Tim Clark, chief executive of Dubai's Emirates airline company, has suggested legal action against Western competitors for their accusations that the airline, along with several others, had received government subsidies that amounted to unfair competition.
"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 .
In addition to Emirates, Abu Dhabi's Etihad Airways and Qatar's Qatar Airways have been accused of utilizing government subsidies to provide them an extra edge against Western competition.
Last Thursday, the United States' largest three airlines – American Airlines, Delta Airlines and United Airlines – jointly issued a 55 page document outlining their complaints against the Gulf-based carriers, claiming that the Gulf airlines are unfairly competing with the aid of billions in government subsidies. Among the items described as unfair subsides are interest-free loans, free land and reduced airport costs.
"It will threaten our entire industry," Captain Rick Dominguez, executive administrator of the Airline Pilots Association International, said to the Chicago Tribune . "Nothing less than our careers are at stake."
German Lufthansa Airlines and French Air France have also joined the row, convincing the European Commission to take up the issue on behalf of its aviation industry.
“European airlines are losing market share against the Gulf airlines, because of their unfair competitive practices, particularly because of the significant public subsidies and guarantees that they enjoy,” the French transport minister told The National .
However, Emirates was quick to point out that its operations have added $7.6 billion to the European economy between 2013 and 2014. Furthermore, Emirates supports nearly 85,000 jobs throughout the European Union, according to a commissioned study by the London-based consultancy Frontier Economics. Additionally, a report by the US-United Arab Emirates Business Council pointed out $16 billion in benefits each year because of the two nations' commercial aviation relationship, as well as 100,000 jobs and $1.6 billion in taxes.
However, not all American companies agree with the airlines' claims, as a few companies, including FedEx, JetBlue Airways and Boeing, rely on partnerships with the Gulf-based airways.
The U.S. airlines “want the U.S. government to protect them from competition from able, attractive new entrants,” FedEx Express President and Chief Executive Officer David Bronczek wrote in a letter last month to the State, Commerce, and Transportation departments. “The U.S. should not capitulate to the interest of a few carriers who stand ready to put their narrow, protectionist interests ahead of the economic benefits that Open Skies provides to the people of the United States.”
Etihad, Qatar Airways and Emirates are consistently ranked highly by customers as well. All three airlines 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. Although Lufthansa ranked 10th, none of the other concerned airlines ranked in the top 20, with the U.S. airlines all coming in significantly lower.
The major U.S. airlines have been riddled with financial problems for years, before some of their Gulf competitors, like Etihad, which was created in 2003, were even founded. United filed for bankruptcy back in 2002, cutting employee pensions and its workforce in order to survive. The airline emerged from bankruptcy in 2006.
In 2005, Delta also filed for bankruptcy, significantly cutting salaries and finding creditors to help bail the company out. More recently, in 2011, American Airlines joined the others and filed for bankruptcy. The U.S. government also famously bailed out its struggling airline industry after the September 11, 2001, terrorist attacks in New York City and Washington D.C., providing $5 billion in cash payments, insurance guarantees, liability protection and a $10 billion loan guarantee program that ended in 2006.
Last year both Air France and Lufthansa were faced with pilots' strikes, disrupting the companies' earnings. Air France faced a 60 percent profit drop in the the 3rd quarter of 2014. While Lufthansa faired better financially, it has been forced to reexamine employee benefits and retirement plans.
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 .
Currently representatives from the airlines and government officials from the concerned nations plan to meet to discuss the allegations further. Etihad and Emirates both stated that they are currently reviewing the 55 page document before responding in full.