Executive Summary
This research paper is a mixed case study of the Open Skies policies of the Emirati airlines. The research engaged ten professionally competent constitutional experts who enriched this study with comprehensive empirical evidence. Using 20 questionnaires in the form qualitative and quantitative structure, the research discovered a lot about the UAE’s open skies policy. To help people understand how the UAE open skies have influenced the global air transportation business, the study designed four objectives. The objectives aim at examining the main aims of the UAE’s open skies, the crucial role of the open skies in promoting trade liberalisation and true international competition, the challenges they pose to the UAE government and the influence of the EU and the US anticompetitive policies in the implementation of the open skies policies.
Since the UAE began signing bilateral and multilateral open sky agreements with various Asian, European and American states, its airline business has operated exceedingly well. The UAE government has enhanced its aero-political protection, gained enough access to other global airlines through the free trade policies, and experienced substantial economic advantages and trade expansion. Nonetheless, the open skies have increased government expenditure, frustrated the UAE’s business partners, and increased international air business conflict. To end this controversial dilemma about open skies, future studies should examine ways of incorporating state-owned and state-owned airlines, without causing international conflict.
Introduction
As nations grew towards better policy development, the initial problem that marred several countries across the world is the manner in which each will reinforce control over its territorial boundaries in the air, on the land, and across the seas. To ensure that countries possess enough autonomy over their air boundaries, the open sky agreements came into existence (American Airlines 2015). As a way of avoiding international conflicts, the open sky agreements have dominated the policy frameworks that control the activities of the airline of several countries, including the UAE (American Airlines 2015).
The United States created its first open sky agreement in the year 1979, and commenced with its open sky policing to several other nations, subsequently influencing the manner in which countries control the air boundaries (American Airlines 2015). The UAE began its move towards establishing effective open sky agreements in the year the 1980s after the Emirati government noticed its undeterred influence in the international air transportation.
Background to the Research
Due to the increasing demand for the Emirati airlines for international air transportation purposes, the government of the UAE has been applying several efforts towards ensuring that the Emirati airlines form part of the continentally renowned open skies policies (American Airlines 2015). With its airline exceeding 700 passenger flights on a weekly basis, carrying passengers to and from more than 16 European Union (EU) member states, the Emirati airline and the operations of its couriers have a great connectivity influence on the EU frontier economies (American Airlines 2015).
Dubai has historically been a long-term supporter of bilateral and multilateral open skies agreements with more than 150 international airlines, which have connections with its airport. Regardless of the fact that the UAE airline at times is underappreciated and undervalued with a limited intercontinental footprint, its campaign towards ensuring that it plays an integral part in the international open skies policies has brought some considerable changes.
Despite its successful endeavours in signing more than 150 open skies agreements with several international airlines, the open skies policies in Emirati have been variably significant given the nature of the external environment (Government and Environment Affairs Department 2014). In essence, a typical open sky agreement specifies no restrictions on the types of aircraft and the frequency of travel allowed by a nation’s space, as well as the hosting nation’s agreement to maintain high aviation safety and security standards. In actuality, open skies have played a significant role in Dubai but continue to pose serious international dilemmas for the UAE government (Government and Environment Affairs Department 2014).
The earliest notion of the international open skies policies was that the policies would bring about liberalisation, true international competition, an open global economy, a free and fair trade, and a fair aero-political protection. However, this notion is no longer realistic given the heightened conflicts, the growth of anticompetitive alliance arrangements and lack of free and fair trade within the international airline business.
The UAE has signed open skies agreements with over 70 European and the United States, yet its efforts to continue making the open skies policies effective on the global scale, for the benefit of free and fair competitive airline trade, have been affected by the influence of the giant European and American carriers. From a realistic perspective, the open skies have supported the Emirati airlines to engage in free and fair international air transport business that brings about maximum liberalisation, but their signed agreements with the US and EU counterparts have become problematic in the late days. In one of the leading newspapers in the UAE, latest 2015 reports about the rapport between the Emirati airlines and the EU and the US airlines, reveals that there is a serious spat between these nations as the EU and the US airlines seek to promote several anticompetitive policies that will likely frustrate the Emirati airlines.
The Scope of the Research
Based on the introduction offered in this research, several progressive issues are promising a prospective future for the open skies policies of the UAE, but some international and internal problems seem to affect the effectiveness of the open skies policies in Emirati. The quest to make the Emirati airline receive the maximum respect and acknowledgement from the global perspective has been high, but the efforts made by the frontier economies of the EU towards endorsing the anticompetitive policies are impeding the strategies of stabilising the open skies policies the UAE. This research focuses on analysing the status of the open skies policies, the crucial role of the open skies agreements signed by the Emirati government, the challenges that the government is facing while dealing with the open skies policies from an international perspective. Besides, the research will analyse the threats that the fair-competition agreements have posed against the UAE open skies agreements.
Aims and Objectives of the Research
The aim of this research project is to examine the open skies policies of the UAE, and especially how the policy has managed to serve the Emirati airlines, how they have proved crucial in the UAE’s role in the international air transport, and how the EU anticompetitive alliance arrangements have affected the open skies retrogressively. The debate that is increasingly affecting the authenticity of the open skies policy is whether the open skies are truly serving the purpose trade liberalisation, free and fair trade, aero-political protection, fair competition, or even encouraging the growth of an open global economy (Strosnider 2015). In several times, the UAE government has found itself at loggerheads with the frontier nations of the EU, and other giant economies concerning its limited intercontinental footprint in the international air transport, especially when compared to some of the giant and influential European carriers. Due to such dilemmas, the following are the main objectives set for this study.
Main Objectives of the Research Project
- To investigate the current status of the UAE’s open sky policy, including its objectivity and performance
- To examine how the UAE’s open skies policies have proven crucial in the promoting trade liberalisation and true international competition.
- To determine the challenges that the UAE government is facing while dealing with the open skies policies in the domestic and international level
- To analyse how the EU anticompetitive policies continually impede the efforts of stabilising the open skies policies of the UAE
Research Approach/Methodology
Mixed Case Study Approach
The study took the approach of a mixed case study approach. Based on a foundational definition given by Creswell (2003), a case study is an empirical research inquiry that often investigates a modern business or science phenomenon within its real-life perspective, especially when the research involves four issues. A case study is important when dealing with a research problem whose boundaries between the problem context, and the phenomenon is not obvious (Creswell 2003).
Besides, a case study suits a research that contains many variables, and especially one that uses several previous theoretical assumptions in its processes of data collection and analysis. It should be noted that this research sought its foundation from the open skies policies of the UAE, whose existence and eminence in guiding an effective UAE international airline business have become debatable issues. Due to such suppositions, the reason behind the selection of a mixed case study lies in the nature of the study itself.
Case studies play an integral role when dealing with a problem that has an identifiable identity such as a group or an organisation, or when dealing with a problem that has a social, political or cultural context. The issues surrounding the crucial role of the open skies policies of the UAE airline are diverse and tend to raise mixed reactions from various researchers.
To investigate the problem of the altered operations of the open skies policies and its deemed efficiencies in controlling the UAE’s international air transport requires a critical consideration of the pre-existing theories and the international debates concerning the UAE’s open skies policies. To get a thorough analysis of the issues surrounding the UAE open skies policies, the research decided to use a mixed case study approach, due to the assumed efficiencies associated with the use of both quantitative and qualitative research techniques in examining complex phenomena.
Target Population and Sampling
To collect primary data from the intended participants, the researcher engaged ten experienced constitutional of the Emirati Airline to help explain the quandary involving the applicability of the open skies policies, the challenges facing the implementation of the policies, and the influence of the EU anticompetitive alliance agreements on the existence and implementation of the open skies policies. The research engaged these managers based on the notion that these people hold enough information concerning the status of the open skies policies, the wrangles between the UAE couriers and the frontier US and EU nations, and the challenges facing the implementation of the UAE’s open skies policies. The research used a purposeful sampling approach since it needed few respondents (Creswell 2003). Apparently, the most appropriate sampling approach is the purposeful sampling technique, which also bears the name judgmental, subjective or selective in which the study targets specific people.
Data Collection Instruments
Following the initial definition of Creswell (2003), “mixed methods research is a research design (or methodology) in which the researcher collects, analyses, and mixes (integrates or connects) both quantitative and qualitative data in a single study or a multiphase programme of inquiry.” The sequential or simultaneous use of the two methods requires a comprehensive understanding of the two forms of data, viz. the qualitative type of data and the quantitative type of data. The primary data collection instruments were the self-administered open and closed-ended questionnaires that meet the requirements of collecting quantitative and qualitative research data. According to Johnson, Onwuegbuzie, and Turner (2007), the most prevalent data collection instrument used in collecting quantitative data is the closed-ended or the structured questionnaire, while the one that researchers use in collecting qualitative data is the open-ended or the unstructured questionnaire.
The selection of the mixed case study approach and the use of the quantitative and qualitative data collection approaches were based on their reliability in collecting a large amount of data in this time-constrained research. A combination of qualitative and quantitative data enables the researchers to compile rich data that contains assumptions from the theoretical background and the first-hand data from the primary participants (Johnson, Onwuegbuzie, & Turner 2007).
The study chose to use questionnaires as its data collection instruments due to the attributes that associate with the use of questionnaires in research. Based an evaluation of research experts, most of the researchers deem questions as data collection instruments that are easy to compose, easy to implement in the data collection process, and easy to collect easily understandable data. Furthermore, questionnaires are normally cheap to manage during data collection, and their analysis requires minimal efforts from the researcher.
Data Analysis Approach
According to Creswell (2003), quantitative data is one in which the data is predetermined, the data collection instrument is based on questions, and contains concepts that dwell on attitude, observation, census, numerical and statistical information. On the other hand, qualitative data is one, which involves open-ended questions, observation data, text containing opinions and facts, document data, and data collected from actual interviews (Creswell 2003). In analysing qualitative data, the researcher employed content analysis, while in the analysis of the quantitative data; the researcher used an SPSS data analysis tool. SPSS data analysis tool refers to a Statistical Package for the Social Science (SPSS) that is competent in analysing highly complex data (Johnson, Onwuegbuzie, & Turner 2007). The research used the two data collection and data analysis approaches based on the notion that the two research methods are easy to implement and highly cost-effective
Literature Review
Since the UAE noticed the growing impetus for the reliance on the Emirati airlines for international air transport purposes, the Emirati government began a campaign towards solidifying its international influence by signing various open skies agreements with Western and Asian counterparts (Strosnider 2015). The open skies policies have helped the Emirati airlines to gain a considerable international influence on the international air transport that was initially a business of America and several other big European carriers (Strosnider 2015).
When trying to understand how the Emirati airlines have influenced the international air transportation, it is important first to consider an analysis of the current trends in the business of airline across the world. Back in the years of early development, the American aviation system was the most powerful aviation system in the world, with big couriers and aviation expertise coming solely from the United States (Strosnider 2015). Towards the beginning of 1990, several nations boosted their airlines and promoted the internationalisation of airlines.
On seeing that the UAE is increasingly becoming influential in the air transportation business, the EU and the US convinced the Emirati government to enter into bilateral and multilateral open skies agreements (Tang 2015). The increased need for open skies came amid the increasing demand for liberalisation of the market for easy access to the earlier restricted markets. From a general perspective, the open skies policies have successfully enhanced the opening of new markets for the US carriers and the promotion of free and fair trade where competition and consumer choice have existed.
As Tang (2015) postulates, unknown among many nations is that the onset of the open skies policies generated by the American government came predominantly for two foundational reasons. The first significant reason was that the open skies to promote liberalisation and minimise or completely remove the influences of governments in the international aviation marketplace (Tang 2015). The second reason was to ensure that bilateral agreements are pertinent to the US interests.
While signing the bilateral agreements, the US and the EU remained ignorant of the fact that most of the mega airline businesses in the Arabian Peninsula are state-owned businesses where state capitalism is inevitable (Tang 2015). From an advantageous perspective, the open skies agreements that the Emirati airlines signed with its Western and Asian counterparts have made it very profitable and successful in the international air transportation business.
Fortunately, the open skies agreements conferred huge benefits for the Emirati airlines as they acted as a gateway to the most profitable world markets even though they never provide any benefits for the EU or the US. The UAE continues to reap huge benefits and continues to grow as the most lucrative global air market as attention for air transport has recently shifted towards its home. The UAE is benefiting from the United States and the European Union’s economies while the EU and the US get no returns.
The demands for travelling to the UAE from the US and the EU are incredibly higher when compared with the travel demand coming from the UAE (Tang 2015). Since the year 2006, the open skies agreements have made the UAE airlines benefit from the international air transport through the uninterrupted international air passenger traffic. To make the global air market beneficial for its business, the Emirati government has reinforced several pro-competition subsidies and other numerous unfair government-bestowed advantages (Tang 2015). Since most of the mega couriers are state-owned properties and state-managed air transportation facilities, the countries that are partnering with the UAE in the open skies agreements tend to receive little or completely no benefits from these international Emirati couriers. While the Emirati airlines enjoy a growth rate of about $40 billion from its counterparts, the partners come out frustrated.
Primary Data Findings
This research paper engaged ten constitutional experts who have various experiences in the areas of international politics, political science, globalisation, and matters of international trade agreements. The primary data came in two forms, the quantitative data and the qualitative data, that were predominantly from the closed-ended questionnaires and the open-ended questionnaires respectively. The research typically involved 20 questionnaires, with each questionnaire containing at least four important questions that reflected the needs of the objectives established (See Appendix 1 and 2).
Due to the variations in the data presentation, the quantitative and the qualitative data provide varying information that needed separate sorting strategies. The study collected the quantitative data using tables that contained a Likert scale format that comprised of four forms of responses (Strongly Agree [SA], Agree [A], Unsure [U], Disagree [D], and Strongly Disagree [SD]). The following are the findings of the quantitative and qualitative data gathered from the constitutional experts.
Quantitative Data
Objective 1 (Table 1): Investigating the status of the UAE’s open skies policies
The table above represents the opinions of the constitutional experts concerning the actual aims of the UAE’s open skies policies. Based on the data from the table, a majority of the respondents 9/10 (90 %%) feel that the open skies predominantly aimed at promoting an open international business competition. In another viewpoint, most of the respondents 7/10 (70%) agreed that the open skies aimed at facilitating aero-political protection for the benefit of avoiding international conflicts and war related to territorial disagreements, while the rest (10%) was unsure, and 2/10 (20%) disagreed respectively. Another aim of the open skies was to expand the air connectivity of the Emirates with other countries of the western and the Asian regions and 9/10, which translates to 90% of the respondents agreed while only one person (10%) disagreed. Lastly, respondents gave varied responses concerning the development of open skies as means of strengthening the airline business.
From the data in the above table, several issues seem to accompany the performance of the open skies policies of the Emirati airlines. A majority of the respondents, approximately 8/10 (80%) agree with the notion that the open skies policies are performing relatively well compared to the open skies of other nations. Concerning whether the open skies are promoting mutual beneficence, 6/10 (60%) of the respondents agree that the policies benefit both the Emirati airlines and other foreign couriers while a few of them 4/10 (40%) disagreed.
Regarding whether the spat caused by the EU and the US is causing affecting the airline business, a majority of them 7/10(70%) agree that the spat is harmful while 3/10 (30%) of them agree that the spat is harmless. When asked about profitability, a majority of the respondents 9/10 (90%) claimed that the Emirati airlines are benefiting from the multilateral open skies, while only one person claimed that the EU suffers losses.
Objective 2 (Table 2): Role of the UAE’s open skies in liberal trade and competition
The above table provides a comprehensive overview of the crucial role of the open skies and the perceived significances of its existing policies. All respondents (100%) agreed that the UAE’s open sky policies have supported business expansion in the Emirati airlines. Concerning whether the open skies have enhanced the growth of the international relations with its core partners, 40% of the constitutional experts agreed while a majority of them, 60% disagreed with this notion.
The research also delved into questioning if the UAE’s open skies have promoted free and fair trade with its business counterparts. Surprisingly, only 60% agreed with this opinion, while the rest (30%) disagreed and only 10% were uncertain about this issue. All the respondents agreed that the open skies agreements have brought about positive economic effects and 90% stated that the open skies have protected the interests Emirates and oppressed global exploitations. Others (60% of them) said that the policies have improved liberal competition and improved air connectivity.
Objective 3: The Challenges facing the UAE government in managing open skies
In its third objective, the research sought to investigate the challenges that the UAE government is facing while dealing with the open skies policies in the domestic and international levels. Based the results, respondents provided equally varying responses (50/50), concerning whether the open skies policies are increasing international pressure and causing internal conflict in the government or not. Concerning increasing government expenditure on the airline trade, 70% of the participants revealed that the open skies have forced the UAE government to overspend on the airline trade while 30% denied.
Concerning the impact of the open skies on the UAE’s legislation, 80% denied that they have unfortunately resulted in internal legislative dilemmas while only 20% agreed. The research also wanted to understand whether the open skies signed with several western and American counterparts are causing serious implications for other UAE’s global businesses. Eighty percent (80%) of the respondents denied while only 20% agreed with this notion.
Objective 4 (Table 4): The effects of the EU and US anticompetitive agreements
The research had its interest in understanding how the EU and US anticompetitive alliance agreements are affecting the UAE airline trade. Based on the responses in the above table, these anticompetitive policies are increasingly affecting the airline business of the UAE About 90% of the respondents claimed that the anticompetitive alliances are causing serious business upheavals in Emirates. Concerning their impact on the business profitability, 70% of the participants claimed that the anticompetitive policies of the EU nations and the US have resulted in sizeable business losses in the Emirati airlines.
Additionally, all the respondents agreed that the anticompetitive alliances have halted trade liberalisation and brought about international business spat among the partners. On discovering whether the anticompetitive alliances have demeaned aero-political protection and frustrated the UAE, 50% of the respondents agreed, 30% were uncertain, while the least, 20% of them disagreed with this idea about the anticompetitive alliances of the US and the EU nations.
Qualitative Data
What can you say about the status of the UAE’s open sky policy, regarding its objectivity and performance?
Concerning this question, the ten constitutional experts viewed the open sky policies as instruments of promoting effective international competition in the area of international air transportation business. Out of the ten constitutional experts who responded to this question, seven of them roughly explained that the open skies policies have an integral role in fostering fair competition. However, they were oblivious of whether the UAE policies have managed to promote fair international trade or they have merely instigated trade distortions due to the state interferences with the international air transportation.
From the perspective of aero-political protection, the constitutional experts revealed that the primary aim of developing the international open skies policies among the nations was to offer maximum aero-political protection to shun interferences and exploitations against each other. As the experts explain, this objective has been unachieved and altered by the amendments that have persistently affected the constitutional elements of the open skies.
How have the UAE’s open skies policies proven crucial in the promoting trade liberalisation and true international competition?
The constitutional experts interviewed in this research revealed that the open skies policies are perfect solutions for promoting trade liberalisation especially for the nations like the UAE, which has historically suffered competition problems while trying to penetrate the international markets. The open skies agreements have empowered the UAE to ensure that its couriers are expanding the air connectivity of the Emirates with other countries of the western and the Asian regions.
The UAE understands very well that the open skies policies of the Emirates have significantly helped to promote liberalisation and true international competition in the international air transportation. However, the pending global influence on the functioning of the open skies agreements has fuelled problems and instabilities in the proper implementation of the open skies policies. The UAE has managed to penetrate the international markets and become one of the most lucrative open-air markets in the world.
What are the major challenges that the UAE government is facing while dealing with the open skies policies in the domestic and international level?
The UAE government has witnessed a sharp growth in its air transportation market and liberalised trade in the airline business. However, the open skies have brought unique challenges from the Emirati government. Among common challenges affecting the Emirati government, when dealing with the open skies from an internal perspective is increased government expenditure in the airline business. The airline business has recently placed financial pressure in Emirati as the government capital injections have resulted to over $6.3 billion in travel subsidies.
In 2013 reports, the Emirati government has spent over $7.8 Billion in the expansion of the Dubai International Airport to maintain current airline pressure and $32 Billion to boost the New Dubai World Central Airport to sustain the future growth of Dubai. Apart from financial stress, the Emirati government is experiencing an unexpected international conflict coming from the open skies agreements signed with the US and the EU countries.
Give a brief account of how the EU and US anticompetitive policies are continually impeding the efforts of stabilising the open skies policies of the UAE
The research sought to understand the opinions of the constitutional experts concerning the manner in which the EU and US anticompetitive policies are affecting stability and implementation of the UAE’s open skies policies. From the perspective of the constitutional experts, the Emirati airlines are trading on a terrible international policy arrangement given the rising conflict resulting from the EU and US anticompetitive policies.
The anticompetitive alliance agreements between the EU and the US have halted trade liberalisation and brought about international business spat among the partners, have caused serious business upheavals, and have resulted in sizeable business losses in the Emirati airlines. Due to the international pressure coming from the EU giant couriers and the US major couriers calling for the withdrawal of the UAE government in the international air transportation business, the situation has brought some detectable changes in the profitability of the Emirati airlines, the regular operations of the airlines, and the international reputation.
Data Analysis and Discussion
To strengthen the understanding of the Emirates open skies policies, this research thought it was imperative to consider the main aims of the open skies, and the crucial role of these open skies regarding the airline performance. The research also delved into understanding the challenges that the government faces in implementing the open skies and the threats resulting from the EU and the US anticompetitive alliance agreements.
From the gathered data, it is clear that the UAE open skies came predominantly to promote free and fair international air transportation business where competition and customer choice are primary facets. The open skies also came to support the development of the aero-political protection to sustain the interests of the Emirati nationals and to protect the national boundaries (American Airlines 2015). The UAE open skies have managed to protect the national aero-political interests, and promoted free international air transportation, but have failed to fair competition.
Fair competition from the perspective of the international air transportation exists when the national airlines are free from the government direct and indirect influence whether through political or direct financial boosts (American Airlines 2015). However, due to the failed amendments to improve the UAE open skies policies, other nations that are participating in the multilateral and bilateral agreements with the UAE have been disadvantaged because the airline business in Emirati is solely under the government ownership and full government support.
The Emirati government understands very well that the Gulf Countries are not subject to corporate income tax or fuel tax, the independent regulatory oversight, their own competition laws, which exempt government-owned entities in various government sectors including the transport department (American Airlines 2015). Due to the legal advantages existing within its constitution and within the international air transportation policies, the UAE has increasingly relied on these legislative advantages to impose costly requirements against its foreign competitors.
Conclusion
Even though the United States and the European Union nations are aware of the growing challenges regarding the control of the UAE open skies policies, they have no substantial reasons to force policy amendments on the Emirati airlines. The quest to attain a fair international air competition cannot come from imposing forceful amendments on the state-owned business entities. It is possibly true that the open skies of the Emirati airlines have frustrated their business counterparts, but determining whether or not airlines should be state-owned or private establishments is a quandary that none of the nations can unravel.
The open skies have been favourable for the Emirati airlines, which are experiencing an unprecedented growth rate of an estimated $40 Billion value in the international air transportation. Regarding the challenges that the open skies are presenting in the Emirati government, the government capital injections to boost the $6.3 Billion air travel subsidies is affecting the government concentration on other public investments.
Future Work
To end this controversial dilemma about open skies, future studies should examine ways of incorporating state-owned and state-owned airlines, without causing international conflict. Through policy reforms, state-owned airlines may reshape.
References
American Airlines: Restoring Open Skies: The need to address subsidised competition from State-Owned Airlines in Qatar and the UAE 2015, Web.
Creswell, J 2003, Research Design: Qualitative, Quantitative, and Mixed Methods Approaches, Sage Publications, Thousand Oaks.
Government and Environment Affairs Department 2014, ‘Open Sky’, The International and Government Affair Journal of Emirates, vol. 21, no. 1, pp. 1-12.
Johnson, R, Onwuegbuzie, A & Turner, L 2007, ‘Toward a Definition of Mixed Methods Research’, Journal of Mixed Methods Research, vol. 1, no. 2, pp. 112-133.
Strosnider, T 2015, ‘Minimum Procedural Delay: A Legal Analysis of the US.-EU Open Skies Agreement, and the Fight to Increase North Atlantic Competition’, Irish Journal of Legal Studies, vol. 5, no. 2, pp. 25-51.
Tang, R 2015, International Air Service Controversies.