SPONSORED:

Senators: Gulf airline subsidies are 'distorting the market'

Senators: Gulf airline subsidies are 'distorting the market'
© Getty Images

A group of 21 senators said Thursday that Middle Eastern airlines that have come under fire for allegedly receiving subsidies from their government owners are "distorting the market" for international flights from U.S. airports. 

Unions that represent employees of the largest U.S. airlines, known collectively as the Big Three, have alleged Middle Eastern airlines such as Qatar Airways, Etihad Airways and Emirates Airlines received more than $42 billion in subsidies since 2004.

The major U.S. airlines — Delta, United and American — say the payments to their 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 airlines. 

ADVERTISEMENT

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 policy. 

The senators said in a letter to the departments of Transportation, Commerce and State on Thursday that the Obama administration should launch the talks with the Middle Eastern nations because Gulf airlines are currently receiving an unfair advantage over U.S. carriers. 

"We are writing in regard to recent reports that over the past decade the governments of Qatar and the United Arab Emirates (UAE) have granted over $40 billion in subsidies and other benefits to their state-owned passenger carriers," the lawmakers wrote to Secretaries Anthony FoxxAnthony Renard FoxxHillicon Valley: Uber, Lyft agree to take California labor win nationwide | Zoom to implement new security program along with FTC | Virgin Hyperloop completes first test ride with passengers Uber, Lyft eager to take California labor win nationwide Big Dem names show little interest in Senate MORE, Penny PritzkerPenny Sue PritzkerThe Hill's Morning Report - Sanders steamrolls to South Carolina primary, Super Tuesday Biden's new campaign ad features Obama speech praising him Obama Commerce secretary backs Biden's 2020 bid MORE and John KerryJohn Forbes KerryMemo to Joe: It's not 2015 anymore Biden campaign manager says he's 'going to make good' on 'incredibly progressive' agenda Markey wins reelection in Massachusetts MORE

"We are concerned that these actions by Qatar and the UAE may be distorting the market in favor of their state-owned airlines and violate our bilateral Open Skies agreements," they continued. 

Travel and consumer groups have argued that U.S. airlines are making the allegations of Open Skies violations against the Middle Eastern carriers because they are trying to prevent competition for international flights.

The Gulf airlines have argued, meanwhile, that they fly to parts of the world that are underserved by U.S. airlines, making them an important part of the nation's economy. 

"It is far too important for the U.S. economy for multiple reasons for the activities of the Gulf carriers to be cut back, because once you do that and you start closing the Open Skies that you have today, there's enormous ramifications," Emirates CEO Tim Clark said in a recent interview with the British BBC network. 

"The U.S. economy would be severely affected by a closure, shutting down of the Open Skies arrangement which has manifested, produced huge amounts of wealth for aerospace, Boeing, General Electric ... as well as everything else," he continued. 

Unions that represent the employees of the largest U.S. airlines have formed campaigns to pressure the Obama administration to question the Gulf carrier subsidies, include one — the Partnership for Open and Fair Skies — that organized the Senate letter on Thursday. 

“These senators are standing up for the U.S. aviation industry and American jobs and we thank them," a spokeswoman for the group, Jill Zuckman, said in a statement. 

"Their formal request to the Departments of Transportation and State to open consultations with Qatar and the United Arab Emirates (UAE) for violating Open Skies policy, clearly indicates the importance of the U.S. government enforcing its trade agreements," she continued. "Republicans and Democrats alike understand what’s at stake for the U.S. aviation industry and how these foreign subsidies are undermining American jobs.”

The Obama administration launched a domestic review of the claims against the Gulf airlines, but it falls far short of the full-scale international negotiation Big Three U.S. carriers have called for. 

The senators said Thursday that they hope the administration's review leads to a broader look at the alleged violations of the Open Skies agreements. 

"We understand and appreciate that the Departments of Transportation and State are carefully reviewing this situation," the lawmakers wrote. "Should it be determined that these governments are providing subsidies in violation of Open Skies agreements and policies, we urge you to take immediate action to ensure that the agreement is being enforced, including by requesting consultations with the governments of Qatar and the UAE." 

The lawmakers added that the alleged Open Skies violations could cost U.S. airline workers their jobs if they are left unchecked. 

"International flight routes are extremely competitive and we fear that these subsidies may have led to market distortions," the lawmakers wrote. "If so, failure to take action could cause harm to the U.S. passenger airline industry and the broader U.S. economy, including significant job losses." 

The letter was signed by Sens. Amy KlobucharAmy KlobucharFormer Minnesota Democratic leader quits party Top cybersecurity official ousted by Trump Lawmakers question tech CEOs about content moderation in first post-election hearing MORE (D-Minn.); Johnny IsaksonJohnny IsaksonOutside groups flood Georgia with advertising buys ahead of runoffs Georgia's Perdue-Ossoff runoff a legacy of the Solid South Alabama zeroes in on Richard Shelby's future MORE (R-Ga.); Gary Peters (D-Mich.); Mark KirkMark Steven KirkSenate majority battle snags Biden Cabinet hopefuls The Hill's Morning Report - Sponsored by Facebook - Senate makes SCOTUS nominee Barrett a proxy for divisive 2020 Senate Republicans scramble to put Trump at arm's length MORE (R-Ill.); Richard DurbinDick DurbinDemocrats brush off calls for Biden to play hardball on Cabinet picks Ending Trump's transactional arrogance on our public lands President is wild card as shutdown fears grow MORE (D-Ill.); James InhofeJames (Jim) Mountain InhofeHouse Democrats back slower timeline for changing Confederate base names Barrasso to seek top spot on Energy and Natural Resources Committee Overnight Defense: Trump orders troop drawdown in Afghanistan and Iraq | Key Republicans call Trump plan a 'mistake' MORE (R-Okla.); Debbie StabenowDeborah (Debbie) Ann StabenowSenate Democrats reelect Schumer as leader by acclamation  Bottom line Peters fends off challenge in Michigan Senate race MORE (D-Mich.); Rob PortmanRobert (Rob) Jones PortmanDemocrats brush off calls for Biden to play hardball on Cabinet picks Leadership changes at top cyber agency raise national security concerns Senate passes bill to secure internet-connected devices against cyber vulnerabilities MORE (R-Ohio); Ben CardinBenjamin (Ben) Louis CardinDemocratic senators urge Facebook to take action on anti-Muslim bigotry On The Money: Biden, Democratic leaders push for lame-duck coronavirus deal | Business groups shudder at Sanders as Labor secretary | Congress could pass retirement bill as soon as this year Top Democrat: Congress could pass retirement bill as soon as this year MORE (D-Md.); John HoevenJohn Henry HoevenOVERNIGHT ENERGY: Barrasso to seek top spot on Energy and Natural Resources Committee | Forest Service finalizes rule weakening environmental review of its projects | Biden to enlist Agriculture, Transportation agencies in climate fight Meadows meets with Senate GOP to discuss end-of-year priorities Senate advances energy regulator nominees despite uncertainty of floor vote MORE (R-N.D.); Sherrod BrownSherrod Campbell BrownOn The Money: Democrats accuse Mnuchin of sabotaging economy in dispute with Fed | Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing | JPMorgan: Economy will shrink in first quarter due to COVID-19 spike Democrats accuse Mnuchin of sabotaging economy in dispute with Fed McSally, staff asked to break up maskless photo op inside Capitol MORE (D-Ohio); Mike LeeMichael (Mike) Shumway LeeLoeffler isolating after possible COVID-19 infection Rick Scott tests positive for coronavirus OVERNIGHT ENERGY: Barrasso to seek top spot on Energy and Natural Resources Committee | Forest Service finalizes rule weakening environmental review of its projects | Biden to enlist Agriculture, Transportation agencies in climate fight MORE (R-Utah); Claire McCaskillClaire Conner McCaskillDemocrats must turn around Utah police arrest man driving 130 mph claiming he was going to kill former Missouri senator McCaskill congratulates Hawley on birth of daughter MORE (D-Mo.); David Perdue (R-Ga.); Al FrankenAlan (Al) Stuart FrankenThe Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Trump, Biden clash over transition holdup, pandemic plans The Hill's Morning Report - Fearing defeat, Trump claims 'illegal' ballots The Hill's Morning Report - Biden inches closer to victory MORE (D-Minn.); Tammy BaldwinTammy Suzanne BaldwinSenate Democrats reelect Schumer as leader by acclamation  Next Congress expected to have record diversity Infrastructure, energy investments urgently needed to create U.S. jobs MORE (D-Wis.);  Martin HeinrichMartin Trevor HeinrichHouse Democrats push Biden to pick Haaland as next Interior secretary OVERNIGHT ENERGY: Haaland being vetted by Biden team for Interior Secretary | Progressive group slams Biden White House pick over tie to fossil fuel industry | Green groups sue over Arctic drilling plans Haaland being vetted by Biden team for Interior secretary MORE (D-N.M.); Elizabeth WarrenElizabeth WarrenDemocrats brush off calls for Biden to play hardball on Cabinet picks What's behind the divisions over Biden's secretary of Labor? Alito to far-right litigants: The buffet is open MORE (D-Mass.); Ed MarkeyEd MarkeyOVERNIGHT ENERGY: Biden eyes new leadership at troubled public lands agency | House progressives tout their growing numbers in the chamber at climate rally | Trump administration pushes for rollback of Arctic offshore drilling regulations House progressives tout their growing numbers in the chamber at climate rally UK moves up deadline to ban sales of new gasoline and diesel vehicles MORE (D-Mass.); Cory Booker (D-N.J.) and Orrin HatchOrrin Grant HatchMellman: What happened after Ginsburg? Bottom line Bottom line MORE (R-Utah).