What Does A Trump Presidency Mean For US Air Transport?

donald-trump-is-right-americas-airports-are-awful

Donald Trump was elected president of the USA on 8 November, a victory for change over status quo candidate secretary Hillary Clinton.

President-elect Trump emphasised protectionist views during the campaign, repeatedly touting plans to build a wall on the US-Mexico border and reject the USA’s free trade agreements, including the pending Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA).

He also emphasised bringing jobs back to the USA, which he claims were lost as a result of globalisation.

Air transport issues are one topic that Trump was mostly silent on during the campaign.

Trump will face a number of pending international air transport issues, barring 11th hour actions by the lame duck administration of president Barack Obama, when he takes office on 20 January 2017. These include on-going informal discussions with Qatar and the United Arab Emirates over open skies, and pending foreign air carrier permits for Norwegian’s Irish and UK subsidiaries.

American Airlines and LATAM Airlines also have a proposed joint venture pending before the US Department of Justice.

Beyond these immediately pending issues are topics that are likely to come up during his administration. These include a new air service agreement with the UK after it leaves the EU, and expanding access to Beijing and Shanghai as airlines from both China and the USA hit the existing limits.

ME3

The Qatar and UAE discussions follow allegations by the US mainline carriers that Emirates Airline, Etihad Airways and Qatar Airways have benefitted from more than $40 billion in government subsidies, which have allowed them to dump capacity in the US market.

American, Delta Air Lines and United Airlines argued that each new daily widebody flight on one of the three Gulf carriers resulted in a net loss of roughly 821 jobs in the USA.

US carriers would be forced to exit some domestic markets, especially small communities, as the airlines lost international feed in markets where they were unable to compete with the Gulf airlines, they said in a 2015 white paper.

The Gulf carriers have vehemently denied the subsidy allegations, saying they compete fairly with their US counterparts.

Trump’s emphasis on international protectionism and bringing jobs back to the US suggest a potentially hard line stance towards the Gulf carriers. However, he has not commented on the issue.

NORWEGIAN

The US Department of Transportation has all but approved Norwegian’s application for a foreign air carrier permit for its NAI subsidiary. The regulator released a tentative decision granting the permit in April, but has not issued a final decision despite closing the comment period in May.

US labour unions are firmly opposed to NAI due to its use of what they call a flag of convenience in Ireland. They argue that the airline would be able to undercut US carriers – hurting US jobs – by being based in the low-tax European country and using labour based in other low cost countries, like Thailand.

EU officials have lambasted the US delays approving NAI’s permit. A separate application by Norwegian for a foreign air carrier permit for its UK subsidiary remains pending before the DOT.

Trump’s protectionist and pro-US labour comments suggest a decision against NAI.

US AIRLINES

US airlines, at least American, Delta and United, stand as potential beneficiaries of a Trump presidency. They may receive support in their campaigns against the Gulf carriers and Norwegian.

However, the same policies that could benefit the three mainline carriers could also hurt smaller US airlines, including Alaska Airlines, Hawaiian Airlines and JetBlue Airways. All three have extensive codeshare networks that, at least at Alaska and JetBlue, include partnerships with the Gulf carriers, and either are or plan to expand internationally.

JetBlue has cautioned that a rejection of NAI’s application could create obstacles for it when it begins the process of launching service to Europe, as it warns of reciprocal treatment from EU aviation authorities.

Separately, Trump has said he will reduce the corporate tax rate in the USA. This would likely be a benefit to all US carriers.

Source: flightglobal.com

GetSocial