A powerful public relations firm run by former Obama aides is running a campaign against open skies agreements, which have brought greater competition and lower airfares for Americans.
The firm SKDKnickerbocker, run by former Obama White House communications aides Anita Dunn and Bill Burton, is working on behalf of legacy carriers Delta, American, and United Airlines. SKDKnickerbocker is one of several Democratic lobbying firms representing the Partnership for Open and Fair Skies, which for over two years has asked the federal government to freeze new routes of its competitors and limit open skies agreements with Qatar and UAE.
A lobbying effort tried but failed to insert a provision in the final Senate tax cut bill that would have taxed Gulf carriers, opening the door for reciprocal taxes against U.S. airlines and cargo carriers, opponents of the tax said.
The legacy carriers—Delta, American, and United—have spent millions lobbying both the past and present administration to restrict the open skies agreements with Qatar Airways, Emirates Airline, and Etihad Airways. They say the Gulf carriers are unfairly subsidized, allowing for artificially low ticket prices.
However, the legacy carriers have never filed an official complaint with the Department of Transportation, which could assess potential violations through an independent 180-day review of the existing open skies agreements.
Eliminating government regulation over international air travel through open skies agreements have generated at least $4 billion in annual gains to travelers, according to a study by the Brookings Institution.
The partnership has "spent lavishly" against open skies agreements, hiring several Democratic firms, including $1.7 million with SKDKnicerkbocker, and other firms run by former Obama and Hillary Clinton aides. The Partnership for Open and Fair Skies also paid Beacon Global Strategies, led by Clinton alum Philippe Reines, $280,000, and $620,000 to the Messina Group, founded by Jim Messina, Obama's 2012 campaign manager.
Its spokesperson is SKDKnickerbocker's Jill Zuckman, also a former official in the Obama Department of Transportation. The CEO of American Airlines Doug Parker donated $15,000 to Clinton's campaign, and former Delta CEO Richard Anderson contributed $353,400 to a pro-Hillary Clinton Super PAC and $33,400 to the Democratic National Committee last year.
Anita Dunn, the former Obama White House communications director, and Bill Burton, a longtime Obama aide, are both managing directors at SKDKnickerbocker. A private-equity firm controlled by Mark Penn, the chief strategist for Hillary Clinton's failed 2008 campaign, purchased SKDKnickerbocker in 2015.
After failing to convince the government to reopen the open skies agreements, lobbyists tried to use a signature piece of Republican legislation as a vehicle to benefit legacy carriers. A provision was added into the Senate tax reform bill targeting Gulf carriers with a $200 million tax over a decade.
A coalition of U.S. passenger and cargo carriers that supports open skies agreements said the tax meant to target the big three Gulf carriers would have unintentionally hit up to 14 other countries and led to retaliatory taxes on U.S. companies.
"This is another poorly veiled attempt by Delta to shield itself from competition and circumvent the established Department of Transportation process to review legitimate subsidy claims," said Andrea Christianson, spokesperson for U.S. Airlines for Open Skies, which represents Atlas Air Worldwide, FedEx, Hawaiian Airlines, and JetBlue Airways.
"This special interest ploy was designed to hurt the Gulf carriers but would actually impact airlines from as many as 14 countries and territories, such as Jordan, Ethiopia, and Malaysia," she said. "In addition, the provision opens the door to retaliatory taxes that would harm U.S. airlines, particularly U.S. cargo carriers."
"Delta appears unconcerned about the collateral damage of its multimillion-dollar lobbying campaign, but Congress should be," Christianson added.
The provision was ultimately removed before the Senate voted to approve the tax cut bill by a 51-49 vote early Saturday morning.
Reached by email, Zuckman said the Partnership for Open and Fair Skies would not be commenting on the tax provision.
Scott Reed, a Republican strategist, is lobbying on behalf of the Partnership for Open and Fair Skies. CRC Public Relations is also promoting the effort.
"We're happy to be a part of a bi-partisan group of Republicans and Democrats who are dedicated to seeing our Open Skies agreements enforced," said CRC President Greg Mueller. "The United States cannot stand idly by as foreign governments pour billions in subsidies into their national airlines in violation of existing trade agreements. This distorts the market and costs American jobs, something that should be odious to all citizens of our country."
Update Dec. 6, 2017, 2:28 p.m.: This post has been updated to clarify certain information.
Published under: Tax Reform