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Emirates' Clark strikes back in US open skies debate

Emirates president Tim Clark has hit back at an effort by the three US mainline carriers to lobby the US government to roll back open skies with some Gulf nations, calling the airlines' allegations "sweeping and unfounded".

"I am surprised by reports that the three largest US carriers – each of which was a beneficiary of America’s unique Chapter 11 bankruptcy reorganisation law - have presented a case against open skies access for some airlines including Emirates, based on claims of subsidies," says Clark in a statement to Flightglobal.

"As far as the airline industry is concerned, aeropolitical protection for airlines is arguably the biggest subsidy of all," he adds. "Therefore, it would be ironic, and a shame, if the US, who have been the forerunners of liberalisation and deregulation, would now contemplate a u-turn on its successful international aviation policies for the benefit of a narrow few, based on sweeping and unfounded subsidy allegations."

In late January, chief executives of Delta Air Lines, American Airlines and United Airlines met with senior White House officials to persuade them to consider limiting the access of Gulf carriers to the USA. It is understood that the carriers are pushing the US government to review existing open skies deals with the countries of these Gulf airlines.

Delta says the three carriers have begun a discussion with the US government on "the impact of more than $40 billion of government subsidies and unfair benefits to state-owned Gulf airlines, specifically Emirates, Etihad and Qatar [Airways]".

In response to this, Clark says: "We are very interested to see how the figure of '$40 billion of government subsidies and benefits' was calculated. It is especially surprising because some of the complaining CEOs have publicly called for the US to emulate the pro-aviation growth policies of Dubai."

The three Gulf carriers have repeatedly denied charges that they benefit from state subsidies, and Clark reiterates this. "We have never received financial subsidies or bail-outs. We did receive start-up capital of $10 million in 1985 and a one-time infrastructure investment of $88 million for two Boeing 727 aircraft and a training building," he says.

"This investment has been more than repaid by dividend payments to the government of Dubai which total over $2.8 billion to date."

Etihad and Qatar Airways decline to comment on the move in Washington DC by the three US mainline carriers. The US Department of Transportation declines to comment on the meeting between the three US airline chief executives and secretary of transportation Anthony Foxx. The chief executives are also believed to have met with commerce secretary Penny Pritzker.

"For the United States government to be persuaded by a non-representative vocal minority that it should change course, particularly with regard to its Open Skies policy, makes absolutely no sense," says Clark.

The bid by the three US airlines for their government to reevaluate its open skies deals with certain Middle Eastern countries have attracted strong reactions. Mid-sized and smaller US airports that are not significantly dominated by a US mainline carrier have said that rolling back open skies could hurt new international service to the USA.

Delta, American and United have been backed in their efforts by the Air Line Pilots Association (ALPA). The union says it is in favour of open skies “provided that partner nations’ airlines compete on commercial merit and do not benefit from unfair economic advantages in the marketplace”.

Among other US carriers, New York-based JetBlue Airways and FedEx have spoken out in favour of retaining US open skies policies. JetBlue is a codeshare partner with all three Gulf carriers - Emirates, Etihad and Qatar.

Southwest Airlines - the other major US carrier - has so far remained silent on the issue. US airline trade association Airlines For America has declined to comment, referring all questions to the three US mainline carriers.

Emirates operates to nine US cities non-stop from Dubai, and provides one-stop service to 60 other cities in the Middle East, Africa and Asia Pacific.

Clark says these are destinations "currently not served by American carriers, except perhaps via their alliance partners where routings are often relatively convoluted or inconvenient".

"Head-to-head, there are virtually no competitive overlaps between Emirates’ network and those of the three complaining US carriers," he adds.

The Dubai-based carrier has transported more than 10.7 million passengers on its US flights, and Clark estimates that the carrier's US operations have contributed more than $2.8 billion annually for the airports in New York, Dallas/Fort Worth, Houston, Los Angeles, Boston, San Francisco, Seattle and Chicago.

Source: Cirium Dashboard