“Big Three” bluster came to nothing

The three most influential carriers in the U.S. have mounted a vociferous campaign that accused Gulf airlines of benefitting from huge government subsidies that disadvantaged North Atlantic carriers. In May, the two sides signed a new Open Skies agreement that barely differs from past accords. What was the fuss about?

by CHIEF CORRESPONDENT, TOM BALLANTYNE  

June 1st 2018

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The U.S.-based Business Travel Coalition did not hold back when news broke last month that Washington and the United Arab Emirates (UAE) had shaken hands on a new Open Skies treaty that was not substantially different to previous accords. Read More »

“It is only fitting that in a scripted Washington, DC House of Cards kind of way, a political campaign based on a legal fabrication, compounded by lies and fueled by seemingly limitless corporate money, would end with bizarre claims of victory even when, by the victor’s own definition of success, it was a colossal failure. That is precisely what happened last week when the news that the U.S. and the UAE had reached an understanding to end a three year fake controversy,” the group declared.

The coalition’s view may be extreme, but in many ways it summed up three years of going nowhere by American Airlines, Delta Airways and United Airlines. When U.S. Assistant Secretary of State, Manisha Singh, and Emirati Ambassador to the U.S., Yousef Al Otaiba, signed the accord at the U.S. State Department, it became clear the agreement involved no restriction, limit or prohibition on Gulf carriers, Etihad Airways and Emirates Airline.

They will be able to fully and freely exercise the Fifth Freedom rights contained in the U.S.-UAE Open Skies Agreement. Qatar, not part of the UAE, came to a similar agreement with the U.S. earlier this year.

The dispute began in 2015 when American Airlines, Delta Airways and United Airlines alleged Emirates Airlines, Etihad Airlines and Qatar Airways received billion dollar government subsidies that gave them an unfair advantage in the North American market. The Gulf carriers have long denied all allegations.

Extraordinarily, both sides claimed victory after the new treaty was signed. In a website statement, the lobbyist for the three U.S. carriers, the Partnership for Open & Fair Skies, wrote: “This agreement will freeze Emirates and Etihad Airways from additional direct flights from the United States to Europe and Asia, that is fifth freedom rights that allow a carrier to transport revenue traffic from its home country to a second country and onto a third country.”

An advocacy group representing Delta Airlines, Americans for Fair Skies, said: “The UAE has agreed to end its market-distorting subsidies and freeze new fifth freedom routes into the U.S.”

The statements were quickly contradicted by the UAE Embassy in the U.S. “All current and future rights for both countries’ carriers to fly all flights, including fifth freedom flights, remain in place as an outcome of the discussions,” it said.

“Airlines in both countries are free to continue to add, reduce or adjust flights and services consistent with the broad provisions of the 2002 ATA (Air Transport Agreement).” It said the UAE’s carriers “are, and have been at all times, in full compliance with the agreement.”

Emirates said: “Contrary to some media reports, there is no freeze on any of the operating rights prescribed in the Air Transport Agreement or any tacit undertakings to do so. The Record of Discussion also makes clear the UAE and its designated carriers are, and have been at all times, in full compliance with the Agreement, and there were never any violations of the Agreement by UAE carriers.”

The Dubai carrier added the talks preserved Open Skies and guaranteed “complete commercial flexibility that benefits consumers, communities and the economies of both countries.”

U.S. carriers have demanded that Gulf carriers disclose full financial reports to disprove allegations they are subsidized.

“We are pleased to note the Record of Discussion explicitly recognizes Emirates’ longstanding practice of publicly releasing audited financials in full compliance with international standards, as well as engaging in arms-length market-based third party transactions, without recourse to government subsidies,” Emirates said in a statement.

In January, the airline announced some flights to the U.S. would be reinstated after their suspension last year. A month later it said it would upgrade Dubai-Dallas from B777s to A380s.