The chief executives of American, United and Delta airlines in a joint appearance vowed not to relent in their fair-trade campaign against Persian Gulf carriers they accuse of reaping unprecedented government support. The executives want Washington to invoke a formal consultation provision in the open skies agreements it has with UAE and Qatar to discuss their complaints.
Nearly four months into their effort to compel the U.S. government to revisit the two open skies agreements, American Airlines CEO Doug Parker, United Airlines’ Jeff Smisek and Delta Air Lines’ Richard Anderson participated in a panel discussion May 15 at the National Press Club in Washington, D.C. Their appearance followed a round of speeches and press conferences conducted over the past two months by the Gulf carriers they accuse of improper subsidies: Etihad Airways of Abu Dhabi and Emirates Airline of Dubai, which represent two of the seven emirates of UAE, and Doha-based Qatar Airways.
A white paper the U.S. airlines released in March alleges the three state-owned Gulf carriers have received $42.3 billion in subsidies and other “unfair government-conferred advantages” in the last decade to the detriment of American industry.
“This is orders of magnitude subsidization far beyond anything that I’ve ever seen in my career,” Smisek said. “We are ready, willing and able to compete globally against any airline. But you cannot compete against a national treasury. You cannot compete against an arm of a state. You cannot compete (with) an infinite supply of oil.” Auditors’ statements United has seen indicated that Etihad and Qatar were not going concerns. “But for massive government subsidies, those carriers would be liquidated,” he said.
Anderson revealed that Delta initiated an effort two years ago to scour financial statements and filings by the Gulf carriers worldwide, leading to the compilation of the white paper. “We were able to build a really strong case,” he said. “To put it in a legal framework, we proved subsidy beyond a reasonable doubt.”
National Press Club president John Hughes of Bloomberg News, the panel moderator, asked the executives to respond to a study Etihad Airways commissioned and released on May 14. Conducted by The Risk Advisory Group, the study found that the big three U.S. airlines have received $71 billion in financial support since 2000 in the form of bankruptcy debt relief, pension fund bailouts from the U.S. Pension Benefit Guaranty Corporation and fuel subsidies.
In response, Anderson asked airline employees in the audience “who have lost their pensions in bankruptcy” to stand. “I’d like them to tell these people about whether Chapter 11 (bankruptcy reorganization) has subsidies. It doesn’t; there were no guaranteed subsidies,” he declared. “It was the employees and the creditors in a legal process that went through a reorganization.”
The executives said they will not accept U.S. government inaction on their plea to revisit the open skies agreements. In April, the U.S. departments of State, Commerce and Transportation said they would review the charges made against the Gulf carriers, and they sought comments from interested parties. “The government will have to act…The evidence is so compelling,” Parker said.
Anderson suggested that the airlines may seek relief through Congress if they are not satisfied with the government response. “We’ve been at it over two years and we’re not going to stop,” he said. “The investigations are just going to continue.”