Obama Administration Questions U.S. Airlines On Subsidy Claims -Source

The Obama administration has asked U.S. airlines for more information on their claims that Gulf carriers have received market-distorting subsidies, marking its first written response to U.S. airlines’ lobbying effort, Reuters has learned.

The administration asked U.S. airline representatives about 20 questions in writing last week about their method in determining the subsidy allegations and about the market harm they say Gulf carriers have caused them, according to a person familiar with the matter.

U.S. airlines hope to provide the government answers within 10 days, the person said.

While the administration has not taken a stance, the request reflects the growing focus on the debate in Washington. The source said the questions were factual and did not suggest the administration was either swayed or skeptical.

Leaders in the U.S. House Committee on Transportation and Infrastructure have recently called on the administration to look into the allegations, while U.S. airlines repeated their request Tuesday for the United States to open talks with Qatar and the United Arab Emirates on the “Open Skies” agreements that authorize flying between the nations.

The Gulf carriers, meanwhile, have stepped up their defense.

“We make no apologies for offering new competitive choice for air travelers,” Etihad Airways Chief Executive Officer James Hogan said in a speech on Tuesday, adding that the airline supports more than 200,000 U.S. jobs and is transparent about what he emphasized were loans, not subsidies, provided to it by the government of Abu Dhabi, its shareholder.

Emirates airline President Tim Clark said at a separate media event Tuesday that the U.S. airlines’ allegations were incorrect and promised to provide a “line-by-line response” to their lobbying document.

Both said they are in touch with the Obama administration, and Clark said his meetings were “very constructive.”

Kerry Humphrey, a spokesperson for the Economic and Business Affairs Bureau at the U.S. Department of State, reiterated that the administration takes the U.S. airlines’ competition concerns seriously but remains “committed to the Open Skies policy,” which has benefited travelers, the U.S. aviation industry and the U.S. economy.

“No decisions have been made,” she said in an email.