May 6, 2015

Conference in Dubai sees Emirates threaten to take sledgehammer subsidy allegations by US

Relations between US and a number of Gulf carriers have been strained since January and the situation shows no signs of cooling off. At the beginning of the year American Airlines, Delta Air Lines and United Airlines alleged that Emirates, Qatar Airways and Etihad Airways had received in excess of US$40bn in state subsidies over the last ten years, allowing them to both drive down ticket prices and oust competitors from key markets. Over 250 members of Congress have since signed a letter pushing for the US Departments of State and Transportation to consult with Qatar and the United Arab Emirates over the allegations. In addition the situation has seen these major US airlines also question the validity and fairness of the Open Skies agreement that exists between the three Gulf carriers and the US.
Having made a number of comments vehemently denying these allegations, Tim Clark, President of Emirates Airlines, has even more forcefully denied these allegations at a conference in Dubai: “Having read the report, you could drive a bulldozer through just about everything… We will deal a sledgehammer to that report as far as Emirates and Dubai is concerned,” he said. While no time scale would be given for a full and detailed response, Emirates’ Chief Executive, Sheikh Ahmed Al Maktoum, indicated that as it had taken the US airlines two years to prepare their allegations, it would not be unreasonable to allow the Gulf carriers two years to produce a formal response.
Clark had previously indicated he would resign if the report proved accurate, and has consequently challenged the heads of the three US airlines to do the same should their allegations prove to be unfounded. “If you are wrong, and we show you to be wrong… will you resign? What will you do when this rebuttal comes back at you and shows the political entities that you’ve managed to orchestrate to come behind you that you are fundamentally wrong?” he wanted to know. He continued by stating that the argument of stealing market share was poor as a multitude of the destinations in the Middle East, Africa and Asia had been minimally served by US carriers. “We have never been subsidised. We have never received from the government of Dubai any kind of… special treatment,” Clark said, adding that Emirates’ growth was not as a result of state intervention and instead had come from its own earnings, cash flow, and debt issuance.



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