Comment
U.S. barriers to regional airline expansion
July 1st 2016
As the U.S. presidential election approaches on November 8, an issue of concern for Asia-Pacific airlines is the fate of the Trans-Pacific Partnership Agreement (TPPA), a groundbreaking regional free trade agreement that was formally signed in New Zealand last February. Read More » Signatories to the TPPA were the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.
Republican presidential contender, Donald Trump, has said he will dump the TPPA if he is elected. Democratic presidential candidate, Hillary Clinton, favoured the TPPA when she was U.S. secretary of state. She changed her mind earlier this year to counter support that then rival Democratic candidate, Bernie Sanders, had garnered by opposing the TPPA.
Since then, the Democratic Party has voted against an amendment to a platform that would have opposed the TPPA, but said any trade deal must protect workers and the environment.
Asia-Pacific supporters of the TPPA regard it as critical to the region’s economic growth - and therefore air traffic expansion. But there is a growing fear, exemplified by the visit to Washington DC by Singapore prime minister, Lee Hsien Loong, in August, that the pact won’t be ratified by President Obama and that it won’t see the light of day after he departs from office.
Adding to the uncertainty about future U.S. trade policy are indicators that U.S. aviation regulators are being pressured by special interest groups to roll back the open skies aviation policy the country has pursued for years. Open Skies critics in the U.S. believe the policy threatens American jobs and puts undue pressure on the big U.S. carriers, despite their booming businesses.
Examples supporting the changed U.S. position are attempts to halt the accelerating capacity foreign airlines, particularly from the Middle East, but also from Mainland China, want to put into North America. As well, discussions on an open skies treaty between the U.S. and China have stalled, with no resolution in sight.
Another indicator of a changed U.S. approach to liberal skies is the U.S. Department of Transportation’s (DoT) lengthy delay in approving the joint venture between Qantas Airways and American Airlines. Australia and New Zealand have approved the partnership, but it is felt the U.S. is holding off consent until the country’s aviation bureaucrats know who their president will be.
While no one wants to overreact to these separate sets of circumstances, if it is true that the U.S. is beginning to re-regulate to protect its own airlines, then it would hardly be surprising if other nations did the same, including countries where U.S. carriers either do good business or where they want to build their businesses. And that includes the Asia-Pacific.
In an era where airlines are seeking more freedom to operate across borders rather than less, a new wave of U.S. aviation protectionism would be a grim prospect indeed, particularly if airlines in the world’s largest future market decided to retaliate against a retrograde U.S. aviation policy.
