Three Issues Regarding US Aviation and the Global Market

Three Issues Regarding US Aviation and the Global Market

1.      Certification of New Products

In order for a company to bring a new product to market it must first apply to the FAA for a certification of the product.  This helps to ensure that the product is safe to use and is a very important step in the implementation of a new product. However, due to an abundant lack of resources and properly trained personnel, it is taking the FAA anywhere from one to eighteen months to approve the certification of new products.

The Government Accountability Office released a report on the 21^st of January 2015 reviewing initiatives set forth to improve the certification process. The report, “highlighted the lack of specificity and flexibility in some of the FAA’s bilateral safety agreements, poor overall communications with foreign civil aviation authorities and the large fees required by those governments (Mark, para. 3, 2015).” In other words, the FAA certification process is hindering US manufacturers’ ability to compete in a global market. The negative outcomes involved with a slow FAA certification process are intensified by the less time-consuming processes used by the aviation regulatory bodies of other countries.

2.      The European Union Emissions Trading System (EU ETS)

The EU ETS is a plan which attempts to put a cap on the total amount of carbon-dioxide emitted within EU. Companies are able to trade and sell emissions allowances, and must have enough of the allowances by the end of the year to cover their emissions. In 2012 the EU ETS planned to apply these regulations on emissions to the aviation industry, which included flights originating outside of the EU. Prior to these regulations coming into effect, President Obama signed an anti-ETS bill which stated that US airlines could not participate in the trading scheme. China, Russia, and India soon after passed similar laws. Due to the international pressure the EU ETS laws regarding foreign carriers was put on hold until 2013. A year later the laws regarding international operators was postponed until 2017.

The international business aviation community has been against the EU ETS laws from the onset. The National Business Aviation Association (NBAA) referred to the EU ETS as an “onerous and unnecessary tax that severely harms the industry and limits the economic benefits it provides” (Klenske, para. 3, 2014). Further impeding the integration of the EU ETS into the international aviation community is the development of emissions standards by the International Civil Aviation Organization (ICAO) that were accepted by 185 member states.

3.      Persian Gulf Carriers Receive Illegal Government Subsidies Resulting in Unfair Competition

United Airlines, American Airlines, and Delta Airlines released a groundbreaking report recently claiming that, “Qatar Airways, Etihad Airways and Emirates have received $42 billion "in quantifiable subsidies and other unfair benefits from their respective governments since 2004"” (Karp, para. 2, 2015). This illegal funding has resulted in a distorted marketplace which has allowed the three Gulf airlines to expand their businesses under conditions that should be resulting in lost profits.

The actions of the governments of Qatar and the United Arab Emirates are an immediate and severe threat to the operations of US carriers. However, Emirates is the leading purchaser of American manufactured aircraft produced by Boeing. This puts the US government in an awkward situation of conflicting national and international interests. To Capt. Rick Dominguez, executive administrator of the Airline Pilots Association International the way forward is clear and something must be done to provide a fair competitive playing field for the airlines. In his words, "Nothing less than our careers are at stake" (Karp, para. 10, 2015).

Bibliography

Bunce, P. (2012, July 18). Hearing: The global competitiveness of the U.S. aviation industry: Addressing competition issues to maintain U.S. leadership in the aerospace market. Retrieved March 14, 2015, from http://www.gama.aero/node/11517

Karp, G. (2015, March 5). U.S. airlines to Gulf carriers: 'Compete fairly' Retrieved March 14, 2015, from http://www.chicagotribune.com/business/breaking/ct-airline-subsidies-0306-biz-20150305-story.html

Klenske, N. (2014, May 20). The latest on the EU ETS. Retrieved March 14, 2015, from https://www.ainonline.com/aviation-news/business-aviation/2014-05-20/latest-eu-ets

Mark, R. (2015, January 25). GAO reports on FAA certification and foreign approval of aviation products. Retrieved March 14, 2015, from https://www.ainonline.com/aviation-news/business-aviation/2015-01-25/gao-reports-faa-certification-and-foreign-approval-aviation-products