By Courtney Trenwith
Richard Anderson is one of 3 US airline CEOs that claim to have evidence Gulf carriers have received $40bn in gov’t subsidies
A major American airline CEO embroiled in a heated dispute against three Gulf airlines has blamed 9/11 terrorists “from the Arabian Peninsula” for his company’s bankruptcy bailout in 2005.
Delta Airlines’ Richard Anderson is one of three US carriers that claim they have evidence Dubai's UAE-based Emirates Airline and Etihad Airways and Qatar Airways have received a total of more than $40 billion in government subsidies that breach the Gulf states’ open skies agreements with the US.
Denying the cash hand outs, Emirates CEO Tim Clark said Delta and United Airlines’ had benefited from US bankruptcy laws that allowed them to forgo debt and cut operating costs to continue flying in what amounted to “arguably the biggest subsidy of all”.
Speaking on CNN on Monday, Anderson inferred the Gulf states were responsible for those bankruptcies.
“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,” he said.
Numerous airlines globally were forced to undertake unprecedented restructuring programs in the mid-2000s, including retrenching thousands of staff and cutting services when flight bookings plummeted following the New York City attacks in 2001.
Two of the 19 9/11 hijackers were from the UAE, while 15 were from Saudi Arabia and the others were from Egypt and Lebanon.
Anderson said although the restructured airlines had been allowed to forgo billions of dollars in debt, it was “categorically false” that they had received bailouts.
“And in the US our restructuring process is transparent and there is no government subsidy, and in fact there were billions of dollars of equity and unsecured debt that were wiped out through that process,” he said.
Anderson claimed Emirates, Etihad and Qatar Airways were “not airlines, they are governments”.
Delta, United and American Airlines have collaborated to call on the US government to review the open skies agreement with the Gulf airlines.
“[We want] our government to go in and request negotiations and negotiate a way to level the playing field to set off against $40 billion in subsides, most of which is just direct subsidies,” Anderson said.
“We have spent two years analysing their financials and we have found evidence of their actual financial statements from other places in the world that provide documented evidence that can’t be refuted of tens of billions of dollars of direct government subsidies.
“The Middle East carriers, the UAE and Qatar cannot deny huge government subsidies. They’re a violation of the WTO [World Trade Organization] definition of subsidy and they’re a violation of US open skies agreements.
“So let’s not be detracted by the huffing arguments that the UAE make.”
In a rare public rebuke of criticism of Emirates, Clark said in a statement last week that the complaining airlines’ call for political protection “makes absolutely no sense” and made a mockery of the country’s liberalist stance.
“As far as the airline industry is concerned, aero-political protection for airlines is arguably the biggest subsidy of all,” Clark said in a statement sent to Arabian Business.
“Therefore, it would be ironic, and a shame, if the US, who have been the forerunners of liberalisation and deregulation, would now contemplate a U-turn on its successful international aviation policies for the benefit of a narrow few, based on sweeping and unfounded subsidy allegations.”
The Gulf carriers have rapidly expanded globally but service a maximum of nine US cities and Clark said there was “virtually no” overlap with flights offered by the complaining US airlines.
Those services also allowed passengers one-stop connectivity to 60 other cities in the Middle East, Africa and Asia Pacific - destinations he said were not currently served by American carriers, except perhaps via their alliance partners “where routings are often relatively convoluted or inconvenient”, Clark said.
Meanwhile the Gulf carriers provided billions of dollars annually to the US economy by providing consumer and business connections.
time for Qatar airways to leave One World alliance since they lodged the complaint against Gulf airlines.
Tim Clark should have mentioned the fact, American passengers are flocking to Gulf Carriers due to the high level of service provided on long-haul flights outbound from North America.
Young, healthy staff tend to the passengers, with smiles ear to ear, latest technologies, and functioning seats, lavatories and what not.
Instead of the disasterous nature of the employees on American carriers, aggressive, huffers and puffers. Sorry to have paid for first class on their carriers, money wasted.
Subsidy or not, American carriers had a 60 year head start to maintain the lead, but greed plays a big part in their continued spiral.
Emirates celebrates minute profit margins, because they spend massively on re-investing, and providing service for its passengers across all destinations.
US airlines deserve their terrible reputation for quality, and simply can't compete with Arab and Asian airlines whose quality is superior and actually treat passengers like humans.
Time for Richard Anderson to follow his true calling and become an anchor on Fox TV News.
Middle East airlines generally report profit margins in line with the global average of 4.3%. They are not minute; African, Asian and European margins are. True, US margins are larger, which is surprising given the heavier union led job protection schemes and lower fares.
Suppose it doesn't matter though. When did facts ever get in the way of reporting here or the rah rah supporters for EK that flock to these pages any time anyone has the temerity to voice disapproval!
In general the 3 Gulf airlines charge more for air fares, compared with Delta, United, American, and they have every right to do so. They offer younger fleet, great in board & ground service, excellent in board entertainment program and of course no plastic food.
The first thing Richard Anderson should do, if he is truly interested in saving his company is to give up his unbelievable bounes.
Unfortunately Qatar is one of those airlines that is subsidised
None of the Airlines mentioned in this article have the credibility to back their holier-than-thou claims and trigger happy rants. Western Airlines have conveniently used the bail out whenever available to save the day. To their credit, the hand outs do have public visibility and transparency. It is no secret that the troika from GCC are inherently welded to state managed funding, protection and promotion. When these airlines constantly benefit from the banks, financial institutions and airport facilities which are either state owned or state backed, the assertions of independent funding don't really stick.
Richard Anderson said the 9/11 terrorists came from the Arabian peninsula. He did not incriminate Arab airlines for the terrorist attacks. His comments were as significant for what he did NOT say.
Ah who says the service is better than US airlines. I eventually felt that it was in everybody's interests not to fly Emirates at all, following a litany of issues, rather than constantly complain.
Fundamentally, EK pay Tim Clark's salary, so he's duty bound to stick up for them, 'he who pays the piper calls the tune ....etc.'
However, do not dismiss US government intervention as a hollow threat, they look after their own and their influence is far reaching.
For example, how far the international banking community presence has dwindled in the UAE, as a result of US regulatory intervention. US driven economic sanctions on Russia over Ukraine have badly dented its economy, the list goes on.
Also the more the power of IS and their atrocities spreads across the region and the greater the publicity surrounding their actions, the less keen international travellers will be to use Middle East airports as global hubs of choice.