Miami: The United States’ largest airlines cannot pick and choose how its governments’ "open skies" agreements are enforced without consequences, Emirates airline President warned on Tuesday as he continues to fend off accusations of subsidies.
The three biggest US carriers -- Delta, United and American -- want their government to freeze Emirates, Etihad Airways, and Qatar Airways’ access to the country and open up consultations with their national governments over allegations of state subsidies.
“If you shutdown open skies, anti-trust immunity has to go because you are creating a competitive imbalance,” Tim Clark told reporters at the International Air Transport Association (IATA) annual meet in Miami.
Open skies agreements, which the US has with the UAE and Qatar, allows airlines from the signatory countries to fly unrestricted between their home country and to the other signatory country.
In the US, domestic and their international partner airlines have received antitrust immunity, which allows them to coordinate on pricing and schedules, among other privileges.
Restriction, competition
“You are not only restricting foreign carriers and their competitive powers [by removing open skies] but you’re also enhancing your own powers ergo because you have antitrust immunity. It can’t work,” Clark said.
The three major US airlines compiled a 55-page document earlier this year that outlined claims of $42 billion in state subsidies to the big Gulf airlines over the past decade, which they handed to their government.
The US carriers claim the subsidies are in breach of the open skies agreements and want government to government consultations to start. The Gulf airlines deny they are subsidised.
But Clark said the US carriers “legally have no right for consultations” because the grievances procedures outlined in the open skies agreement “speaks to a very, very limited area.”
“It addresses what could be considered as damage through a pricing action or a dumping action,” Clark said.
“The agreement did not address things like the accusations they have made against us,” he added,
Clark also said that under the agreement that if one party is able to show cause then they must allow the “counter party to respond and if it continues to take place then and only then can consultations take place.”
Open books
Emirates does plan on officially responding to the allegations “very soon” and the airline has offered to “open its books” to the US government.
“Every single transaction ... if we have to open our cash books, if we happen to open our accounts payable, our accounts receivable, if we happen to open our stock account and the way we assess the value of our assets ... I have no problem,” Clark said.
American Airlines and Germany’s Lufthansa, who has also complained to their government about the Gulf carriers, have suggested this week that the airline industry adopt subsidy definitions from the World Trade Organisation (WTO) to stop what they accuse the Gulf airlines of receiving.
But Clark said this would not work because the WTO also states that you cannot discriminate between foreign and domestic entities, which would mean, for example, a foreign airline should be able to operate domestically in the US.
You cannot “cherry pick” definitions, Clark said.
The Emirates chief executive said he is not sure what is behind the open skies debate because “there is no such need for a resolution because there is not a problem.”
But he said that he thinks the launching of services between Milan and New York by Emirates in 2013 may have something to do with it.
Certain US and European carriers complained about the route and legal action was taken against the airline over the route, which an Italian court ultimately ruled in favour of Emirates last year.
While the open skies debate has threatened to overshadow the IATA meeting this week, Clark said that he did not believe that the issue, which has played out through my media since January, has affected industry cooperation.
