Trump Pledges Airlines Help in Feud Over Foreign Rivals’ Aid

Updated on
  • ‘Big league’ subsidies fuel some competition, president says
  • U.S. carriers have complained of Emirates, Etihad, Qatar Air

Southwest CEO Says Meeting With Trump Was 'Terrific'

President Donald Trump told U.S. airlines he would help them compete with foreign carriers that are aided by their governments, a crucial signal of White House support for an industry campaign that began in 2015.

“A lot of that competition is subsidized by governments, big league,” Trump said at a White House meeting Thursday with the nation’s largest airlines, air freight companies and airports. “I’ve heard that complaint from different people in this room. Probably about one hour after I got elected, I was inundated with calls from your industry and many other industries, because it’s a very unfair situation.”

Active involvement by Trump would answer two years of prodding by Delta Air Lines Inc.United Continental Holdings Inc. and American Airlines Group Inc. to act on claims that $50 billion in government support have enabled three Persian Gulf carriers to compete unfairly. While Trump didn’t name individual foreign companies, the U.S. airlines last week asked to meet with Secretary of State Rex Tillerson to discuss their allegations against Emirates, Etihad Airways PJSC and Qatar Airways Ltd.

Delta Chief Executive Officer Ed Bastian suggested a connection between opposition to alleged subsidies and Trump’s focus on job creation in the U.S.

“At Delta, we plan to hire 25,000 people over the next five years with the support of a level playing field globally,” Bastian said in a statement about the White House meeting.

Shares Rise

Etihad declined to comment. Representatives for Emirates and Qatar Air didn’t respond to requests for comment. The airlines have disputed the claims of their U.S. rivals.

A Bloomberg U.S. airlines index rose 2.2 percent at 1:15 p.m. in New York after earlier advancing as much as 2.7 percent for the biggest intraday gain in two weeks.

Trump made his comments as part of a wide-ranging discussion in which he also called for improvements to airports, roads and rails. He didn’t say what steps he might consider in regard to alleged aid. He said he’d seek to help domestic carriers while also encouraging investment by foreign airlines in the U.S.

For a look at Trump’s comments on the air-traffic system, click here

“We want to make life good for them also,” he said. “They come with big investments. In many cases, those investments are made by their governments, but they are still big investments.”

Boeing Sales

In bringing up airline subsidies, Trump is wading into a fight that pits the interests of the biggest U.S. passenger carriers against those of Boeing Co., the country’s top exporter. The Persian Gulf trio are the largest customers of Boeing’s wide-body jetliners, accounting for nearly one-third of the order backlog, according to data compiled by Bloomberg Intelligence.

The Obama administration said it would hold discussions with Qatar and the United Arab Emirates last year but never took formal action. The airlines want the U.S. to convene talks on whether the subsidies violate international agreements governing air travel. Some companies at the Thursday meeting, including JetBlue Airways Corp. and FedEx Corp., oppose such talks.

“We are particularly gratified that President Trump is focused on longstanding trade violations by the U.A.E. and Qatar that are costing American jobs,” said Jill Zuckman, a spokeswoman for the Partnership for Open & Fair Skies, which represents the three biggest U.S. carriers and several airline unions.

‘Obsolete’ Infrastructure

Trump also said much of the nation’s transportation infrastructure needed significant improvements.

“We have an obsolete plane system, we have obsolete trains, we have obsolete airports, we have bad roads,” he said. “And we’re going to change all that.”

He also called the air-traffic control system “outdated.” Southwest Airlines Co. Chief Executive Officer Gary Kelly urged the government to get out of the system, a position supported by most major airlines except Delta. The conversation with Trump was focused on infrastructure investment, regulation and “the overall need to reduce the tax burden, and especially for aviation,” Kelly told Bloomberg Television.

Trump promised broad-based help on those fronts.

“You people are regulated probably as much as anybody,” he told the executives. “We’re going to be announcing something I would say over the two or three weeks that will be phenomenal in terms of tax and developing our aviation infrastructure.”

The president’s Jan. 27 order barring U.S. entry for refugees and visitors from seven predominantly Muslim countries didn’t come up in the meeting, Kelly said. A federal appeals court is considering whether to reinstate the ban, which was temporarily blocked by a federal judge on Feb. 3.

— With assistance by Deena Kamel, Michael Sasso, Julie Johnsson, and Alan Levin

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