Robert Silk
The U.S. has long been the leading champion for free markets in global aviation. However, the Trump administration has begun to walk back that approach. The travel industry should be concerned.
Since mid-September the administration has issued three orders related to international air travel that are protectionist in nature. The first came on Sept. 15, when the DOT ordered Delta and Aeromexico to dissolve their antitrust-immune joint venture by Jan. 1, citing anticompetitive impacts of Mexican government measures that reduced passenger flights and barred cargo flights at the primary Mexico City airport.
Then on Oct. 9, the department ordered Chinese carriers to halt overflying of Russia on U.S. service, citing the fact that it disadvantages U.S. airlines, which aren't allowed to pass through Russian airspace.
And on Oct. 28 the DOT ratcheted up its pressure campaign on Mexico, ordering the cessation of two Aeromexico transborder routes from Felipe Angeles Airport near Mexico City and blocking nine planned transborder routes by Mexican airlines from Mexico City or Felipe Angeles.
Looked at in combination, these decision indicate a clear extension of the president's protectionist agenda into the aviation realm. And anyone interested in open aviation markets should read with wariness the way the DOT framed the Aeromexico-Delta ruling, A press release referred to the decision as an enforcement of the "America first agenda in our skies," and it included an ominous warning: "President Trump and secretary Duffy are taking note of multiple other countries that are disregarding the terms of our air transport agreements," it said, referring to DOT secretary Sean Duffy.
The release went on to make a thinly veiled reference to the Netherlands, which has reduced flight capacity at Amsterdam's Schiphol Airport, a move geared officially toward noise abatement and perhaps unofficially toward emissions reductions.
The liberalization of international air travel, led by the U.S., has been a boon to consumers and airlines alike. Since 1992, the U.S. has put 138 bilateral Open Skies treaties in place, allowing for open access and market competition between airlines of each country, unconstrained by government-imposed flight caps.
Flyers also benefit from agreements similar to Open Skies between the U.S. and several other countries, Mexico among them.
The State Department website describes Open Skies treaties as "pro-consumer, pro-competition and pro-growth."
"Their provisions include reciprocal obligations to eliminate government intervention in commercial air carrier decisions about routes, capacity, frequencies and pricing, thereby freeing airlines to provide more affordable, convenient and efficient air services to consumers and shippers," the website reads.
In 2015, when the U.S. had only 98 Open Skies agreements, a Brookings Institution study found that they were generating $4 billion in annual savings to travelers, a figure that has surely ballooned since then.
The U.S. Travel Association, long a stalwart advocate of Open Skies regimes, has referred to them as "the most important policy tool for expanding choice and competition in international air travel."
Appropriately, Trump himself set a precedent for protecting free aviation markets during his first term when he brushed aside a relentless lobbying push by American, Delta and United for flight restrictions on Persian Gulf carriers Emirates, Qatar and Etihad.
But with this Trump administration pursuing a more muscular protectionist agenda, unfettered aviation markets are on their way to be the next domino to fall.
Airlines for America, which has a history of selectively advocating for protectionist policies, would do well to keep that potentiality in mind. Delta especially should have learned its lesson, as it's now appealing the order dissolving its joint venture with Aeromexico.
The rest of the travel industry should also keep its eyes wide open.