A new chapter in the ongoing subsidies fracas
The ongoing mud-flinging between carriers in the US and Europe and those in the Middle East over accusations that the region’s big three carriers – Emirates, Etihad Airways and Qatar Airways have been recievin
May 5, 2015
By Donald Urquhart
The ongoing mud-flinging between carriers in the US and Europe and those in the Middle East over accusations that the region’s big three carriers – Emirates, Etihad Airways and Qatar Airways have been recieving government subsidies, creating an unlevel playing field.
The back and forth has been going on for some years, with the Middle East carriers denying they are subsidised by their governments and producing independent research reports touting the positive economic benefits their services have on the markets they serve.
A big part of the problem of this whole debate has been the lack of hard evidence of these subsidies. But that apparently changed recently when a group including American Airlines, Delta Airlines and United Airlines, along with US pilot and labour groups, disclosed the details of what they said were “obvious and massive” Gulf-carrier subsidies totalling US$42 billion since 2004. The group has submitted a 55-page document to the US government urging a re-think of Washingtons’ open-skies treaty with Qatar and the United Arab Emirates (UAE).
Among the accusations supposedly detailed in this report are Dubai’s assumption of fuel-hedging losses, savings from artificially low aiport charges and savings from non-unionised labour force. Qatar on the other hand is accussed of giving interestfree loans to its carrier and reduced debt-interest charges, while Abu Dhabi is accused of giving capital injections to its home carrier, interest-free loans with no repayment obligation and additional subsidies.