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New Etihad blockbuster to US govt: Keep the skies open

June 3, 2015 Aviation, Headline News No Comments Email Email

egtmedia59Etihad Airways, national airline of the United Arab Emirates (UAE), has urged the US Government to “keep the skies open”, in a comprehensive formal response to the joint campaign by Delta Air Lines, United Airlines and American Airlines. The Big Three US carriers are agitating for action against some Middle Eastern carriers for what they see as unfair tactics.

The war of words between Middle Eastern carriers and their American rivals is steadily escalating.

The dispute began when US airlines cried foul, accusing prosperous Middle Eastern carriers, including Etihad and Dubai-based Emirates, of abusing the Open Skies agreement by receiving government subsidies. The Middle Eastern carriers emphatically deny the charges.

In a recent salvo, Etihad Airways accused its Big Three US airline critics of having received benefits worth USD 71.48 billion.

Etihad Airways’ latest submission to the US Government highlights the many benefits that the US Open Skies policy and competition deliver to consumers, to American workers, and to US trade and tourism.

Etihad says its submission “categorically refutes the claims made by the Big Three US carriers; proves that equity and loans from Etihad’s shareholder are not subsidies under any applicable rules; and shows that Big Three have not demonstrated any harm from Etihad, whereas Etihad has shown how they have benefited from its operations.

The submission argues that the Big Three carriers have gained more than USD 70 billion in benefits from US Government authorities, and through legal processes such as Chapter 11 bankruptcy reorganisation, over the last 15 years.

In a letter supporting the airline’s formal submission, James Hogan, Etihad Airways president and chief executive said: “Etihad Airways did not seek this fight; we focus on making money by providing world class, innovative, re-imagined and value-for-money product and services to our guests.”

Etihad Airways has submitted that the Big Three carriers’ claims, allegations and requests for relief are not supported by fact, logic, law, or treaty, and that:

  1. Etihad’s conduct, and that of the UAE Government, is fully consistent with the US–UAE Air Services Agreement, applicable United States law and the governments’ respective treaty obligations;
  2. Government ownership is not an issue under the US-UAE Air Services Agreement;
  3. Shareholder equity and loans are not subsidies;
  4. While Etihad competes vigorously for all passengers, it does not charge artificially low fares;
  5. Etihad causes no actionable harm to the Big Three carriers, and actually provides them with significant commercial benefits in terms of connecting passengers onto their networks (an estimated 300,000 in 2015);
  6. Etihad has been successful in markets in which the Big Three carriers affirmatively choose not to compete, and is in fact providing the Big Three carriers with an avenue (through codeshare and interline agreements) to offer their passengers routes that they choose not to fly themselves; and
  7. Etihad treats its worldwide employees, who come from over 140 countries, including the United States, fairly and with respect.

Hogan said: “For these reasons, we respectfully submit that the Big Three carriers’ campaign against Etihad Airways should end immediately and that there is no basis whatsoever for government-to-government consultations under the US–UAE Air Services Agreement.”

Etihad Airways’ submission includes detailed information about the airline, its financial strategy and its business performance.

Commenting on the submission, James Hogan said: “Our story is one of an airline that has chosen to challenge the global status quo, bringing new competition to markets that have for too long been dominated by the major legacy airlines.

“In many markets, airlines react to our new competition by improving their own offer to consumers.  It is ironic that in the home of free competition, a market in which we account for only a tiny fraction of one per cent of international departures, we have instead been attacked.”

Etihad Airways’ submission includes the example of routes to the Indian sub-continent to explain what it calls the inaccuracies of the Big Three’s arguments.

There will be more on this, of that you can be sure!

Etihad has set up a website to push its cause on the issue:

Edited by Peter Needham

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