Point-by-point
Fuel Hedging Allegation
The Legacy carriers claim that the Dubai government, through Emirates’ parent company, Investment Corporation of Dubai (ICD), shielded Emirates from “massive losses” on fuel hedging contracts after a sharp decline in global oil prices in 2008—2009.
Fact presented by Emirates: When fuel prices plunged in 2008, Emirates and ICD agreed that fuel hedging contracts would be transferred to ICD, so that non-realised, paper losses for fuel hedging contracts under “mark to market” accounting did not present a misleading portrayal of Emirates’ operations.
Notwithstanding this transfer, all actual payments on the contracts at maturity were ultimately paid using Emirates’ own cash resources. Letters of credit to meet collateral calls were issued against Emirates’ credit, not ICD’s, the direct opposite of what the Anderson Report asserts. Neither ICD nor the Dubai Government absorbed any losses, and when the transactions were completed, ICD actually made a profit, which would otherwise have gone to Emirates. As a result, the transfer cost Emirates money, the precise opposite of the alleged “subsidy”.
Labour Rights Allegation
The Legacy carriers allege that Dubai provides an artificial cost advantage to Emirates through the structure of its labour law.
Fact presented by Emirates: There is no precedent under the Open Skies Agreement or under any international trade agreement for treating differences in national labour practices as a “subsidy.” The United States has always strongly objected to such efforts, since US labour laws depart from the International Labour Organisation conventions in numerous respects, including with regard to the ILO’s “right of association.”
The Legacy carriers have asked the United States to adopt a legal position for which there is no international authority, and which if applied would require Congress and state legislatures to revise a host of US laws, including those dealing with striker replacement and right-to-work, limits on union organising and the right to strike, restrictions on primary and secondary boycotts, and restrictions on public employee unions.
Airport Infrastructure and User Fee Allegations
The Legacy carriers assert that the Dubai International Airport user charges fail to recover the full cost of infrastructure, and that this disproportionately benefits Emirates in its hub operations.
Fact presented by Emirates: The Open Skies Agreement requires that user fees “shall not exceed ... the full cost ... of providing the appropriate ... facilities.” The law prevents the parties from charging more than full costs (to prevent airports from gouging foreign airlines). It does not set a floor on charges, or require airports to cover their costs. Compass Lexecon ignores this and finds a “subsidy” on the assertion that airport fees are too low.
Airports worldwide do not charge to recover their full costs, including Legacy carrier hubs such as Detroit, Atlanta, Newark and Dallas/Fort Worth, nor does the US Department of Transportation or the Federal Aviation Administration require them to do so.