The U.S. airlines argue the Gulf carriers have an unfair advantage over them — particularly in the booming Middle Eastern and Asian markets — because they receive generous subsidies from their oil-rich governments. They said those financial benefits undercut the international aviation pacts between the U.S. and those Middle Eastern nations, which essentially function as free trade agreements.
“Foreign airlines should not receive preferential tax treatment if their countries choose not to open their markets to U.S. companies,” Isakson said last month. The Republican senator said the provision would have helped “protect Georgia airline employees.”
But some outside groups warned about unintended political consequences of the language should it be codified into law.
The Sandy Springs-based UPS, which operates in the Gulf, said it was supportive of the tax overhaul more broadly but that the Isakson language was "problematic" given the "likely retaliatory impact on the cargo industry in the overseas markets we serve," according to spokeswoman Kara Ross. FedEx had come out against the campaign by U.S. airlines in the past, saying it reeked of trade protectionism.
Representatives from the Gulf airlines, meanwhile, have argued that U.S. carriers also receive government subsidies and that their American counterparts were trying to bully their way out of an economic fight they were losing.
“What I’m trying to do is get everybody to the table so that our companies ... are all competing on a level playing field. We’ve appropriately gotten everyone’s attention, so we’ll move forward to get everyone negotiating,” Isakson said in an interview Thursday.
Regarding cargo carriers such as UPS and FedEx, Isakson said, “they have an interest too so I want to watch out for them as well.”
The Partnership for Open & Fair Skies, a group set up by the U.S. airlines to fight the Persian Gulf carriers, declined to comment.
Congressional scorekeepers previously estimated the Isakson amendment would have led to some $200 million in new revenue for the federal government because of the taxes the Gulf carriers would have been forced to pay.
The U.S. carriers had been pushing the Obama and Trump administrations to similarly punish their Gulf-based rivals for more than two years.
Read more about Delta’s political fight here.