Three Big U.S. Airlines Allege Additional State Subsidies to Qatar Airways
June 29 2016 - 5:53PM
Dow Jones News
By Susan Carey
Days after the U.S. government said it intends to hold
"informal" discussions with two Persian Gulf governments over a
trade dispute brought by three big U.S. airlines, the U.S. carriers
said they have uncovered evidence that the government of Qatar
provided additional subsidies to Qatar Airways.
Qatar Airways has vehemently denied receiving subsidies and
posted rebuttals on U.S. regulatory dockets. On Wednesday,
Doha-based Qatar Airways wasn't immediately available for comment,
nor was the Qatar Embassy in Washington. Its U.A.E.-based rivals,
Etihad Airways and Emirates Airline also have denied being
subsidized.
American Airlines Group Inc., Delta Air Lines Inc. and United
Continental Holdings Inc., 18 months ago said they had documented
$42 million in subsidies and unfair benefits given to three big
Gulf carriers since 2004 by their state owners. The three U.S.
companies lodged a trade complaint with their government, asking it
to modify liberal air treaties with Qatar and the U.A.E., and to
freeze additional flights to the U.S. by the three fast-growing
Gulf carriers.
Last week, the U.S. State Department told the U.S. carriers and
their labor-union allies that it remains committed to its "open
skies" aviation policy, under which liberal air treaties are struck
to boost passenger choice and help the broader economy through
increased travel, trade and job growth. But the government, saying
it takes seriously the competition claims raised by some U.S.
carriers, said it plans to hold "informal, technical discussions"
in July with the U.A.E. and Qatar.
On Wednesday, the big U.S. airlines said their forensic
investigators had found further evidence of trade-distorting state
aid, based on financial statements Qatar Airways filed with a
corporate registry office in Singapore. Those documents, the U.S.
side alleges, indicated that Qatar Airways received more than $7
billion in aid in the fiscal year ended in March 2015, and has
commitments from its government for a further $3.7 billion in
subsidies.
Law firm Wilmer Cutler Pickering Hale and Dorr LLP, which is
representing the big U.S. carriers, found the new evidence in the
spring, according to Partnership for Open & Fair Skies, the
lobby of the three U.S. carriers and their labor allies. The
lawyers found that the Qatar government transferred 72 planes, cash
and other assets with a value of $5 billion to the airline and
injected $2.2 billion in cash. Furthermore, the government
authorized an additional $3.7 billion, the WilmerHale report
said.
Another group of U.S. airlines that opposes the position of
American, Delta and United was invited to meet State Department
officials on Wednesday about the trade dispute. The group, which
includes FedEx Corp., Alaska Airlines Group Inc., JetBlue Airways
Corp. and Hawaiian Holdings Inc., has expressed concern from the
outset of this fight that rolling back liberal air treaties could
cause economic damage and possible retaliation.
The State Department Wednesday confirmed that it met with
representatives of the U.S. airlines, travel, tourism and cargo
industries, as part of its regular contact with stakeholders
interested in Middle Eastern aviation issues. As for the new
allegations involving Qatar, the department said it is "carefully
and thoroughly reviewing the claims by some U.S. carriers that the
Gulf carriers are benefiting from government subsidies that are
distorting the market."
Write to Susan Carey at susan.carey@wsj.com
(END) Dow Jones Newswires
June 29, 2016 17:38 ET (21:38 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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