U.S. to meet with Persian Gulf nations on airline subsidies

U.S. carriers say Gulf nations unfairly subsidize expansion by Emirates, Qatar Airways and Etihad Airways.
U.S. carriers say Gulf nations unfairly subsidize expansion by Emirates, Qatar Airways and Etihad Airways. Star-Telegram

The State Department will hold informal talks with the United Arab Emirates and Qatar over claims the Persian Gulf nations gave unfair subsidies to their state-owned airlines.

U.S. diplomats will conduct the informal technical discussions with representatives of the Middle Eastern countries next month, a State Department official said, confirming previous reports. The U.S. government stopped short of seeking more formal consultation provisions under air-travel treaties, said the official, who asked not to be identified because the talks will be private.

Fort Worth-based American Airlines Group, Delta Air Lines and United Continental Holdings have urged the Obama administration to hold formal negotiations with the United Arab Emirates and Qatar, alleging that they have provided more than $42 billion in unfair subsidies and other benefits to Emirates, Qatar Airways and Etihad Airways.

The U.S. airlines contend that the subsidies have allowed the Gulf carriers to aggressively expand in the United States, siphoning off international business to Europe and Asia with upscale cabins and in-flight services. All three of the Gulf carriers have launched service at Dallas-Fort Worth Airport in recent years.

The Persian Gulf carriers have disputed those allegations and said that U.S. carriers received their own government subsidies through debt forgiveness in the bankruptcy system.

Undersecretary of State Catherine Novelli discussed Middle East aviation issues with representatives of U.S. airlines and labor unions last week, the State Department official said. The opening of informal talks won’t affect the U.S. Open Skies policy, which has expanded passenger and cargo flights to and from the U.S., the official said.

“We appreciate how seriously the United States government has taken the issue of massive subsidization of the Gulf carriers,” said Jill Zuckman, spokeswoman for the Partnership for Open & Fair Skies, which is backed by the biggest U.S. airlines. “Discussions between our governments are an important step forward.”

A representative of Emirates declined to comment and Qatar Airways didn’t respond to a reporter’s query. Etihad said the carrier hadn’t received a meeting request or update from the U.S. government.

“However, we submitted our formal response to the false allegations made against us by the Big 3 U.S. carriers last May,” the airline said in an e-mailed statement. “We respect the process and we await the outcome of the U.S. government’s deliberations.”

This article includes material from Star-Telegram archives.