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The Emirates Advantage… Not just subsidies

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The Emirates Advantage… Not just subsidies

Old 04-17-2015, 11:34 AM
  #81  
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Originally Posted by IQuitEagle View Post
Not that I like defending the Middle East carriers, but let's be honest. I'd say the elimination of millions upon millions of debt in Chapter 11, plus the forced "renegotiation" of lease terms and rates of other services, is not much different than the government actually giving airlines money. Our bankruptcy laws are a joke.
It's A LOT different than the government giving the US airlines money.....because the US government didn't give the US airlines any money when they went through bankruptcy. And even if you want to stick to your "not much different" argument, it certainly isn't 40 Billion dollars worth like the Big ME have received.
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Old 04-17-2015, 12:04 PM
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Originally Posted by Drofdeb View Post
When I refer to the union, I'm talking about all of them that represent the regionals, ALPA, Toonsters, FAPA,etc.

They all suck or did you not realize that? Who do the 19000 regional pilots go to? The unions are just a tool for management in their whipsaw games.

Born in Dubai!? Ignorance is bliss. (see TP's post)

Carry on.
Yeah, ignorance IS bliss. TP is being a bit coy and knows exactly what I'm talking about. Nothing like a little Sharia law to keep everyone enjoying the "good life" in the UAE, eh?

My union at my airline seems to be doing a pretty good job. Surely 19,000 regional pilots (are there that many?) could get together and start their own "Regional Airline Pilots Association" and show the rest of us how it's done? Perhaps you could spearhead the drive and become its first leader and show us all what trade unionism is all about? In my many years of union volunteerism, I've found the guys with the biggest mouths are usually the ones that are afraid to step forward and show the rest of us how it should be done.
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Old 04-17-2015, 02:21 PM
  #83  
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Originally Posted by globalexpress View Post
Yeah, ignorance IS bliss. TP is being a bit coy and knows exactly what I'm talking about. Nothing like a little Sharia law to keep everyone enjoying the "good life" in the UAE, eh?

My union at my airline seems to be doing a pretty good job. Surely 19,000 regional pilots (are there that many?) could get together and start their own "Regional Airline Pilots Association" and show the rest of us how it's done? Perhaps you could spearhead the drive and become its first leader and show us all what trade unionism is all about? In my many years of union volunteerism, I've found the guys with the biggest mouths are usually the ones that are afraid to step forward and show the rest of us how it should be done.
Lol what can I say after u took my comments out of context.

Or was that a deliberate attempt so as to save face. Hee hee.

Carry on.
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Old 04-17-2015, 08:41 PM
  #84  
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Originally Posted by globalexpress View Post
It's A LOT different than the government giving the US airlines money.....because the US government didn't give the US airlines any money when they went through bankruptcy. And even if you want to stick to your "not much different" argument, it certainly isn't 40 Billion dollars worth like the Big ME have received.
Semantics. Whether a government gives cash to an enterprise, or allows it a system to eliminate tons of debt, the end result is the same. However, since you are so bent on seeing no evil where you don't want to see it, I doubt you will admit that.

And even if the U.S. airlines' total isn't "40 billion" as you say, you are now saying that the ME airlines' offense is worse, just because of the magnitude. Silly, because if subsidies are wrong, then they are wrong, period.
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Old 04-17-2015, 09:56 PM
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Originally Posted by IQuitEagle View Post
Semantics. Whether a government gives cash to an enterprise, or allows it a system to eliminate tons of debt, the end result is the same. However, since you are so bent on seeing no evil where you don't want to see it, I doubt you will admit that.

And even if the U.S. airlines' total isn't "40 billion" as you say, you are now saying that the ME airlines' offense is worse, just because of the magnitude. Silly, because if subsidies are wrong, then they are wrong, period.
It's not a matter of admitting anything. I just don't buy the Chapter 11 argument. If you made a point, for example, that the 1B dollars of ATSB LOAN GUARANTEES** the US government made to some US airlines one time after 9/11 when our country was at war and when the financial market was pretty much shut down to the airlines, now you might have a point. Or when cities in the US offer revenue guarantees or other incentives for a low cost carrier, for example, to start service to their city, then maybe you have a point. I'd argue that IMO they aren't really good points, but I could see someone taking that position. Do you want me to make some more points for you, or are you going to hang your hat entirely on the whole Chapter 11 thing?

You're implying that the US Government somehow designed our nation's Chapter 11 laws to benefit US airlines and the US government transferred money from the government to the US airlines.....nah. Don't buy it. The US government didn't give American any money when they just went through Chapter 11, for example. You might not like our nation's bankruptcy laws, but that doesn't mean American, for example, was subsidized by the US government.

So I'll ask you the same question I've asked everyone else debating points in the paper...........did you even read it from beginning to end? Do you see a transfer of wealth from the US government to US airlines similar in scope and magnitude that the Big ME 3 are enjoying right now?

**unlike the "loans" provided to the ME airlines (see linked paper), these ATSB loans had terms, were paid back, and were a net financial gain to the US Treasury (i.e. us taxpayers) when it was all said and done.
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Old 04-18-2015, 04:34 AM
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Originally Posted by globalexpress View Post
It's not a matter of admitting anything. I just don't buy the Chapter 11 argument. If you made a point, for example, that the 1B dollars of ATSB LOAN GUARANTEES** the US government made to some US airlines one time after 9/11 when our country was at war and when the financial market was pretty much shut down to the airlines, now you might have a point. Or when cities in the US offer revenue guarantees or other incentives for a low cost carrier, for example, to start service to their city, then maybe you have a point. I'd argue that IMO they aren't really good points, but I could see someone taking that position. Do you want me to make some more points for you, or are you going to hang your hat entirely on the whole Chapter 11 thing?

You're implying that the US Government somehow designed our nation's Chapter 11 laws to benefit US airlines and the US government transferred money from the government to the US airlines.....nah. Don't buy it. The US government didn't give American any money when they just went through Chapter 11, for example. You might not like our nation's bankruptcy laws, but that doesn't mean American, for example, was subsidized by the US government.

So I'll ask you the same question I've asked everyone else debating points in the paper...........did you even read it from beginning to end? Do you see a transfer of wealth from the US government to US airlines similar in scope and magnitude that the Big ME 3 are enjoying right now?

**unlike the "loans" provided to the ME airlines (see linked paper), these ATSB loans had terms, were paid back, and were a net financial gain to the US Treasury (i.e. us taxpayers) when it was all said and done.

To answer your question, I have read the full report. Happy now?

We've been over this before, but I guess it needs to be said again:

You just mentioned $1 billion in loan guarantees, it was actually $10 billion, but those never really amounted to anything. About $1.1 billion in loan guarantees ended up being given to 7 airlines.

It was the Grants that were given to the airlines, close to $5 billion, that would fit under the definition of subsidy. Delta (the combined NWA and DAL) received close to $1 billion in cash from the U.S. government as part of those Grants. American (the combined AA, USAir, and AWA) would be a similar amount. That's not exactly chump change when talking about subsidies.

I won't speak to Etihad and Qatar, but when Emirates gets lumped in the only thing the report could find (and that's still really unproven) is that Dubai covered a fuel hedging loss for them. The retort to that is that Emirates pays their largest shareholder (which is basically the government of Dubai) a dividend every year. It is usually in excess of $100 million to $200 million. So even if the government covered the hedging loss, it would seem they have paid it off for the most part, or will within another few years.

One of the major reasons I keep speaking up about this is that it would appear to me that everyone is missing the point. Emirates, Etihad, Qatar, Turkish, Singapore, Cathay Pacific, and quite few other airlines are certainly supported in one form or another by their respective governments. Nothing is going to change that. Those governments see the benefit of a strong airline. They see the positive economic impact on their city/country.

Union thuggery and antiquated protectionist mindsets are not going to do the U.S. carriers, or their employees, any good over the long run. The U.S. carriers, and their employees, would be better off finding ways to emulate what Etihad, Emirates, Qatar, Turkish, et. al. are doing.



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Old 04-18-2015, 06:30 AM
  #87  
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Originally Posted by globalexpress View Post
It's not a matter of admitting anything. I just don't buy the Chapter 11 argument. If you made a point, for example, that the 1B dollars of ATSB LOAN GUARANTEES** the US government made to some US airlines one time after 9/11 when our country was at war and when the financial market was pretty much shut down to the airlines, now you might have a point. Or when cities in the US offer revenue guarantees or other incentives for a low cost carrier, for example, to start service to their city, then maybe you have a point. I'd argue that IMO they aren't really good points, but I could see someone taking that position. Do you want me to make some more points for you, or are you going to hang your hat entirely on the whole Chapter 11 thing?

You're implying that the US Government somehow designed our nation's Chapter 11 laws to benefit US airlines and the US government transferred money from the government to the US airlines.....nah. Don't buy it. The US government didn't give American any money when they just went through Chapter 11, for example. You might not like our nation's bankruptcy laws, but that doesn't mean American, for example, was subsidized by the US government.

So I'll ask you the same question I've asked everyone else debating points in the paper...........did you even read it from beginning to end? Do you see a transfer of wealth from the US government to US airlines similar in scope and magnitude that the Big ME 3 are enjoying right now?

**unlike the "loans" provided to the ME airlines (see linked paper), these ATSB loans had terms, were paid back, and were a net financial gain to the US Treasury (i.e. us taxpayers) when it was all said and done.
In no way am I saying that Ch. 11 was designed to benefit airlines. It is so much broader than that: it is designed to help US businesses in any industry.

You seem hung up on the "transfer of money" aspect. But if the point of contention is that government subsidies provide for unfair competition, our Ch. 11 policies do come into play. You don't even have to look outside the US to see this. AA (or more specifically, Arpey) wanted to avoid BK. But since UA/DL/NW had already restructured in BK protection, shedding loads of costs, AA was in a disadvantaged situation. They declared BK with a record amount of cash in the bank. And like the others, they emerged profitable. Not due to any revamp of the business plan, or innovative product offering; just due to lower institutional costs.
Hardly a process which falls in to the "fair competition" concept.

Yes I have read the paper to the end. It makes a good case, but like any other piece written and sponsored by authors with an ulterior motive, it is far from objective in its intent, scope, research, and presentation. As such, a true understanding of the issue requires broader thinking and a deeper level of research.

Just consider that the ME airlines are not the only airlines to receive government assistance. (for example, consider: Subsidies: the state aid that companies would like to forget..., The UK in airport subsidies | Environment | The Guardian) If the objection is truly over subsidies, other airlines, including numerous US JV partners would be on the list and detailed in the report. But they are not. So it is less about subsidies, and more about the success of ME carriers.
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Old 04-18-2015, 09:18 PM
  #88  
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Originally Posted by Typhoonpilot View Post
To answer your question, I have read the full report. Happy now?

.........................

Union thuggery and antiquated protectionist mindsets are not going to do the U.S. carriers, or their employees, any good over the long run. The U.S. carriers, and their employees, would be better off finding ways to emulate what Etihad, Emirates, Qatar, Turkish, et. al. are doing.

Typhoonpilot
Union thuggery? Are you serious? You're defending a group of Sheiks WHO LITERALLY PERSONIFY WHAT A THUG IS, and you think my union is displaying acts of "thuggery?" You're can't be serious?

Yes, glad you actually read the paper. I am not familiar with the cash grants you mention. The ATSB loans had terms, and were repaid, unlike the loans mentioned in the paper.

There is little doubt that every company on the planet received some sort of "indirect" subsidy from their governments. You could say D R Horton (a large US homebuilder) gets a "subsidy" from the US government because we're all allowed to deduct mortgage interest on our tax returns, reducing the cost of home ownership. British Airways gets a "subsidy" because their employees get their healthcare paid for through the government while Delta has to pay for health insurance for their employees through increased compensation packages. This raises Delta's costs.

We're not talking about stuff like that. We're talking about HUGE, multi-billion dollar subsidies that are propping up these ME airlines. The 3 airlines in question, in a few years, are going to have more widebodies than the ENTIRE US widebody fleet, yet they only have 4% of the population of the US. How in the world is that possible? Are ME airline managers that good, or is there something else going on? Nope, they're not that good. They're getting sweetheart deals and using those bennies to dump capacity into Europe and the US.

If the government owns a portion of the airline and the airline is paying the thugs a dividend, that's OK. That's not a loan repayment. I own lots of companies through stock ownership just like most guys/gals on this forum. The stocks sometimes pay a dividend. They're not repaying me for a loan. The companies are returning to the owners of the company (the shareholders, me) accumulated profits. Two ENTIRELY different things.

Yeah, you're right! We should try to emulate those companies. Who can we call in Washington DC that's going to give us discounted aircraft loans, reduced landing fees, shiny new airports that don't have to cover the cost of capital, recovery for fuel hedging losses, and the likes? I want some of that! If we got those kinds of subsidies like the Big ME 3 get, we'd have Dom flowing out of our A380's first class showerheads!
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Old 04-18-2015, 10:06 PM
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Originally Posted by IQuitEagle View Post
In no way am I saying that Ch. 11 was designed to benefit airlines. It is so much broader than that: it is designed to help US businesses in any industry.

You seem hung up on the "transfer of money" aspect. But if the point of contention is that government subsidies provide for unfair competition, our Ch. 11 policies do come into play. You don't even have to look outside the US to see this. AA (or more specifically, Arpey) wanted to avoid BK. But since UA/DL/NW had already restructured in BK protection, shedding loads of costs, AA was in a disadvantaged situation. They declared BK with a record amount of cash in the bank. And like the others, they emerged profitable. Not due to any revamp of the business plan, or innovative product offering; just due to lower institutional costs.
Hardly a process which falls in to the "fair competition" concept.

Yes I have read the paper to the end. It makes a good case, but like any other piece written and sponsored by authors with an ulterior motive, it is far from objective in its intent, scope, research, and presentation. As such, a true understanding of the issue requires broader thinking and a deeper level of research.

Just consider that the ME airlines are not the only airlines to receive government assistance. (for example, consider: Subsidies: the state aid that companies would like to forget..., The UK in airport subsidies | Environment | The Guardian) If the objection is truly over subsidies, other airlines, including numerous US JV partners would be on the list and detailed in the report. But they are not. So it is less about subsidies, and more about the success of ME carriers.
Again, not buying the Ch 11 argument and of course I'm hung up on the transfer of money. That's the problem, isn't it? I don't like the reorganization laws, but then again I suffered greatly under them so of course that would be true. However, just because a country allows a company to reorganize under the watch of a bankruptcy judge (just like the UAE does, for example), it doesn't mean that said government is artificially subsidizing that entity. And CERTAINLY not to the tune of the billions of dollars in question in the paper.

I read the links you supplied and the spreadsheet. There were some arguments that appeared compelling, and if the EU and the US wanted to investigate some of those financial transactions further, I wouldn't be opposed to it. If found illegal, the transactions should be reversed or open skies agreements nullified. But c'mon. A lot of that stuff was pretty trivial. Do you think we'd be here arguing about a government paid for hangar in Dubai or a government provided railway platform in Doha?

Frankly, I really could care less about the "small potato" stuff because just as is mentioned above, there isn't a company on the planet that doesn't somehow benefit from their respective governments' policies. But again, when a group of airlines receives benefits that are so out of whack that a tiny country in the Middle East can order 100's of widebody aircraft, larger than the entire fleet of aircraft in the US.....something's not right. And, by the way America and Europe, we want to dump these subsidized aircraft on your shores and put US and European airline workers out of work so we can diversify our economies away from oil and keep the gravy trail rollin' for our Sheikhs and self-appointed kings when the oil dries up.
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Old 04-18-2015, 11:50 PM
  #90  
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Originally Posted by globalexpress View Post
Yes, glad you actually read the paper. I am not familiar with the cash grants you mention. The ATSB loans had terms, and were repaid, unlike the loans mentioned in the paper.

Some examples:

Straight from American Airlines annual report:
"Somewhat offsetting the impact of the September 11th events, the company recorded $856 million in reimbursement from the U.S. government under the Air Transportation Safety and Stabilization Act..."

From UAL Corp Annual Report:
"United has received $652 million in compensation under the act..."

other figures from airlines now rolled into UAL and DAL:

Continental Airlines grant = $417 million
Northwest Airlines grant = $461 million


Don't have the exact amounts for DAL, USAir and AWA but they were as significant as those listed. So each of the current big 3 in the USA received over $1 billion in Grants. Total money given was close to $5 billion when jetBlue, Alaska, etc are figured in.



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