An Emirates Airbus A380 jet lands at the JFK International Airport in New York (file). In an interview with Reuters, Tim Clark, president of the world’s largest international carrier, urged the US government to think about the impact on its aerospace industry, which has been boosted in recent years by orders from the Gulf.

Bloomberg/Atlanta


Delta Air Lines Inc, American Airlines Group Inc and United Continental Holdings Inc are stepping up their campaign against Arabian Gulf region airlines that they say are getting an unfair advantage from $42bn in government subsidies.
The three biggest US carriers said they met with European Union officials last week to discuss the impact of the “alleged subsidies” doled out over the past decade.
The meeting escalates an effort begun last month when the US airlines submitted a 55-page document to the Obama administration, urging a review of US air treaties with the Gulf nations. European airlines including Air France-KLM Group and Deutsche Lufthansa AG also have complained to the EU about the Gulf carriers.
The subsidies and other advantages allow the Gulf carriers to fly large planes half empty and offer much lower fares than their US counterparts on flights between the US and Asia, thereby stealing market share on lucrative overseas routes, according to the trio of airlines. What the US airlines want is for the government to modify or scrap air treaties with the UAE and Qatar.
Those treaties, part of the more than 100 of the Open-Skies agreements negotiated by the US since 1992, allow direct access to cities around the world and in general have helped foster greater competition and lower prices on flights to hundreds of destinations.
“These unprecedented subsidies, which continue to grow every year, skew the competitive landscape in Europe as well as the US,” Trebor Banstetter, a Delta spokesman, said in an e-mail. “We look forward to more discussions on the global impact of the unfair competition created by these airlines.”
Emirates Airline, Qatar Airways and Etihad Airways all have used the Gulf’s position as a crossroads for global flight paths to funnel more traffic between the West, Asia and Australasia through their hubs. Dubai International airport last year toppled London’s Heathrow as the No 1 airport by international traffic.
The US airlines contend the three Gulf carriers are expanding to capture far more passenger traffic than their home populations need, Delta has said. Their growth already has hurt European carriers, according to Delta.
John Byerly, a lobbyist for Emirates and a former US State Department official, said his client has not even seen the US airlines’ report.
“Speaking personally, I think it’s an outrage that Delta and its allies see fit to hold secret briefings of European officials in Brussels while refusing to make their 55-page report available to the American public,” Byerly said in a telephone interview.



Emirates chief urges US to ignore subsidy claims

Reuters/Paris


The head of Dubai’s Emirates has hit back at US airlines in an increasingly bitter subsidy spat and urged Washington to block their calls to renegotiate Open Skies agreements.
In an interview with Reuters, Tim Clark, president of the world’s largest international carrier, also urged the US government to think about the impact on its aerospace industry, which has been boosted in recent years by orders from the Gulf.
He was responding to allegations of trade-distorting Gulf subsidies made by the three largest US airlines, Delta Air Lines, American Airlines and United Airlines.
In a 55-page dossier presented to the US government, they have called for the renegotiation or suspension of Open Skies liberalisation deals with the UAE and Qatar.
Open Skies deals broadly give airlines from each side the right to fly wherever and whenever they want.
US airlines say the system puts them at a disadvantage because their market is far bigger.
Furthermore, they allege that Gulf states broke the trade deals by pouring $40bn of alleged subsidies into their carriers, something Gulf nations and airlines have repeatedly denied.
And they complain that three Gulf carriers—Emirates and Etihad of the UAE and Qatar Airways - switched strategy after the deals were negotiated to become global hubs threatening the rest of the industry, rather than ordinary national carriers.
Clark denied that Emirates, founded in 1985, had changed its spots and said its growth and strategy were discussed openly during the trade talks that led to the 1999 Open Skies deal.
He said it was the US that had pioneered such agreements and Emirates had invested heavily in aircraft, notably from US manufacturer Boeing, as a result.
“So on what basis would they call for negotiations, because they laid the groundrules in the first place?”
Emirates has ordered a total of 289 Boeing wide-body jets, including 199 that have yet to be delivered. It is also the largest single customer of European plane maker Airbus.
“We have invested heavily in the US aerospace industry and a lot of what we have done with regard to market access has allowed us to go and place these orders, for which we have contracts in place,” Clark said.
“I don’t want to be seen as threatening or intimidatory but I am hoping that the US government thinks about all of this.”
Clark said the airline could provide a “cast iron defence” against subsidy claims and hinted at possible legal action over the criticisms, voiced especially by Delta.
“Delta is maligning us, leading people down a path which is based on unsubstantiated false allegations and that is very serious. It could be commercially damaging to us and if it is we will consider ... all our options,” Clark said.
He called for publication and a right of response to the 55-page report.
He also rejected claims that Gulf carriers had been able to take market share from US airlines, saying it was they that had missed the boat on globalisation.
“When the world started to knit together and energise, and all these people started travelling, where were the American carriers then?,” he said. “They go in and out of India and say the fares are too low. OK, that’s your problem: maybe your costs are too high, Richard,” he said, in a swipe at Delta CEO Richard Anderson.
The US airlines say the Gulf carriers use aggressive pricing to poach customers, but Emirates and its Gulf rivals maintain passengers are attracted by modern planes and better service.
“Emirates does its own thing. It supplies a quality product which knocks spots off any American product,” Clark said. “Why should we match their prices when we don’t need to?”