U.S. airlines called subsidies granted to Persian Gulf airlines "extreme," and said they're confident President Barack Obama's administration will take action to address what they see as unfair competition threatening the domestic industry.
Executives of Delta Air Lines Inc., American Airlines Group Inc. and United Continental Holdings Inc. laid out their case for the first time publicly that the Gulf carriers are arms of their governments more than free-market airlines. The United Arab Emirates and Qatar have provided their state carriers with more than $42 billion in subsidies and other benefits since 2004, according to a 55-page investigative report.
The airlines want the administration to keep the Gulf carriers from adding flights into the U.S. pending a review of the Open Skies air treaties among the nations.
"It's extreme in the amount of subsidies," said David Ross, an attorney for the airlines from the WilmerHale law firm in Washington. "It's extreme in the amount of capacity being added to the U.S. market."
Earlier Thursday, Emirates Airlines President Tim Clark called the U.S. airlines' assertions "bluster and flimflam" and said he will travel to Washington this month to defend his carrier against the allegations.
"They must be prepared for a very robust response from us," Clark said in Berlin. Emirates has added value to the U.S. cities it serves with "very reasonable" fares and connections that are more favorable than those provided by U.S. competitors, he said.
The U.S. airlines' presentation comes as they plan to start lobbying Congress in support of their cause. The efforts by American, United and Delta will include lawmakers overseeing transport and trade, plus other legislative leaders, said a person familiar with the plans, who asked not to be identified because details aren't public. The airlines also want to keep pressing Secretary of State John Kerry and Transportation Secretary Anthony Foxx, the person said.
Courting Senate and House members opens a new front in the campaign against what American, United and Delta say are unfair subsidies for Doha-based Qatar Airways and to the UAE's Emirates Airline and Etihad Airways.
American, United and Delta say the Gulf carriers are able to undercut competitors on fares -- drawing travelers to their bases in the Middle East and away from European and Asian hubs served by the U.S. industry.
Officials from Emirates, Etihad and Qatar did not comment on the U.S. airlines' assertions after the news conference.
U.S. airline executives met with federal officials in January to lay out their case without making the evidence public. They followed up last month by sharing their investigative report with officials of the European Union.
The State Department is reviewing the U.S. airlines' materials and is working with agencies including the Transportation and Commerce Departments on potential next steps, said an official who wasn't authorized to comment publicly.
The official said the administration is weighing two competing issues: the concerns raised by the airlines and the benefits to consumers, the U.S. aviation industry, U.S. cities and the U.S. economy as a result of the Open Skies policy.
While the Obama administration takes the airlines' concerns seriously and will thoroughly review them, it remains committed to the Open Skies policy that has helped the U.S. economy through job growth and increased travel and trade.
Asked whether the State Department was raising this issue with Qatar and the UAE, the official said that diplomatic conversations with allies remain private.
Information for this article was contributed by Nicole Gaouette of Bloomberg News.
Business on 03/06/2015