Emirates airline says to submit response soon in Open Skies row

The president of carrier Emirates said it will soon submit to the U.S. government a response to American rivals’ allegations that it has received illegal subsidies, which the Gulf airline calls unfounded.

The U.S. airlines want the government to alter its “Open Skies” agreements with the United Arab Emirates and Qatar, accusing them of lavishing their airlines with over $40 billion in subsidies and distorting competition. Emirates, Etihad Airways and Qatar Airways deny the subsidy claims.

Etihad last week filed a 60-page submission to the United States, stating in response to the subsidy allegations that it is required to repay shareholder loans.

Tim Clark said the carrier would respond to the allegations “sooner than you think”, but he told journalists on Tuesday on the sidelines of a meeting of the International Air Transport Authority (IATA) in Miami that he saw no issue to resolve because the Open Skies agreement only sets out grievance procedures on price actions, not subsidies.

He also said that if the U.S. were to tear up the Open Skies agreement, then by the same logic it would have to cancel anti-trust immunity allowing U.S. carriers to agree joint ventures with foreign carriers, without them falling afoul of foreign ownership regulations.

The Partnership for Open & Fair Skies, a lobbying group backed by U.S. airlines and labor, said in response to Clark’s comments that the joint venture agreements brought lower fares.

“The real issue is the billions of dollars of cash infusions propping up the Gulf carriers by the United Arab Emirates and Qatar, which is a violation of our Open Skies policy between our countries,” it said in a statement.

Qatar Airways CEO Akbar Al Baker on Monday warned that any change to the agreements could spark protectionism.

The director general of IATA, which has no mandate to formally act on the issue, on Monday said the body was in fully in favour of growing liberalisation, though he said the debate may well comprise a definition of what is free and fair.

Emirates’s Clark also added that he would like to see the lifting of restrictions that prevent foreign carriers from taking more than a minority stake in another airline.

“I would dearly love to see the removal of restrictions on foreign ownership. I don’t believe in taking part-stakes,” he said.

He also did not expect to make any announcements at next week’s Paris Air Show.