Are Gulf State Airlines Taking Unfair Advantage of Open Skies Agreements?

Since 1992, Open Skies agreements—bilateral agreements designed to eliminate government involvement in airline decisionmaking about routes, capacity, and pricing in international markets—have vastly expanded international flights to and from the United States, promoting increased travel and trade, enhancing productivity, and spurring high-quality job opportunities and economic growth.

While most of these bilateral agreements have increased competition and benefited U.S. airlines, employees, and consumers, in a few cases, foreign governments have pursued industrial polices meant to increase market share for their national airlines. In particular, major U.S. airlines have argued that the governments of the UAE and Qatar, in contravention of their obligations under Open Skies agreements, have provided billions of dollars in subsidies and other benefits to their state-owned air carriers over the past decade. This subsidized support has helped Gulf airlines expand routes into the United States, distorting the market and hurting U.S. carriers and airline jobs.

On May 21st, Hudson Institute hosted a discussion addressing questions about the impact of state subsidies and other directed benefits on the international aviation market, as well as policy measures the United States can take to preserve Open Skies agreements and increase economic growth. Former Speaker of the House Newt Gingrich and Assistant to the President for Trade and Manufacturing Policy Peter Navarro provided opening remarks, followed by a panel discussion including the Honorable James H. Burnley IV, former U.S. Secretary of Transportation, Steve Taylor, Vice President of Regulatory Affairs at FedEx Express, and Douglas Holtz-Eakin, President of the American Action Forum. The discussion was moderated by Hudson Senior Fellow Thomas Duesterberg.