Skift Take

Here's a prediction. The Trump Administration probably won't mess with long-standing U.S. Open Skies agreements with Qatar and the United Arab Emirates. Yes, they may make things difficult for Delta, American, and United. But they're too important for other U.S. entities, including global shipping giant Federal Express.

The three biggest U.S. airlines asked for a meeting with new Secretary of State Rex Tillerson to discuss their long-held contention that billions of government subsidies enable the Persian Gulf carriers to compete unfairly for passengers.

Emirates, Qatar Airways Ltd. and Etihad Airways PJSC are receiving help from their governments that undermines “the basic principles of fair and open competition that are the foundation” of air treaties that regulate service between countries, according to a letter signed by the chief executives of American Airlines Group Inc., Delta Air Lines Inc. and United Continental Holdings Inc.

“The subsidies allow the Gulf carriers to operate without concern for turning a profit, unlike U.S. airlines, and therefore focus entirely on stripping market share and driving out competition,” according to the letter signed by American’s Doug Parker, Delta’s Ed Bastian and United’s Oscar Munoz. “The subsidy-enabled capacity dumping by the Gulf carriers has nearly eliminated U.S. carrier service to the Middle East and India.”

The U.S. airlines have long pushed the federal government to open discussions with Qatar and the United Arab Emirates over the issue of subsidies, which the U.S. companies allege to be more than $50 billion. The Obama administration said it would hold informal technical discussions with the two nations last year, but never took formal action.

The Gulf carriers have said American, Delta and United have received their own government assistance through debt forgiveness in the bankruptcy process.

Some smaller U.S. airlines and cargo carriers, notably FedEx Corp., have opposed any broad changes to Open Skies agreements with the U.A.E. and Qatar.

Editor’s note: Here’s the full text of the letter.

Download (PDF, 169KB)

©2017 Bloomberg L.P.

This article was written by Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network.

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Tags: open skies

Photo Credit: A Qatar Airways Airbus A350 arrives in Frankfurt. Delta, American and United want to keep Qatar, Emirates and Etihad from further U.S. expansion. Michael Probst / Associated Press