America’s airline workers and CEOs are mad as hell.
They face increasing competition from a group of foreign rivals which — they say — are government supported, profiting off cheap labour, and abusing international agreements.
One the surface, it seems like a perfect opportunity for President Donald Trump to champion American workers and threaten to tear up another trade agreement.
But, so far, he’s not biting, and there’s two reasons why.
His job-creation focus is manufacturing, not the services industry, and the airlines that are triggering the complaints hail from a part of the world where Trump has growing business ties.
What’s the issue?
The shorthand version of the feud is as follows: Since //2015// American, Delta, and United Airlines (the US3) have been complaining about competition from three huge and fast growing Middle East-based rivals, Emirates, Etihad, and Qatar Airways (the ME3).
According to the US3, the ME3’s growth has been fuelled by as much as $US50 billion in subsidies over the past decade — allowing them to flood the international market and threaten the job security of US aviation workers. They also say the ME3 are in violation of the OpenSkies agreements that govern international air travel between the US and 120 nations including the UAE and Qatar.
They’re trying hard to get Trump’s attention. Last Sunday, a group of United Airlines employees, unions, and members of Congress held a protest at Newark Liberty International Airport in reaction to the launch of a new daily service by Emirates from Newark to Athens, Greece — a route that United flies during the summer. At the same time, a bipartisan group of 25 members of Congress from the New York and New Jersey wrote the White House asking Trump to block the Newark-Athens flight
“It’s crystal clear that the U.S airlines and their employees are looking to President Trump to enforce our international agreements with the trade cheaters of the UAE and Qatar,” Jill Zuckman a spokeswoman for the lobbying group representing the US3 on this matter said.
The ME3, as you might expect, refute all this. They note that US airlines have been bailed out and supported by government spending in the past, and that their own flights into the US are job and growth creators.
From his early days on the campaign trail, Trump keyed in on the need for America to rebuild its once booming manufacturing sector. Time and time again, candidate Trump and then President Trump vowed to support American made products.
In fact, the President has personally taken time to praise companies such as Ford, General Motors, United Technologies, and Intel for their decision to maintain manufacturing operations in the US.
That extends to Boeing.
In February, when asked about US airlines’ request to block the entrance of Norwegian Air’s Irish subsidiary into the domestic market, White House press secretary Sean Spicer replied:
“They’re flying Boeing planes. There is a huge economic interest that America has in that deal right now. I don’t want to get ahead of the President on that. But just to be clear, I mean, when you’re talking about U.S. jobs, both in terms of the people who are serving those planes and the person who’s building those planes. That’s a very big difference.”
The difference here is Boeing and its assembly plants in Washington State and South Carolina that produced the 120 737 and 787 jets in Norwegian’s Boeing-only fleet. These are the same plants that will build the 100 next generation 737 MAX airliners Norwegian has on order with a list value of more than $US11 billion.
After all, there are few visuals quite as representative of American industrial might than a shiny new Boeing jet.
The ME3 are big spenders
But Norwegian is small potatoes when compared to the economic might and sheer spending power of the ME3.
Take Emirates for instance. The airline is one of Boeing’s most important and reliable customers. Emirates’ fleet of 160 Boeing 777s is the largest of its kind in the world and worth $US45 billion.
To put things into perspective, if a 737 is the aeronautical equivalent of a $US25,000 family sedan, then a 777 is a $US100,000 Cadillac Escalade. And Emirates has been buying these “Cadillacs” in bulk with orders for another $US86 billion worth of Boeing 777 and next generation 777X airliners.
It’s not just Emirates. Collectively, the ME3 account for nearly 80% of the 306 777X aircraft Boeing has sold.
Then there are the engines, which Boeing does not make.
For Emirates, a larger number of its 777s are powered by General Electric GE90 engines. In 2015, Emirates signed a $US16 billion deal with GE to provide maintenance for these engines. Even many of the the non-American aircraft Emirates, Etihad and Qatar fly are powered by American-made engines, built by a Connecticut-based joint venture between GE and Pratt & Whitney called Engine Alliance.
Put it all together and the three airlines hold more than $US150 billion worth of economic power that will keep Boeing’s assembly lines rolling for the next decade and beyond.
In spite of the vastness and importance of the airline industry, the Trump administration’s focus on manufacturing and that shining image of US industrial supremacy takes precedence. After all, why antagonize some of the most lucrative customers for America’s most recognisable industrial export.
It’s also worth raising the issue of the The Trump Organisation’s business interests in the United Arab Emirates. These business dealings have been the subject of great criticism from the President’s detractors.
In February, the President’s two sons — Eric and Donald Jr. — presided over the opening of the latest Trump-branded golf course, The Trump International Golf Club Dubai. The course, located a stone’s throw away from downtown Dubai, was developed by Trump family friend, billionaire Hussain Sajwani and his Dubai-based DAMAC Properties. According to Reuters, DAMAC pays the Trump Organisation a licensing fee to use the Trump brand on the facility which features a 30,000 sq. ft. clubhouse, four restaurants, state-of-the-art recreation facilities, and a 7,300 yard, Par 71 golf course designed by Gil Hanse.
DAMAC is also developing a second Trump branded golf course in the emirate called the Trump World Golf Club Dubai. The second facility will feature an 18-hold championship course designed by Tiger Woods. During 2015 and 2016, DAMAC paid the Trump Organisation as much as $US10 million, Bloomberg reported.
The the tiny Emirate of Dubai has blossomed over the past couple of decades under the guidance of its ruler Sheikh Mohammed bin Rashid al Maktoum, and revolves around its government ruled by the House of al Maktoum.
That includes infrastructure, land, and the blessing for real-estate development — all as part of the ruling family’s efforts to brand Dubai as an global hub for trade and commerce — and a the heart of this this international marketing effort is the Dubai’s most recognisable and effective branding tool — Emirates and its shining fleet of jumbo jets.
It’s not just Dubai either. Neighbouring Abu Dhabi where Etihad is based, and Qatar to the north are doing much of the same — including building hotels and golf courses that might carry the Trump name. According to
Hotelier Middle East, in 2015 Ivanka Trump said the organisation is looking at “multiple opportunities” in Abu Dhabi, Qatar and Saudi Arabia.”
On a practical level, Emirates is also the how the world’s golfers will find their way to Trump’s Dubai properties. And — according to a passenger on the flight — it’s how Eric and Donald Jr. made their way back to New York from Dubai.
It’s still early, and entirely possible the White House could take up the concerns raised by American, Delta, and United’s concerns.
If they don’t, we have a good idea why.
Business Insider Emails & Alerts
Site highlights each day to your inbox.