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U.S. airlines take fight against Gulf carriers to Washington

Emirates Airline started flying the A380, the most luxurious aircraft in the world with on-board shower spas and a bar for first class passengers, to DFW Airport in October.
Emirates Airline started flying the A380, the most luxurious aircraft in the world with on-board shower spas and a bar for first class passengers, to DFW Airport in October. Star-Telegram

America’s largest three airlines on Thursday released details of a report claiming that three fast-growing Persian Gulf carriers have received billions in illegal subsidies from their governments over the past decade.

Officials from United Airlines, American Airlines and Delta Air Lines said they have gathered evidence during a two-year investigation to document that Qatar Airways, Etihad Airways and Emirates have received $42 billion “in quantifiable subsidies and other unfair benefits from their respective governments since 2004.”

The Gulf carriers, each known for luxurious service and regularly voted by consumers as among the best airlines in the world, have been expanding aggressively, including in the United States. Each of the three carriers operates flights at Dallas-Fort Worth International Airport, where they compete with Fort Worth-based American to carry people around the world.

“The subsidies are obvious and massive,” said David Ross, an international trade attorney with WilmerHale who is working with the airlines, adding that the study conformed to the definition of subsidy that the World Trade Organization uses.

Emirates President Tim Clark, speaking to reporters Thursday in Berlin, called the U.S. airlines’ claims “bluster and flimflam” and said he will travel to Washington this month to defend his carrier against the allegations.

“They must be prepared for a very robust response from us,” Clark said.

The alleged subsidies including interest-free loans with no repayment terms, government assumption of fuel-hedging losses, subsidized airport charges and free land.

U.S. airline officials claim the Gulf airlines would be losing money if they competed fairly, and the subsidies allow the three Gulf carriers to expand their fleets, grow international routes and distort the commercial marketplace.

U.S. airlines fear the further loss of business to the Gulf carriers and, ultimately, the erosion of U.S. jobs. The loss of a wide-body aircraft route costs 800 U.S. jobs, they say.

“It will threaten our entire industry,” said Capt. Rick Dominguez, executive administrator of the Air Line Pilots Association International. “Nothing less than our careers are at stake.”

The U.S. airlines are turning to Congress for help in tightening aviation treaties with Qatar and the United Arab Emirates. The lobbying will include lawmakers overseeing transport and trade, plus other legislative leaders, one person told Bloomberg News, and the airlines want to keep pressing Secretary of State John Kerry and Transportation Secretary Anthony Foxx.

Under so-called Open Skies agreements, by which airlines can fly freely between countries, the U.S. carriers are hoping the U.S. government will push for “consultations,” a provision for resolving such disputes.

This article includes material from Bloomberg News.

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