Airport in Doha. In September 2017, Air India will add service to Los Angeles, taking a shot at the ME3’s traffic to India.

Donald Trump can seamlessly restrict this expansion by citing the Open Skies Agreement. Emirates has been flying from Milan to New York for a few years now, affecting the struggling Alitalia flights to JFK. Recently, Emirates added Athens to Newark service resulting in massive protests by United Employees claiming the route is “Violating the Open Skies Agreement.” United ended operations on the same route, which was clearly struggling due to the entrance of Emirates in the market.

The United Employees, apart of the Open & Fair Skies group, have asked President Trump to intervene, but action has yet to be taken. Delta employees also protested the inaugural flight of the new Doha to Atlanta flight operated by Qatar Airways. United CEO Oscar Munoz said, “…if United were to offer the flight, Newark-Athens, United would lose $25 Million a year, clearly not a viable route especially when you aren’t a governmentally owned airline.”

Recent studies have found the ME3 to have $50 million in subsidies flying to the U.S. President Trump needs to end flights from Europe by the ME3, as they’re hurting both EU and US carriers and the Open Skies Agreement. Talks with EU leaders can help the struggling carriers, but only if the correct changes are made. With some small adjustments, President Trump can make Middle Eastern flying fair again for all carriers involved in the market.

Featured photo from Layoverhub writer Max Trimm.