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Emirates refutes subsidy allegations

DUBAI, July 1, 2015

Dubai-based Emirates has submitted a point-by-point, fact-based response to the US government refuting allegations made by its North American rivals of subsidy and unfair competition.

Earlier this year, the US legacy carriers - Delta, United and American Airlines – had launched an aggressive lobbying campaign in a protectionist bid to restrict consumer choice, and restrict the growth of international flights to the US operated by Emirates and other Gulf airlines. The ‘Big 3’ also submitted a 55-page report presenting evidence of Emirates competing unfairly.

The North American airlines have alleged that Emirates has received over $6 billion in subsidies, including fuel hedging subsidies; purchasing goods and services from related third parties at below-market terms; disproportionately benefiting from airport infrastructure and user fee at Dubai International airport; and having an artificial cost advantage through the structure of the UAE's labour law, all of which the UAE airline has systematically disproved.

“Emirates' response is comprehensive and based on hard facts. We clearly show why the Big 3 have no grounds to ask the US government to unilaterally freeze Emirates' operations to the US or pursue other action under the Open Skies agreement. It is because we are absolutely not subsidised, and our operations do not harm these legacy carriers, but instead benefit consumers, communities and America's national economy," said Sir Tim Clark, president of Emirates Airline.

"Our global expansion is funded from our own cash flow, and debt raised in the open market through banks and financial institutions. Our success is due to superior commercial performance. To date we have paid our shareholder, the Dubai government, more than $3 billion in dividends. All of this is laid out in our financials, audited by Pricewaterhouse Coopers. We are financially transparent, and have published fully audited accounts for over 20 years," Clark said.  

Much of the Big 3's case rests on the legal premise that the WTO's anti-subsidy rules apply to international aviation or is implicitly incorporated in the US Open Skies Agreements, which is wrong, the airline said in a statement.

The legacy carriers have also build their case for a unilateral freeze on Article 11 of the Open Skies Agreement, but this is the wrong article, it said.

Clark added: "By asking the US government to take unilateral action, the Big 3 are asking the US to breach its own negotiated international obligations. This would put in jeopardy America's Open Skies relationships with 113 other countries, and all the significant public and competition benefits that the Open Skies program has generated."

In another allegation against the Gulf carriers, the Big 3 have claimed to have lost traffic to competition and with every wide-body flight by a legacy carrier lost to a foreign airline, 800 US jobs will be lost.

Emirates had again disproven those claims showing that on every route that it had established to the US, overall traffic had grown significantly after its entry. Moreover, the Big 3 highlighted concerns of thereat to employment based on two job creation studies in the German and Austrian markets. The reports in fact contradicted their arguments and found that Emirates supported 2,400 jobs in Germany and 3,300 jobs in Austria per round trip.

More specific to US jobs, aviation experts Campbell-Hill Aviation Group has analysed the US jobs effect of Emirates' flights to America, and found that the UAE airline supported nearly 4,000 US jobs per daily round trip service.

Clark said: "The methods employed by the US legacy carriers to discredit Emirates have been surprising and frankly, repugnant. We do not underestimate their lobbying prowess, but facts are facts. The Big 3's white paper is riddled with inaccuracies, conjecture, and legal misinterpretations, and we have clearly disproved every allegation made.” – TradeArabia News Service




Tags: Emirates | US | subsidy |

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