Gulf carriers admit to massive, ongoing subsidies

The United Arab Emirates said it spent USD7.8 billion to build an 11-story air terminal at Dubai International Airport for the sole benefit of its airline, Emirates, according to documents the airline filed with the US government that confirmed one of the most excessive and unapologetic violations of Open Skies policy to date.

In papers recently submitted to the Obama administration, Qatar Airways, Etihad Airways and Emirates acknowledged dozens of instances of receiving subsidies from the treasuries of the UAE and Qatar, as well as actions they took to shield their finances from scrutiny.

The Partnership for Open and Fair Skies, which represents the US carriers and several airline employee unions, highlighted the subsidies and their harm to American workers in a major legal filing this week with the US government.

“These endless cash infusions from foreign government treasuries have allowed the Gulf carriers to expand far beyond what market forces could ever support, fundamentally distorting the marketplace and harming US carriers and American jobs,” said Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies. “It´s urgent that the Obama administration take swift action and request consultations to end these trade violations before the Gulf carriers damage the US aviation industry the same way they have devastated Europe´s.”

One of the most striking admissions comes from Emirates, which told US regulators that the government directly subsidizes the cost of the airport terminals that it builds for Emirates´ exclusive use. The government spent USD7.8 billion to construct the Emirates terminal at the Dubai International Airport, which is the first facility of its kind: 11 floors designed for the largest fleet of A380s, with fine dining, a full service spa and other amenities all intended to give Emirates a competitive advantage over the US and other international carriers in attracting passengers connecting around the world.

In its legal filing, the Partnership noted that unlike the subsidized expansion of the Emirates terminal, US airports are required to be “self-financing,” using revenue generated from landing fees, passenger fees, facilities rentals and other charges to fund the respective airport´s operating and capital costs. Furthermore, the filing notes that Emirates´ “success would suffer if they were required to cover the costs through charges and fees, which would be prohibitive.”

The Partnership for Open & Fair Skies is a coalition that includes American Airlines, Delta Air Lines and United Airlines, along with the Air Line Pilots Association, the Allied Pilots Association, the Southwest Airline Pilots´ Association, the Association of Professional Flight Attendants, the Association of Flight Attendants-CWA, the Communications Workers of America, and the Airline Division of the International Brotherhood of Teamsters.