Emirates hits back at US carriers in subsidy row
02 / 07 / 2015
Emirates Airline has issued a detailed response which aims to "debunk" a report from three major US carriers which accuses them of receiving subsidies which create unfair competition.
The 193 page point-by-point response to the Delta, United and American’s report claims that Emirates does not receive subsidies, that the US carriers built their case on the wrong legal standards and that restricting competition would hurt consumers.
In their report, the North American trio also called on the US government to review the Open Skies policy that authorised commercial flights between the US, Qatar and the United Arab Emirates over a decade ago.
Emirates president Tim Clark said: "The methods employed by the US legacy carriers to discredit Emirates have been surprising and frankly, repugnant.
"We do not underestimate their lobbying prowess, but facts are facts. Unlike the big three’s white paper, which is riddled with inaccuracies, conjecture, and legal misinterpretations, Emirates’ response is comprehensive and based on hard facts.
"We clearly show why the big three have no grounds to ask the US government to unilaterally freeze Emirates’ operations to the US or pursue other action under the Open Skies agreement.
"It is because we are absolutely not subsidised, and our operations do not harm these legacy carriers, but instead benefit consumers, communities and America’s national economy."
The US airlines had claimed that Emirates received over $6bn in subsidies, including fuel hedging subsidies; purchasing goods and services from related third parties at below-market terms; disproportionately benefiting from airport infrastructure and user fee at Dubai International airport.
In total, the carriers argue that Middle Eastern carriers have received $40bn in unfair subsidies.
In response Emirates said it had made profits for 27 straight years and said its expansion is funded from our own cash flow, and debt raised in the open market through banks and financial institutions.
Clark said: "Our success is due to superior commercial performance. To date we have paid our shareholder, the Dubai government, more than $3bn in dividends.
"All of this is laid out in our financials, audited by Pricewaterhouse Coopers. We are financially transparent, and have published fully audited accounts for over 20 years."
Emirates also pointed out that several US businesses had warned against making changes to the open skies agreement.
FedEx has warned that changes to the Open Skies agreement could affect its business.
In a detailed filing to the US Department of Transportation (DoT), the US express giant states: "FedEx is being put at risk by the request for unilateral action from a small group of US airlines, both in the Middle East and around the world.
"The confidence that we have in the continuation of the US-UAE Open Skies agreement has allowed us to invest in the Dubai facility and flight operations."
The docket filed by Nancy Sparks, FedEx managing director of regulatory affairs, states that the company’s intention is to "defend Open Skies, not the position of the Gulf carriers".
"While such a limit on competition might satisfy the goals of the Big 3, it would be harmful to FedEx and to all other US airlines that rely on Open Skies agreements to operate internationall," the document said.
"A violation of the existing Open Skies agreement would invite retaliation or renunciation of their agreement by the UAE.
"In either case, as the US airline with the most flights to and from the UAE, we believe that we would potentially be subject to the greatest harm."
It concluded: "The US should not capitulate to the interests of a few carriers who stand ready to put their narrow, protectionist interests ahead of the economic benefits that Open Skies provides to the people of the US."
To read Emirates summary response, click here
To read the US carriers’ white paper, click here