US favours Gulf airlines in Open Skies dispute

10 July 2016

US reported to have ruled against holding formal talks with Gulf states

The US government will not hold formal consultations with the UAE and Qatar to review the existing Open Skies agreement with the two countries.

This will serve a major blow to the dispute initiated in early 2015 by the US’ Big Three airlines - Delta, American and United - against the three largest Gulf airlines.

MEED earlier reported that the US Department of State was planning to hold informal talks with representatives of the UAE and Qatar in late June prior to holding informal talks with both governments in July.

It now appears that the process will not advance to formal consultative talks. Instead the US government will utilise a more mellow approach primarily through a series of diplomatic meetings with representatives from the two Gulf states, the US’ Politico reported, citing confidential sources.

Emirates declined to make a comment on the recent development.

The open skies dispute was initiated in January 2015 by the US’ Big Three. They requested the US government to open consultative talks with the two Gulf states to renegotiate certain terms of the Open Skies agreement and while doing so limit the Gulf airlines’ expansion into the US market due to allegations that they have received unfair subsidies in violation of the bilateral aviation agreement.

The US airlines alleged that Dubai’s Emirates Airline, Abu Dhabi’s Etihad Airways and Qatar Airways have received government subsidies worth an estimated $42bn over a 10-year period.

The Gulf airlines have strongly denied the allegation and have presented their counter arguments with the US’ Transport Department in 2015.

In January, Qatar Airways’ CEO Akbar al-Baker said he expects the US government to rule in favour of the Gulf airlines. “The US government is starting to realise the case was a total waste of time and money because the Big Three’s lawyers are trying to prove a losing case,” Al-Baker said.

Saj Ahmed, chief analyst at London-based StrategicAero Research also told MEED in 2015 that the US government ”will allow the Gulf airlines to continue to expand in the US market because the US airlines have consistently failed to serve the GCC properly.”

 

 

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