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Emirates Air denies 'demonstrably inaccurate' subsidy claims

Emirates Air denies 'demonstrably inaccurate' subsidy claims

Emirates Airlines said Tuesday of that allegations from U.S. airlines that it has been receiving subsidies from its government owners are "patently false."  

Unions that represent employees of the largest U.S. airlines, known collectively as the Big Three, have alleged Emirates and other Middle Eastern airlines like Qatar Airways and Etihad Airways have 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. 

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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 said would upset other areas of foreign relations.

Emirates said Monday in a filing with the Departments of State, Commerce and Transportation in response to the allegations from U.S. carriers that the claims it has received subsidies that violate the Open Skies agreement are "demonstrably inaccurate." 

"Emirates is one of the world’s leading airlines precisely because Emirates does not depend on government subsidies, bail-outs, and bankruptcy laws, but operates as a consumer-focused, profit-driven, commercial enterprise," the company said. 

"Emirates has earned a profit for twenty-seven straight years, because Emirates is committed to world-class customer service, is well-managed, and has pioneered an innovative aviation model: long-haul to long-haul service that reduces costs and travel times and provides unrivaled global connectivity for international travelers, particularly in the heavily populated but underserved countries in the Indian Subcontinent and Africa," the statement 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.

One such campaign, known as the Partnership for Open and Fair Skies, said Tuesday that U.S. airlines are standing by their allegations, despite Emirates denial of the claim it has received subsidies. 

“Emirates can submit as many pages as it wants, but it still won’t paper over what has been well-documented: Emirates has received billions in subsidies and unfair benefits from the treasury of the UAE," Partnership for Open and Fair Skies spokeswoman Jill Zuckman said in a statement. 

"Our investigation shows that these massive subsidies have allowed Emirates, Etihad and Qatar airlines to expand far beyond what market forces could ever support, distorting international competition and tilting the playing field to its advantage," she continued. "With American jobs at stake, the time for action is increasingly urgent. We respectfully ask that the U.S. government request consultations with Qatar and the UAE, and stand up against these unfair government subsidies that violate our Open Skies agreement.”

Emirates said Tuesday that documents that have been filed with the Obama administration about the alleged subsides to Middle Eastern carriers "consists of a series of demonstrably inaccurate assertions, outright distortions, and legal misinterpretations of the Open Skies Agreement. 

"In their White Paper, the Legacy Carriers allege that Emirates has received over $6 billion in subsidies from the Dubai government. This claim is patently false," the company said. 

"Emirates is a financially transparent business with nothing to hide," the statement continued. "Emirates has financed its growth from its own financial resources, reinvesting in its own business continuously and utilizing a wide range of external financing options available in the market. Each stage of Emirates’ organic growth story can be understood from the audited financial statements that Emirates’ has maintained from the date of its inception. There is no room in any of this for subsidy or unfair government benefits."  

Travel and consumer groups in Washington 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.

Emirates said Tuesday that it agrees with that assessment. 

"The Legacy Carriers have framed their complaint in terms of their narrow commercial interests, but they are asking the United States to undertake a massive departure from Open Skies policy," the company said. 

"Open Skies policy embraces goals such as greater competition, increased flight frequency, more consumer choice, promotion of business travel and tourism, improved service, and innovation," Emirates continued. "The Legacy Carriers have not even tried to argue that these goals of Open Skies have been harmed."  

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 full Emirates filing can be read here