United CEO: Open skies 'terribly abused' by Gulf governments

17 Jul 2015 by GrahamSmith

United Airlines' chief executive has accused the governments of Qatar and the United Arab Emirates of abusing the open skies agreements between their countries and the US.

Jeff Smisek said both nations have "terribly abused" the agreements and "used massive subsidies" that he claims have totalled $42 billion over the last decade.

Smisek told our sister publication Buying Business Travel: "It's aberrational, off the charts. These countries have no home markets at all, they rely entirely on taking traffic from others, through subsidies – whether subsidised pricing, product levels or marketing...

"I suspect there are billions of additional dollars of additional subsidies buried in interested party transactions."

Last month, United, Delta and American formed the Partnership for Open & Fair Skies coalition calling on Washington to enforce the open skies agreement, which they claim is weighted in favour of Gulf carriers (see news, June 17).

It asks the US government to put a temporary block on new US-bound services by Qatar Airways, Etihad Airways and Emirates.

Etihad has urged the US government to keep the open skies agreement in place, claiming the "Big Three" US carriers have received more than $70 billion in benefits from Washington, the majority in the form of Chapter 11 bankruptcy protection, over the last 15 years (see news, May 15).

However, Smisek said: "That's an absurd argument. Bankruptcy protection is not a subsidy whatsoever. The people who get hurt in bankruptcy are creditors and shareholders.

"If they want to talk about subsidies, we welcome that. Bring it on, we'll win that argument all day long."

He added: "What we have here is a trade dispute. Our government has had a long-standing trade policy, that it won't tolerate the dumping of subsidised goods into the US – whether that's subsidised steel, cotton, strawberries, soya beans, or airline tickets.

"This is a pure trade dispute, not protectionism. We welcome competition and we don't like protectionism. But we also expect our government to enforce its long-standing trade policies."

Qatar Airways chief executive Akbar Al Baker has threatened to withdraw his airline from Oneworld if the open skies row continues (see news, June 9).

Graham Smith

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