Aviation

U.S. airlines win key ally in Congress in fight over Gulf carrier subsidies

A ceremonial water spray welcome from DFW fire trucks. Emirates Airline's A380, the most luxurious aircraft in the world with on-board shower spas and a bar for first class passengers, landed at DFW AirportOctober 1, 2014.
A ceremonial water spray welcome from DFW fire trucks. Emirates Airline's A380, the most luxurious aircraft in the world with on-board shower spas and a bar for first class passengers, landed at DFW AirportOctober 1, 2014. Star-Telegram

U.S. airlines won support from a crucial congressional committee chairman in their complaints about state aid to Persian Gulf carriers, while the Middle East operators said their critics don’t have the facts straight.

“There appear to be subsidies that are flowing to those airlines,” Rep. Bill Shuster, R-Pa., who leads the House Transportation and Infrastructure Committee, said in an interview at an aviation industry event in Washington. “When you look at the things they are doing, they don’t seem to make economic sense. They’ve got to be getting money from somewhere.”

Without specifying how he will proceed, Shuster said he plans to highlight the issue with his panel. The U.S. government should examine the Open Skies agreements, which allow Emirates, Qatar Airways and Etihad Airways access to U.S. airports, Shuster said.

The U.S. Chamber of Commerce Foundation’s 14th annual aviation conference served as a platform for executives to lay out their positions in the dispute over what Delta Air Lines, United Continental Holdings and American Airlines Group say is $42 billion in unfair government support for state-owned airlines from Qatar and the United Arab Emirates.

Emirates, the largest of the Gulf trio, promised a detailed report “supported with financially and legally verified documents” to answer the U.S. carriers’ complaints, which were presented to the government in January. U.S. agencies are studying the case, the Obama administration has said.

Emirates “will rebut all the things that were said about us,” airline President Tim Clark said at a news conference Tuesday.

U.S. carriers say their Gulf rivals are offering impossibly cheap tickets on routes to Asia, through their hubs in the Middle East, flying jumbo jets with far more seats than could be filled from their home markets alone.

They’ve been especially hurt in routes to India, according to the U.S. airlines’ investigation. Since 2008, the three Middle Eastern companies have more than tripled their share of U.S.-to-India bookings, to 40 percent. The portion controlled by the U.S. airlines and their European partners has fallen slightly.

“American would like to fly to India, but given how low the fares are because of the subsidies, we simply can’t do that,” American CEO Doug Parker said Tuesday. “They’re flying at fares that certainly can’t be profitable.”

The U.S. airlines want the government to open talks with Qatar and the United Arab Emirates over existing air treaties. Until an investigation is concluded, they are asking for the Gulf airlines to be barred from expanding flights in the U.S.

While Emirates promises a more elaborate rebuttal, it challenged some of the basic assumptions of the allegations. The U.S. airlines claim Dubai covered $1.6 billion to $4 billion in fuel-hedging losses in 2008 and 2009, according to their report. But Emirates said it covered those losses with its own cash reserves.

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