Final Exam Blog

One topic that I would like to revisit is the discussion about global airlines and whether or not foreign airlines are given an unfair advantage over the US carriers.  Under this topic I discussed how the Open Skies Agreement created a hands off policy by government in routes and pricing. The stipulation to this is the airline under the Open Skies Agreement must be self-sustaining and not receive government subsidies. Many US carriers said that airlines like Qatar Airways and Emirates are breaching the Open Skies Agreement. Emirates had to receive a bailout be the Investment Corporation of Dubai after a bad call on fuel hedging (Kane 2015).  Another topic that has US carriers on the fritz about foreign air carriers is their ability to buy aircraft at lower interest rates through the export-import bank (Simon 2014). I discussed how the export-import bank really helps Boeing compete with Airbus. The topic that I would like to discuss is the approval of US routes for Norwegian Air International. In this post I will discuss what exactly Norwegian Air does and what the new US approval for routes means. I would like to go over why there was a huge opposition to Norwegian Air being approved for routes in the US and who opposed it. I will then conclude with the question of whether or not Norwegian Air practices are right under the Open Skies Agreement and other opinions concerning their operations.

First off, it is very important to know that Norwegian Air International is a subsidiary of Norwegian Air Shuttle based in Norway, but created and located in Ireland. It is important to understand that the Norwegian Air brand name operates under four different operating certificates (Sumers 2016). Two of which are in Norway, one in Ireland and another in the UK. They all operate under the same name. Now Norwegian Air Shuttle has flown Europe to US routes since 2014 (Sumers 2016). As of December 2, 2016, the United States Department of Transportation has issued a final permit for flight into the Unites States with NAI’s Irish based operation. The Department of transportation stated, “Regardless of our appreciation of the public policy arguments raised by opponents, we have been advised that the law and our bilateral obligations leave us no avenue to reject this application (Martin 2016).” With the DOT’s approval, Norwegian Air’s Irish based operation can now fly into the United States. The new approval will add more routes to different cities in the Unites States. The Irish based Norwegian carrier can add more routes to the US (Sumers 2016).

Norwegian Air's US approval for the Irish airline has brought up many disputes between US carriers and organizations. Norwegian Air outsources most of its operations. For example, Norwegian Air  uses a hiring agency based in Singapore and bases the flight crews in Bangkok (Bachman & Matlack 2015). In addition they are hiring flight attendants based in the United States. By being a subsidiary of a carrier in Norway but operating out of Ireland, the airline can take advantage of the less strict labor laws, wage differences and decreased taxes in Ireland. Norway's tax and labor laws are more restrictive to the business (Mouawad 2016). By doing this they can have much cheaper ticket prices than US carriers. According to Jad Mouawad, Norwegian's Air Shuttle that had previous routes to the US from the Norway airline has had ticket prices of $509 between Oslo and Kennedy airport (US) while the same route offered by United Airlines was $895 (2014). This shows that despite being the Norway certificate operator and not the Irish subsidiary, the outsourcing of labor is still enough for decreased ticket prices.  The opposing party against Norwegian Air Internationals approval claims that the airline is not only trying to avoid the tax and labor laws of Norway but are essentially shopping around by outsourcing much of what they do in countries where the airline can save money (Bachman & Matlack 2015). The three major US air carriers strongly disapprove of the approval because they feel the business practices NAI operates under is a huge advantage (Jansen 2016). This advantage is feared by US air carriers because cheaper tickets will hurt their business as people will follow the cheaper tickets. Organizations such as the Air Line Pilots Association oppose the approval because it is feared that air line pilots and flight crews working under the US carriers will be hurt also. ALPA has also stated, "If one company is allowed to ignore the principles of U.S. air transport agreements, others will try to do so as well, and the result could jeopardize billions of dollars that airlines and their workers contribute to the U.S. economy (ALPA 2016)."

In my opinion, I don't feel that Norwegian Air's operating practices are a breach of the Open Skies Agreement. NAI doesn't receive government subsidies. The advantage they have are a result of business. There is nothing that states outsourcing is not allowed. Competition is fierce within the domains of the airline industry. According to Ted Reed, the profit margin of airlines is quite small, close to 0.1% (2013). That being said, it is quite easy to see why any kind of advantage in the airline industry would create some heated debate. However, as stated by the DOT, legally the US has no right to not allow the carrier to operate despite their operating practices. That being said I still don't condone these operating practices. If other carriers decide to follow these practices it would definitely hurt the US economy. If an airline decides to outsource everything they do, jobs would move over seas and in essence, airlines will search for the cheapest sources of labor. I think it goes without saying that safety is the highest priority. I think that the operating practices that Norwegian operates under needs to be looked over cautiously to make sure they are also doing everything in the bounds of regulations and safety if everything is outsourced in different countries. By having the majority of their practices outsourced to different countries it would be easy to have something overlooked where an airline that does everything in-house with the same country is easily watched over. At the end of the day, with Norwegian Air offering such low ticket prices I would foresee other airlines try to compete by lowering their ticket prices also. If this was to happen it would be good news for passengers as ticket prices would be lower.

References:

ALPA. (2016, July 28). ALPA Hails Congressional Opposition to Norwegian Air International. Retrieved December 13, 2016, from http://www.alpa.org/news-and-events/news-room/2016-04-28-ALPA-hails-congressional-opposition-norwegian-air-international

Bachman, J., & Matlack, C. (2015, February 12). Budget Airlines Shop the World for Cheaper Pilots. Retrieved December 13, 2016, from https://www.bloomberg.com/news/articles/2015-02-12/budget-airlines-shop-the-world-for-cheaper-pilots

Jansen, B. (2016, December 05). Norwegian Air plans U.S. expansion. Retrieved December 13, 2016, from http://www.usatoday.com/story/travel/flights/todayinthesky/2016/12/05/norwegian-air-plans-us-expansion/94986022/

 Kane, F. (2015, March 18). Emirates Airline president denies US rivals’ charges of government bailout over fuel losses | The National. Retrieved November 04, 2016, from http://www.thenational.ae/business/aviation/emirates-airline-president-denies-us-rivals-charges-of-government-bailout-over-fuel-losses 

Martin, H. (2016, December 2). Norwegian Air International gets final approval for flights to U.S., despite opposition. Retrieved December 13, 2016, from http://www.latimes.com/business/la-fi-norwegian-air-20161202-story.html

Mouawad, J. (2014, February 6). Long-Haul Expansion by a Norwegian Carrier Upsets U.S. Airlines. Retrieved December 13, 2016, from https://www.nytimes.com/2014/02/07/business/international/long-haul-expansion-by-a-norwegian-carrier-upsets-us-airlines.html?_r=1

Reed, T. (2013, February 25). Airlines, Not Yet Where They Want To Be, Make 21 Cents Per Passenger. Retrieved December 13, 2016, from http://www.forbes.com/sites/tedreed/2013/02/25/airlines-not-yet-where-they-want-to-be-make-21-cents-per-passenger/#1d0340ab2410

Simon, M. (2014, August 8). The Ex-Im Bank is hurting my business. Retrieved November 04, 2016, from http://www.chicagobusiness.com/article/20140808/OPINION/140809833/the-ex-im-bank-is-hurting-my-business 


Sumers, B. (2016, December 02). Approval of More Norwegian Air Flights Opens Door for Cheaper Transatlantic Travel. Retrieved December 13, 2016, from https://skift.com/2016/12/02/dot-approval-of-more-norwegian-air-flights-opens-door-for-cheaper-transatlantic-travel/

Job Plans and Topic Overview

Have my job plans changed after taking this course?

My previous job plans were to become a flight instructor and build my flight hours and experience. After building enough hours I had previously said that I would like to move on to the regional airlines. After taking this course, my job plans have not changed. I don't think they have changed nearly at all because it goes without saying that pilot wages are on the rise in the airlines and it is finally becoming a job that more people can find practical spending the large amounts of money up front on flight training. There were many guest speakers that discussed the rise of wages in the airlines and how many of us are coming into the industry at the right time. It is unknown how long this positive trend in aviation will continue. However, I am glad to be in it when I am. With that, my overall plans have not changed. I am also working towards my aircraft dispatch certificate on the side of flight training. I wouldn't mind having the chance to work as a dispatcher at some point in my aviation career. However, for now, my overall plans of working as a flight instructor and moving on to the regional airlines has not changed.

I will be graduating this upcoming April (winter 2017 semester). Upon graduation I will be looking to  get a job as a flight instructor. I find this to be the most efficient route to getting flight hours and experience in.

I feel like the most useful topic that we discussed in the course was the flight duty time regulations and whether or not cargo industry be exempt from them. I found this to be the most useful because I didn't exactly know all of the flight duty regulation changes. In order to examine the subject and formulate an opinion on whether or not the cargo industry should be exempt from the newer regulations, you must understand what the regulations are. In addition to helping me understand these regulations better, I felt as though these regulations affect me in a much more direct manner than all the other topics. While I am sure it can be argued most of the topics we covered would affect the industry and therefore my career also, I feel the flight duty time requirements affect me directly as they would govern my work days later on when I am able to have a career in the airlines.

I think the least useful topic that we went over was the Chinese competitor to Boeing and Airbus. I found that the topic itself was very interesting but there wasn't a great deal of discussion. I don't think this topic will effect myself and others as much as the other topics. I say this because Comac is a long ways out from becoming a huge competitor to both Boeing and Airbus. The fact that they have struggled getting certification from the FAA for some time now points to there being some kind of major problem in the certification process. The bottom line is Boeing and Airbus have been tested and proven time and time again. While it is interesting that China wants to join the competition in building aircraft, I feel it will be quite a long time before they would even impact the US.

Aviation Organizations

Aviation Organizations are important to the industry as a whole as they serve as a voice for their members on particular issues. Aviation organizations can help you in the segment of industry you are working in by fighting current topics with your industry in mind. There are a wide variety of aviation organizations out there that cover the different segments of the industry. From airline pilots, to airplane mechanics to the general aviation community, there is a organization that covers the segment of the industry you are in. By joining these organizations, it shows employers you are involved in the industry. In addition, organizations like the Aircraft Owners and Pilots association (AOPA) offer flight planning tools for pilots along with the ability to buy insurance with the membership. Therefore, organizations serve as an important tool in helping the aviation community you are involved in. Two specific organizations that would be important to belong to are the Air Line Pilots Association (ALPA) and the Aircraft Owners and Pilots Association (AOPA).

The Air Line Pilots Association (ALPA) is the largest airline pilot union in the world today. According to their website, their mission is "… to promote and champion all aspects of aviation safety, … to represent, in both specific and general respects, the collective interests of all pilots in commercial aviation; to assist in collective bargaining activities on behalf of all pilots represented by the association; to promote the health and welfare of the members of the association before all governmental agencies… (ALPA n.d.).  According to ALPA, the association serves three major functions for its members. The first function is in the form of airline safety and overall security which comes in the form of representation and searching for safety improvements in the industry. According to the website, they have accident investigators that help the National transportation safety board in an effort to promote safety. The second function includes representation by negotiating contracts which involve salary's, and benefits. The final role that ALPA lists is advocacy which involves representing pilots' views to congress, the White House and other federal agencies (ALPA n.d.). This is important because these are the areas of government that decide on many of the regulations that come into play. It is important to have someone representing pilots' interests in these decisions. ALPA has a huge role in the overall industry. One of the roles of ALPA is to create safety and security in the industry. ALPA as stated above is one of the largest pilot unions in the world today and with that they have a big voice in current issues and changes with regulations. One example, was the third class medical reform, where ALPA opposed the reform prior to it being passed (Pope 2015).

The other organization that I am currently in is the Aircraft Owners and Pilots Association (AOPA). I think this is a really important organization to be apart of as a pilot currently involved in General Aviation because the large amount of tools and services they offer to the community.  These tools include airport directories, flight planning software, weather data and many others. According to AOPA, they represent the largest aviation community in the world and they represent pilots in seventy-five different countries (AOPA "About." n.d.). AOPA lists its mission as advocating for its members, educating both pilots and policy makers, supporting actives that foster the development of General Aviation, fighting for the right to keep General Aviation available and securing resources (AOPA "Mission, vision and values." n.d.). AOPA also shows huge support for other sectors of the aviation industry. They help protect and represent airports and airspace in the US along with providing support for aircraft owners and certification that goes along with the aircraft. In regards to airports, AOPA offers resources for airport managers also (Moore 2014).

It will be very important to belong to these organizations as I engage more in my aviation career. It will be important to join the Air Line Pilots Association because they have a big voice in representing the views and collected interests of airline pilots to congress and government agencies. The representation in regards to pilot contracts in salaries and working conditions will directly effect me as a pilot interested in the airline career. In addition, AOPA is a valuable organization to a pilot such as myself because they provide tools that I can currently use for everyday flights and they support the airports that I fly into day in and day out while in flight training. Their representation for General Aviation is important because in the midst of all the commercial areas of the industry, the General Aviation community is sometimes overlooked. AOPA provides the support and representation GA pilots need.


References:
ALPA. (n.d.). What we do. Retrieved November 28, 2016, from http://www.alpa.org/about-alpa/what-we-do2

AOPA. (n.d.). About. Retrieved November 28, 2016, from https://www.aopa.org/about

AOPA. (n.d.). AOPA's Mission, Vision and Values. Retrieved November 28, 2016, from https://www.aopa.org/about/mission-vision-and-values

Moore, J. (2014, June 19). AOPA offers resources for airport managers. Retrieved November 28, 2016, from https://www.aopa.org/news-and-media/all-news/2014/june/19/aopa-networking-nh

Pope, S. (2015, July 28). ALPA Moves To Block Medical Reform Bill. Retrieved November 28, 2016, from http://www.flyingmag.com/news/alpa-moves-block-medical-reform-bill

Aviation Emissions

The idea of aviation emissions is nothing short of new. Statistics can show that over time these emissions are only expected to continue. In order to fully understand the topic at hand, one must understand what exactly emissions are. Carbon dioxide is a by-product of burning jet fuel. Jet fuel has carbon in it and when it is burned in an aircraft engine, the carbon is released to combine with oxygen in the air (David Suzuki Foundation n.d.). This in turn creates carbon dioxide. Carbon dioxide is a major greenhouse gas that is released into the atmosphere by people and our machines. Carbon dioxide is one of many gases that trap the solar radiation the sun gives out in our planet (Platt 2013). This trapping effect warms the planet. Other harmful products released when burning jet fuel include nitrous oxides, soot and sulphate (Platt 2013).

 Statistically speaking, aviation does in fact produce a large amount of emissions. According to the David Suzuki Foundation, "It accounts for four to nine percent of the total climate change impact of human activity (n.d.)." The increased demand in the ever-changing aviation industry have increased flights and therefore the emissions also. In fact, the International Council on Clean Transportation has stated, "if commercial aviation were a country, it would rank seventh in global greenhouse gas emissions…(Brown 2014)." Looking at carbon dioxide levels, it looks like the aviation industry contributes around 12% of the carbon dioxide emissions out of all transport methods (ATAG n.d.). One can further understand the emissions created by aviation by comparing it to another mode of transportation that we are all very familiar with; driving. An environmental news website called Grist.org calculated the difference in the carbon dioxide levels between flying and driving from Philadelphia to Boston. They calculated that a plane would produce 184 kilograms of carbon dioxide per person and a entire medium sized car would produce only 104 kilograms of carbon dioxide (Earth Talk 2016).  In addition to this whole idea, a european consultant agency called CE Delft, found that flights that consisted of 1500 kilometers are about fifty percent worse than a petrol car for each passenger per kilometer (economist 2006). However, putting this in perspective, the 1500 kilometer flights that airlines do are not practical for any other form of aviation. With that, 80% of the emissions produced by the aviation industry are these long haul flights (ATAG n.d.). Currently, the only way to lower the emissions in aircraft is to be more efficient by burning less gas. There has been some research into alternative fuels like fuels made out of things like algae which would lower the emissions (ATAG n.d.). One thing I think is very important to note is that according to the Air Transport Action Group, the jets today are 80% more fuel efficient per seat kilometer than in 1960 (n.d.). Therefore, we have certainly come a long way and I'd be willing to bet the trend will only continue. The increase in number of flights throughout the years may be one reason for increased emissions.

The United Nations came to an agreement on aircraft emissions on October 6, 2016. The fact that they ratified such an agreement is big news in that the aviation industry is the first industry to have a worldwide pact to control emissions. This agreement will only apply to international flights. The entire system is voluntary from 2021-2027 and then become mandatory from 2028 to 2035 (Lowy 2016). Basically, the levels of emissions in the year 2020 will be recorded and used as a cap for airlines. If an airline goes over this cap they will have to purchase credits for more emissions (Lowy 2016). The United States and China have both agreed to join in on this initiative in its voluntary stage which is important because both produce the most emissions (Milman 2016).

The Paris Agreement is another agreement that deals with the reduction of emissions. According to the European Commission, the deal is set to limit the increase in temperature to 1.5 degrees celsius and for each country to reduce their emissions in order to decrease the global emissions (European Commission n.d.). The agreement was set forth on November 4, 2016 (Guardian News 2016). However, our new president elect creates a great uncertainty into what will happen in regards to the Paris Agreement. Donald Trump has said, "Any regulation that's outdated, unnecessary, bad for workers or contrary to the national interest will be scrapped and scrapped completely (BBC News 2016)." He has said that he wants more drilling, an approval of a Keystone pipeline from Canada and less regulations (BBC News 2016). That being said, one could say that he thinks less restrictive regulations and more drilling will help the U.S. economy. It is very hard to sit down and know what exactly he will do while in office. However, if he plans to withdraw from the Paris Agreement as he has said it is likely that other nations will also withdraw. In addition, it is likely many countries would be angered by the U.S. withdrawing from the Paris agreement as it shows a lack of concern for the global climate (U.S. News & World report 2016).

In my opinion, I think lowering emissions is important for all industries. It is important to consider the future and acknowledge the fact there are consequences from all of our actions. However, in the current time I don't know if the the United Nations agreement of airlines using carbon credits is the most effective way to handle the issue. Aviation has simply increased more and more over years. By using this credit system, I think you can only limit your emissions to a point. In the long run it comes down to engine efficiencies or alternative fuels. Also, I think that airlines will most likely burn right through their credits early because of increases in air transportation. I definitely think more money and time can be put on creating more efficient engines. We have come a long way in terms of engine efficiencies as it is. Therefore, I wouldn't say it was necessarily a over reaction. I think these laws are definitely important steps in agreeing and coming to a consensus that something needs to be done to preserve our climate. However, when it comes down to it, engine efficiency is what is important. These increases in efficiencies will only come in time.



References:

ATAG-Air Transport Action Group. (n.d.). Facts & Figures - Air Transport Action Group (ATAG). Retrieved November 17, 2016, from http://www.atag.org/facts-and-figures.html

BBC News. (2016, May 27). Donald Trump would 'cancel' Paris climate deal. Retrieved November 17, 2016, from http://www.bbc.com/news/election-us-2016-36401174

Brown, V. (2014, January 2). Aviation industry faces pressure to curb emissions. Retrieved November 17, 2016, from http://www.dailyclimate.org/tdc-newsroom/2015/01/aviation-climate-impact

David Suzuki Foundation. (n.d.). Air travel and climate change. Retrieved November 17, 2016, from http://www.davidsuzuki.org/issues/climate-change/science/climate-change-basics/air-travel-and-climate-change/

Earth Talk. (2016, March 24). Is flying or driving better for the environment? Retrieved November 17, 2016, from http://environment.about.com/od/greenlivingdesign/a/fly_vs_drive.htm

Economist. (2006, June 8). The dirty sky. Retrieved November 17, 2016, from http://www.economist.com/node/7038726

European Commission. (n.d.). Paris Agreement. Retrieved November 17, 2016, from https://ec.europa.eu/clima/policies/international/negotiations/paris/index_en.htm

Guardian News. (2016, November 13). Trump seeking quickest way to quit Paris climate agreement, says report. Retrieved November 17, 2016, from https://www.theguardian.com/us-news/2016/nov/13/trump-looking-at-quickest-way-to-quit-paris-climate-agreement-says-report

Lowy, J. (2016, October 6). UN agreement reached on aircraft climate-change emissions. Retrieved November 17, 2016, from http://bigstory.ap.org/article/6be5cb930f7b4ecbb24ec79219a74225/un-agreement-reached-aircraft-climate-change-emissions

Milman, O. (2016, October 06). First deal to curb aviation emissions agreed in landmark UN accord. Retrieved November 17, 2016, from https://www.theguardian.com/environment/2016/oct/06/aviation-emissions-agreement-united-nations

Platt, J. (2013, October 9). CO2 101: Why is carbon dioxide bad? Retrieved November 17, 2016, from http://www.mnn.com/earth-matters/climate-weather/stories/co2-101-why-is-carbon-dioxide-bad

U.S. News & World Report. (2016, November 14). What if Trump Pulls U.S. Out of Paris Agreement on Climate Change? Retrieved November 17, 2016, from http://www.usnews.com/news/national-news/articles/2016-11-14/what-could-the-world-do-if-trump-pulls-us-out-of-paris-agreement-on-climate-change

Global Airlines

US airlines have been sparking some heated debate with foreign long-haul air carriers claiming that their success is a result of government subsidiaries. In other words, major US airlines are claiming that the foreign air carriers are breaking the open skies agreement by being supplied with government subsidies in some particular way. In order to better understand the debate, I will first discuss the US-UAE Open Skies Agreement.

The Open Skies Agreements "are bilateral agreements that the U.S. government negotiates with other countries to provide rights for airlines to offer international passenger and cargo services" (Bureau of Public Affairs 2016). The Open Skies Agreement is a government hands-off policy in that it does away with government interference about airline routes and pricing. Beneath all this, one fundamental rule within the Open Skies Agreement is the airline must be self sufficient and must not receive government subsidies. The Open Skies Agreement, makes airline routes more flexible (Bureau of Public Affairs 2016). According to the Bureau of Public Affairs, the agreements allows for an estimated sixteen percent increase in air traffic, resulting in nine millions jobs being supported (2016). As far as U.S. routes, the Open Skies Agreement expanded direct route international flights to other U.S. cities like Detroit, Las Vegas, Memphis, Minneapolis, Orland and Portland (Bureau of Public Affairs 2016). Two foreign long haul carriers that are apart of the Open Skies Agreement and have received government subsidies are Qatar Airways and Emirates Airline (PR Newswire 2015). According to PR Newswire, Qatar airways has confirmed that it received land from the government worth $452 million for office and residential space (2015). While Emirates has taken part in fuel hedging and its parent company (Investment Corporation of Dubai) assumed the costs (PR Newswire 2015). Fuel hedging is buying large amounts of fuel at a time when the prices are low. This is a gamble as prices could rise and the airline will make money or the fuel prices could get even lower and the airline or fuel hedger would lose money (Global Risk Management n.d.). The conflict arose in 2009 when Emirates Airlines made a bad call on fuel Hedging and they lost a lot of money (Kane 2015). The Investment Corporation of Dubai had to bail the company out. The major U.S. airlines (Delta Air Lines, United Airlines and American Airlines) have said that the bailout was a form of government subsidy which goes against the rules in the Open Skies Agreement. In addition, the United Arab Emirates payed $7.8 billion to build a huge terminal for Emirates Airline use (PR Newswire). Some would say this was a government subsidy which also broke the Open Skies Agreements. 

Emirates Airline has responded to the U.S. carriers claims regarding the fuel hedging. The president of Emirates Airline, Tim Clark stated, "All cash losses incurred by Emirates as a result of its fuel trades in place 2008-2009 were settled in full from the airline's own cash reserves and were not paid for by the government of Dubai (Kane 2015)." Tim Clark of Emirates Airline has also stated that U.S. carriers are just trying to maintain their market share (Kane 2015). This brings me to the next point: Have the three major U.S. carriers received government subsidies? The short answer to this question is yes. The air mail act of 1925 provided subsidies that helped lead to innovation and creation of many of the domestic routes that would be flown (McGee 2015). Another example of a government subsidy given to US airlines is the Fly America Act of 1974 (McGee 2015). Under this act federal agencies are required to use US carriers for transportation (McGee 2015). In addition, the Essential Air Service program is an example where US carriers fly routes that service the rural communities (McGee 2015). These routes are essential to the communities however, and because they are to rural areas, the airline could lose money as it is not a popular route. The government subsidizes these flights making these routes possible and airlines won't lose money (US DOT n.d.). However, according to Bill McGee, "Throughout the country, taxpayers have supported billions in airline infrastructure over the decades (2015)." An example of this is seen with the reveal of a plan to rebuild the LaGuardia airport which will cost $4 billion dollars. Half of this price will be paid by the government and the other half through private funding (Hajela 2015). One could argue that this project is not considered a government subsidy for the US carriers.  However, this terminal will help US carriers which is why Delta Air Lines is a partner for the new terminal (Hajela 2015). Depending on how you look at it, most airlines receive some type of subsidy from the government.  In my opinion, the reason for all this debate is the terms of not being government subsidized may be to vague. To clear this heated debate up I think there should be a more clear definition of what a subsidy is and what is not allowed. Both the three major U.S. carriers and Gulf carriers are pointing their fingers at each other saying the other has/had government subsidies.

The government subsidy debate isn't the only issue the major three US carriers have a problem with in the foreign air carriers. The US carriers believe that foreign carriers have the ability to purchase new jet aircraft at lower interest rates than the US carriers with the Export-Import Bank (Simon 2014). According the Export-Import Banks website, their overall mission is to support American jobs by "facilitating the export of US goods and services (EXIM n.d.)." However, the air carriers say the lower interest rates allow foreign air carriers to update their fleet much faster by buying new aircraft at these lower interest rates while the US carriers have higher rates (Simon 2014). Delta has estimated that the Export-Import Bank has cost the airlines $684 million a year and impacted 7500 jobs (Lee 2015). The Export-Import Bank's charter was blocked on June 30, 2015, (Rogers 2015). The closing of this bank significantly hurts the aircraft manufacturer Boeing because the bank backed loans on aircraft airlines were buying. Without the Export-Import Bank, the airlines will be forced to go to Airbus. Boeing helps secure 1.5 million American jobs (Crawford 2015). An option for Boeing to stay competitive would be to move to Canada where a government-backed bank can guarantee loans (Crawford 2015). 

Overall, I don't think the global playing field is fair for long haul carriers. I don't think fairness will ever be the same because there are so many variables that effect business in the airlines. That being said the governments between two countries are always going to be different in some kind of way and thus effect subsidies. I think the idea of "no-government subsidies" is very vague. How does one define what a subsidy is and if it's compliant with the Open Skies Agreement? As far as the Export-Import Bank goes, I think that the bank is critical for companies like Boeing. Without it, I fear their competition with Airbus will be hurt. The loss of American jobs if Boeing left the US would be disastrous. It is very evident that there is strong competition between US carriers and the Gulf carriers. This competition I suspect will only continue to get stronger. 

References:

 Bureau of Public Affairs. (2016, September 16). Open Skies Partnerships: Expanding the Benefits of Freer Commercial Aviation. Retrieved November 04, 2016, from http://www.state.gov/r/pa/pl/262022.htm 

 Crawford, J. (2015, October 26). ​Boeing CEO: Losing Export-Import Bank "means loss of jobs" Retrieved November 04, 2016, from http://www.cbsnews.com/news/boeing-ceo-losing-export-import-bank-means-loss-of-jobs/ 

 EXIM. (n.d.). About Us. Retrieved November 4, 2016, from http://www.exim.gov/about 

 Global Risk Management. (n.d.). Hedging your fuel risk exposure. Retrieved November 04, 2016, from http://www.global-riskmanagement.com/en/why-protect/fuel-risk-exposure/hedging-fuel-risk 

 Hajela, D. (2015, July 28). New York reveals $4 billion plan for a new LaGuardia airport. Retrieved November 4, 2016, from http://www.usatoday.com/story/todayinthesky/2015/07/27/new-york-gov-cuomo-announces-new-laguardia-airport/30751423/ 

 Kane, F. (2015, March 18). Emirates Airline president denies US rivals’ charges of government bailout over fuel losses | The National. Retrieved November 04, 2016, from http://www.thenational.ae/business/aviation/emirates-airline-president-denies-us-rivals-charges-of-government-bailout-over-fuel-losses 

 Lee, M. Y. (2015, April 10). Does the Export-Import Bank ‘prop’ foreign corporations to compete unfairly with the U.S.? Retrieved November 04, 2016, from https://www.washingtonpost.com/news/fact-checker/wp/2015/04/10/does-the-export-import-bank-prop-foreign-corporations-to-compete-unfairly-with-the-u-s/

 McGee, B. (2015, September 02). How much do taxpayers support airlines? Retrieved November 04, 2016, from http://www.usatoday.com/story/travel/columnist/mcgee/2015/09/02/how-much-do-taxpayers-support-airlines/71568226/ 

 PR Newswire. (2015, August 27). Emirates Confirms Billions in Government Subsidy for Airport Terminal. Retrieved November 4, 2016, from http://www.prnewswire.com/news-releases/emirates-confirms-billions-in-government-subsidy-for-airport-terminal-300134208.html 

Rogers, K. (2015, June 29). Entrepreneurs await fate of Ex-Im Bank. Retrieved November 04, 2016, from http://www.cnbc.com/2015/06/29/entrepreneuers-who-do-biz-overseas-await-ex-im-banks-future.html

Simon, M. (2014, August 8). The Ex-Im Bank is hurting my business. Retrieved November 04, 2016, from http://www.chicagobusiness.com/article/20140808/OPINION/140809833/the-ex-im-bank-is-hurting-my-business 

 U.S. DOT. (n.d.). Essential Air Service. Retrieved November 04, 2016, from https://www.transportation.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service 

The COMAC C919

The Commercial Aircraft Corporation of China Ltd. (COMAC) looks to compete with major aircraft manufacturers Boeing and Airbus. On November 2, 2015 COMAC rolled out its first narrow body aircraft the C919. Chinese aviation is on a huge rise. According to Alberto Riva, Boeing is estimating "Chinese airlines will need to buy more than 6,000 airplanes between 2014 and 2034, worth almost $1 trillion (2015).” Simply looking at these figures it isn't hard to understand why China is looking to produce aircraft within their own country. At the same time, they are forced to battle with manufacturing titans, Airbus and Boeing. 

I think that the C919 will be able to get FAA certification in the future. However, it certainly won't be an easy task. This is shown through COMAC's other production jet which is a regional jet called ARJ-21. COMAC has stated they built a spinoff of the original ARJ-21 to comply with FAA certification standards (Gavindasamy & Miller, 2015). However, it has been a five-year process of the FAA shadowing the certification process (Gavindasamy & Miller, 2015). With its current specifications, the ARJ-21 failed to receive FAA certification which severely limits its markets as it can't be flown in the U.S. Some believe that the FAA is taking their time in the certification process because of political and economic issues between the FAA and the Civil Aviation Administration of China (Gavindasamy & Miller, 2015). According to Siva Govindasamy and Matthew Miller, the FAA has stated in an email to Reuters News Agency, "The FAA enjoys a good working relationship with CAAC and we continue to work together to develop a path to work towards certification of the derivative model of the ARJ-21 and, possibly, the C919... (2015)." In my opinion, I think the C919 has potential to get FAA certification. Due to that fact that COMAC is a Chinese manufacturer and that it doesn't have a reputable name currently, I think the certification process is due to be lengthy. 

If the COMAC C919 becomes FAA certified, it could definitely be considered among air carriers due to its price tag. The China National Radio predicted the price of the C919 to be 30% less than the B737 and A320 (AeroTime 2015). It can be assumed that this lower cost can be associated with the lower cost of pay to employees. However, I do foresee a number of challenges with integrating the C919 in U.S. air carriers. The first problem I can think of would deal with training challenges. The contract to build a full flight simulator for the C919 was given to Rockwell Collins in Cedar Rapids, Iowa (McHale 2011). The question that comes to mind is would pilots have to initially travel to China to receive training in this simulator. Customer support on the aircraft is another issue. Providing product support infrastructure is a task that might be very hard for COMAC to integrate in the U.S. (Michaels 2014). Therefore, with reduced costs to buy the aircraft, the air carriers could face problems with product support with possibly more aircraft down time. Another issue at hand is production delays in the C919. The projected buyers are scheduled to receive their order in 2018, however those following COMAC believe it may be even later than 2018 (Gavindasamy 2016). Therefore, by the time COMAC starts delivering their product, it will already be more outdated than the current production of planes like the A320 neo and 737 Max (Gavindasamy 2016). In other words, the C919 will already be beat in performance by the newer Airbus and Boeing models. Better performance and efficiency equates to lower cost which is one reason a U.S. carrier may opt to stay with Airbus or Boeing. Perception is an issue at hand also. COMAC doesn’t have a built up reputation like Airbus or Boeing in Europe and the United States. The fact that it is “made in China’ may create a negative stigma until the company can show its safety and efficiency. At the same time, I think that passengers who fly on aircraft of this type generally have no idea what type of aircraft they are flying on unless they have some knowledge on the industry or are told. Due to this reason, I don’t think that general public perception is an issue. The air carriers will be the ones where perception may be an issue simply due to COMAC’s lack of reputation at this point in time.

The Commercial Aircraft Corporation of China, otherwise known as COMAC, is a state owned limited liability company (COMAC n.d.).  Being state owned is an advantage for COMAC as they are heavily funded by the Chinese government. Many Chinese air carriers have political pressures in buying products from COMAC as COMAC is largely government funded (Matha 2015). This can be seen in the order numbers for the C919. Bernie Leighton states that COMAC has around 450 orders for the C919 and the vast majority of them are carriers in China (2015). According to COMAC’s website (n.d.), their overall mission is “to build the large aircraft program into a symbol for the reform and opening up policy in the new era and for creating an innovative nation, and to build COMAC into a world class aviation enterprise.” As stated previously, COMAC does have another aircraft out which is the ARJ-21. The ARJ-21 is a regional type aircraft that fits up to 90 passengers (Gavindasamy & Miller, 2015). Similar to the C919, the ARJ-21 has yet to receive FAA certification and is unable to fly in the U.S.

Other companies are already making attempts in making strides on the global scene to challenge Boeing and Airbus. A good example of this is the Russian MC-21 produced by the Irkut Corporation which is owned by the United Aircraft Company (Russia Today 2016).  The company has stated that they plan to be producing 20 aircraft a year by the year 2020 (Russia Today 2016). China and Russia are both in their infancy in building these narrow body aircraft compared to Airbus and Boeing. Both the Chinese C919 and Russian MC-21 haven’t made it passed initial testing stages. It will definitely take some time to be fair competitors with Boeing and Airbus. The fact that these countries have created aircrafts of this feat are in no doubt an accomplishment. It takes a great deal of resources such as man power, money and time. Companies like Boeing and Airbus have had their fair share of success and loss. It was only a matter of time other countries would join the competition. Even if the governments helps support and foster the development of a production aircraft like the COMAC C919, it was a huge feat for China.

In my opinion, Boeing and Airbus haven’t really responded to COMAC’s introduction of the C919. Both manufacturers have been on top of the game for quite some time and have credibility that COMAC has yet to receive. On top of that, both manufacturers have their own projects which include the A320neo and 737 MAX (Chang 2012). Boeing is continuing its reign with the acceptance to build a plant in China in 2015 for their contract to build 300 jets for China (Cahill 2015). Overall, Airbus and Boeing will continue to be on top. However, in the long term it may be possible to see COMAC in there.

AeroTime. (2015, November 20). Made in China: Why C919 can hardly be called Chinese. Retrieved October 27, 2016, from http://www.aerotime.aero/en/people/people-news/editorial/20413-made-in-china-why-c919-can-hardly-be-called-chinese

Cahill on Business, J. (2015, November 4). Boeing has a new big challenge: China. Retrieved October 27, 2016, from http://www.chicagobusiness.com/article/20151104/BLOGS10/151109968/boeing-has-a-new-big-challenge-china

Chang, G. G. (2012, November 25). Chinese aviation ABC's: Airbus, Boeing and COMAC. Retrieved October 27, 2016, from http://www.forbes.com/sites/gordonchang/2012/11/25/chinas-aviation-abcs-airbus-boeing-and-comac/#31d0c3351048

COMAC. (n.d.). Company profile Commercial Aircraft Corporation of China, Ltd. Retrieved October 27, 2016, from http://english.comac.cc/aboutus/introduction/

Govindasamy, S. (2016, February 23). China's COMAC aims for first C919 flight by early 2017: Sources. Retrieved October 27, 2016, from http://www.reuters.com/article/us-coma-china-c-idUSKCN0VW110

Govindasamy, S., & Miller, M. (2015, October 21). Exclusive: China-made regional jet set for delivery, but no U.S. certification. Retrieved October 27, 2016, from http://www.reuters.com/article/us-china-aircraft-arj21-exclusive-idUSKCN0SF2XN20151021#ij0P11gFChwoyzBM.97

Leighton, B. (2015, March 18). A Closer Look at the COMAC C919 - Why does it exist? Retrieved October 27, 2016, from http://www.airlinereporter.com/2015/03/closer-look-comac-c919-exist/

Matha, M. (2015, December 18). 5 Reasons why Chinese aircraft manufacturer will become a global contender. Retrieved October 27, 2016, from https://www.linkedin.com/pulse/5-reasons-why-chinese-aircraft-manufacturer-become-global-matha

McHale, J. (2011, January 7). COMAC C919 simulator program awarded to Rockwell Collins by XASC. Retrieved October 27, 2016, from http://www.intelligent-aerospace.com/articles/2011/01/comac-c919-simulator.html

Michaels, K. (2014, June 24). Opinion: COMAC tie-up with Bombardier a win-win. Retrieved October 27, 2016, from http://aviationweek.com/commercial-aviation/opinion-comac-tie-bombardier-win-win

Powell, S. (2015, November 9). China’s COMAC C919 aircraft running behind schedule – First commercial flight not before 2019. Retrieved October 27, 2016, from http://loyaltylobby.com/2015/11/09/chinas-comac-c919-aircraft-running-behind-schedule-first-commercial-flight-not-before-2019/#disqus_thread

Riva, A. (2016, June 28). China just flew its first passenger jet - and it's a clunker. Retrieved October 27, 2016, from https://news.vice.com/article/china-just-flew-its-first-passenger-jetand-its-a-clunker

Russia Today. (2016, June 8). MC-21: Russian high-tech plane rolls out to challenge Airbus 320. Retrieved October 27, 2016, from https://www.rt.com/news/345823-mc-21-aircraft-presentation-irkut/