As it happened: Top UAE aviation execs in the US to confront subsidies row

Senior executives from Emirates and Etihad are in the US capital on Tuesday to fight their corner in an ongoing row over subsidies that US airlines claim they receive from their governments and which give them an unfair advantage

(10.12pm UAE time) Sir Tim leaves the stage after delivering a robust argument which couldn't be much clearer - Emirates does not and has not received government subsidies.

Amusing tweet from Reuter reporter Victoria Bryan on Clark's turn of phrase:

 

(10.10pm UAE time) Clark doesn't rule out legal action in this dispute but says he hopes "good sense" prevails.

(10pm UAE time) Clark is asked about a part of the report in which it says he has offered to resign if any of the allegations are proven. In response, he says: "I won't have to resign because the allegations are incorrect so let's park that. I stand by everything I have said."

(9.55pm UAE time) On claims that the Dubai government paid $4 billion of fuel hedging loans for Emirates, Clark responds in a single word: "Tosh".

(9.51pm UAE time) Clark seems keen to wrap up this argument. "We do not receive subsidies in any shape or form," he says. Can't be any clearer than that!

(9.50pm UAE time) Clark appears to be puzzled by the opposition from US carriers. "What's driving this opposition, I don't know," he says in response to questions from media.

"The US carriers should be working with us, not against us," he adds, pointing out that Emirates brings 2.4 million tourists to the US each year.

"I hope this won't affect our expansion plans in the United States. It is a key part of our expansion strategy and we're looking to fly to 20 cities. We see no reason why there should be any retardation in what we are planning to do," Clark tells reporters.

(9.45pm UAE time) Clark continues: "We will make a line by line response to the multiple allegations made. We have to check all this... We will do it in a methodical manner. Give us a bit of time but I don't intend to spend a lot of time on this."

(9.42pm UAE time) "This report by the US carriers is a bit of a surprise and we want the chance to respond and we will do that. We will rebut all the things said about us and when we do we should get an apology from those making these allegations... We are not here to take down other carriers."

(9.40pm UAE time) Clark says the US signed Open Skies agreement with the UAE in 1999 and four years later Emirates launched its first US route to New York. It now flies 84 flights per week on a "non-subsidised basis". There is no support for the operation from the government, he insists.

(9.35pm UAE time) Sir Tim says Emirates was created with NO government subsidies.

(9.25pm UAE time) Before we hand over to Sir Tim, here's a new tweet from Americans for Fair Skies which highlights the tough task ahead of the Emirates boss in swaying public opinion in the US.

 

(8.50pm UAE time) Less than an hour until the bell rings for round 2 and in the corner will be Sir Tim Clark, president of Emirates (pictured below) who has already had a thing or two to say about this whole subsidies row. Read his comments here.

(7.58pm) And here's more Twitter reaction to Hogan's speech from the US-based Partnership of Open & Fair Skies. Doesn't look they have been swayed by his argument:

 

(7.50pm UAE time) While you're waiting for Sir Tim, take a look at this commentary from Aviation Week.

So there you have it. I don't think James Hogan could have been clearer and he was certainly in no mood to concede anything to the US carriers. Next up at about 9.30pm UAE time will be Sir Tim Clark, president of Emirates and you can catch his comments here as they happen.

(7.40pm) Hogan finishes his speech by saying Open Skies is about customer choice.

“This is ultimately all about consumer choice. Customers choose to fly Etihad Airways because we offer a great product, with outstanding service, on the routes they want to fly, at prices that are competitive within those markets.

“They choose us against many different competitors, depending upon which market we are in. But quite honestly, it is very rare that US carriers offer those alternatives. No US carrier flies into Abu Dhabi. There are very few US carriers operating to where we do in the Indian sub-continent, in south-east Asia, or in the wider Middle East.

“We make no apologies for offering new competitive choice for air travellers. We hope to continue to do so around the world.”

Twitter update from Jon Ostrower, Aerospace & Boeing beat reporter for The Wall Street Journal:

 

(7.35pm UAE time) Hogan uses the example of the airline’s first Boeing 787 Dreamliner flight into the United States, which started on Sunday from Abu Dhabi to Washington DC. The aircraft is the second of 71 Dreamliners on order from Boeing, part of total orders of almost 120 aircraft worth more than $36 billion with the American manufacturer.

In addition, he says, Etihad Airways delivered 180,000 travellers onto the networks of US airlines in 2014, and 50,000 in the first two months of 2015.

More from Associated Press writer David Koenig on Twitter:

 

(7.30pm UAE time) “We regard ourselves as a friend of the United States,” he says. “Certainly, the bonds between the UAE and the USA are incredibly strong, and we believe Etihad Airways has always reflected that in our business operations.

“We are major customers of Boeing, of GE, of Sabre, and of many other American businesses. We work with strategic American partners – for example, with Atlas, on developing and improving global cargo operations. We work with US financial institutions, with US tourist boards, with US airports. Our commitment to the US economy supports more than 200,000 jobs.”

(7.25pm UAE time) Hogan continues by outlining the economic contribution that Etihad Airways delivers to the United States, directly through its daily flights between Abu Dhabi and six US destinations, which the airline serves exclusively, and also through its extensive supply chain partners throughout the country.

(7.20pm UAE time) More from Hogan on the airline's business plan... “Our shareholder believes in our business plan. They have increased their commitment as we have developed – they have invested in our success.

“They’ve seen the success we are delivering, both as a business in our own right and as a catalyst for other business, trade and tourism, in Abu Dhabi and the UAE. We are now not just an airline but a successful aviation group, incorporating handling, maintenance and distribution capabilities.

“Our shareholder, like any rational shareholder in the world, has made that commitment to us because it expects a return, and as it sees greater success from our business, it sees the opportunity for even greater returns in the future. The key word is return.”

Twitter update from Air Transport World senior editor Aaron Karp:

 

(7.13pm UAE time) As a national airline owned by its government, says Hogan, Etihad Airways is no different than scores of airlines around the world. The airline has always made clear it has received equity investment and shareholder loans, which have been supplemented by $10.5 billion in loans from international financial institutions.

Twitter update from Free Enterprise, a US business organisation:

 

(7.10pm UAE time) He also says that Etihad Airways had been more transparent about its business than other airlines.

“Etihad Airways has had a greater focus on reaching and delivering sustainable profitability – we believe – than any other national airline in history,” he says. “We set a timetable to break even within a decade and we beat that target. We’ve delivered a net profit in each of the last three years.

“I say ‘we believe’ because it is surprisingly hard to find financial information about the first one or two decades of national airlines around the world. We get criticized regularly for our so-called lack of transparency but we see few national airlines that were as open in their first stages of development, as we are being in ours.”

(7.05pm UAE time) Hogan reveals that the ‘secret’ behind Etihad Airways’ rapid growth was nothing more than incredible customer service, delivered on modern new aircraft, with world-leading product, at competitive prices, on routes people want to fly.

Twitter reaction from the Partnership of Open & Fair Skies:

 

(7pm UAE time) Hogan has laid out the key facts behind Etihad Airways’ growth and its competitive strategy.

“As one of the newest national airlines anywhere in the world, we’ve had to create everything from scratch: every bit of product, every bit of our operations, every bit of our infrastructure,” he says.

“Etihad is a David, a David who’s been facing Goliaths since 2003, when we started. In virtually every market we’ve entered, we’ve had to face existing competitors, with established businesses, established infrastructure, established sales and marketing, established brands, and established customer bases.

“In many cases, those established airlines were gifted amazing infrastructure – airports, terminals, slots, landing rights – over decades. To take them on, we’ve had to work harder and we’ve had to work smarter. That’s called competition.

“We’ve been helped by our geographic position. The Gulf is at the centre of today’s trade and travel routes. Today’s aircraft technology and the changing patterns of world trade mean we are positioned strongly for many new and emerging markets.

“We’ve been helped by our blank sheet of paper – no legacy systems, no legacy aircraft, no legacy mindsets. And we’ve been pushed hard by the vision and ambition of our shareholder to create a globally competitive airline.”

(6.52pm UAE time) In his first public comments since three US airlines launched a campaign against Etihad Airways and other Gulf carriers, Hogan calls for reasoned debate based upon facts. He also warns against action which would restrict competitive choice for millions of US and international air travellers in markets which the US airlines have chosen not to serve.

(6.50pm UAE time) It's time for Etihad chief James Hogan and he is quick to praise the Open Skies policy as “a model of success, generating enormous benefits for travellers and for airlines in the US, the UAE and around the world.

Twitter update from Associated Press airline reporter David Koenig:

 

(6.45pm UAE time) Analysts have suggested Lufthansa should seek closer ties with Emirates, especially given its main European rivals IAG and Air France have cooperation deals with Qatar Airways and Etihad but Spohr insists that Lufthansa is not looking at any passenger agreements with Emirates Airline.

(6.40pm UAE time) Before the UAE execs take to the stage, Lufthansa Group CEO Carsten Spohr has already spoken and has warned that an "oligarchy" of Gulf carriers could "destroy" its competitors and eliminate consumer choice if they continue to allegedly receive market-distorting state subsidies without check.

He said aviation agreements between Europe and the United States by contrast enable fair competition because they "clearly subject subsidies and state support to scrutiny."

"Bilateral agreements (with Qatar and the United Arab Emirates) must be reviewed and must be renegotiated," he added.

(6.30pm UAE time) Top ranking executives from Dubai’s Emirates Airlines and Abu Dhabi’s Etihad Airways will today speak in Washington in a bid to quash the ongoing row over subsidies US airlines claim they receive from their governments and which give them an unfair advantage.

Delta Air Lines Inc, United and American Airlines have asked the White House to look into the financial statements of competitors from Qatar and the UAE, which they accuse of receiving more than $40 billion in government subsidies since 2004, and have called for the open skies agreements with both countries to be renegotiated.

In a bid to retaliate, Etihad Airways’ CEO James Hogan (pictured above) is also in Washington today, where he will address the allegations in a keynote speech at the 14th annual Aviation Summit. The theme of the summit, considered one of the industry’s most influential gatherings, is “the future of space and aviation in the global economy”.

Emirates’ president Sir Tim Clark is also in Washington and will give a press conference addressing the issues at around 1:30pm Washington Time (9:30pm UAE time).

In an interview with the Financial Times, Clark, speaking before he mets with transport officials in Washington, said he intended to address the damaging allegations.

“We will deal with [the allegations] line by line. They will be eating their words,” he was quoted as saying.

Subsidies is an issue which European carrier have long being pursuing, claiming the likes of Emirates and Qatar Airways are not operating on a "level playing field". However, the inclusion of the 9/11 attacks as part of the debate has been dismissed by Lufthansa CEO Carsten Spohr as an unwelcome distraction.

During a debate on the issue on CNN, Delta Airlines CEO Richard Anderson blamed his company’s 2005 bankruptcy on "Arabian Peninsula 9/11 terrorists" and hit back at Gulf carrier’s assertion that the US airlines had received backdoor government subsidies via Chapter 11 bankruptcy protection.

“It’s a great irony to have the UAE from the Arabian Peninsula talk about that given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula, which caused us to go through a massive restructuring," Anderson said. Following much criticism, Delta issued an apology, which was quickly rejected by Emirates.

“This is the American cowboy version of having the discussion… You might argue if the right words have been used, or they might not have gone as emotional, but the discussion behind it, how liberalised, how private is aviation and how much is aviation is subject to governments’ supporting, even destroying the business… That discussion, in my view, is there to stay. It will hang around for a while and it will not just disappear in the next few weeks,” Spohr (pictured above) said in an exclusive interview with Arabian Business in Dubai.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on arabianbusiness.com may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

Posted by: procan

Limit access to Gulf Airlines to western markets period .As is a popular saying in the Gulf States, if you do not like it..... well you know.

All comments are subject to approval before appearing

Further reading

Features & Analysis
Q&A: The laptop ban and what it means when flying from Dubai and Abu Dhabi

Q&A: The laptop ban and what it means when flying from Dubai and Abu Dhabi

Couldn't a laptop with a bomb inside still pose a danger within...

After all the hype, what's the future for Hyperloop One

After all the hype, what's the future for Hyperloop One

Los Angeles-based Hyperloop One may have struck a deal this month...

1
Focus: Gulf airlines face looming growth threat from 'protectionist' Trump government

Focus: Gulf airlines face looming growth threat from 'protectionist' Trump government

Election of Donald Trump, one-time owner of now-defunct East...

4
Most Discussed
sponsoredTracking