America’s largest three airlines came together Thursday to release a report claiming that three fast-growing Persian Gulf carriers have received $42 billion in illegal subsidies from their governments over the past decade.
Officials from United Airlines, American Airlines and Delta Air Lines said they have gathered evidence during a two-year investigation to document that Qatar Airways, Etihad Airways and Emirates have received $42 billion “in quantifiable subsidies and other unfair benefits from their respective governments since 2004.”
The Gulf carriers, each known for luxurious service and regularly voted by consumers as among the best airlines in the world, have denied receiving inappropriate government subsidies.
The claim of illegal subsidies has been an ongoing issue that U.S. airlines have been pushing, but on Thursday they escalated the fight, showing their work publicly by releasing specifics from their joint investigation into subsidies.
“The subsidies are obvious and massive,” said David Ross, an international trade attorney with WilmerHale who is working with the airlines, adding that the study conformed to the definition of subsidy that the World Trade Organization uses.
The alleged subsidies including interest-free loans with no repayment terms, government assumption of fuel-hedging losses, subsidized airport charges and free land.
U.S. airline officials claim the Gulf airlines would be losing money if they competed fairly, and the subsidies allow the three Gulf carriers to expand their fleets, grow international routes and distort the commercial marketplace.
U.S. airlines fear the further loss of business to the Gulf carriers and, ultimately, the erosion of U.S. jobs. The loss of a wide-body aircraft route costs 800 U.S. jobs, they say.
“It will threaten our entire industry,” said Capt. Rick Dominguez, executive administrator of the Airline Pilots Association International. “Nothing less than our careers are at stake.”
Under so-called Open Skies agreements, by which airlines can fly freely between countries, the U.S. carriers are hoping the U.S. government will push for “consultations,” a provision for resolving such disputes.
“We’re all about competing, but this is an example of unfair competition,” said Mark Anderson, senior vice president for corporate and government affairs for United Airlines. “We’re not competing against air carriers, we’re competing against governments.”
Of the 114 Open Skies agreements around the world, airline officials said they have an issue with just two of the pacts: with Qatar, home of Qatar Airways, and the United Arab Emirates, where Etihad and Emirates are based.
On Thursday, for the first time, the airlines detailed their allegations, claiming Qatar Airways received $17.5 billion in subsidies from 2004 to 2014, while Etihad received $18 billion and Emirates $6.8 billion.
The report provided some detail on individual subsidies. For example, it claims Emirates pays very low airport fees. If Emirates’ home hub were O’Hare instead of Dubai, its costs would be $1.4 billion more per year, the report says.
An Emirates spokesman said the airline was examining the documents released Thursday and did not have an immediate comment. However, the airline has consistently denied it receives subsidies. Its president, Tim Clark, reportedly said Thursday he plans to meet with U.S. officials to counter the allegations.
Emirates is the largest operator in the world of 777 jets made by Boeing, which is in an awkward position on the issue, selling aircraft to domestic and Gulf airlines.
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