Open skies worth keeping

Jazz Shaw of Hot Air gives an excellent overview of the benefits of Open Skies policies and how these policies will benefit the American people. The article also exposes the arguments against these agreements as nothing more than an attempt by large US companies to gain extra-market profits.

I do take a different view on whether foreign governments subsidizing domestic industries is a problem, however, what is not debatable is that Open Skies policies are good for the American economy and must be supported by the current Administration.

The best way to help American business is to cut taxes and regulations and support policies that oppose overregulation by the federal government, such as Open Skies.

Read the article here and below:

If you’re not familiar with America’s Open Skies Agreements you might want to bring yourself up to date. Begun under Bill Clinton in 1992, they are a series of agreements regarding international commercial air travel which we’ve entered into for more than the past quarter century. (You can read a good summary and access lists of the applicable agreements at the State Department website.) What the Open Skies plan essentially does is allow the airlines of various countries to fly international routes freely with the ability to openly compete against each other for customers. We currently have such agreements with more than 120 “partners” ranging from individual nations to large, collective trading groups like the EU.

While far from perfect, the benefits to American travelers from these agreements are obvious. First, they limit government meddling in the free market. Air travelers benefit from the competition because, while domestic fares tend to keep rising, international flights covered by Open Skies agreements have seen fares decrease by up to 30%. This tends to increase international tourism, benefitting both countries as tourists spend more money on holiday travel.

So why are the major American air carriers lobbying so hard to roll back or eliminate these agreements? Zach Almond at the American Spectator points out what should already be obvious.

T]he Big 3 airlines — Delta, United, and American-US Air — are unconcerned.
 
They want plane protectionism and they want it now, both because they don’t like the competition on international routes and because Open Skies agreements are also agreements for governments not to issue subsidies — which our domestic airlines have been known to chase in down markets.
 
So they’re lobbying for the government to put the kibosh to agreements, which would further depress travel, which would make their lobbyists’ job of pressing for subsidies, perks, and bailouts both legal and easier.
 
We can admire the stunning, naked cynicism of this ploy. It’s worthy of a mention on House of Cards or other shows about political intrigue at the expense of the national interest. But what it’s not worthy of is our, or our government’s, support.

No discussion of this topic would be complete without pointing out some of the darker and more problematic aspects of these agreements. We’ve engaged in these contracts with some fairly shady characters, including state-sponsored airlines from countries with dubious (if not simply awful) human rights records, ties to terrorism and all the rest. Consumers sending their travel dollars to such nations have the right to do so but should be aware of where their money is going.

Also, the “fair trade” aspect is problematic in many instances. While our domestic carriers are nothing to write home about and we barely have any competition due to massive corporate mergers, many foreign countries heavily subsidize their airlines so they have a decidedly unfair competitive advantage. This is particularly true of places like Saudi Arabia, China and many members of the EU who have decidedly socialist leanings.

But is that enough of a reason to abandon such agreements? It’s better to simply ensure that travelers are aware of these problem areas and let them vote with their own wallets accordingly. Further, prices for international travel on the big American carriers would immediately skyrocket without the competition. It’s possible that we could consider terminating agreements with some of the worst offenders on a case by case basis if no other resolution available. If there is some broader remedy needed, it’s pressure from the White House and the State Department to discourage our partners from using such subsidies to unfairly undercut market prices. We reached precisely such an agreement with Qatar in January after they had been subsidizing their airlines for decades. A diplomatic resolution like that is far better than the total abandonment of the many Open Skies agreements currently in place.