Emi­rates con­firms bil­lions in Govt sub­sidy for air­port ter­mi­nal

The Pak Banker - - COMPANIES/BOSS -

The United Arab Emi­rates spent a stag­ger­ing $7.8 bil­lion to build an op­u­lent, 11-story air ter­mi­nal at Dubai In­ter­na­tional Air­port for the sole ben­e­fit of its air­line, Emi­rates, ac­cord­ing to doc­u­ments the air­line filed with the U.S. gov­ern­ment that con­firmed one of the most ex­ces­sive and un­apolo­getic vi­o­la­tions of Open Skies pol­icy to date.

In pa­pers re­cently sub­mit­ted to the Obama ad­min­is­tra­tion, Qatar Air­ways, Eti­had Air­ways and Emi­rates ac­knowl­edged dozens of in­stances where they re­ceived sub­si­dies from the trea­suries of the UAE and Qatar, as well as ac­tions they took to shield their fi­nances from scru­tiny. The Part­ner­ship for Open and Fair Skies, which rep­re­sents the U.S. car­ri­ers and sev­eral air­line em­ployee unions, high­lighted the sub­si­dies and their harm to Amer­i­can work­ers in a ma­jor le­gal fil­ing this week with the U.S. gov­ern­ment.

Some of the sub­si­dies ac­knowl­edged by the Gulf car­ri­ers in­clude: Qatar Air­ways con­firmed it re­ceived free land worth $452 mil­lion from the gov­ern­ment of Qatar. Its sub­mis­sion to the U.S. gov­ern­ment clearly states that "the State pro­vided Qatar Air­ways with parcels of land to en­sure that the car­rier had enough real es­tate for of­fice and residential space," and "in 2013, ap­pro­pri­ated the land for the public in­ter­est at its then mar­ket value."

Emi­rates con­firmed that it al­lowed its par­ent com­pany, the In­vest­ment Cor­po­ra­tion of Dubai (ICD) to as­sume its fuel hedg­ing con­tracts, ex­plain­ing that it "had the op­tion to pur­sue a dif­fer­ent ap­proach," one that made it un­nec­es­sary to re­port its hedg­ing losses. The re­sult is that Emi­rates shifted costs off its books and ar­ti­fi­cially in­creased its prof­its - all with­out the typ­i­cal risk a com­mer­cial en­ter­prise would en­counter in the mar­ket­place.

Eti­had ad­mit­ted that it sold its fre­quent flyer pro­gram to it­self in 2013 in or­der to show a profit. Ac­cord­ing to its own 2014 fi­nan­cials re­cently un­cov­ered in Hong Kong, Eti­had sold its own cargo com­pany to it­self the fol­low­ing year to sim­i­larly show a profit - ac­tions that a typ­i­cal com­mer­cial en­ter­prise would be un­able to take.

"These end­less cash in­fu­sions from for­eign gov­ern­ment trea­suries have al­lowed the Gulf car­ri­ers to ex­pand far be­yond what mar­ket forces could ever sup­port, fun­da­men­tally dis­tort­ing the mar­ket­place and harm­ing U.S. car­ri­ers and Amer­i­can jobs," said Jill Zuck­man, chief spokesper­son for the Part­ner­ship for Open & Fair Skies. "It's ur­gent that the Obama ad­min­is­tra­tion take swift ac­tion and re­quest con­sul­ta­tions to end these trade vi­o­la­tions be­fore the Gulf car­ri­ers dam­age the U.S. avi­a­tion in­dus­try the same way they have dev­as­tated Europe's."

One of the most strik­ing ad­mis­sions comes from Emi­rates, which told U.S. reg­u­la­tors that the gov­ern­ment di­rectly sub­si­dizes the cost of the air­port ter­mi­nals that it builds for Emi­rates' ex­clu­sive use. The gov­ern­ment spent $7.8 bil­lion to con­struct the Emi­rates ter­mi­nal at the Dubai In­ter­na­tional Air­port, which is the first fa­cil­ity of its kind: 11 floors de­signed for the largest fleet of A380s, with fine din­ing, a full ser­vice spa and other ameni­ties all in­tended to give Emi­rates a com­pet­i­tive ad­van­tage over the U.S. and other in­ter­na­tional car­ri­ers in at­tract­ing pas­sen­gers con­nect­ing around the world.

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