Competition among airlines is growing fiercer each and every day. And typically competition is an excellent market force, as it drives prices down and oftentimes ensures that the most efficient airline succeeds. Unfortunately, this has not been the case as of late.
Competition has been largely increasing due the rapid expansion of Middle Eastern airlines, like Emirates Airline, Etihad Airways and Qatar Airways, which have been generously supported by none other than the good ole' Uncle Sam.
Government intrusion into the free marketplace always raises a few eyebrows, but the fact that our federal government is aiding and abetting the direct competitors of American employers is inconceivable.
Take for instance the U.S. Department of Homeland Security’s recent decision to launch a U.S. Customs and Border Protection pre-clearance facility in Abu Dhabi, despite the fact that no U.S. airlines fly to this destination. This diversion of taxpayer dollars for the construction and operation of a facility that will only benefit airlines in the Middle East that compete with domestic carriers is exemplary of the type of government waste that brought us to our current debt predicament, which has now exceeded $17 trillion.
Airlines in the Middle East have also been bolstered by the Export-Import Bank of the United States (Ex-Im Bank). The Ex-Im Bank provides these air carriers with favorable loan rates and terms, which are often better than those available on the open market, to purchase Boeing aircraft.
This year alone, Ex-Im has doled out hundreds of millions of dollars in loans to Emirates Airline and Etihad Airways. And Ex-Im goes much further than simply providing loans. In fact, the Bank backed $1.46 billion worth of bonds for Emirates Airline in 2012 according to a Bloomberg report.
These sweetheart deals are quite rotten for the U.S. airlines, which are forced to idly watch their competitors receive what are essentially subsidies from the American federal government. Historically, only foreign companies have been given the privilege of accessing Ex-Im’s favorable rates.
As a result they have been able to save significant sums of money. These savings have been in turn used to expand their businesses and make a foray into American routes.
Emirates now has 62 weekly flights from Dubai to seven different U.S. destinations according to recent media reports. Qatar has announced it will expand its service to Miami and Philadelphia, despite already flying to Chicago, Houston, New York and Washington.