Dubai: An Etihad Airways-commissioned report into government-linked financial benefits received by the United States’ largest airlines released yesterday marks a turning in the heated subsidy spat.
Etihad commissioned consultancy The Risk Advisory Group in March 2015 to quantify the financial benefits the US’ big three airlines — Delta, United and American — have received. The report, in response to the US carriers’ own claims that Gulf airlines are state subsidised, says the US carriers have received $71.48 billion (Dh262.3 billion) in benefits related to Chapter 11 restructuring and bailouts from the Pension Benefit Guranty Corporation (PBGC).
“This marks a turning point from Gulf carriers refuting claims to being on the offensive politically and in the public arena,” stated Will Horton, senior analyst at CAPA — Centre for Aviation, by email.
The report says United has been the largest beneficiary, totalling a combined estimated $44.4 billion. Meanwhile, it also says all three airlines have benefited from billions in fuel tax savings, tax incentives and funds.
But Partnership for Open & Fair Skies, a group representing the US carriers, argue that Chapter 11, PBGC and other benefits are not comparable to the subsidies they allege the Gulf carriers receive.
“The Chapter 11 process is not a ‘subsidy’, as established by international trade law, and many other countries have similar procedures in place. In addition, US taxpayers are not liable for any restructuring of airline pension plans in bankruptcy,” Jill Zuckman, chief spokesperson, stated by email.
The Etihad-commissioned report includes revelations that American received between $80 and $85 million in subsidy from the State of Missouri in 2003 to help fund the redevelopment of a facility in the state, United received $6.29 million in tax credits in 2011 and 2012 from Colorado’s Office of Economic Development and International Trade and that Northwest airlines, absorbed into Delta in 2008, received a $761 million financing from the State of Minnesota in 1992 that was used to build a fleet maintenance facilities in the state.
“The study from The Risk Advisory Group shows that governments aid airlines on both sides of the dispute, but in different ways … Each group is stretching the limits of credibility in their favour in their analysis,” stated Ernest Arvai, partner at US-based aviation consultancy AirInsight, by email.
“These benefits, in our view, are a fair comparison to the alleged subsidies the Gulf airlines received … While the nature of the benefits may differ, they are nonetheless real, and provide cash flow relief to airlines in one form or another,” he added.