US, Emirates near deal to solve air subsidy spat

spent huge sums over the last three years pressing the Obama administration and Trump administration for tough action, and have been eager to show a win on the issue. The airlines have hoped that if they have more visibility into the finances of the stateowned Emirati airlines, the Emiratis will no longer be able to get away with unfair subsidies.

Both of the Emirati airlines have long denied receiving unfair government subsidies, as has Dohabased Qatar Airways. But the U.S. airlines claim that the Gulf airlines have managed to mask payments to their airlines through creative accounting, such as catering contracts arranged at far below market rates.

It was unclear precisely what transparency measures the Emiratis will agree to in the deal. But in the Qatari arrangement, Qatar agreed within one year to releasing audited financial statements for Qatar Airlines “in accordance with internationallyrecognized accounting standards.” Within two years, Qatar Airways is to disclose any transactions with other state-owned entities, such as caterers or other companies that support airline operations.

The other major concern of the U.S. airlines regards start so-called “Fifth Freedoms” flights — routes that go from third countries, such as those in Europe, directly to the United States. Emirates Airline currently offers “Fifth Freedom” flights in which passengers can fly from New York-area airports to Milan, Italy or Athens without ever setting foot in the UAE.

The U.S. carriers claim those flights offered by flag carriers of the UAE undercut the flights they offer on the same routes. But the Gulf airlines have pointed out that some of the U.S. carriers also offer flights that never set foot in their home country, such as Delta’s direct flight from Manila, Philippines, to Tokyo.

Under the scenario U.S. airlines fear, Emirates or Etihad could expand their offerings by adding flights from Abu Dhabi or Dubai to, say, Paris or London, stop to pick up more passengers, then fly on to New York.

The U.S. airlines had sought a “freeze” — a binding commitment that they wouldn’t offer any more Fifth Freedom flights — from the Gulf airlines, but appear to have fallen short. Instead, they are likely to receive a side-letter or similar document that states that as of now, there are no plans to offer any more such flights, at least partially addressing the U.S. concerns. The side document is still being drafted, several individuals briefed on the discussions said.

For the UAE, the agreement averts the more serious step U.S. airlines wanted: re-opening the socalled open-skies treaties that could ultimately lead to less favorable conditions for Persian Gulf airlines.

Though on the same side of the airline dispute, Qatar and the UAE oppose each other in a bitter, unrelated standoff. Last year, the UAE, Saudi Arabia and other Gulf nations blockaded Qatar after accusing it of supporting extremism and fomenting dissent throughout the region.

Qatar has worked to change that perception, and its ruling emir was praised by President Donald Trump this week in an Oval Office meaning for significant progress on that front.

The Qatari deal in January on the airline dispute increased the pressure on rival UAE to reach a similar agreement quickly.

Wthe ASHINGTON (AP) — The United States and United Arab Emirates are nearing a deal to resolve a years-old spat over alleged government subsidies to Emirati airlines that the major U.S. airlines claim have tilted the competition against them, four individuals familiar with the negotiations told The Associated Press.