By Rory Jones in Dubai and Robert Wall in London
Emirates Airline has submitted a 388-page document to the U.S.
government that aims to rebut accusations by North American rivals
that it is subsidized.
The submission by the Dubai-based carrier, the world's biggest
international airline by traffic, shifts the focus of the global
airline spat to U.S. officials who now have to decide whose
arguments are more persuasive.
The document, which Emirates presented to the U.S. government on
Monday, represents the most detailed argument yet by one of the
rapidly growing Middle East carriers in defense of its business
practices. It follows monthslong verbal sparring between America's
three major carriers and the three biggest Persian Gulf rivals:
Emirates, Abu Dhabi-based Etihad Airways and Qatar Airways.
"We are absolutely not subsidized, and our operations don't harm
these legacy carriers, but instead benefit consumers, communities
and America's national economy," Emirates President Tim Clark said
in a statement.
Speaking to reporters in WashingtonSHY after meeting U.S.
governmentSHY representatives, he called his rivals' assertions "a
mess of legal distortions and factual errorsSHY."
Emirates' move comes after Delta Air Lines Inc., United
Continental Holdings Inc. and American Airlines Group Inc. in
January issued a 55-page report accusing the three Persian Gulf
carriers of collectively receiving $42.3 billion in subsidies. The
U.S. airlines called on the U.S. government to curb their rivals'
growth through changes to bilateral "open skies" agreements that
liberalized air travel.
The U.S. government early on said it took the allegations
seriously and asked the three U.S. airlines for additional
information, which they supplied. The departments of
Transportation, State and Commerce opened up regulatory dockets
where interested parties can post comments and documents.
The Gulf carriers have said they are commercial enterprises that
aren't state subsidized.
Etihad supplied its rebuttal to the U.S. claims in early June.
Doha-based Qatar Airways hasn't produced a document, but has
dismissed the U.S. claims in numerous public comments. It declined
to comment.
The U.S. airline trio is supported by pilot unions and European
carriers such as Air France-KLM SA and Deutsche Lufthansa AG, which
have also lobbied for curbs on the Persian Gulf rivals.
The Middle Eastern airlines have secured the backing of travel
agency representatives, which argue the airlines offer a
higher-quality of service than their U.S. peers. The carriers also
have the support of delivery companies, such as FedEx Corp., which
have large logistics hubs in Dubai.
Emirates in its submission to the U.S. government seeks to
counter allegations made by its rivals on a mix of financial and
legal grounds. In several cases, the Dubai-based carrier asserted
that its U.S. rivals have benefited from many of the same business
practices that they denounce as subsidies.
The U.S. carriers accused Emirates of transferring a large
liability on fuel bets off its books in 2008 to mask losses in what
amounted to a government subsidy. Emirates said the losses were
never realized. The mark-to-market accounting losses would have
distorted Emirate's operational performance, the carrier said,
adding that the Dubai government received a financial gain when
fuel prices rebounded. Delta employed a similar accounting approach
in its 2009 results, Emirates said.
Emirates also said U.S. airlines struck advantageous deals with
airports even as the U.S. carriers argued the low charges at Dubai
International Airport that serves as Emirates's hub were
effectively a subsidy. Airports in Pittsburgh and Portland, Ore.,
granted Delta preferential financial terms to secure its business
and Denver airport in 2014 extended incentives to United to ensure
the U.S. carrier wouldn't cease its hub operations there, according
to the Gulf carrier.
Delta declined to address the specific allegations. United
didn't immediately respond to request for comment.
The most expansive element of the rebuttal deals with the open
skies agreement between the U.S. and United Arab Emirates, which
effectively allows Emirates to fly to any point in the 50 U.S.
states. The U.S. carriers argue those traffic rights should be
curtailed because Emirates and its neighbors are violating the
spirit of the law.
Emirates denies the accord is being violated. The carrier said
its rivals are invoking international trade rules that don't apply
to air transport.
"Emirates can submit as many pages as it wants," said Jill
ZuckmanSHYSHY, a spokeswoman for the U.S. airlines' coalition,
called Partnership for Open & Fair Skies. "But it still won't
paper over what has been well-documented: Emirates has received
billions [of dollars] in subsidies and unfair benefits from the
treasury of the U.A.E."
Another persistent claim against the Middle East carrier has
been that they are paying artificially low prices for fuel.
Emirates said it pays less for its jet fuel at U.S. airports than
it does at home, including from the national oil company.
Whether the U.S. government will act is unclear. The three U.S.
carriers have requested the U.S. pursue consultations with the
governments of the U.A.E. and Qatar over the open skies air
treaties.
American Airlines Chief Executive Doug Parker said in June that
he expected the U.S. government to take action soon.
Emirates' Mr. Clark, who previouslySHY said he expected existing
open skies accords to remain intact, said on Tuesday that he
expects the U.S. government to start reviewing the evidence in July
or August beforeSHY deciding on whether to act.
Susan Carey contributed to this article.
Write to Rory Jones at rory.jones@wsj.com and Robert Wall at
robert.wall@wsj.com
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