- REUTERS/Kevin Lamarque
The largest US airlines want the White House to intervene in the expansion of three huge Middle Eastern rivals, which they say is hurting business and jobs. Trump hasn’t taken up the cause. The Middle Eastern carriers – Emirates, Etihad, and Qatar – are big customers of Boeing’s. Trump’s family business also has strong ties and ambitions in the United Arab Emirates and Qatar.
America’s airline workers and CEOs are mad as hell. They face increasing competition from a group of foreign rivals that they say are government-supported, profiting off cheap labor, and abusing international agreements.
On the surface, it seems like a perfect opportunity for President Donald Trump to champion American workers and threaten to tear up another trade agreement, but so far he’s not biting. There are two reasons for this.
His focus on job creation is in manufacturing, not the services industry, and the airlines that are triggering the complaints hail from a part of the world where Trump has growing business ties.
What’s the issue?
Here’s the shorthand version of the feud: Since 2015, American, Delta, and United Airlines (the US3) have been complaining about competition from three huge and fast-growing Middle East-based rivals – Emirates, Etihad, and Qatar Airways (the ME3).
According to the US3, the ME3’s growth has been fueled by as much as $50 billion in subsidies over the past decade, allowing them to flood the international market and threaten the job security of US aviation workers. They also say the ME3 are in violation of the Open Skies agreements that govern air travel between the US and 120 nations including the UAE and Qatar.
They’re trying hard to get Trump’s attention. Last Sunday, a group of United Airlines employees, unions, and members of Congress held a protest at Newark Liberty International Airport in New Jersey in reaction to the launch of a new daily service by Emirates from Newark to Athens, Greece – a route that United flies during the summer. At the same time, a bipartisan group of 25 members of Congress from New York and New Jersey asked the White to block Emirates’ Newark-Athens route.
“It’s crystal clear that the US airlines and their employees are looking to President Trump to enforce our international agreements with the trade cheaters of the UAE and Qatar,” said Jill Zuckman, a spokeswoman for the lobbying group representing the US3 on this matter.
The ME3, as you might expect, rebut all this. They say US airlines have been bailed out and supported by government spending in the past, and that their own flights into the US create jobs and growth.
- REUTERS/Kevin Lamarque
From his early days on the campaign trail, Trump keyed in on a need for America to rebuild its once booming manufacturing sector. Time and time again, candidate Trump and then President Trump vowed to support American-made products.
The president has personally praised companies such as Ford, General Motors, United Technologies, and Intel for deciding to keep manufacturing operations in the US.
That extends to Boeing.
In February, when asked about US airlines’ request to block the entrance of Norwegian Air’s Irish subsidiary into the domestic market, White House press secretary Sean Spicer said:
“They’re flying Boeing planes. There is a huge economic interest that America has in that deal right now. I don’t want to get ahead of the president on that. But just to be clear, I mean, when you’re talking about US jobs – both in terms of the people who are serving those planes and the person who’s building those planes – that’s a very big difference.”
The difference here is that Boeing and its assembly plants in Washington state and South Carolina that produced the 120 737 and 787 jets in Norwegian’s Boeing-only fleet are the same plants that will build the 100 next-generation 737 MAX airliners Norwegian has on order with a list value of more than $11 billion.
After all, there are few visuals quite as representative of American industrial might as a shiny new Boeing jet.
The ME3 are big spenders
But Norwegian is small potatoes when compared with the economic might and sheer spending power of the ME3.
Take Emirates, for instance: The airline is one of Boeing’s most important and reliable customers. Emirates’ fleet of 160 Boeing 777s is the largest of its kind in the world and worth $45 billion.
To put things into perspective, if a 737 is the aeronautical equivalent of a $25,000 family sedan, then a 777 is a $100,000 Cadillac Escalade. And Emirates has been buying these “Cadillacs” in bulk, with orders for another $86 billion worth of Boeing 777 and next generation 777X airliners.
It’s not just Emirates. Collectively, the ME3 account for nearly 80% of the 306 777X aircraft Boeing has sold.
Then there are the engines, which Boeing does not make.
For Emirates, a larger number of its 777s are powered by General Electric GE90 engines. In 2015, Emirates signed a $16 billion deal with GE to provide maintenance for these engines. Even many of the non-American aircraft Emirates, Etihad, and Qatar fly are powered by American-made engines, built by a Connecticut-based joint venture between GE and Pratt & Whitney, called Engine Alliance.
Put it all together, and the three airlines hold more than $150 billion worth of economic power that will keep Boeing’s assembly lines rolling for the next decade and beyond.
Despite the vastness and importance of the airline industry, the Trump administration’s focus on manufacturing, that shining image of US industrial supremacy, takes precedence. After all, why antagonize some of the most lucrative customers for America’s most recognizable industrial export?
It’s also worth raising the issue of the Trump Organization’s business interests in the United Arab Emirates. These business dealings have been the subject of criticism from the president’s detractors.
In February, the president’s two adult sons, Eric and Donald Jr., presided over the opening of the latest Trump-branded golf course, the Trump International Golf Club Dubai.
The course, located a stone’s throw away from downtown Dubai, was developed by Hussain Sajwani, a billionaire and Trump family friend, and his Dubai-based DAMAC Properties. According to Reuters, DAMAC pays the Trump Organization a licensing fee to use the Trump brand on the facility, which features a 30,000-square-foot clubhouse, four restaurants, state-of-the-art recreation facilities, and a 7,300-yard, par-71 golf course designed by Gil Hanse.
DAMAC is also developing a second Trump-branded golf course in the emirate, called the Trump World Golf Club Dubai, which will feature an 18-hole championship course designed by Tiger Woods. In 2015 and 2016, DAMAC paid the Trump Organization as much as $10 million, Bloomberg reported.
- REUTERS/William Maclean
The tiny emirate of Dubai has blossomed over the past couple of decades under the guidance of its ruler, Sheikh Mohammed bin Rashid al Maktoum, and revolves around its government, ruled by the house of al Maktoum.
Infrastructure, land, and real-estate development are all part of the ruling family’s efforts to brand Dubai as a global hub for trade and commerce, and the heart of this international marketing effort is Dubai’s most recognizable and effective branding tool: Emirates, and its shining fleet of jumbo jets.
It’s not just Dubai either. Neighboring Abu Dhabi, where Etihad is based, and Qatar to the north are doing much of the same – including building hotels and golf courses that might carry the Trump name. According to Hotelier Middle East, in 2015, Ivanka Trump said the organization was looking at “multiple opportunities” in Abu Dhabi, Qatar, and Saudi Arabia.
On a practical level, Emirates is also the how the world’s golfers will find their way to Trump’s Dubai properties. And according to a passenger on the flight, it’s how Eric and Donald Jr. made their way back to New York from Dubai.
It’s still early, and it’s entirely possible the White House could take up the concerns raised by American, Delta, and United.
If it doesn’t, we have a good idea why.