Emirates rejects US subsidy allegations
American carriers’ argument is a ‘mess of legal distortions and factual errors’, Clark says
Emirates yesterday issued a 350-page report rejecting allegations of unfair competition and that it has received over $6 billion (around Dh22 billion) in subsidies.
The airline’s rebuttal comes in response to the aggressive campaign by US carriers — Delta, United and American Airlines — to restrict the growth of international flights to the US operated by Emirates and other Gulf carriers.
Emirates President Sir Tim Clark yesterday said in Washington DC that the US carriers’ argument is nothing more than a “mess of legal distortions and factual errors”, and that the rebuttal proves false the claim that Emirates benefits from government subsidies in violation of the USUAE Open Skies Agreement.
“The methods employed by the US legacy carriers to discredit Emirates have been surprising and frankly, repugnant. The Big 3’s mess of legal distortions and factual errors falls apart at the slightest scrutiny. The allegations about Emirates receiving subsidies or competing unfairly are false,” he said.
Reacting strongly to the subsidy and unfair allegations levelled by big three airlines of the US against Gulf carriers, Emirates said it has helped create thousands of jobs in the US and contributed in adding economic value to the airports where it is operating.
Emirates flies 84 flights each week from nine USA gateways.
The estimated annual economic value of Emirates services to these airports and their surrounding regions is $2.9 billion, Emirates said in a statement yesterday.
In addition, via interline arrangements, Emirates said that it has provided over 775,000 feed passengers to US legacy carriers, producing $133 million in financial benefits to them over the past five years.
Releasing its point-by-point, fact-based response to the allegations made by three US-based airlines — Delta, United and American Airlines — Emirates yesterday said restricting competition would hurt consumers, communities and the national economy.
“The Big 3 [US legacy carriers] are earning record profits, while seemingly content to remain on the lower ranks of global customer satisfaction surveys. They claim to have lost traffic to competition but in fact on every route that Emirates has established to the US, overall traffic has grown significantly after Emirates’ entry,” Emirates stated.
The Dubai-based carrier dismissed allegations that hundreds of jobs are being lost to foreign carriers. Referring to aviation experts in Campbell Hill Aviation group, who analysed the US job effects of Emirates flights to the US, it said Emirates supported nearly 4,000 jobs per daily round trip service. In Austria, it supported 3,300 jobs and in Germany 2,400 jobs. Sir Tim Clark, President of Emirates airline, said that the Big 3’s white paper is littered with self-serving rhetoric about ‘fair trade’, ‘level playing field’, and ‘saving jobs’, but their mess of legal distortions and factual errors falls apart at the slightest scrutiny. “The Big three are far from being ‘harmed’ financially by Emirates’ operations, and they are not even operating in the same markets that we are,” he said.
The airline rejected the allegations that it has received over $6 billion in subsidies, including fuel hedging subsidies, purchasing goods and services from related third parties at below market terms, disproportionately benefiting from airport infrastructure and user fee at Dubai International Airport and having artificial cost advantage through the structure of the UAE’s labour law.
“The subsidy allegations put forward by the Big 3 are patently false. We have been profitable for 27 years straight, and unlike our accusers, we have never depended on government bailouts or protection from competition. Dubai has no oil reserves to speak of, and therefore it embarked on a well-documented strategy to diversify its economy with air transport as a key enabler.”
Protectionism
Andrew Charlton, managing director of Aviation Advocacy based in Switzerland, told Gulf News by phone that the allegations made by US carriers are baseless. “US airlines for many years benefited from open competition. The moment there is sniff of gunfire, they are hiding behind the wall of protectionism. It is incredible. The US airlines are making the allegations to protect their market share.”
The US carriers have misinterpreted Emirates’ financial reporting of its fuel hedging activity, mischaracterised the facts of the fuel hedging contracts, and misunderstood the terms of Emirates’ 2009 transaction with its parent company, Investment Corporation of Dubai (ICD), Emirates said in its 350-page report.