Dubai: Emirates airline President Tim Clark, refuting claims by America’s biggest carriers that the major Gulf airlines benefit from billions in state subsidies, said on Wednesday the US government should not be persuaded by a “non-representative vocal minority”.
American, Delta and United, reportedly lobbying the US government to alter or terminate its open skies agreement with Gulf states, allege Emirates, Etihad Airways and Qatar Airways have benefited from loans, tax exemptions and other support totaling $40 billion (Dh147 billion) since 2004. The US airlines claim the state subsidies are in violation of America’s trade policy.
Clark said changing the open skies agreement, which allows Emirates to fly to any point in the US from its Dubai hub, “makes absolutely no sense. And this at a time when the overarching requirements of the Middle Eastern geopolitical calculus requires relationships to be cemented, not fractured.”
Etihad Airways declined to comment on Wednesday on the US carrier claims. Qatar Airways did not respond to a request to comment.
Clark questioned how the three US airlines, which he mentioned had all benefited from the US’ chapter 11 bankruptcy law that allowed them to restructure and cut costs, reached the $40 billion figure.
“We have never received financial subsides or bailouts. 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 said in the statement emailed to Gulf News.
“This investment has been more than repaid by dividend payments to the government of Dubai, which total over $2.8 billion to date,” he added.
John Strickland, Director of UK-based JLS Consultants, said the US carriers are “concerned about additional Gulf carrier growth into the US market” but would be hard pressed to convince the US government to alter its open skies agreements.
“The potential implications of ending open skies agreements would be far reaching in the interlinked 21st century global economy so the pressure will be not to,” he said by email.
Improve product offering
Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and CEO of Emirates airline and Group, told Bloomberg on Wednesday that US carriers should turn their attention to improving their product offering.
“Offer the best to the passengers and people will fly with you,” Shaikh Ahmad was quoted as saying.
The US airlines, citing competition from the allegedly subsidised Gulf airlines, claim they have lost at least five percentage points of their share of flight bookings from the US to destinations in the Indian subcontinent and Southeast Asia, Reuters reported on Wednesday.
Clark said Emirates, which “operates flights on a fully commercial basis, is simply offering passengers a more convenient service to a larger number of destinations.
“Today we fly to nine US cities, providing travellers with non-stop services to Dubai, as well as one-stop connectivity to 60 other cities in the Middle East, Africa and Asia Pacific – destinations currently not serviced by American carriers,” Clark said.
He said the airline’s flights to the US airports “generate more than $2.8 billion of estimated economic value annually” and generates “hundreds of thousands of high value US jobs” through “massive aircraft investments with Boeing, GE and other US aviation manufacturing partners.”
“Emirates’ significant contribution to the US economy is only possible because the open skies policy enables us to respond competitively to market dynamics, not only to serve but also to stimulate new demand,” Clark said.
Comparison
The three Gulf airlines, Emirates, Etihad Airways, and Qatar Airways have purchased a combined 477 long-haul aircraft from US airplane manufacturer Boeing, according to its website, since 2004, the same period they have been accused of racking up $40 billion in subsidies.
In comparison, American, Delta and United have purchased a combined 142 long-haul Boeing aircraft; however, they have also purchased a combined 675 short-haul Boeing aircraft, which would not compete on routes with the Gulf carriers.
Emirates has also received support from US government agencies to purchase American aircraft. In 2013-14, Emirates raised $284 million from the Export-Import (Ex-IM) Bank of the United States, the official export credit agency that finances foreign purchases of United States goods, for aircraft purchases, an airline spokesperson told Gulf News by email.
