Yesterday an article by Matthew Yglesias appeared in Slate asserting that repealing our nation’s cabotage laws and allowing foreign airlines to service U.S. routes would revive airline competition and provide cheap fares to consumers. In response to this flawed position, ALPA has commented:
“Apart from starting from the erroneous premise that the airline industry is not vigorously competitive, Mr. Yglesias hasn’t thought his proposal through. Cabotage would mean that a foreign airline does business in the U.S. domestic market subject to the laws of its own country rather than U.S. laws. If Air China were permitted to operate cabotage service, for example, it would be doing business in the U.S. domestic market as a Chinese business, subject to Chinese tax law, not U.S. tax law, Chinese labor law, not U.S. labor law, Chinese environmental law, not U.S. environmental law, etc. We don’t permit this in any other business sector: if Toyota wants to build cars in the U.S. it must set up a U.S. corporation to do so and have its U.S. plants be subject to U.S. laws; if Airbus want to build planes here it must do the same.
There is no good reason to treat the airline sector differently. This misguided “cabotage is a cure” idea has been raised repeatedly over the years, usually by commentators with no experience in the airline industry. Not surprisingly, it has been consistently been rejected by policy makers of all stripes. We don’t need foreign airlines operating in the US domestic market under foreign laws. We need government policy that supports a level playing field for U.S. air carriers so that they can compete in the international marketplace and continue to provide safe, affordable air transportation for travelers.”
View the article and ALPA’s comment here: http://www.slate.com/articles/health_and_science/transportation/2013/08/cabotage_will_revive_airline_competition_foreign_airlines_should_be_able.html