Emirates Airline has submitted a 388-page document to the U.S.
government that aims to rebut accusations by North American rivals
that it is unfairly subsidized.
The submission by the Dubai-based carrier shifts the focus of
the global airline spat to U.S. officials who know have to decide
whose arguments are more persuasive.
The document, which Emirates presented to the U.S. government on
Monday, represents the most detailed argument yet by one of the
rapidly growing Middle East carriers in defense of its business
practices. It follows months-long verbal sparring between the
U.S.'s three major carriers and the three biggest Persian Gulf
rivals: Emirates, Abu Dhabi-based Etihad Airways and Qatar
Airways.
"We are absolutely not subsidized, and our operations don't harm
these legacy carriers, but instead benefit consumers, communities
and America's national economy," Emirates President Tim Clark said
in a statement.
Emirates' move comes after Delta Air Lines, United Airlines and
American Airline in January issued a 55-page report accusing the
three Persian Gulf airlines of collectively receiving $42.3 billion
in subsidies. The airlines called on the U.S. government to curb
their rivals' growth through changes to bilateral so-called Open
Skies agreements that liberalized air travel.
The U.S. government early on said it took the allegations
seriously and asked the three U.S. airlines for additional
information, which they supplied. The departments of
Transportation, State and Commerce opened up regulatory dockets
where interested parties can post comments and documents.
Etihad supplied its rebuttal to the U.S. claims in early June.
Doha-based Qatar Airways hasn't produced a document, but has
dismissed the U.S. claims in numerous public comments. It declined
to comment.
The U.S. airline trio is supported by pilot unions and European
carriers such as Air France-KLM SA and Deutsche Lufthansa AG, who
have lobbied far longer for curbs on their Persian Gulf
competitors. The Middle Eastern airlines have secured the backing
of travel agency representatives, which argue the airlines offer a
higher-quality of service than their U.S. peers. They also have the
support of delivery companies, such as FedEx Corp., which have
large logistics hubs in Dubai.
Emirates, the world's biggest international carrier by traffic,
in its submission to the U.S. government seeks to counter
allegations made by its rivals on a mix of financial and legal
grounds. In several cases, the Dubai-based carrier asserted that
its U.S. rivals have benefited from many of the same business
practices that they denounce as subsidies.
The U.S. carriers accused Emirates of transferring a large
liability on fuel bets off its books in 2008 to mask losses in what
amounted to a government subsidy. Emirates said the losses were
never realized. The mark-to-market accounting losses would have
distorted Emirate's operational performance, the carrier said,
adding that the Dubai government received a financial gain when
fuel prices rebounded. Delta employed a similar accounting approach
in its 2009 results, Emirates said.
Emirates also said U.S. airlines struck advantageous deals with
airports even as its rivals argue low charges at the Dubai
International airport that serves as Emirates's hub were
effectively a subsidy. Airports in Pittsburgh and Portland granted
Delta preferential financial terms to secure its business and
Denver airport in 2014 extended incentives to United to ensure the
U.S. carrier wouldn't cease its hub operations there, the Gulf
carrier said.
The most expansive element of the rebuttal deals with the Open
Skies agreement between the U.S. and United Arab Emirates, which
effectively allows Emirates to fly to any point in the 50 states.
The U.S. carriers argue those traffic rights should be curtailed
because Emirates and its neighbors are violating the spirit of the
law.
Emirates denies the accord is being violated. Its rivals are
invoking international trade rules that don't apply to air
transport, it said.
Critics dismissed its arguments. "Emirates can submit as many
pages as it wants," said Jill Zuckman, spokeswoman for the U.S.
airline's coalition. "But it still won't paper over what has been
well-documented: Emirates has received billions in subsidies and
unfair benefits from the treasury of the U.A.E."
Another persistent claim against the Middle East carrier has
been they are paying artificially low prices for fuel. Emirates
said it pays less for its jet fuel at U.S. airports than it does at
home, including from the national oil company.
How and when the U.S. government will act is unclear. The three
U.S. carriers have requested the U.S. pursue consultations with the
governments of the United Arab Emirates and Qatar over the Open
Skies air treaties.
American Airlines Chief Executive Doug Parker said this month he
expected the U.S. government to take action soon. Mr. Clark said
previously he expected existing Open Skies accords to remain
intact.
--Susan Carey contributed to this article
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