The US Legacy Carriers Complain About Gulf Carriers, But Benefit from Alliances with Foreign Government-Owned Airlines
Delta, United and American Airlines (“Legacy Carriers”) complain about competition from state-owned carriers Emirates, Qatar and Etihad.
But the Legacy Carriers are more than happy to benefit from deep-pocketed foreign governments through their alliance with foreign carriers, many of which are state-owned or -invested.
In fact, the Legacy Carriers participate in global alliances that include 28 state-owned or state-invested airlines, many of which are notorious recipients of subsidies:
- China Eastern (Delta), China Southern (Delta) and Air China (United) (together with Hainan Airlines) received at least US$1.1 billion in subsidies in 2014 alone. (Centre For Aviation, 5/3/15)
- Delta and American benefit not only by their alliances with these carriers but also by direct investments in them (Delta – $450 million in China Eastern; American – $200 million in China Southern). (Bloomberg, 12/12/16; Dallas Morning News, 3/28/17)
- South African Airways (United) recently received a 10 billion rand (US$1.5 billion) subsidy. (The South African, 9/14/17).
- SriLankan Airlines (American), the troubled national carrier, owes US$3.25 billion backed by the government and has been unable to attract private investment. (Asian Mirror, 4/26/16)
- Aerolíneas Argentinas (Delta) has just “burned through $5 billion in subsidies” according to Argentinian Transport Minister Guillermo Dietrich. (Wall Street Journal, 9/20/16)
- Aeroflot (Delta) is 51% owned by the Russian government, which funnels $170-420 million per year to the airline through overflight fees, in addition to subsidies for special new regional services, such as to Crimea. (Aviation Advocacy; Air Transport World, 4/6/17)
Other state-owned partners of the Legacy Carriers have been successful but do not draw the same criticism from the Legacy Carriers as the Middle East carriers. Singapore Airlines, for example, a United partner, is one of the top airlines in the world and majority-owned by the government for 70 years.
Delta’s partners in SkyTeam (10 out of 20 alliance members are state-owned or -invested)
- Aeroflot: 51% owned by government of Russia (Airline Update, 10/29/17)
- Aerolíneas Argentinas: Majority owned by government of Argentina, renationalized in 2008 (Centre For Aviation)
- Air France: 17.6% owned by government of France (Air France, 3/31/16)
- China Eastern: 62% owned by government of China (Centre For Aviation)
- China Southern: Majority owned by government of China (Centre For Aviation)
- Kenya Airways: 29.8% owned by government of Kenya (Financial Times, 9/21/17)
- Middle East Airlines: Majority owned by Banque du Liban (Centre For Aviation)
- Saudia: 100% owed by the Kingdom of Saudi Arabia (Centre For Aviation)
- TAROM: 97% owned by government of Romania (TAROM)
- Vietnam Airlines: Majority owned by government of Vietnam (Centre For Aviation)
United’s partners in Star Alliance (14 out of 28 alliance members are state-owned or -invested)
- Air China: Majority owned by government of China (Centre For Aviation)
- Air India: 100% owned by government of India, but slated to be privatized (Centre For Aviation; CNN, 6/29/17)
- Air New Zealand: 52% owned by government of New Zealand (Air New Zealand)
- Croatia Airlines: 96.8% owned by government of Croatia (Croatia Airlines)
- EgyptAir: 100% owned by government of Egypt (Centre For Aviation)
- Ethiopian Airlines: 100% owned by government of Ethiopia (Ethiopian Airlines)
- LOT: 99.9% owned by the Treasury of Poland (Polish Airlines)
- SAS: State investments by governments of Sweden (17.1%), Denmark (14.2%) and Norway (11.4%) (SAS)
- Shenzen Airlines: Majority owned by Air China (majority government owned) (Centre For Aviation)
- Singapore Airlines: 54.5% owned by government holding company (Centre For Aviation)
- South Africa: 100% owned by government of South Africa (Centre For Aviation)
- TAP Portugal: 50% owned by government of Portugal (Aviation Gazette, 2/8/16)
- Thai Airways: Majority owned by Thai Ministry of Finance (Thai Airways)
- Turkish: 49% owned by Turkish Wealth Fund (Turkish Airlines)
American’s partners in oneworld (4 out of 13 members are state-owned or -invested)
- Cathay Pacific: 29.99% owned by Air China (majority owned by P.R. China) (Cathay Pacific)
- Finnair: 66% owned by government of Finland (Finn Air)
- Malaysia Airlines: Renationalized in 2014, now 100% owned by Malaysia’s sovereign wealth fund (Centre For Aviation; Daily Mail, 8/9/14)
- Sri Lankan: 100% owned by government of Sri Lanka (Reuters, 5/5/17)