x Abu Dhabi, UAEWednesday 20 September 2017

Gulf and US airlines’ open skies row ‘has reached impasse’

The dispute over alleged subsidies should be taken up at the government level, the head of American Airlines Group said.

MAD MONEY -- Pictured: Doug Parker, American Airlines CEO, in an interview on May 19, 2015 -- (Photo by: Adam Jeffery/CNBC/NBCU Photo Bank via Getty Images)
MAD MONEY -- Pictured: Doug Parker, American Airlines CEO, in an interview on May 19, 2015 -- (Photo by: Adam Jeffery/CNBC/NBCU Photo Bank via Getty Images)

A dispute between the largest United States airlines and Arabian Gulf carriers over alleged subsidies has reached an impasse and should be taken up at the government level, the head of American Airlines said.

American Airlines, Delta Air Lines and United Continental Holdings claim that Emirates, Etihad Airways and Qatar Airways receive government subsidies that allow them to compete unfairly.

Talks with counterparts at Arabian Gulf airlines have not resolved the issue, the American Airlines chief executive Doug Parker said yesterday in Hong Kong. “We have agreed to disagree and I think this now belongs with governments, not CEOs,” Mr Parker said. “We can compete with airlines. We can’t compete with countries.”

The major US airlines say Arabian Gulf carriers have received $42 billion in subsidies from Qatar and the UAE, allowing them to win market share by offering cheap international connections through their hubs.

The US airlines have asked their government to keep the Gulf carriers from adding more US flights pending a review of open skies air treaties.

“We are petitioning the government to enforce our trade laws,” Mr Parker said.

The Gulf carriers deny they receive subsidies and say the US airlines are trying to bully them because they cannot compete on quality. US carriers received their own subsidies after the September 11 terrorist attacks and shed debt with government blessing via Chapter 11 bankruptcy reorganisations, the Qatar Airways chief executive Akbar Al Baker said last month.

“You just need to ask the creditors of US airlines that filed bankruptcies, or the employees who took pay cuts as to whether or not the governments subsidised those airlines, or whether they did,” Mr Parker said. “If that’s the real argument they have, that ‘you’re subsidised also’, we disagree, but let’s have that conversation.”

Qatar Airways could pull out of the oneworld alliance, which includes American Airlines, if the dispute drags on, Mr Al Baker said last week. Mr Parker said he hoped that would not happen.

American Airlines “is really happy with oneworld and the partnerships that are there, and hopes those relationships continue to exist”, he said. “That’s a relationship that we view as separate from public policy.”

Mr Parker was in Hong Kong for the first anniversary of American Airlines’ non-stop service from Dallas/Fort Worth to Hong Kong. The carrier has also added services from Dallas to Beijing and Shanghai, he said.

American Airlines will soon begin a service from Los Angeles to Sydney, Mr Parker said. The carrier also will take over Delta Air Lines’ former landing slot at Tokyo’s Haneda Airport, flying there from Los Angeles.

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