News Backgrounder
Gulf carriers mount assault on U.S. White Paper allegations
Gulf airlines are no strangers to allegations their success is down to government subsidies. Last month, the chief executives of two of the “big three” Middle East carriers took to the global stage to argue their case against the most recent broadside, this time from American carriers.
May 1st 2015
Etihad Airways president and chief executive, James Hogan, is no shrinking violet. In London last month he made clear his view of the latest attack on the Gulf carriers: “The dark clouds of protectionism are gathering,” he declared. Read More » “Five mega-carriers are trying to pull the ladder up after years of having it their own way.”
Emirates Airline president, Tim Clark, also in London, told a press conference: “We are an unsubsidized carrier, always have been. We operate on a commercial basis. We are required to. We have no access to cheap funding from the government of Dubai. We have no access to free fuel… all the things that are thrown (at us) we will deal with reasonably and fairly. I hope (after that) it will be put to bed once and for all.”
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| Emirates Airline has invited the U.S. government to examine its books to counter U.S. airlines’ allegations said the Dubai carrier’s boss, Sir Tim Clark |
Clark was commenting on a 55-page White Paper submitted to the White House and Congress in the U.S. by three American headquartered global carriers, Delta Airlines, United Airlines and American Airlines. They have claimed Emirates, Etihad and Qatar Airways have benefited from more $40 billion in state subsidies in the past decade. These funds, the American carriers alleged, are in breach of open skies agreements.
Clark said Emirates has invited the U.S. government to look at the airline’s books to prove true his statements. Clark, Hogan and Qatar Airways chief executive, Akbar al Baker, have consistently and strongly denied claims of “state aid” from their respective governments.
Hogan said while the U.S. carriers mentioned the issue of subsidies 42 times in their report, the customer was mentioned only once. “The people who will really lose if these giant legacy airlines are successful are the millions of travellers benefiting from new choices in the global air travel market,” he said.
In Europe, major airlines, particularly Germany’s Lufthansa and Air France, have been lobbying again the Gulf carriers, protesting at their increasing penetration of markets by their investments in local operators, mainly Etihad’s. The Abu Dhabi flag carrier has equity in Alitalia, airberlin and the Swiss regional, Darwin Airline (now Etihad Regional).
At a meeting of European Union transport ministers in April, the French and German representatives asked the European Commission to address the subject of government subsidies in its negotiations for a new commercial aviation agreement with the Gulf states. Lufthansa and other European carriers have called for a halt to approvals of new routes for Gulf airlines into Europe.
Etihad’s Hogan warned the ultimate price of any action taken against Gulf airlines would be the impact on the growth of the global aviation industry. While in Europe he met the European Commission Transport Commissioner, Violeta Bulc, he said Eithad contributes multi-billion Euros to European economies.
Research conducted by Oxford Economics verified that Etihad’s core operations in the EU contributed $1 billion to the combined GDP (Gross Domestic Product) of the 28 EU member nations and supported more than 11,000 jobs last year, said Hogan.
Additionally, the airline’s 2014 capital spending on aircraft and other aviation equipment contributed $2.6 billion to the EU’s GDP and supported more than 28,100 jobs. The research showed that during the past decade, the airline’s operations contributed approximately $6.1 billion to the EU GDP, while its capital spending on aircraft and aviation equipment exceeded US$11 billion.
“Etihad Airways is not just another foreign airline flying to Europe to poach local traffic,” he said. “We are a sophisticated partner and investor in Europe for long-term mutual benefit.
“Through our own flights, our 21 European codeshare partnerships and our minority investments in five European airlines, we are adding value to Europe in a way that no other foreign airline is. We also operate one-stop services between Europe and 19 destinations not served by any EU carriers. And we provide codeshare access to many of these markets for European airlines, including connections to Australia for 11 carriers, five of which ceased operating their own services on these routes before we entered the market.”
Hogan warned “growing resistance to us from a handful of protectionist competitors could have unintended consequences well beyond limiting our development. If our growth is curtailed or our investments in airlines are compromised, the real damage will be to Europe in lost jobs, lost flight connectivity, lost investment in local and national economies and lost consumer choice,” he said.
