The Obama administration is finally wading into the ongoing spat between United States and Gulf carriers over allegedly illegal subsidies the Gulf airlines have received – with the Departments of State, Commerce and Transportation announcing Friday that they would begin formally accepting statements and “insights” from stakeholders in the dispute.
In a joint statement from the U.S. departments, the administration said, "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.”
In response, Etihad Airways has expressed its hope that the outcome will not be prejudged, referring to the allegations as "unsubstantiated." The airline also pointed out that it was not currently able to fully respond to the claims as the American lobby had not provided full details.
The U.S. airlines accuse the Gulf carriers of having received some $42 billion in unfair subsidies from their respective governments over the past decade. Last month the U.S. carriers jointly released a 55-page document outlining their claims, which included interest-free loans, free land and reduced airport costs.
All three of the U.S airlines have struggled financially since the early 2000s, with each having gone through bankruptcy starting with United in 2002, then Delta in 2005 and most recently American in 2011. The airline industry was also bailed out by the U.S. government after September 11, 2001, with the federal government providing $5 billion in cash payments, insurance guarantees, liability protection and a $10 billion loan-guarantee program that ended in 2006.
With the increasing popularity of Gulf carriers and their additional flights to North America, the struggling U.S airlines have felt the heat of their new competition. While Etihad Airways, Qatar Airways and Emirates are consistently ranked highly by customers – all three made the top ten of the 2014 World Airline Skytrax Awards ranking, with Qatar Airways coming in second, Emirates in fourth and Etihad in ninth – their American counterparts all rank significantly lower.
However, it is unclear what the review by the American government will actually accomplish for the airlines. Saj Ahmad, chief analyst for London-based consultancy Strategic Aero Research told The National, "In the grand scheme of things, this is of no real concern to the Gulf carriers. Even if the U.S. airlines could prove their outlandish allegations, it’s unclear what form of punitive action could be taken. The truth is that U.S. passengers are badly served on domestic flights, but have a world of choice when they travel abroad, largely thanks to the Gulf carriers.”
Responding to the allegations, Emirates Chairman Sheikh Ahmed Bin Saeed al-Maktoum accused the Western airlines of trying to turn back time and said that Western airlines should improve their service.
“Offer the best to the passengers and people will fly with you,” Sheikh Ahmed told Bloomberg Business Week Middle East .
Tim Clark, chief executive of Dubai’s Emirates airline company, has also suggested legal action against his U.S. counterparts if their accusations negatively affective his company.
“If we establish there has been commercial damage as a result of what has been said about us . . . all options are on the table,” Clark told the Financial Times .
As for us, we'll fly the Gulf carriers any day over the American competition.