Feds to Investigate Subsidy Claims Against Gulf Airlines

Delta Air Lines Plane

In response to allegations from the "Big 3" U.S. airlines -- American Airlines, United Airlines, and Delta Air Lines -- the U.S. Departments of Commerce, State, and Transportation have commenced a review of Emirates, Etihad Airlines, and Qatar Airways, which according to American, United, and Delta receive subsidies from sponsoring governments that impede fair competition in the skies.

Because of alleged "distortions" in the global aviation market, U.S. airlines have asked the federal government to renegotiate its Open Skies agreements with the United Arab Emirates and Qatar, which allow Gulf Carriers to do business in the United States.

"The claims … are of significant interest to stakeholders and all three federal agencies," the Obama Administration said in a statement. "The U.S. government takes seriously the concerns raised … and is interested in receiving insights and feedback from stakeholders before any decisions are made regarding what action, if any, should be taken. Accordingly, consistent with the Obama Administration's Open Government Initiative and commitment to transparency, public participation, and collaboration, the three departments are announcing the establishment of an open forum by which any interested stakeholder may submit information regarding their views on this subject and have access to the information submitted by other interested stakeholders."

Interested parties may submit information supporting or refuting U.S. airlines' allegations at www.regulations.gov through the end of May, at which point the Obama Administration will consider the submitted testimony.

The Partnership for Open and Fair Skies, which represents U.S. airlines and their unions in the Open Skies debate, applauded news of the government review.

"We commend the action by the U.S. Departments of Transportation, State, and Commerce to open formal proceedings on the airline subsidies by the United Arab Emirates to Etihad Airways and Emirates Airways and Qatar to Qatar Airways. This is an important first step towards restoring fairness to our skies and stopping the largest trade violation in history," the group said in a statement. "There will certainly be a diversity of opinions on this matter, but one thing we should all agree on is the freedom to have this dialogue with our government and for our government to have formal consultations with the UAE and Qatar. We believe the evidence is clear: Etihad, Qatar, and Emirates would not be commercially viable without national subsidies. The more than $40 billion in subsidies have instead allowed these airlines to distort the international aviation marketplace and threaten American jobs."

Although it has not yet commented on the federal review, the U.S. Travel Association has vehemently opposed U.S. airlines' claims against Gulf carriers, which it characterizes as an attempt to limit, not expand, aviation competition.

"The Big Three airlines hate competition," U.S. Travel Association Executive Vice President for Public Affairs Jonathan Grella said last week, before the government had announced its review of Gulf carriers. "Rather than cope with it in the marketplace they will undertake extreme means to stamp it out politically."

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