Emirates Airline assembles top team to rebut US carriers’ allegations over subsidies
Emirates Airline is putting together a top team from its legal, strategic and financial departments to respond to allegations made by US airlines that it had used unfair business methods to become one of the leading forces in global aviation.
Tim Clark, the Emirates president, is planning to fly to Washington soon to meet US department of transport officials and attempt to head off any changes to federal legislation regarding the open skies policy.
The detailed allegations were contained in a briefing to selected journalists late last week.
“We are very confident that we can debunk all those arguments quickly and robustly,” said a spokeswoman for the airline.
Emirates, Etihad Airways and Qatar Airways were named in a 55-page report made public by three US airlines – American, Delta and United – and other US aviation industry organisations in a Washington conference call. The National and other Arabian Gulf media organisations were excluded from the “invite only” conference call organised by a lobbyist firm last Thursday.
When The National requested dial-in details the newspaper was told: “This is an invite-only event, thanks.”
The report accused the three of using unfair business methods and prohibited financial subsidies to contravene the open skies rules that govern international aviation.
The US airlines want to change the rules that have until now ensured a liberalised global aviation industry. An Etihad spokesman declined to comment until the airlines had properly reviewed the report. All three Gulf airlines have rejected similar allegations.
Mr Clark said: “We have only just got a copy of the white paper prepared by Delta, United and American – which, to date, has been presented only to select officials and journalists.
“We will provide a response when we’ve had the opportunity to fully review the allegations, and are confident that any allegation that Emirates has been subsidised is totally without grounds.”
Qatar Airways had not replied to a request for comment at the time of going to press.
The report said: “Fuelled by massive government subsidies, state-owned Qatar Airways, Etihad Airways and Emirates are aiming to dominate global aviation by exploiting open skies policy.
“These three airlines, wholly owned by their governments, are using unprecedented subsidies to exploit their open and unfettered access to the US market. This threatens our US airline industry, airline jobs and the US economy,” the report authors wrote.
“Over the last decade alone, Qatar, Etihad, and Emirates collectively have received more than $42 billion in subsidies and other unfair benefits from the governments of Qatar and the United Arab Emirates, according to a recent investigation. Those subsidies are in violation of open skies policy and put thousands of US airline jobs at risk.” Then the report breaks down the subsidies it alleges have been given to the three Gulf airlines over the past decade.
The biggest alleged subsidy is $12.4bn in “interest-free loans and shareholder advances” it claims were given to the airlines; next is $11.2bn in “equity infusions, grants and future committed subsidies”, followed by $8.8bn of “interest savings from government loan guarantees and interest-free loans”.
The report claimed that a $3.1bn benefit came from “a union ban resulting in below market labour costs”, and smaller amounts from “government assumption of fuel hedging losses” ($2.4bn), “subsidised airport charges” ($2.3bn) and “passenger fee exemption, rebates and miscellaneous subsidies” ($1.8bn).
The US carriers’ report states: “The three [Gulf] carriers’ routes to the US have not meaningfully increased passenger traffic; they only serve to displace US airline market share and shift good US aviation jobs overseas.
“In fact, every lost international round-trip route by US carriers because of this subsidised competition equals a net loss of more than 800 US jobs.”
Danny Sebright, the president of the US-UAE Business Council, said that “the big three US airlines should stop complaining and start competing”.
A report from the trade body last year identified more than $16bn in benefits each year to the US, supporting more than 100,000 jobs and generating more than $1.6bn in taxes.
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Updated: March 7, 2015 04:00 AM