Are Gulf Airlines Destroying U.S. Aviation? The PR Battle in a Trade Spat Heats Up

The PR conflict between Gulf-based airlines Qatar Airways, Emirates, and Etihad, and the three biggest American airlines is heating up. For those of you who are just catching up, the three largest U.S. carriers—Delta, United, and American Airlines—formed a lobbying group called the Partnership for Fair and Open Skies (the Partnership) and earlier this year filed a complaint to the U.S. government accusing the three Gulf carriers of violating their Open Skies agreements, which allow foreign airlines to land in the U.S., by receiving unfair subsidies from their government owners and investors. The Delta-United-American alliance wants the Obama administration to renegotiate the Gulf carriers’ Open Skies agreements to limit the allegedly subsidized “excess” passenger capacity they have been delivering to the United States.

The Gulf carriers are much younger than the American legacy carriers but are starting to eat into the American carriers’ international market share, particularly on routes to the Indian subcontinent, by offering better service at lower prices. The Partnership claims this is only possible because of their alleged government subsidies.

In the latest round, a report apparently sponsored by the Partnership claims that the demise of the U.S. shipbuilding industry offers a cautionary tale for how foreign subsidies could kill the American aviation industry:

“The end of a level playing field in aviation, with U.S. companies facing direct competition from subsidized foreign carriers, is remarkably similar to what happened to U.S. shipbuilders in the 1980s. If these foreign carriers are indeed successful in shifting traffic from American companies to their own, then American aviation will suffer…If this foreign, subsidized capacity remain unregulated, the U.S. aviation industry will be decimated by a loss of almost 200,000 jobs.”

Two immediate problems with the report’s comparison of the U.S. aviation industry to the demise of American shipbuilding jump out at me. First, the Gulf carriers are among the largest purchasers of Boeing’s passenger aircraft. In 2014, Emirates placed a $56 billion order for a whopping 150 Boeing 777Xs. Qatar Airways also bought 50 777Xs last year and added 14 more 777s this year. Etihad snapped up 25 777Xs in 2013 and, as of 2014, had also ordered 71 of Boeing’s 787 Dreamliners. One of the Partnership’s claims is that government subsidies have helped Gulf carriers buy massive fleets of modern aircraft in a way private American companies would not or could not be able to finance themselves. Taking this assertion at face value, I fail to see how this would lead to the demise of the U.S. aviation industry, which would include American aircraft manufactures like Boeing, a la American shipbuilding in the 1980s. Certainly it would suggest the opposite.

Perhaps the author meant to limit the aviation industry comparison to just American air carriers, rather than the “apples-to-apples” comparison of shipbuilding to aircraft manufacturing. Even still, the argument does not hold. The second problem is that, even if the three legacy American carriers lose significant international market share to foreign competitors, they will hardly be put out of business. American airlines have the exclusive right to service the American domestic market. This domestic market will never go away and will never be the provenance of a foreign carrier, Gulf or otherwise. Foreign air carriers are not and legally cannot be substitutes for American carriers on the domestic market the same way a foreign-built ship could substitute for an American-built ship. The only logical comparison, in which the American product and foreign products actually are substitutes on the domestic market, is aircraft manufacture. Chicago-based Boeing is in a cushy position, locked in a duopoly with France’s Airbus for the global passenger jet market (no disrespect to our Canadian and Brazilian friends at Bombardier and Embraer). The American aviation industry will be alright.

Furthermore, the American carriers’ international routes to Europe are rather secure. Through a mechanism known as “immunization,” the U.S. Department of Trade is able to grant immunity from U.S. anti-trust laws to members of international airline alliances. The American carriers and their European counterparts (Delta and Air France-KLM in the SkyTeam alliance; United and Lufthansa in the Star Alliance; and American Airlines and British Airways in the OneWorld Alliance) have used this law to legally limit competition on transatlantic routes (which, by the way, has led to a significant increase in ticket prices compared to routes with more independent competition, according to a study by the U.S. Department of Justice). In any case, a third country airline cannot fly revenue-generating passenger routes connecting European and American cities (or any two other countries’ cities for that matter) except for routes where the European city lies as a waypoint between the third country and the American city, in which case all three countries must negotiate in order for the American and European parties to grant the third country airline the exception.

The U.S. domestic market and the transatlantic European markets are essentially locked in. In effect, the real threat from the Gulf airlines is in the market for passengers from fast-growing emerging markets, especially the Indian subcontinent. It is understandable that the U.S. carriers would be frustrated by their Gulf competitors’ ability to use government financing at extremely favorable terms to purchase new aircraft, expand their capacity on routes connecting India to the U.S. via their hubs in the Gulf and, in doing so, drive down prices and margins on those routes. But this hardly signals the “demise” of the American aviation industry, and analysts like Aaron Klein, the author of the study and a director at the Bipartisan Policy Center, should know better.

The alarmist tone of this and other Partnership research does not help its case. American travelers already sense that the Gulf carriers provide better customer service and a better flying experience at a lower price. If these Gulf carriers’ gains are unfairly earned, hyperbole and exaggeration will hardly help convince frustrated, budget-conscious, and quality-conscious American travelers to care.

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NOTE: Over the past few days I’ve been digging into the Partnership’s white paper and the Gulf airlines’ responses, trying to see who has a better case. I intend to publish an analysis of what I find in the coming week. I also intend to be more prolific with my writing here (inshallah).

Misreading the Saudi War in Yemen

Two months ago J.M. Berger wrote an article on ForeignPolicy.com taking a seemingly fresh perspective on events in Yemen: that an attack claimed by ISIS on two mosques associated with the Houthis may be the Middle East’s “Franz Ferdinand” moment, sparking region-wide war. I normally wouldn’t go out of my way to analyze an article most people probably don’t remember, but I’ll make an exception for two reasons. First, Berger is highly respected in his field, and rightly so. He has done cutting-edge work analyzing terrorists’ use of social networks for propaganda and recently co-authored a well-received book on ISIS. His words deservedly carry weight and so should be critiqued when off the mark. Secondly, his analysis reflects one of pitfalls in using historical analogy to help understand current events. Though the ISIS attacks on Houthi mosques in Yemen resembles similar sectarian attacks at the beginning of Iraq’s sectarian civil war, their significance to Saudi Arabia’s intervention in the conflict is minimal. Rather than explaining the chain of events that got Riyadh to start a war, the real significance of the ISIS attacks is their reinforcement of our understanding of how the group instrumentalizes sectarianism to expand its influence.

A Curious Analogy

So what exactly does Berger argue? In his view, the ISIS-claimed attacks sparked the Saudi-led intervention in Yemen. By bombing two mosques frequented by Houthis, who claimed control of Yemen’s government in January this year, ISIS induced the Houthis to march southward toward Aden, the seat of ousted president Abd Rabbuh Manur Hadi’s resistance at the time. The Houthis’ southern march in turn led Saudi to intervene militarily in coalition with a number of Muslim states from across the Middle East and Africa to reinstate Hadi. In Berger’s words, “[i]t’s getting hard to escape the feeling that the Sanaa bombing might be the Middle East’s “assassination of Archduke Franz Ferdinand” moment…”

Berger’s reading of the mosque bombings in Yemen parallels the consensus understanding of how the sectarian civil war in Iraq began. In 2006, Abu Musab al-Zarqawi, who led al Qaeda in Iraq at the time (the precursor to ISIS), directed the bombing of the al-Askari mosque and shrine complex, one of the holiest Shi’i sites in the country and resting place of two of Twelver Shi’ism’s Imams. Zarqawi targeted the complex in a deliberate and successful attempt to encourage sectarian civil war. If any attack screams Franz Ferdinand moment for spiraling sectarian conflict in the Middle East, it was that one.

Similarly, ISIS may very well have intended to spark sectarian war in Yemen, but Berger overstates the mosque bombings’ role in the Saudi intervention. Riyadh had ample reason to intervene in Yemen before the Houthi march on Aden—namely to reassert its influence in Yemeni political affairs and to counter perceived Iranian encroachment. Both of these objectives have long been features of Saudi foreign policy, and growing setbacks to both policy objectives in recent years were sufficient causes for Saudi intervention.

So what should we make of the ISIS bombings? As far as the Saudi intervention is concerned, the bombings are rather minor. The Saudis would not have permitted the absence of government in Yemen for long, and the Houthi march to Aden was not the straw that broke the camel’s back—Houthi control of Sana’a was bad enough in Riyadh’s eyes. Pressure on Riyadhs’s twin goals of renewing influence over Yemeni politics and countering Iran’s perceived ambitions in the peninsula had been growing for years and culminated with the fall of Hadi’s government—which was put in place by the Saudi-dominated GCC in 2012—to the Houthis. This was enough to drive Saudi to intervention; Riyadh did not need the Houthi march on Aden, precipitated by an ISIS attack on Houthi-affiliated mosques, to force its hand.

Riyadh’s Policies toward Yemen and the Region

Saudi Arabia’s intervention is firstly a calculated step to reassert its dominance over its perceived sphere of influence in Yemen. Riyadh has attempted to influence Yemeni domestic politics for all of Yemen’s modern history, beginning with Yemen’s 1962-1970 civil war. In that war, Saudi Arabia backed supporters of the ousted Zaydi Imam against a successful military coup backed by Egypt. This was part of its effort to defend conservative Arab monarchies against the rising tide of socialist Arab nationalism. Riyadh failed to reinstate the Zaydi monarchy but it did maintain extensive monetary relationships with the lay Zaydi tribesmen of Yemen’s north, who were politically empowered in the new “republican” government that replaced the Imamate controlled by the Zaydi elite. By the 2000s, however, Riyadh’s influence had diminished and had “left its Yemeni contacts to whither.” Upheaval in Yemen since 2011 has surely made Saudi Arabia anxious for stability below its southern border, and its present intervention is an attempt by the new king to re-impose a government that is favorable to Saudi interests.

Secondly, Saudi Arabia’s intervention comes in the context of its regional cold war with Iran. Not only does Riyadh feel that it has lost control over Yemen; it feels that it has lost control to its biggest rival. While the Houthis are far from Tehran’s puppets (though I’m sure they willingly take whatever support Tehran offers), what is important is Riyadh’s perception that they are in fact a conduit for Iranian influence in the Arabian Peninsula. Yemen’s importance to Saudi Arabia is similar to Ukraine’s importance to Russia: Riyadh would no sooner allow Yemen to come under Iranian control than Russia’s Vladimir Putin would allow Ukraine to join NATO.

Like Franz Ferdinand…if World War I had Already Started

The very concept of comparing the ISIS attacks to the assassination of Franz Ferdinand is odd since the Middle East was already in the midst of regional war when Saudi Arabia intervened in Yemen. Saudi Arabia and its Sunni Arab allies have been working to militarily confront Iranian involvement in Syria since 2011, and the intervention in Yemen is an extension of Saudi’s efforts to counter Iranian influence throughout the region. The alleged ISIS mosque attacks in Yemen come in the context of an ongoing regional conflict, and so do not constitute the unique war-starting “Franz Ferdinand moment” Berger makes them out to be.

Answering the Wrong Question

Berger singles out the ISIS attack on Houthi mosques as a uniquely important event, different in quality from the hundreds of other attacks and assassinations in Yemen since 2011. He is correct, but he singles it out in answer to the wrong question. The attacks do not explain why Saudi intervened. Rather, they give insight into ISIS’s strategy for expansion outside of Syria and Iraq. Berger himself notes:

“…in Yemen, it is not safe to assume that the al Qaeda splinter group and self-proclaimed caliphate [ISIS] is merely pursuing a campaign of random or purely opportunistic terrorist attacks. Instead, we should examine the consequences of its actions outside of Iraq and Syria: The group is seeking to escalate internal and regional tensions among its most dangerous foes, believing that if its provocations result in a full-blown regional war, it will thrive in the chaos.”

We can already see this strategy playing out inside Saudi Arabia. An ISIS-affiliated social media account claimed responsibility for the May 22nd bombing of a mosque in the Shi’a city of Qatif. A week later, ISIS claimed responsibility for bombing another Shi’a mosque in Saudi Arabia, this time in Damman. ISIS, in keeping with its predecessors the Islamic State of Iraq and al Qaeda in Iraq, is trying to ignite sectarian warfare outside of the Levant; sectarian warfare in whose resulting chaos, distrust, and violence ISIS supporters can carve out a foothold. [NOTE: Since first drafting this, ISIS executed another attack in Yemen targeting Houthi-affiliated mosques].

Yemen’s conflict, on paper, appears ripe for sectarian exploitation and the media has consequently portrayed the conflict in a fashion similar to the sectarian wars previously seen in Lebanon, Iraq, and Syria. The Houthis’ roots are in Zaydi Shi’a revivalism, and Saudi Arabia intervened, at least in part, to confront what it considers Iran’s region-wide anti-Sunni project. Moreover, underlying the internal Yemeni conflict is the geographic distribution of Yemen’s religious populations. Political divisions in Yemen have traditionally fallen along a north-south divide: the “conservative” north, with its tribal politics, against the relatively more relaxed south, with its history of British and later Marxist rule. North and South Yemen skirmished regularly before unification in 1990, fought a civil war a mere four years later in 1994, and have been at odds again since a southern secessionist movement took hold in the 2000s. None of these conflicts were overtly religious. However, these old political divisions, which once divided the country into two states, roughly correspond to the country’s geographic concentration of Zaydi Shi’a in the north and Shafi’i Sunni in the south, enabling those who wish to promote sectarianism in Yemen to express the regional rivalry in sectarian terms.

This sectarian understanding is favored by media coverage of the current conflict, but those who track Yemen (myself included) have pointed out that relations between Yemen’s Shafi’i (Sunni) and Zaydi (Shi’a) communities have historically been cordial. Rather, the conflict is rooted in the breakdown of the Yemen state and the failure of the 2011 GCC Initiative’s plan for reforming it. However, the historical absence of broad-scale sectarian conflict in Yemen may be changing as opposing factions within the current conflict are starting to define their enemies in sectarian terms. Riyadh is not helping allay sectarianism in Yemen by treating it as a battleground in its region-wide contest with Iran, a contest that is itself expressed in sectarian terms.

ISIS’s ability to encourage sectarianism within Yemen could allow it to solidify its nascent foothold in the country and carve out a niche among the many non-state actors competing for influence, punting further into the future the restoration of any effective Yemeni state. Despite decades of problems, Yemenis have long proven to be pragmatic and resilient against adversity, its society resisting pressure to devolve into widespread sectarian civil war despite having one of the most heavily-armed civilian populations in the world. This pragmatism has allowed Yemen to survive, albeit in poor condition, in the face of years of warnings that it is “on the brink” of becoming the next Somalia, Afghanistan, or Syria. If successful, ISIS’s efforts to inflame sectarianism amid the chaos following this year’s government collapse could undermine the pragmatism that has long insulated Yemen from the worst consequences of its many challenges.

Vox on Yemen: It’s a Sunni vs. Shia thing, right?

Vox.com’s most recent “explainer” on Yemen is a prime example of what casual analysts get wrong about the county and why Vox’s brand of explanatory journalism, while great in principle, suffers from its reliance on a handful of generalists jumping from subject to subject, portraying themselves as experts capable of laying down the “real truth” behind any current event.

Vox’s first error is especially egregious: they describe the Southern Movement (Hirak) as led by Al Qaeda in the Arabian Peninsula.

“There’s a whole other rebellion in Yemen’s south, which is led by a particularly dangerous al-Qaeda affiliate, Al-Qaeda in the Arabian Peninsula (AQAP).”

Vox discovers a new faction in Yemen.

The “rebellion in Yemen’s south” presumably refers to Hirak, the name used to refer to a protest in the former South Yemen advocating for separation from Sana’a, either through increased autonomy or outright secession. Associating Hirak with AQAP is especially cringe-worthy given how much the south has suffered at the hands of other militant jihadists. It’s was a group of Afghan jihad veterans who ransacked Aden during the South’s previous failed attempt at secession in 1994.

Vox conflating Hirak with AQAP likely comes from the fact that AQAP and its alter ego Ansar al-Sharia took over a chunk of southern territory after the popular protests of 2011. AQAP’s territorial control was concentrated in the former-South Yemen governorates of Lahj and Abyan, including Abyan’s capital Zinjibar. This sparked Western media hyperventilation over the possibility of al-Qaeda overrunning Aden and somehow holding hostage the world’s oil supplies transiting through the Bab al-Mandab strait, which lasted until locally-organized popular committees and a U.S.-supported military campaign expelled AQAP from their self-declared emirate.

Thirty more seconds of Googling could have cleared up the AQAP-Hirak confusion for Vox, so while embarrassing, this mistake isn’t the kind of pervasive shortcoming that undermines a good deal of Yemen analysis in other outlets.

The more insidious analytical problem with Vox’s piece, and those of most media outlets, is the casual description of the Yemeni government as “Sunni-dominated” and the conflict as primarily sectarian. Wire services like Reuters made a particularly bad habit of this in 2014, describing the Houthis as “Shi’ite rebels” fighting “Sunni” northern tribesmen, though they are traditionally Zaydi.

Sunni-dominated...as of 2012...by the VP for the (Shia-dominated?) Saleh government.

The sectarian lens is an easy analytic framework to fall back on. It has stuck in Yemen because some of the basic facts on which this analysis rests are true: Shi’a (most of whom are Zaydi) are a slight minority in Yemen (around 40%). The president is Sunni (Shafi’i). Zaydi religious leaders have been oppressed by Sana’a since the 1962-1970 civil war succeeded in replacing the Zaydi Imam with a republican form of government.

While sectarian analysis is convenient, it is wrong in the Houthi case. Intentionally or not, it implies that Sunni-Shi’a sectarianism in Yemen should be analyzed similarly to the Sunni-Shi’a divide in Iraq or Syria. But the northern tribesmen who fought the Houthis throughout 2014, though affiliated with the Islamist Islah party, are from traditionally Zaydi tribes. Former president Ali Abdullah Saleh, who fought the Houthis in multiple wars throughout the 2000s, is also a Zaydi. In fact, Saleh initially had no problem with the early Houthi movement (the Believing Youth) as it offered a counterbalance to Salafi influence in the north.

This is what passes for analysis in a major newspaper.
An example of lazy sectarian analysis from the Washington Post. Image at http://wapo.st/1J61gXX

The Houthis are not fighting the “Sunni-led” government so much as they are just fighting the government. Their long march and consolidation of power in northern Yemen, which has been underway for years, is best understood as a re-balancing among northern power centers rather than a mission for revenge against sectarian crimes or religious oppression. Players in the north include the Houthis, tribal confederations, and government forces.

The most sectarian of any of the Houthi’s battles is its fight with Salafis, whom they’ve long seen as a threat to Zaydi youth and a sign of Saudi interference. The Houthi campaign for northern domination began with their siege of the Wahhabi Dar al-Hadith institute in the northern town of Dammaj.

Beyond this, the sectarian motivation is harder to back up. Their next targets were tribes affiliated with Islah, particularly the Al-Ahmar-led Hashed tribal confederation. While the Islah connection supports a casual sectarian association given Islah’s philosophical roots in the Sunni Muslim Brotherhood, the tribes supporting Islah in the north were historically Zaydi. Their alliance with Islah could be understood as political rather than religious. The Houthi-tribal conflict is better read as a re-balancing of power; the (non-sayid) Zaydi tribesmen, from whom the sayid-led Zaydi Imamate drew its foot soldiers, were politically empowered when Zaydi sayids (who form the Houthis’ ideologic core) lost political influence after the 1962 revolution. Now the Houthis have seized on an opportunity to reassert their control.

Once the Houthis defeated the Al-Ahmars in 2014, the next target was the Sana’a-based government. But the “Sunni-dominated” government’s roots are not in Sunni triumphalism but a non-sectarian Free Officer republicanism, however flawed. The republican government may have been anti-monarchy, but it was not anti-Zaydi. Saleh, Yemen’s president until 2012, was himself a Zaydi. Yet he fought six wars against the Houthis. Using the sectarian convention, that would mean Yemen’s “Shia-dominated” government fought the Houthi “shi’ite militia.” Sectarian analysis falls apart.

Moreover, the Houthis have enjoyed support from individuals across sectarian lines since the 2011 protests. The have gained the support of anti-establishment protestors, even Sunnis, who feel betrayed by the internationally-backed National Dialogue’s shortcomings and are encouraged by the Houthis’ willingness to challenge tired, old-guard players like president Hadi (Saleh’s vice president for 17 years) and the al-Ahmar family.

What Vox does get right, however, is its tempered appreciation of Houthi goals. Despite widespread talk of a coup, it appears the Houthis prefer to use their power to influence the government, not usurp it. Long critics of the National Dialogue, the Houthis seem particularly concerned this time about the new constitution’s redrawing of federal districts to bi-sect traditional Houthi territory will diminish their ability to protect their interests in Yemen’s future federal reformation.

Maybe Vox could teach CNN to avoid sensationalism.