Etihad rebuts subsidy claims, attacks US airline ‘oligopoly’

Abu Dhabi: Etihad Airways on Monday issued it strongest rebuttal yet of claims that it received market-distorting subsidies, saying it is required to repay loans and that its US competitors have a “condescending” view of non-US law.

The comments by the Abu Dhabi-based carrier mark its latest move to deter the Obama administration from revisiting aviation agreements with the UAE and Qatar. US airlines say more than $40 billion (Dh146.9 billion) in subsidies from the countries have allowed Etihad, Emirates airline and Qatar Airways to begin driving down prices and push competitors out of certain markets, contrary to ‘Open Skies’ agreements negotiated by the United States.

In a 60-page submission to the US government on Sunday made publicly available on Monday, Etihad said the US Open Skies policy did not prohibit airlines from receiving shareholders loans.

Etihad’s sole shareholder, the government of Abu Dhabi, gave it $5.2 billion with “the express requirement that such loans be repaid by Etihad.”

No international trade rules or precedent by the United States exists for addressing airline subsidy claims, complicating the US government review of the matter.

Etihad said the Open Skies policy does not define subsidy, but its main concern is to stop subsidies from lowering airfare artificially.

Citing a study it commissioned, Etihad said its published fares from April 2013 to March 2015 fell “generally” within the range of the fares of its opponents: namely, Delta Air Lines Inc, United Continental Holdings Inc and American Airlines Group Inc.

Other complaints by these airlines “reflect a quasi-colonial attitude and take a very condescending view of non-US law,” Etihad added.

The US airlines say Etihad has received a $501 million benefit because the UAE does not tax travellers connecting through its airports. Etihad responded that the rule applies to all carriers, although US airlines route their passengers elsewhere.

Overall, Etihad called the allegations “little more than a regulatory attempt to further cement [US airlines’] oligopoly, particularly on transatlantic markets.”

Jill Zuckman, spokeswoman for a US airline-union coalition known as the Partnership for Open & Fair Skies, said in a statement, “Government-to-government consultations are entirely appropriate given that Etihad has taken billions of dollars in subsidies from its government, the UAE.”