The United States airline industry is facing competition from the foreign market, particularly from the Gulf region and Asia. This competition that the United States is currently experiencing is more substantial than in the past. This is primarily due to government subsides, cheaper labor, cheaper equipment costs and little to no taxation of foreign airline by their governments.

Foreign airlines excel with their government subsidies. According to the Economist  “a group of airlines disclosed details of “obvious and massive” Gulf-carrier subsidies totaling $42bn since 2004”(Economist, 2015). As you can see foreign governments are pumping billions of dollars into their countries airlines so they will succeed. To add insult to injury “The U.S. airline industry faces higher taxes than the three Gulf majors. The aviation industry has 17 unique federal taxes and fees. Airlines-for-America estimates that about 20% of a $300 ticket for a typical, domestic round-trip itinerary with a single connection in both directions is composed of taxes. The federal tax rates paid by airlines are higher than federal taxes paid on alcohol, tobacco, and firearms, which were originally intended to discourage use”(Ropazo, 2014 ). Therefore, the US carriers are at a big disadvantage over the foreign carriers due to taxes. This could easily be changed with lower taxes on airlines and a possible government subsidy.

Even though foreign carriers succeed with their own subsidies, our government is aiding their efforts. The Import Export Bank “is the official export credit agency of the United States” (EX_IM, 2015). The mission of the Import Export bank is to assist in financing the export of goods and services from the United States to international markets (EX_IM, 2015). This bank has been financing foreign carrier purchases; particularly United State’s manufactured aircrafts such as Boeing. In fact, “The U.S. Government Accountability Office said in a 2014 report that 28 percent of Ex-Im’s total exposure is solely wide-body aircraft. That constitutes nearly $32 billion worth of subsidies from U.S. tax revenues providing foreign competitors an unfair advantage as U.S. companies are ineligible for such discounted financing”(Crane, 2014). Therefore, with foreign carriers stocking up on new wide body Boeing aircraft (which are financed through Ex-Im bank) they are actually saving an estimated amount of 20 million dollars per aircraft throughout its useful life. While this does aid our own manufacturing industry, it is hurting our airlines.

Finally, it is hard for airlines in the United States to compete with foreign labor; this is a commonality within many other industries. There are certain parts of the world where the cost of living is considerably less than living within the United States. The airlines in those areas of the world can pay their pilots, management and maintenance crew less than what the United States carriers have to pay. Foreign airlines have taken advantage of their savings. These airlines in turn provide their customers with lower ticket prices and more amenities on their flights. This is a problem that the United States carriers and our government cannot fix. You cannot ask a pilot or technician to take less money due to the high price it costs them to get their certifications. Norwegian Air is a perfect example of this incongruity.  There is a Norwegian airline that is based in Ireland that employs Thailand based crews through a Singaporean pilot company. They have based their company in Ireland because “Ireland has weaker labor laws that will allow the airline to keep labor costs low by outsourcing its crew to Asia”(Zillman, 2014).

With all that is mentioned above it is easy to see why US carriers are struggling in the international market. Our government need to make policies that help our U.S. based airlines and not hurt them. If they don’t make changes now the US airlines will soon become domestic only airlines.

Judson, C. (2014, September 8). Guest: How the Export-Import Bank hurts U.S. airlines. Retrieved March 17, 2015, from http://www.seattletimes.com/opinion/guest-how-the-export-import-bank-hurts-us-airlines/

Feeling the heat. (2015, March 6). Retrieved March 17, 2015, from http://www.economist.com/blogs/gulliver/2015/03/airline-subsidies-gulf

Rapoza, K. (2014, April 1). Why UAE And Qatar Have The 'World's Best' Airlines. Retrieved March 17, 2015, from http://www.forbes.com/sites/kenrapoza/2014/04/01/why-uae-and-qatar-have-the-worlds-best-airlines/2/

The Facts about Ex-Im Bank. (n.d.). Retrieved March 17, 2015, from http://www.exim.gov/newsandevents/the-facts-about-ex-im-bank.cfm

Zillman, C. (2014, May 8). Pilots battle against ‘Walmart-ing’ of airline industry. Retrieved March 17, 2015, from http://fortune.com/2014/05/08/pilots-battle-against-walmart-ing-of-airline-industry/