The US government is taking the allegations by the country’s three largest carriers of more than $42 billion in subsidies to Gulf carriers “very seriously”, despite an outwardly slow response.
“We’re taking this very seriously, we want all parties to take it seriously,” says Thomas Engle, deputy assistant secretary for transportation affairs at the US Department of State, at the Phoenix International Aviation Symposium on 8 May. “We’re trying to balance the need for a prompt government decision on how whether to respond to the legacies with the need to do a good job.”
The US departments of commerce, state and transportation opened a joint public docket on 10 April inviting interested parties to comment on the allegations. Comments are due by the end of May.
American Airlines, Delta Air Lines and United Airlines, as well as a number of their unions, have joined together to push the US government to enter consultations with Qatar and the United Arab Emirates (UAE) over the allegations of subsidies to Emirates Airline, Etihad Airways and Qatar Airways.
The airlines have expressed frustration on the length of time it is taking the US government to take action. Their chief executives sent a letter in April to the US secretaries of commerce, state and transportation urging them to immediately freeze the capacity of the Gulf carriers at January levels until consultations with the Gulf governments are complete.
“It is now apparent that the Gulf carriers are taking advantage of this delay to change the facts on the ground, rushing to add new widebody service in an attempt to gain even more market share before the US government acts to counter their subsidised expansion,” they said.
At the time Emirates had announced new service to Orlando and increased service to Boston, New York John F Kennedy and Seattle from later this year. Since then, Qatar has announced plans for new service to Atlanta, Boston and Los Angeles in 2016.
While taking the subsidy allegations seriously, the US government will have to weigh both sides of the situation carefully, notes Engle.
“The legacy carriers have usefully reminded us that our international aviation policy from the 1990s does not look kindly on subsidies,” he says. “It’s also important to recall that that policy reaffirms the goal of ‘safe, affordable, convenient and efficient air service for consumers’.”
John Byerly, an independent consultant who works with Emirates, and Ben Hirst, chief legal officer at Delta, nearly fell into fisticuffs over the subsidies issue at the Phoenix symposium.
Byerly berated Hirst, accusing Delta and its partners of withholding their evidence from the Gulf carriers for three months while simultaneously speaking with the media.
Hirst cut in: “Starting with [the Routes Americas conference in] Denver, when we went in to talk to the government, you characterised what we were doing as being opposed to open skies and that was wrong.”
“Delta started it!” retorted Byerly. “I remember in 2009 opposing open skies with Japan… We won that but Delta – oh my gosh – the number of cases which you have been fighting against open skies are legend. It’s a pity.”
American, Delta and United have repeatedly said that they support open skies and only have issues with the Gulf carriers due to the magnitude of the subsidies and amount of capacity they have added to the USA. They claim this amount would be considered illegal dumping under World Trade Organisation (WTO) definitions.
Emirates, Etihad and Qatar have repeatedly denied the subsidy claims.