By Keith Laing - 01/27/16 12:10 PM EST
U.S. airlines say government subsidies for Middle Eastern carriers are responsible for a drop-off in overseas traffic as they compete for international passengers.
A group that was formed to pressure the Obama administration to intervene in the subsidy dispute said Wednesday that the reported government payments — which major Persian Gulf airlines have denied receiving — are causing bookings on U.S.-operated international flights to drop steeply.
“In Orlando, San Francisco, and Chicago, the governments of the UAE [United Arab Emirates] and Qatar are using billions of dollars from their treasuries to take away business from U.S. airlines and harm American jobs,” Partnership for Open and Fair Skies spokeswoman Jill Zuckman said in a statement.
Major U.S. airlines including United, Delta and American, known as the Big Three, have accused Qatar Airways, Etihad Airways and Emirates of receiving billions of dollars in subsidies since 2004.
The major U.S. airlines say the payments to Middle Eastern competitors violate the spirit of the Open Skies agreements between the U.S. and the governments of Qatar and the United Arab Emirates, which own the Gulf airlines. They want the Obama administration to launch a review of the claims with the Middle Eastern governments, which would involve a delicate set of negotiations that critics have said would upset other areas of foreign relations.
The Persian Gulf carriers have denied violating the Open Skies agreements, and they have argued that U.S. airlines have historically received subsidies from the federal government at times of distress, such as the period after the Sept. 11, 2001, terrorist attacks.
They have accused the airlines of trying to reduce competition for international flights.
“The U.A.E. government will oppose any attempts to restrict, limit, or control air services,” UAE Minister of Economy Sultan Al Mansoori said in speech in November, according to a Bloomberg report.
“It’s time to encourage and facilitate more competition and more consumer choice,” he continued.
Passenger advocacy groups have largely sided with the Middle Eastern carriers, accusing U.S. airlines of trying to keep international flights artificially high by stifling competition.
They point out that U.S. airlines have received subsidies at various points in their history, including after the Sept. 11, 2001, terrorist attacks that cast a pall over flying for several years.
"When speaking of subsidies, the Big Three US airlines and their cohorts fail to mention that all airports in the United States are subsidized for airline service," the Arlington, Va.-based Travelers United group said in a blog post about the Open Skies debate last year.
"Airports are built with municipal bonds and maintained with passenger facility charges that are all paid for by the American people," the passenger advocacy group's blog post continued.
"None of the airlines, especially Delta and United, that foisted their retirement benefits on the US government, consider the billions that they received by abrogating their responsibilities to their workers," the blog post concluded. "And, no one mentions the subsidies paid to airlines to make them available in times of war."
The airline partnership countered Wednesday that the subsidies to their Middle Eastern competitors "are severely distorting the global aviation market and hurting the ability of U.S. carriers to compete."
"Qatar and the United Arab Emirates (UAE) have provided more than $42 billion in subsidies and other unfair benefits to their state-owned airlines, in direct violation of the Open Skies agreements," the group said.
"In recent months, Delta Air Lines announced the cancellation of its service between Atlanta and Dubai and, similarly, United is canceling its Dulles to Dubai route, citing in part unfair competition with the Gulf carriers," the airline partnership continued. "For every route ceded to a Gulf carrier, economists estimate that more than 1,500 American jobs are lost."
The departments of State, Commerce and Transportation are conducting a review of the claims from U.S. carriers about the Middle Eastern airline subsidies.