U.S. Airlines Allege Unfair Competition from Gulf Carriers

 - March 6, 2015, 12:41 PM
Americans For Fair Skies, which describes itself as a coalition of concerned citizens, has joined the protest against Gulf carriers.

Major U.S. airlines and labor groups went public with a detailed and determined campaign to convince the Obama administration to modify or void open-skies agreements with UAE and Qatar. Led by United, American and Delta airlines, the “Partnership for Open and Fair Skies” released a white paper on March 5 which makes the case that state-owned carriers in those countries in the last decade have collectively received $42.3 billion in subsidies “and other unfair government-conferred advantages” to the detriment of American industry.

The governments of Dubai and Abu Dhabi, two of the UAE’s seven emirates, along with Qatar, are aggressively pursuing economic development strategies using Emirates, Etihad and Qatar airlines, respectively, as “key instruments,” the white paper contends. Those strategies depend largely on a massive expansion of international air traffic through their hub cities, with the airlines ferrying passengers between other countries and the United States. Open skies agreements benefit the Persian Gulf nations by opening the lucrative U.S market to their carriers, “even though they provide essentially no benefits to U.S. carriers in return, given the low level of demand for travel originating or terminating in the two Gulf countries,” the paper states.

Dubai’s Emirates has grown to be the world’s largest airline as measured by international passengers and capacity. It is a key instrument of “Dubai Inc.,” which the paper describes as “a web of commercial corporations, financial institutions and investment arms owned by the Dubai government and the Al Maktoum family.” In a graphic accompanying the narrative, all lines ultimately lead from the airline, the Dubai Airports company, financial institutions and service providers to Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler.

Abu Dhabi and Qatar are pursuing similar strategies to benefit Etihad and Qatar, respectively, according to the white paper. Given their current order books, the Gulf carriers will soon have more capacity in widebody airliners—buying their aircraft from Boeing and Airbus—than the entire U.S. commercial widebody fleet, the paper warns.

The chief executives of American, United and Delta briefed the 55-page white paper to The Wall Street Journal in early February, however, the airlines withheld releasing it more widely until March 5. The executives told the Journal they had already made their case to the Departments of Transportation, State and Commerce and the Office of the U.S. Trade Representative.

Joining the U.S. carriers in announcing the white paper’s wider release was the Fair Skies coalition, which counts as members the Air Line Pilots Association (ALPA), the Allied Pilots Association, the Teamsters airline division and the Association of Professional Flight Attendants. ALPA said it “served as a major voice of airline workers” within the coalition.

A separate group—Americans for Fair Skies—on March 2 unveiled a campaign of radio, digital and print advertisements to argue the case against the Gulf carriers. The group, which describes itself as a grassroots coalition of “concerned citizens,” is led by ALPA’s immediate past president Lee Moak. It named James Buras and Christophe Phiippon as serving with Moak on the board of directors. While the group declined to disclose its donors, it said it has not received contributions from any airline.

In a statement provided to AIN, Etihad Airways said it will comment “after we have had time to properly review and respond to the claims made within” the white paper. Emirates and Qatar did not immediately respond to requests for comment.

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