alexrg
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Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Sun Mar 19, 2017 7:12 pm

I've seen several articles published over the last couple of days on some airline industry blogs regarding how it is hypocritical for the US airline industry to be for EAS subsidies but against subsidized Gulf carriers. Two examples:

http://liveandletsfly.boardingarea.com/ ... subsidies/
http://onemileatatime.boardingarea.com/ ... -argument/

I would disagree with the opinion that since EAS and the Gulf carriers both involve subsidies of some kind means it's wrong to be for one and against the other. EAS is intended to provide areas without air service to areas without it, while it can be argued that subsidies given to Gulf carriers by their respective governments are intended to give them an advantage over their competitors (say what you want about this argument). The reality is that these subsidies are very different from one another and it doesn't make sense to argue that being for one and against the other is somehow hypocritical or only being for something when it benefits you.

What do you think? Is it wrong to be for some subsidies but against others, or is it wrong to consider the two subsidies similar and thereby argue that it's hypocritical to be for EAS but be against government subsidies to Gulf carriers?
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rbavfan
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Sun Mar 19, 2017 7:25 pm

alexrg wrote:
I've seen several articles published over the last couple of days on some airline industry blogs regarding how it is hypocritical for the US airline industry to be for EAS subsidies but against subsidized Gulf carriers. Two examples:

http://liveandletsfly.boardingarea.com/ ... subsidies/
http://onemileatatime.boardingarea.com/ ... -argument/

I would disagree with the opinion that since EAS and the Gulf carriers both involve subsidies of some kind means it's wrong to be for one and against the other. EAS is intended to provide areas without air service to areas without it, while it can be argued that subsidies given to Gulf carriers by their respective governments are intended to give them an advantage over their competitors (say what you want about this argument). The reality is that these subsidies are very different from one another and it doesn't make sense to argue that being for one and against the other is somehow hypocritical or only being for something when it benefits you.

What do you think? Is it wrong to be for some subsidies but against others, or is it wrong to consider the two subsidies similar and thereby argue that it's hypocritical to be for EAS but be against government subsidies to Gulf carriers?


Ask some of the EAS carriers if the services "benefit" them. I would bet they would say no. It's supposed to be for airports where people getting to major cities for services are very hard due to mountains or other obstacles. Gulf carrier subsidies are for an entire airline to undercut competition. EAS routes are never multi airline routes and thus have no competition as there are to few passengers to allow for it. most are on very small under 30 seat aircraft.
Completely different subjects.
 
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enilria
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Sun Mar 19, 2017 10:12 pm

Not only is EAS the same thing, what's worse are airport revenue bonds. The USA carriers complain all the infrastructure of the ME3 is subsidized by the government. Airport Revenue Bonds in the USA are tax free (huge subsidy) and are backed up government credit because the USA is one of the few remaining large countries with government owned airports. The combination of both massively subsidizes the interest rate. They are routinely used not only for terminals, but other capital items used exclusively by a single airlines. Buildings such as airlines headquarters, airline offices, maintenance bases, hangars, etc are all financed with these subsidized bonds in the USA to the tune of probably $70-100 billion. 3 less points on the interest rate is a $3 billion annual subsidy.
 
sandyb123
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Sun Mar 19, 2017 10:17 pm

And... drum roll please; the ME3 aren't subsidized by the government.

SB123
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Varsity1
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 12:25 am

Didn't realize EAS was detrimentally dumping capacity on international routes.

eye roll
 
packmedic
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 1:24 am

I won't speak to the ME3 subsidies (I don't know enough about it) but I do not believe EAS is remotely similar to them. EAS is the difference between no service and service for a remote area. Take Adak, AK for example. At the very far end of the Aleutians, it's not possible to drive to Anchorage, or even the next island over! And the population can't sustain any kind of regular air service. It has twice weekly service to Anchorage on AS, subsidized through EAS. If it wasn't for EAS, there would be no air service on anybody! The people of Adak rely on the EAS service provided through Alaska Airlines to bring food, medical supplies, and more to the island.

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Aesma
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 1:53 am

Basically the US government/citizens consider it's good policy to spend money to support EAS communities.

Meanwhile the UAE governments consider it's good policy to spend money to support airlines which bring millions of people to their countries.
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jetero
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 2:48 am

enilria wrote:
Not only is EAS the same thing, what's worse are airport revenue bonds. The USA carriers complain all the infrastructure of the ME3 is subsidized by the government. Airport Revenue Bonds in the USA are tax free (huge subsidy) and are backed up government credit because the USA is one of the few remaining large countries with government owned airports. The combination of both massively subsidizes the interest rate. They are routinely used not only for terminals, but other capital items used exclusively by a single airlines. Buildings such as airlines headquarters, airline offices, maintenance bases, hangars, etc are all financed with these subsidized bonds in the USA to the tune of probably $70-100 billion. 3 less points on the interest rate is a $3 billion annual subsidy.


First off, from a domestic policy perspective I think you can make a distinction between preserving a remote U.S. city's access to the air transportation network and a foreign government effectively subsidizing airfares from large U.S. gateways to India.

Second off, 300 basis points?! How about checking out the spreads between the LGA tax-exempt and taxable bonds? That's quite a spread you're giving, backwards airline. And it's the same tax treatment for any municipal bond for roadways, water and sewer infrastructure, transit--not specific to airports. But, sure, yeah, it's just the same as EK, QR, and EY. In fact, it's, as you say, WORSE.

And it's been a long time since airline HQs were built with municipal bonds. Going on 40 years as a matter of fact.

https://www.dmagazine.com/publications/ ... -airlines/

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drdisque
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 2:59 am

No current US Airline's (of any notable size) headquarters was built using airport bonds.
 
ikramerica
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 4:14 am

Varsity1 wrote:
Didn't realize EAS was detrimentally dumping capacity on international routes.

eye roll

Yep, EAS steals traffic from already well served markets by dumping capacity to drive out competitors. Everyone knows that.

Oh wait...

Anyway I'm against EAS in most cases and against anything but a small government airline serving a small country that otherwise wouldn't get squat.
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b747400erf
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 6:24 am

No gulf carrier competes on domestic routes. The comparison is not valid.
 
rbavfan
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 11:08 am

Aesma wrote:
Basically the US government/citizens consider it's good policy to spend money to support EAS communities.

Meanwhile the UAE governments consider it's good policy to spend money to support airlines which bring millions of people to their countries.



The difference would be similar to Saudia getting EAS for Riyadh-Madinah if it was in a mountain region thats in accessible & the government funding the route Riyadh-JFK. Inernal route within the country under EAS would be the same as US EAS setup. The US airlines would not get EAS payments to fly JFK- Riyadh which is an INTERNATIONAL ROUTE. So no they are not the same. Saudi Arabia or UAE can fund flights from points within their countries all they want and US airlines would not bitch about it. Subsidizing UAE to US flights they will.
 
c933103
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 3:53 pm

Come to think of it, yes some governments might have spent money in subsidizing their carrier and make them able to provide lower fare than others so as to attract visitors to visit or transit in their country, but it is what the government attempts to do in order to better their position. Thus, it also serve the purpose of better connect their place to the world.

I think it should be looked at in this way: if government of certain nation believes that having a carrier with extensive network will benefit their local economy and livinghood, even if the airline itself is making some losses from it, there are still every reason for the government to support the airline as long as the boost it provide to the airline is larger than that. I think if you treat the entire country as a corporation, it is somewhat similar to that in some larger corporation, the growth and survival of weaker department are supported by stronger department for the betterment of the entire corporation's benefit.
 
32andBelow
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 4:13 pm

c933103 wrote:
Come to think of it, yes some governments might have spent money in subsidizing their carrier and make them able to provide lower fare than others so as to attract visitors to visit or transit in their country, but it is what the government attempts to do in order to better their position. Thus, it also serve the purpose of better connect their place to the world.

I think it should be looked at in this way: if government of certain nation believes that having a carrier with extensive network will benefit their local economy and livinghood, even if the airline itself is making some losses from it, there are still every reason for the government to support the airline as long as the boost it provide to the airline is larger than that. I think if you treat the entire country as a corporation, it is somewhat similar to that in some larger corporation, the growth and survival of weaker department are supported by stronger department for the betterment of the entire corporation's benefit.

I agree with this. I don't think anyone in their right minds would want to travel to Dubai without very low fares.
 
dtw2hyd
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 4:51 pm

The second blogger is a well known Emirates fan boy, it is bit rich to talk about hypocrisy. He should stick to blogs on stretching miles.
 
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jnev3289
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 5:18 pm

32andBelow wrote:
c933103 wrote:
Come to think of it, yes some governments might have spent money in subsidizing their carrier and make them able to provide lower fare than others so as to attract visitors to visit or transit in their country, but it is what the government attempts to do in order to better their position. Thus, it also serve the purpose of better connect their place to the world.

I think it should be looked at in this way: if government of certain nation believes that having a carrier with extensive network will benefit their local economy and livinghood, even if the airline itself is making some losses from it, there are still every reason for the government to support the airline as long as the boost it provide to the airline is larger than that. I think if you treat the entire country as a corporation, it is somewhat similar to that in some larger corporation, the growth and survival of weaker department are supported by stronger department for the betterment of the entire corporation's benefit.

I agree with this. I don't think anyone in their right minds would want to travel to Dubai without very low fares.


That is hilarious! I'm perfectly sane and have visited Dubai every year since 2013 and had more and more fun each time. And yes, even my two moms visited last year and had a blast. Try opening your mind and you might find some things you'll like.
 
32andBelow
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 5:48 pm

190 degrees is not sane by any account.
 
BoeingGuy
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 11:04 pm

Varsity1 wrote:
Didn't realize EAS was detrimentally dumping capacity on international routes.

eye roll


You either didn't read, or didn't understand the OP's point. It's clear to me.

He's noting that the US3 may support subsidies for EAS when it benefits them to do so; yet protest subsidies for Gulf carriers because its'not in the US3's best interesting. In other words, I think he's asking if we feel this is a double standard. US3 carriers support subsidies when it's in their own best interest, but protest them when it's not.
 
cledaybuck
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 11:21 pm

BoeingGuy wrote:
Varsity1 wrote:
Didn't realize EAS was detrimentally dumping capacity on international routes.

eye roll


You either didn't read, or didn't understand the OP's point. It's clear to me.

He's noting that the US3 may support subsidies for EAS when it benefits them to do so; yet protest subsidies for Gulf carriers because its'not in the US3's best interesting. In other words, I think he's asking if we feel this is a double standard. US3 carriers support subsidies when it's in their own best interest, but protest them when it's not.
Yes, they do. The airlines are not politicians with deep beliefs, they are companies looking out for their bottom line. They will be for what is good for them and against what is not.
 
jetero
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Re: Is Being For EAS But Against Subsidized Gulf Carriers Really Hypocritical?

Mon Mar 20, 2017 11:31 pm

BoeingGuy wrote:
He's noting that the US3 may support subsidies for EAS when it benefits them to do so; yet protest subsidies for Gulf carriers because its'not in the US3's best interesting. In other words, I think he's asking if we feel this is a double standard. US3 carriers support subsidies when it's in their own best interest, but protest them when it's not.


Highly doubt any of the US3 support EAS except when they exit a market and are able to have someone backfill to minimize the short-term backlash. Long-term the writing is on the wall. Other than that, I'm sure they find them and the interline agreements to be a nuisance at best.

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