Dispute over government subsidies to US, Gulf airlines heats up

DALLAS – U.S. airlines have been sparring for several years with fast-growing Persian Gulf rivals that seem to be poaching passengers from the Americans. Now, a CEO’s comment that dragged 9-11 into the debate has escalated the fight.

The three largest U.S. airlines claim that three big Gulf carriers have received more than $40 billion in subsidies from their governments since 2004, making competition with them unfair because their costs are artificially low. The CEOs of American, United and Delta are asking federal officials to renegotiate or kill treaties that have allowed airlines from Qatar and the United Arab Emirates to increase flights to the U.S.

American, United and Delta say that unless the treaties are changed, they will be forced to cut back or drop international routes.

State-owned Qatar Airways, Emirates and Etihad Airways say that the U.S. airlines are merely blocking competition and protecting the high fares they charge on international flights. Some U.S. consumer groups agree.

The Gulf airlines also have also claimed that the U.S. airlines have gotten subsidies too. And that is where things got testy this week.

After the terror attacks of Sept. 11, 2001, Congress approved $5 billion in cash aid and up to $10 billion in loan guarantees to help U.S. airlines survive a sharp drop in travel. The Gulf airlines contend that those payments, and benefits that major U.S. airlines received from bankruptcy protection, amounted to subsidies.

In response to those claims, Delta CEO Richard Anderson seemed to link the Gulf carriers and their nations to the 9-11 attacks, in which American Airlines and United Airlines jets were crashed into the World Trade Center in New York and the Pentagon outside Washington, killing nearly 3,000 people.

“It’s a great irony to have the United Arab Emirates from the Arabian peninsula talk about that, given the fact that our industry was really shocked by the terrorism of 9-11, which came from terrorists from the Arabian peninsula,” Anderson said on CNN.

On Thursday, Emirates charged that Anderson’s comments were “deliberately crafted and delivered for specific effect. This brings into question his credibility.” Earlier, Emirates CEO Tim Clark had said Anderson “crossed the line” with the comments about 9-11, which “caused great offence in this part of the world.”

The United Arab Emirates is among the most prominent Arab members in the U.S.-led coalition against Islamic State militants in Iraq and Syria, and all three big Gulf carriers are major customers of U.S.-made Boeing jets – together, they have taken 176 Boeing jets and have another 544 on order.

Delta said that Anderson did not mean to link the Gulf airlines or their governments to the 9-11 attackers.

In a statement, Delta spokeswoman Betsy Talton said Anderson was only reacting to claims by the Gulf carriers that the post-9-11 payments and bankruptcy laws amounted to subsidies. “We apologize if anyone was offended,” she said.

The U.S. airlines have been complaining about the Gulf carriers for several years. They say unfair competition has reduced the share of traffic between the U.S. and the Indian subcontinent on U.S. and partner airlines while the Gulf carriers’ share has grown. They say the Gulf carriers are now targeting routes between the U.S. and Europe.

But the effort to reopen or repeal aviation treaties is opposed by some consumer groups, who say the agreements have boosted competition and lowered fares.

“The overall impression is that the big U.S. network airlines want to lock out independent airlines that offer lower fares, newer airplanes, faster connections, more destinations and better service,” said Kevin Mitchell of the Business Travel Coalition.

American, Delta and United declined to make their CEOs available for interviews.

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