A coalition of groups, known as the Partnership For Open and Fair Skies, has called for a U.S. government review of the subsidies which three Middle East carriers purportedly receive from their respective governments, which the coalition claim violate the spirit of the current Open Skies agreement between the Middle East nations and the U.S.
The coalition alleges that Qatar Airways, Etihad Airways and Emirates Airlines, which are owned by the governments of Qatar and the United Arab Emirates, have received more than $42 billion in subsidies since 2004. The Open Skies agreement between the U.S. and Qatar was signed in 2001, and the agreement with the United Arab Emirates was signed in 2002.
Clear violation of fair competition
The coalition includes American, Delta and United Airlines, as well as the Air Line Pilots Association International; the Allied Pilots Association; the Association of Professional Flight Attendants; and the Airline Division of the International Brotherhood of Teamsters.
"This subsidized support includes interest-free government 'loans' with no repayment obligation, government grants and capital injections, free land, airport fee exemptions and more," the
coalition states on its website.
"These subsidies are a clear violation of Open Skies policy, which is based on the principle of fair competition in a marketplace free of government distortion," the domestic aviation industry groups continued. "$42 billion in subsidies and unfair benefits is the very definition of government distortion."
Leocha demands terminating the juggernaut actions
Countering the Partnership's arguments, however, TravelersUnited, a U.S.-based consumer group is backing earlier statements on the issue by plane maker Boeing and FedEx Express CEO and president, David Bronczec, who accused the U.S. carriers of challenging the foreign carriers out of a fear of competing with them.
"U.S. network carriers - American Airlines, Delta Air Lines and United Airlines - not satisfied with their near monopoly position domestically or with their airline alliance anti-trust immunity, are attempting to stop competition from the Gulf carriers," TravelersUnited chairman Charlie Leocha wrote in a blog post on his group's website.
"Travelers United fully supports open competition in all aspects of aviation. Consolidation in the U.S. airline industry and anti-trust immunity grants to airline alliances have created dangerous degradation of competition in the United States," Leocha continued. "This juggernaut of anti-competitive and anti-consumer airline actions must stop."
IATA has no position
Meanwhile, IATA's director general, Tony Tyler responded to a question if IATA supported requests by airlines to revoke Open Skies agreement between countries because of perceived unfair competition, by saying that IATA has "no position" in this issue. "We have IATA members on both sides of the argument. IATA is, of course, in favour of markets being open and we favour fair competition, which is very difficult to define."
In a related development, a German official with a political delegation in Doha recently ruled out more landing rights in Germany for regional carriers until the dispute is resolved. "Until the problems linked to the subsidies matter are solved and a level playing field for competition established there will be no additional landing rights," the German government's aviation coordinator, Brigitte Zypries, told Bloomberg. Her position was now confirmed by Berlin’s transport minister Alexander Dobrindt who turned down requests from Gulf carriers to expand both their passenger and cargo frequencies and serve additional German cities. As long as they cannot exclude any market distorting subsidies they won’t get new or additional traffic allowances, he has declared according to news agency reports.
EU favors revised traffic agreements
A similar position was voiced by France’s transport minister Alain Vidalies and Dutch vice minister Wilma Mansfeld who was quoted as saying that the European Union will implement more stringent conditions for future landing rights for Middle East carriers. Euro Commissioner Violeta Bulc has been given the mandate to negotiate and conclude revised pacts with the relevant Gulf States. The approach advocates terminating today’s patchwork of bilateral traffic treaties signed by individual EU member states and Arabian governments and put relations on a new footage based on a comprehensive air service agreement between the EU and the Gulf countries. Only then the carriers might be permitted additional traffic rights, provided they guarantee that their airlines refrain from any acts of competition distorting practices.
To respond to the allegations made by the U.S. carriers, Dubai-based Emirates meanwhile has put together a top team from its legal, strategic and financial departments. Emirates President, Tim Clark, plans to fly to Washington soon to meet U.S. department of transport officials and attempt to head off any changes to federal legislation regarding the open skies policy.
Nol van Fenema / Heiner Siegmund
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