U.S. Agencies Start Formal Review of Gulf Carrier Dispute

 - April 10, 2015, 9:37 PM
Etihad CEO James Hogan defended the airline last month in a speech to the U.S. Chamber of Commerce. (Photo: Bill Carey)

U.S. government agencies will conduct a formal review of allegations by major American airlines that state-owned Gulf carriers are improperly subsidized by their respective governments. The agencies are seeking comments and materials from interested parties by the end of May.

The U.S. departments of State, Commerce and Transportation announced the formal proceeding in a joint press release on April 10. Their action came after American, Delta and United airlines produced a white paper containing charges that Qatar Airways and UAE-based Emirates and Etihad Airways in the last decade have received $42.3 billion in subsidies from their governments.

The American carriers want the Obama administration to address their concerns over unfair competition by either modifying or terminating open-skies trade agreements the U.S. negotiated with Qatar and the UAE between 1999 and 2002. Airline executives met quietly with government officials earlier this year to make their case. But the campaign erupted into a public confrontation with the Gulf carriers when the white paper was released in March.

“The U.S. government takes seriously the concerns raised in the report and is interested in receiving insights and feedback from stakeholders before any decisions are made regarding what action, if any, should be taken,” the three agencies state in the joint release. They instruct that interested parties submit information, responses to existing materials or other analysis to an open docket they have made available on the website www.regulations.gov.

Reacting to the announcement, the advocacy group Americans for Fair Skies, which is supporting the U.S. carriers in their campaign, said the formal proceeding is a first step toward “restoring fairness to our skies and stopping the largest trade violation in history. 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.”

In a statement, Etihad Airways welcomed the formal proceeding. “We hope that no one will pre-empt this process or prejudge its outcome,” the Abu Dhabi-based carrier said. “Etihad Airways is committed to setting the record straight regarding these unsubstantiated allegations. However, so far the U.S. airlines have failed to provide the complete details and data supporting these claims to Etihad Airways. Only with all of this information available to us can we provide a full response.”