US row with Gulf airlines nears end with key UAE pact
DUBAI, May 12, 2018
The UAE agreed to increase financial transparency in its airlines as part of a deal with the US to resolve allegations that two state-owned carriers have unfairly benefited from billions of dollars in government subsidies.
The US and UAE acknowledged that while government support of airlines isn’t unusual, it may 'adversely impact competition,' according to a copy of the agreement, which was seen by Bloomberg News.
The Gulf country, home of Emirates and Etihad Airways, also committed to issue annual public financial reports under internationally recognized accounting standards.
While the agreement doesn’t freeze so-called fifth freedom flights, the UAE pledged that its carriers have no plans for additional such routes, a senior state department official said.
Under commercial aviation protocols, those flights start in an airline’s home country and touch down in a different nation before continuing on to a third - in this case, the US Emirates makes such flights from Dubai to Athens and then on to Newark, New Jersey.
The agreement settles the final piece of a long-running dispute over government aid, which pitted the largest US airlines against rivals in the UAE and Qatar, said the Bloomberg report.
American Airlines Group, Delta Air Lines and United Continental Holdings claimed in 2015 that the Gulf carriers were able to compete unfairly on flights into the US because of government subsidies.
US Secretary of State Mike Pompeo is expected to announce the agreement on May 14, people familiar with the matter said, on conditions of anonymity.
Qatar had already reached a separate agreement with US in January, which would apply to its national carrier.
The State Department wanted to address concerns raised by the US carriers and ensure a level playing field, the official said.
The UAE deal bears out “what we have said all along – its government subsidies harm competition,” Scott Reed, campaign manager for the Partnership for Open and Fair Skies, said in a statement.
The group represents American, Delta, United and several airline unions in the dispute.
“All the terms and provisions of the Air Transport Agreement including fifth freedom rights remain fully in place, with the UAE and US airlines free to continue to add and adjust routes and services,” Yousef Al Otaiba, the UAE’s ambassador to the US, said in a statement.
The US carriers in the dispute had claimed subsidies from the Gulf nation allowed Etihad and Emirates to continue operating flights on which they were losing money, giving them an advantage over domestic rivals.
