Emirates rebuts 'incorrect claims' of subsidies

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Emirates rebuts incorrect claims of subsidies

Obama administration asks US airlines for more information on their allegations.

By Issac John (associate Business Editor)

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Published: Thu 19 Mar 2015, 11:39 PM

Last updated: Thu 25 Jun 2015, 7:23 PM

Dubai: Emirates airline unleashed a strong counter offensive against US carriers over their “incorrect claims” of subsidies as the row took a new turn with the Obama administration demanding more proof on the allegations.

Emirates, the largest of the three Gulf airlines that came under attack from the US carriers, debunked allegations of subsidy and “stealing traffic” and warned that American consumers and regional state economies would be the ultimate victims of such protectionist campaign.

In a statement on Wednesday, President of Emirates airline Sir Tim Clark said all the debate about “what constitutes a subsidy, what is fair or unfair competition under whose laws… are just distractions from the real issue at hand.”

The real issue, according to Sir Tim, is that the three biggest US carriers — Delta, American, and United — want to further limit the international air transport choices available to American consumers, airports, local and regional economies. He said Emirates could debunk all claims that it received subsidies.

Sir Tim said the allegations that Emirates benefited from $2.7 billion in subsidies from the government’s assumption of fuel hedging losses, and the government also provided Emirates $1.6 billion in letters of credit are incorrect.

“Let me tell you that some of the figures in there were factually incorrect — the conclusions that were drawn were incorrect and we will put the record straight with regard to the fuel hedge,” he said.

“We will rebut all the things that are said about us. Once we have done that, I expect to be given the benefit of an apology from people who have actually made these allegations,” said Sir Tim.

Rebuffing allegations of “stealing” customers, Sir Tim said Emirates offers “a great product at a competitive price, which appeals to the consumers who choose to fly with us.”

At a media briefing in Washington DC, Sir Tim argued that rather than harming US interests as the white paper prepared by Delta, American, and United claimed, Emirates’ services had increased consumer choices, filled a gap in the market by taking travellers to destinations not served by their home carriers, and helped contribute to US economies, trade and tourism. “Importantly, Emirates also provides a much-needed competitive alternative to the three airline alliances with antitrust immunity permitting them to keep fares artificially high.”

The Obama administration, marking its first written response to US airlines’ lobbying effort, has asked for more information on their claims that Gulf carriers have received market-distorting subsidies.

The administration asked US airline representatives about 20 questions in writing last week about their method in determining the subsidy allegations and about the market harm they say Gulf carriers have caused them, according to a person familiar with the matter.

The request for more proof reflects the growing focus on the debate in Washington. The questions are factual and did not suggest that the US administration was either swayed or skeptical.

Leaders in the US House Committee on Transportation and Infrastructure recently called on the administration to look into the allegations, while US airlines repeated their request on Tuesday for the United States to open talks with Qatar and the UAE on the “Open Skies” agreements that authorise flying between the nations.

Etihad Airways Chief Executive Officer James Hogan said on Tuesday the airline would not make any apologies for offering new competitive choice for air travellers. He pointed out that airline supports more than 200,000 US jobs and is transparent about what he emphasized were loans, not subsidies, provided to it by the government of Abu Dhabi, its shareholder.


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