UAE and U.S. ‘committed to Open Skies,’ says business group
The UAE and U.S. governments are “committed” to the Open Skies agreement, the head of a Washington-based business council said, as American and Gulf-based airlines continue to row over the former’s claims that their Middle East rivals had received massive unfair subsidies over the past decade.
Currently, the Obama administration is looking into claims by the three top U.S. airlines – American Airlines, Delta Air Lines and United Airlines – that three Gulf-based carriers had received $42 billion dollars in “unfair” government subsidies. The Gulf carriers – Emirates, Etihad and Qatar Airways – strongly reject the claims.
The U.S. airlines have called on Washington to halt the expansion of Gulf carriers in the U.S. and to strike a new deal on its Open Skies policy with the UAE and Qatari governments. Open Skies is an agreement which aims to create a freer environment for the international commercial aviation industry.
There is nothing about subsidies written in Open Skies
Danny Sebright, President of the U.S.-UAE Business Council
“The U.S. government has been asked by the U.S. carriers to have a consultation with the UAE government about whether or not subsidies have been received,” Danny Sebright of the U.S.-UAE Business Council told Al Arabiya News. “The UAE and U.S. governments are committed to Open Skies.”
Sebright described keeping the Open Skies agreement in place as “beneficial” for both carriers and travelers, and expects “over the course of the next couple of months is that both sides will determine that keeping Open Skies agreement in the same way they are.”
However, according to Sebright “there is nothing about subsidies written in Open Skies.” He emphasized: “The only thing that Open Skies talks about in one line is fair and open competition.”
Working both ways
The council’s head also pointed to “subsidies” received by the American airlines themselves when he cited a Congressional research service report saying that “the U.S. government gave U.S. airlines since they have been in existence around $140 billion.”
“For example, today the U.S. government requires anybody working for the U.S. government buying a ticket to fly on U.S. carriers, they cannot fly on foreign carrier,” he said, adding that the practice amounts to subsidy.
He also said the UAE government “putting money into the airport infrastructure” was “the same thing the U.S. government has done.”
“Old airports such as JFK need new investment in the infrastructure. That’s not a subsidy to the airline, that’s a subsidy to the infrastructures around the airports, and it helps the U.S. airlines to be more competitive,” he said.
Sebright said that he thought that the reason over the U.S. carriers’ complaints is because they wanted more regulatory, financial and infrastructural support at home.
In response, Jill Zuckman, chief spokeswoman for the Partnership for Open & Fair Skies lobby group wrote to Al Arabiya News that the alleged $42 billion in Gulf subsides have allowed “their state-owned carriers” to “grow without stimulating new passenger demand.”
The Partnership for Open & Fair Skies is set up by American, Delta and United airlines, as well as other associations, with the stated aim of “restor[ing] a level playing field under the Open Skies agreements with Qatar and the UAE.”
These sharp declines in bookings have already resulted in service cuts and more are expected if the government doesn’t take action, which means further loss of American jobs
Jill Zuckman, chief spokeswoman for the Partnership for Open & Fair Skies lobby group
Zuckman also described the harm being done to American workers as “real and evident.”
She cited recent data that stated after Emirates’ entry into four “key” markets, bookings on U.S. carriers and their “joint venture partners” dropped an average of 10.8 percent in Boston, 7.6 percent in Dallas-Fort Worth, 21.4 percent in Seattle and 14.3 percent in Washington.
She added: “These sharp declines in bookings have already resulted in service cuts and more are expected if the government doesn’t take action, which means further loss of American jobs.”
However, this claim is rejected by the Gulf airlines. In late October, Qatar Airways chief executive Akbar al-Baker said that his company was helping create jobs in the United States.
Like the Qatar Airways boss, Sebright said Gulf carriers flying to the U.S. are “creating more jobs.”
“Qatar Airways and Emirates, Etihad created a lot of jobs in the bigger U.S. economy as they are brining all these travelers from India, China, Africa and Gulf countries to spend money in the U.S. economy…hotels, restaurants, shopping malls, that creates jobs, jobs,” he said. “Those are the jobs Gulf carriers are talking about.”
While Sebright described U.S. airlines having to endure “economic problems over the last 10 years,” he said “it is hard to see if U.S. carriers are losing that many jobs if their profits the highest since 10 years. I wonder why they are so angry.”
In late October, American Airlines witnessed an 80 percent net income jump to $1.69 billion thanks to a huge drop in fuel spending.
“I would like to see a statement by U.S. carriers over how many jobs – they directly – lost as a result of the Gulf carries coming in, they never game numbers of the jobs they lost,” Sebright asked.
The finale is what I call a ‘soft landing’ where both sides get something out of this
Danny Sebright, President of the U.S.-UAE Business Council
While there are no official statements by the U.S. airlines over the loss of American jobs, Zuckman said “experts estimate that 800 American jobs are lost for each route ceded by a U.S. carrier to a Gulf carrier.”
Zuckman expects “the Obama administration to stand up for American jobs and businesses” and “request consultations with UAE and Qatar governments” after it has been “provided with an undeniable proof of the subsidies and the harm that the Gulf carriers are causing to the United States.”
The spokesperson insisted that the “U.S. carriers don’t receive subsidies from the U.S. government and wouldn’t want to.”
She added: “This misinformation is being fueled by the Gulf carriers in an effort to hide from the enormous blank checks their airlines have been provided by their government sponsors.”
Some observers have criticized the U.S. carriers for not making similar claims towards state-owned Chinese airlines.
This year, for the first time ever, more Chinese airlines fly to the U.S. than American carriers to China, according to market analysts CAPA.
Until Washington submits its verdict on whether these Gulf airlines are unfairly subsidized, “the finale is what I call a ‘soft landing’ where both sides get something out of this,” Sebright said.