USA and UAE sign pact to resolve airline competition claims

Us Gulf deal Delta Etihad Emirates

USA and UAE sign pact to resolve airline competition claims

According to USA Today, Emirates - accused of unfair competition by rivals Delta, American Airlines and United Airlines - has agreed to "voluntarily open up their accounting books by publishing annual financial statements "consistent with internationally recognized accounting standards". The disclosures could help United States carriers make the case that the airline is potentially getting unfair government subsidies. The Persian Gulf airlines have denied those allegations.

"Until now, improvements to Emirates and Etihad Airways' airport terminals in Abu Dhabi and Dubai have been subsidized by the UAE government", the Partnership said.

The statement declared an intention by both governments to promote "best practices for marketplace participation by their airlines". Etihad will begin issuing such reports at least annually once it completes a restructuring that is underway.

"Emirates Airline and the US airlines that provide or have provided scheduled combination global air services under the agreement have issued such reports for years, " the memo noted.

The financial disclosures are an attempt to assuage concerns among USA airlines that Emirates received substantial subsidies from the UAE government, resulting in unfair competition.

The Trump administration entered into a similar agreement with the Qatar government in January. Emirates now operates two such routes, known in industry parlance as "Fifth Freedom" flights, with one going from Dubai to Athens to Newark and the other going from Dubai to Milan to NY.

But this was muddied by a statement by the UAE Foreign Minister welcoming the agreement.

"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", the embassy said.

While Delta CEO Ed Bastian did not specify which destinations the USA carrier would add in the wake of the UAE deal, CNBC quoted him as saying the airline had been hurt in India and routes now served by the Gulf carriers were ripe for the opportunity for Delta to fly.

The United Arab Emirates said in a statement that the agreement with the USA meant "business as usual by validating all of the rights and benefits - including "Fifth Freedom" services".

Delta stopped flying to Dubai, home of Emirates, in 2015.

The diplomats said the deal is aimed at "ensuring a level playing field in the global aviation sector".

Delta and competitors American Airlines and United Airlines have complained for years about the expansion of three Persian Gulf carriers - Qatar Airways, Abu Dhabi-based Etihad Airways and Dubai-based Emirates Airline, saying they receive state subsidies that have created unfair competition for the USA airlines.

"[Dubai] was one of the markets that we've been run out of", Bastian added.

"United Airlines will continue to work as a constructive partner in advancing a competitive environment where American aviation can thrive and consumers win".

Latest News