May 1 4 , 201 5

The Honorable Anthony R. Foxx Secretary of Transportation US Department of Transportation 1200 New Jersey Ave SE Washington, DC 20590 Re: Request for comments on preserving Open Skies and ensuring competitive choice for consumers **Docket No. DOT -**  **OST -**  **2015 -**  **0082** Dear Secretary Foxx : I am writing on behalf of the U.S.

– U.A.E. Business Council in response to your request for comments on preserving Open Skies and ensuring competitive choice for consumers. O ur members

– including nearly 100 large, medium, and small U.S. companies

– are very concerned that this issue between competing global airlines will prove harmful to the vital bilateral relationship between the U.S. and the U.A.E
. and ultimately undermine U.S. interests in free trade and regional stability. Moreover, we find that the accusations being made by American, Delta, and United airlines regarding alleged subsidies to the Gulf carriers are misleading and threaten to undo the substantial economic benefits that Open Skies has provided to the U.S. economy, to U.S. airlines, and to the U.S. aviation industry at

- large
. According to U.S. government data, the United States has negotiated 114 Open Skies agreements since 1992 with countries from around the world. These agreements have expand ed the global footprint of U.S. carriers and provided tremendous economic benefits to their hub cities across the U.S.

– including but not limited to, Dallas

- Fort Worth, Detroit, Memphis, Minneapolis, and Salt Lake City

– each of which had virtually no international flights prior to 1992. In this regard, the U.S. has benefited more from Open Skies than the U.A.E. To wit, 2014 operating profits for the U.S. airline industry amounted to $12 billion, with American Airlines alone recording over $4.1 billion in net income. As a result of this success, the U.S.

– U.A.E. Business Council firmly believe s that increased capacity and choice is good for all consumers. As a result, American passengers are choosing to fly U.A.E. airlines and have come to value the better service and more convenient connections. According to Skytrax, a research firm, U.A.E. airlines ranked in the top 5 among passengers while the highest placed U.S. airline was Delta, at 49 th . Emirates, meanwhile , competes with U.S. carriers on only two routes. It’s no surprise, therefore, that passengers directly benefit from the Gulf carriers’ global connectivity all across Asia, Africa, and the Middle East while also enjoying the premium service that i s often neglected by the Big 3. The U.S. and the U.A.E. meanwhile share an absolutely critical bilateral d efense and securit y partnership. The U.A.E. is the only Arab country to participate in six coalition actions with the U.S. since the First Gulf War, including the ongoing campaign against the Islamic State in Syria and Iraq. More than 2,000 American military personnel are based in the U.A.E., mostly with the U.S. Air Force’s 380th Expeditionary Wing stationed at Al Dhafra Air Base. This deep defense relationship and the effectiveness of this partnership are critical in promoting regional security and stability at a time when it is very much needed. Therefore , the U.A.E. is not only a consumer of security goods and services

– it is increasingly a provider of security. This is a relationship based not only on high

- level defense cooperation however, but also in 25 billion dollars of two

-way trade . The U.S. exported over $22 billion dollars in goods and services to the U.A.E. in 2014, making the U.A.E. the single largest American export destination in the Middle East

– including more than India, Turkey, and Israel

– for the last six years. These considerable export numbers mean real jobs for everyday Americans. In sum, this is a fast

- growing and dynamic bilateral trade relationship with overwhelming benefit to the U.S.Among the considerable amount of goods exported to the U.A.E. every year from U.S. companies,

commercial aviation

- related products are the largest subset. According to a 2013 study commissioned by the U.S.

– U.A.E. Business Council and enclosed as an addendum to this letter , U.A.E. airlines generate $16 billion of U.S. economic activity annually that now support s nearly half a million jobs. A subsequent 2014 Business Council report on the commercial aviation relationship between the two countries (also enclosed for your review) highlights over $130 billi on in sales of Boeing aircraft and GE engines at the 2013 Dubai Air Show alone

– all by U.A.E. carriers
. Emirates alone has recently committed to acquiring 300 GE 9X engines for its new 777X fleet, worth more than $20 billion in list price, not including new engines for existing 777s on order. The 150 Boeing 777X aircraft order valued at $76 billion (with purchase rights o f an additional 50 planes) is the largest aircraft order by value in the history of U
. S
. commercial aviation. The Big 3 U.S. airlines meanwhile are attacking Gulf carriers for receiving subsidies while ignoring the enormous amount of direct U
. S
. governm ent aid that they themselves receive and have received for decades. Since 2001 , U.S. carriers have received some $15 billion in direct cash pay ments and loan guarantees from the U.S. government
. According to reports, U.S. Big 3 partners such as Air France

- KLM, meanwhile , are gifted with 46 million euros from France as the country looks to increase its ever expanding stake and influence in the airline. Such government aid over the years includes pension fund bailouts and war risk insurance, as well as state or local tax breaks on jet fuel, office construction, and airport leases . In addition, since 2005, U.S. airlines have been consolidating at a rapid clip: America West with U.S. Airways, Northwest with Delta, Continental with United, AirTran with Southwest, and then, most recently, U.S. Airways with American (a merger that prompted a Justice Department antitrust lawsuit). Today, as a result of these consolidations, only four carriers handle 80 percent of U.S. airline seat capacity. We believe that the accusation s being made by the Big 3 are in

- fact a cover for fair competition, which is what truly threaten s to reduce their market share. B y actively lobbying against foreign carriers from gaining permits to establish footholds in the U.S. , domestic Carriers have been able to reap massive gains from consumers by placing a monopolistic premium on ticket sales

– directly hurting customers. This has in

turn also affected international gateway airports within the U.S., who would otherwise stand to benefit from direct flights to other markets. In conclusion , what the Big 3 are calling for is short sighted, protectionist, and hurts American consumers, American companies, and American jobs. The U.S.

– U.A.E. Business Council urge s you , therefore, to carefully consider the views of all stakeholders in this debate and to refrain from taking actions that limit competition in global aviation and undermine broader U.S. interests across the Middle East. In doing so, we urge you to s tand with virtually every other stakeholder in U.S. commercial aviation

– from U.S. airports and the communities they serve, to travel and hospitality companies, to tourist and business travelers, to express delivery providers and cargo airlines. Thank you for your commitment, time, and attention to this important matter. S incerely,

Danny E. Sebright President

## “Hot Air at 30,000 Feet” **– What the Big 3 U.S. Airlines**  **Aren’t Telling You about Open Skies**  **“Stop Complaining and Start Competing”** The “Big 3” U.S. airlines ’ campaign against “Open Skies” is designed to distract attention from their control over 80% of all international flights, including their major international alliances, and the Big 3’s attempts to stop real competition in global air services. Simply put, U.S. airlines should stop complaining and start competing
. Since facts do matter, the U.S.

– U.A.E. Business Council wanted to share some important truths about the Open Skies debate. **“Clueless in Atlanta” -**  **The World is Changing but U.S. Airlines Are N ot**  Global travel and trade patterns are shifting dramatically. The fastest growing regions now are Africa, Asia and the Middle East. The U.A.E. sits right in the middle

– an 8 hour flight to 5.5 billion people. In 1993, more than 73% of global air traff ic was on European or U.S. airlines but by 2033 that proportion will sink to 38%. A 2014 report by the International Air Transport Association (IATA), which forecasts air travel growth over the next 20 years, made the following conclusions:
 India and Indon esia will be two of the five fastest growing markets in terms of additional passenger demand.  Eight of the ten fastest

- growing markets in percentage terms will be in Africa.  Asian and South American destinations will see the fastest “country pair” segment growth. UAE airlines, with hubs in Dubai and Abu Dhabi, are uniquely positioned

– geographically and strategically with their long

- range fleets of wide

- body aircraft

– to take advantage of this shift in passenger demand. The Big 3 ignored this opportunit y, focusing instead on building their U.S. oligopoly and gaining record profits. Instead of competing for these passengers directly, U.S. airlines decided to feed millions of passengers a year to their European partners, where they can collectively fix f ares and control capacity with anti

- trust immunity provided by the U.S. and EU. **“Looking in all the Wrong Places” -**  **The Biggest Subsidies are on the U.S. Airlines Own Balance Sheets**  Before complaining about government support for international competitors , the Big 3 may first want to check their own balance sheets. Since 2006 alone, the Big 3 have transferred billions of dollars of pension liabilities directly to Uncle Sam while leaving creditors holding the bag for billions more through multiple bankruptcies. They received billions of dollars in cash payments and guaranteed loans in a direct government bailout while enjoying the advantages of antitrust immunity to fix transatlantic fares with their European partners.

### “Who’s Afraid of Some Real Compet**ition?” -**  **Protectionis m is the Biggest Subsidy of All** 

The Big 3 U.S. airline oligopoly has built a fortress around the U.S. market, the world’s largest. International airlines can’t fly between two U.S. cities , can’t buy majority stakes in U.S. airlines and have very limited rights to fly passengers between the U.S. and a third country. For U.S. consumers, this means less choice, worse service and higher prices. For U.S. airlines, this means record profits. **“Complaining All the Way to the Bank” -**  **U.S. Airlines Make Record Profits** This month, the Big 3 U.S. carriers all reported record earnings. The U.S. airlines kept their planes full as they reaped the benefits of lower fuel prices and their years

-long dr ive to consolidate the industry into fewer, bigger carriers. As the New York Times reported, “For passengers, the downside was that airlines are reaching these records by also increasing fares, packing flights and increasing revenue via baggage and other fees.” Low fuel costs have been a windfall for the nation's airlines. But their passengers get virtually none of the savings. As CNN reported, “The four major [U.S.] carriers saved a combined $3.4 billion on fuel in the first three months of the year according to their financial reports . . . lower fuel prices shaved their cost by 33%, when compared to last year. . .But the average fare paid to fly... in the quarter fell only 66 cents to $192.39.” **“Service Matters” –**  **Passengers Rate U.A.E. Airlines among th e Best, U.S. Airlines among**  **the Worst** Passengers are choosing U.A.E. airlines because of better service and more convenient connections. According to Skytrax, a research firm, the U.A.E. airlines both ranked in the top 5 among passengers. The highest placed U.S. airline was Delta at 49 th



### . **“Where the Jobs Are” –**  **Part 1** According to a 2013 study commissioned by the U.S.

- U.AE. Business Council, U.A.E. airlines generate $16 billion of U.S. economic activity annually that supports over 100,000 American jo bs. In addition, since 2000 the U.A.E. airlines have been the largest international buyers of American commercial aircraft, with deliveries and orders valued at more than $200 billion, which directly supports hundreds of thousands of jobs in the American aerospace industry. **“Where the Jobs Are” –**  **Part 2** The U.A.E. has been the largest export market for U.S. in the MENA region for six years straight. In 2014 the U.S. had a trade surplus of over $19 billion with the U.A.E., exports that support more th an 220,000 American jobs. **“Who Cares?” –**  **U.S. Airports, Hotels, Travel Leaders, Passengers and Cargo Carriers** The Big 3 are spending more than $10 million on their disinformation campaign, but take a careful look at who has lined up against them: U.S. airports, U.S. travel and tourism leaders, U.S. cargo carriers, U.S. fliers and even other U.S. passenger airlines like JetBlue. “They [the Big 3] believe they have little to risk by limiting foreign carrier access to U.S. markets. What they want is for the U.S. government to protect them from competition from able, attractive new entrants.”

— David Bronczek, FedEx President and CEO “Against the backdrop of America’s windfall of increased flights bringing overseas visitors and generating economic activity and US travel and tourism jobs . The views of the three complaining US carriers, one of which, Delta, ironically enjoys a tremendous fifth

- freedom franchise of its own in

### Japan, do not represent the views of entire US aviation industry.”

—Robin Hayes, JetBlue President

and CEO **“Who Pays?” -**  **Higher Fares, Worse Service, Fewer Choices for Consumers** “Make no mistake: If American, Delta and United succeed in limiting Open Skies in one market, it will destroy the very foundation of Open Skies around the world. Then we’d be back to an era of regulated aviation, higher fares and fewer consumer choices.”

— Roger Dow, president and CEO, U.S . Travel Association **“Friends Matter” –**  **U.S. and U.A.E. Security Ties** The U.A.E has fought with U.S. forces in six coalition campaigns

— including fighting terrorists in Afghanistan for more than 12 years

—and thousands of U.S. troops are stationed in the U .A.E. “...it goes without saying that they [the U.A.E.] are really one of our most important, closest partners today in the region. And they have been there in every important significant international security operation going back more than 20 years... So that part of the relationship is superb.”

—U.S. Ambassador to the U.A.E., Barbara Leaf “Their many contributions to collective defense and their close military ties over decades mark U.A.E. as one of our strongest friends within the region, deserv ing of our continued close engagement and tangible FMS support.”

—Gen. James Mattis, Marine Corps Commander, U.S. Central Command **“Open Skies, Closed Case” –**  **U.S. Airlines Have No Claim to Review Open Skies** The U.S.

- U.A.E. Open Skies Agreement addresses air traffic landing rights and lowering regulatory burdens on airlines. It does not address sources of airline financing or government support. For example, there is nothing in the agreement prohibiting U.S. government

- granted antitrust immunity, bankruptcy protection or pension relief for U.S. airlines. The Big 3 U.S. airlines would also mistakenly apply World Trade Organization definitions of subsidies to a bilateral aviation agreement. But aviation rights and air services are explicitly excluded from the WTO under the GATS treaty

– a position strongly supported by both the U.S. airlines and the U.S. government.

### U.S. **- U.A.E. Business Council releases 2014 Update on U.S.**  **- U.A.E. Commercial Aviation Ties** 

June 4, 2014 The U.S.

- U.A.E. Business Council is pleased to announce the release of the ‘**U.S. -**  **U.A.E. Commercial**  **Aviation Update:**  **Flying Higher**  ’ repor t in conjunction with the launch of non

- stop Etihad Airways service between Abu Dhabi International Airport (AUH) and Los Angeles International Airport (LAX). The two

- page document expands on the findings of the Council’s ‘ **U.S. -**  **U.A.E. Commercial**  **Aviation: Taking**  **Flight** ’ report, released in March 2013. Since the last report, Dubai’s Emirates Airline has launched service to Washington, D.C. and Boston, Massachusetts, with plans to open its new Chicago route in August. Since last March, Abu Dhabi’s Etihad Airways has launched its own service to Washington, D.C., started flights to LAX this month, and plans to open its new route to Dallas in December. The 2014 ‘**U.S. -**  **U.A.E. Commercial**  **Aviation Update:**  **Flying Higher**  **‘** report focuses on key developments underpinning bilateral commercial aviation tra de and commerce over the last year, including landmark sales of Boeing aircraft

– many with General Electric engines

– to U.A.E. global carriers Emirates Airline, Etihad Airways, and regional flydubai during last November’s Dubai Airshow. The report also p rovides new data on the economic potential of new Emirati carrier route launches to markets around the U.S. and commercial opportunities for American companies in the U.A.E. The report delves further to explore burgeoning technical partnerships between Ame rican and Emirati companies set to service the aerospace supply chain with skills and products, infrastructure development and requirements ahead of the World Expo 2020 in Dubai, and modernization projects underway in the Northern Emirates to boost national commercial aviation offerings. **To view**  **the full**  **report, please**  **click HERE**  **or below.** 

- See more at: http://usuaebusiness.org/2014/06/u

- s - u - a - e - business

- council

- releases

- 2014

- update

- on - u - s - u - a - e co mmercial

- aviation

- ties/#sthash.ljUv3ANf.dpuf 

### Report: Growing U.S. **- U.A.E. Commercial Aviation Relationship Supports 100,000 American**  **Jobs; Contributes Over $16 Billion to U.S. Economy** March 27, 2013 182 nonstop flightsfrom nine U.S. gateways expected to carry 2.4 million passengers in 2013; highlighting the U.A.E.’s emergence as a regional hub for commerce and transportation Washington, D.C. (March 27, 2013)

– A new report, released today by the U.S.

- U.A.E. Business Council, finds that the increased non stop commercial airline service between the United Arab Emirates and United States is the fastest growing bilateral aviation relationship in the world. According to the report, flights between the United Arab Emirates (U.A.E.) and United States (U.S.) incr eased 1,500 percent since 2004. This increase is fueled by the rapid growth of the U.A.E.’s international airlines, Emirates and Etihad Airways, and new nonstop flights from U.S. cities to Abu Dhabi and Dubai. The report, “ U.S.

- U.A.E. Commercial Aviation: Taking Flight ,” analyzes the economic impact of the bilateral commercial aviation relationship between the two countries. The report found that in 2012 alone, Emirates and Etihad Airways’ procurement of American

- made commercial aircraft and parts in tandem with the launch of nonstop routes to and from U.S. cities, contributed more than $16 billion to the U.S. economy and supported approximately 100,000 jobs. The full report can be downloaded here: http://usuaebusiness.org/wp

- content/uploads/2013/03/US

- UAE

- aviation

report_Published.pdf

**- See more at:**  **http://usuaebusiness.org/2013/03/r eport**  **- growing** **- u**  **- s**  **- u**  **- a**  **- e**  **- commercial** **- aviation**  **- relationship**  **** **supports -**  **100000 -**  **american -**  **jobs -**  **contributes -**  **over -**  **16 -**  **billion -**  **to -**  **u -**  **s -**  **economy/#sthash.NkRRfQlQ.dpuf**

## Business Council Membership

**Founding:** Abu Dhabi Investment Authority (ADIA) Abu Dhabi National Oil Company (ADNOC) Abu Dhabi Ports Company (ADPC) Advanced Technology Investment Company (ATIC) AECOM Bechtel The Boeing Company BP CH 2M HILL DC Capital Partners DLA Piper D P World DynCorp International Emirates Airline Emirates Nuclear Energy Corporation (ENEC) Etihad Airways Etihad Rail Exxon Mobil First Gulf Bank Fluor Corporation General Electric Goldman Sachs Hillwood International Golden Group Jumeirah Group Lockheed Martin Masdar Mohebi Group Morgan Stanley Mubadala National Bank of Abu Dhabi (NBAD) Northrop Grumman Occidental Parsons Raytheon Senaat **Corporate:** Accenture Aerojet Rocketdyne AIG Property Casualty Akin Gump Strauss Hauer & Feld Alcoa Allen & Shariff Baker Botts Booz Allen Hamilton The Carlyle Group CDM Smith C3 Energy Citi Coca

- Cola The Cohen Group Cubic Corporation Dentons DMCC Dow Chemical DRS Du Dubai Economic Council (DEC) Dubai FDI Dubai International Financial Centre (DIFC) Electro Motive Diesel Eli Lilly FedEx FLIR Systems General Atomics Google Grosvenor Capital Management Guardian Industries Gulftainer The Harbour Group Harris Corporation Honeywell International IBM Jet Aviation Latham & Watkins L

- 3 Merck Merrick & Company MetLife Orbital ATK Oshkosh Corporation PepsiCo Pfizer Polaris Wir eless, Inc. Ras Al Khaimah Free Trade Zone (RAK FTZ) Rockwell Collins Sahouri Insurance Sharaf Group Sikorsky Aircraft Corporation Squire Patton Boggs STS Consulting TenCate Textron Systems Thuraya Telecommunications Company Truven Health Analytics Tyco Unison Agency UPS USAA Real Estate Company Viceroy Hotel Group Visa Westinghouse Electric Company Yahoo! Inc**Associate:**

American Center for GI Health and Wellness AMIDEAST Children’s Hospital of Philadelphia Children's National Medical Center Cleveland Clinic Houston Methodist Global Healthcare Services Mayo Clinic New York Institute of Technology New York University

– Abu Dhabi SAH Global St. Jude Children’s Research Hospital **Honorary:** Abu Dhabi Chamber of Commerce & Industry AmCham Abu Dhabi American Business Council of Dubai & the Northern Emirates Dubai Chamber of Commerce and Industry The Emirates Business Women Council Sharjah Chamber of Commerce and Industry