THE SUBSIDY DEBATE

Do Gulf airlines really get unfair assistance from their governments, or are US carriers looking to stifle the competition?

IN A 2011 interview with Gulf Business, Qatar Airways CEO Akbar Al Baker responded to a subsidy allegation in the following lines: “American airlines get Chapter 11 protection. But if I go bankrupt (after the IPO), the state won’t support me, so what’s the problem?”

But Qatar Airways – which postponed floatation plans soon after the interview – and its Gulf peers are not publicly listed companies but closely guarded private firms with their respective governments owning a stake in them.

This also makes it harder for the big three in the Gulf to counter any allegations about unfair subsidies – especially the recent claims leveled at them by the three American carriers.

In a 40-page dossier that was recently submitted to the US government, Delta Air Lines, United Airlines and American Airlines have claimed that the three Gulf carriers have received government subsidies worth $40 billion.

These funds, they say, have helped the Gulf’s big three to rapidly expand their fleet and invest in super jumbo jets like the A380.

In addition, the US airlines have urged their government to revoke the Open Skies policy that it signed with the UAE and Qatar, saying that the agreement should not exist if the carriers are subsidised.

In response, Gulf airline chiefs have strongly refuted subsidy claims, with some opposing them more vehemently.

Dubai-based Emirates’ president and CEO Sir Tim Clark called the allegations “spurious, fallacious and malicious” while Etihad chief James Hogan has also bristled against what he termed “protectionist measures”.

TRUE OR FALSE?

But are the Gulf three and their US peers in such different playing fields, or is it just professional rivalry?

“The current playing field between the Gulf and US carrier is a result of the differing conditions in their respective home markets. These environments create