## International Coalition of

Tourism Partners

PO Box 208

Haleiwa

, HI 96712

- 0208

Phone: +1

- 808

- 566

- 9900 Fax: +1 (808) 356

- 0196

E

- Mail : member@ictp.travel Web : www.ictp.travel

The Honorable John F. Kerry Secretary of State U.S. Department of State 2201 C Street, NW Washington, DC 20520

Haleiwa, May 26, 2015

Re: Claims Raised about State

- Owned Airlines in Qatar and the UAE

DOT

- OST

- 2015

- 0082

- 0049

Hon. Secretary Kerry,

I may just be one of the few people left in the industry who was actively engaged in the US and EU deregulation and open skies strategy. And a little bit of historical perspective might just show how hypocritical and self

- serving the US Carrier and Union

initiatives are.

I was Head of Government Affairs at IATA in those days when the US government and its airlines embarked on their open skies strategy in the late 1970?s? using every dipl omatic and commercial avenue to mount a crusade on what they called the protectionist Bermuda based bilateral system & the cartelistic IATA tariff system.

At first the aviation c ommunity lined up against them and we were in the front row of

the battle ar guing the case for progressive change , moderation, the comity of nations and the agreements they ha d painstakingly negotiated for three decades. We debated in national and international regulatory fora and public conferences, we hired K street lawyers and consultants. We argued that the US had a huge protected domestic market base, chapter 11 and restrictive ownership shelters that gave it a competitive advantage. We pointed out that airlines of smaller states would n’ t be capable of competing. We fought the legal attacks point by point.2

But slowly we lost the battle as the US put more and more bilateral pressure and concessions into play. As they argued the open skies case for p assengers and for

communities a s they extolled the trade benefits. As they picke d up strategic partners in Singapore, Amsterdam, Tel Aviv, Amman and London or picked off weak sisters with deals or political pressures.

And they were smart. A fter 10 years the EU started to move in the same di rection a nd its de Kroo Commission (on which I served, as President of WTTC), called for a clear target based strategy to open market entry, price and capacity in the same direction. Competition, regardless of flag, became the order of the day and open skies the dominant regulatory regime.

But most important was the fact that it became obvious that the US were right to push vigorously for more competition because customers like low fares, more

choice of serv ices and what they called more price/quality options , a nd airlines need that push to force th em out of cozy oligopolies. But above all the world community with its many socio

- economic challenges needs a strong and expanding Travelism (Travel & Tourism) system to boost trade, jobs and

investment flows.

Then the international competitors got wise, took advantage of their new freedoms and began to create alliances, hubs and improved products. They accepted the challenges of open skies

- often because they had no alternatives

- and in some cases like the UAE, nation states began to capitalize on their global position in international aviation passenger flows and the global economic pivot to Asia. They invested in their airlines and airports. Their carriers bought the most modern aircraft with the lowest pollution levels. And above all they delivered th e best service in the skies and on the ground as a core product.

The US carrier s with their massive, commoditiz ed, totally protected domestic market generally failed to respond adequately to the changing competitive international service and quality dynam ics. Inflight and on the ground they did not meet the strategic investment, product and human resource innovations of foreign competitors.

So now, the champions of open competition and the choice of the market turned 180 degrees and launched their protect ionist legal barrage. And careless of passenger, destination or societal interest they want the rules of the game changed again. Because the competitive heat in the kitchen they designed, built and pushed around the globe just got too hot to handle.3

A read of the claims and responses makes it very clear that open skies is a better bet for the world community and for passeng ers, as well as the US economy and the country that has successfully sold this now globally recognized concept to the wor ld is

fac ed with two choices ? B e bold and stay with your vision or be weak

- be cause some of your airlines don’ t like the consequences

- and sink into the abyss of protectionism.

This is no real choice

- in fact if the US wants to maintain its aviation leadership role, it should take a serious look at further liberalizing its ownership and control provisions, as well as its protected massive domestic base to bring more foreign investment and innovation, to boost its aviation, tourism and trade marketplace

.

And if it really wants to be a strategic leader in a world where green growth will

become the new norm

- because we need growth for inclusive socio

- economics and green to fight the existential threat of climate change. It should look at innovative regulatory fra meworks that create better market opportunity for carriers, domestic or international, who operate with the lowest carbon footprint.

Geoffrey H. Lipman

President International Coalition of Tourism Partners