Air France's Spinetta attacks Emirates over competition

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Air France chief executive Jean-Cyril Spinetta has launched an attack on industry peer Tim Clark, his opposite number at Emirates, accusing the Dubai-based carrier of benefiting from unfair support.

Speaking at the Cannes Airlines Forum, Spinetta hit back at claims made earlier in the day by the Emirates chief executive that the carrier operates on a wholly-competitive basis, denying that it receives either government subsidies or privileged access to oil markets.

“I am simply asking him if he would agree, so that we could all gain from the quality of what he has done, to open all his accounts to a team from Air France/KLM to understand what is its business model and how it operates,” challenged the Air France chief.

Spinetta’s comments represent a renewed attack on sixth-freedom airlines – those having no domestic market and which generate traffic at points far from their hubs – after first raising concerns about such carriers at last year’s forum.

Clark had put up a defence of Emirates against the widely-held belief that the airline enjoys an unfair advantage in terms of financial and political support.

“It has been claimed, in several arenas, that Emirates has no need to join alliances, no desire to reduce costs, or even turn out a profit as it is protected and subsidised by the Government of Dubai. Well I’ve heard those arguments before and frankly they don’t wash,” he said.

“Emirates receives not one iota of aero-political protection which is, after all, the greatest form of government subsidy. No amount of cash or equity or cheap fuel can compare to the subsidy of aero-political protection, none of which Emirates receives or ever has done.

“Emirates also does not receive cheap or free fuel, nor does it have a bottomless pit of capital, as some seem to think.”

He told the forum that the Dubai Government gave the carrier $10 million in cash when it was established in 1985 and that it was told “not to come back for more”. The Emirates chief added that government investment in infrastructure in the initial years totalled some $88 million.

“Since those early days there has been no additional financial input from the Government,” says Clark who adds that the company’s fully-audited results are freely available to all. Emirates – which, like other Dubai-based companies, pays no corporate taxes – turned in a profits record of $429 million for 2003-04, up 74% compared with the previous year’s results.

Regarding the tax-free status enjoyed in the United Arab Emirates, Clark counters: “We do pay taxes in other parts of the world where we are required to do so by law.”

He adds that Emirates has many other forms of outlay which other carriers do not, citing the additional $57 million costs it incurs through ex-patriate employee expenses.