By Shane McGinley
Airline boss says Delta CEO 'might not have gone as emotional' bringing 9/11 attacks into the debate on Gulf gov’t subsidies for Gulf carriers
Comments by the CEO of Delta Airlines, linking the terrorism of 9/11 to the debate on whether Gulf carrier receive billions of dollars in government subsidies, have been dismissed as ‘cowboy’ tactics by the CEO of German flag carrier Lufthansa.
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.
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.
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.
“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 said in an exclusive interview with Arabian Business in Dubai.
Spohr’s predecessor Christoph Franz had previously clashed with Gulf carriers and in 2011 Lufthansa was embroiled in a row with Emirates Airline over landing slots in German.
Lufthansa allegedly lobbied Angela Merkel’s government to stop Emirates gaining additional landing rights in Germany and Clark famously accused the German flag carrier of mounting a deliberate campaign to undermine it and of planning to "take the Gulf carriers down”.
“The Americans are now moving a big step forward saying it is not fair and therefore it cannot be free, which is in line with what we have said for many, many years… It is an argument we have been using in Lufthansa and in France, if I can speak for my Air France counterpart… I think we would all agree that without government support the success of these three parallel Gulf carriers’ growth, basically outgrowing each other, wouldn’t have been possible.
“When does it start to impact the other side where there are no subsidies? That is where things come to a level of discussion which, in a global industry, needs to be discussed,” he added.
The full exclusive one-to-one interview with Lufthansa CEO Carsten Spohr will be published by Arabian Business on Sunday, March 15.
N o matter how hoarse voice the gulf carriers cry in, there is no iota of truth in their contention that they are not subsidized by their governments. They simply could not have reached the altitude they have without their respective government helping them both in terms of heavily subsidized fuel and free use of their hubs namely Dubai and Doha. Given the lack of transparency in the gulf in terms of public financial accountability, the likes of Lufthansa, Air France and KLM would never be able to prove the subsidies.
The trouble is that the west makes lives difficult for themselves, just look at the red tape, overly complicated tax structures, laws and regulations, nuisance and bureaucracy involved in the western airlines. From time to time they should take a good look at the mirror, perhaps they will learn a thing or two. Emirates has publicly published its annual reports since the very start, every expense is receipted just like any other commercial airline. UAE's leadership, proactive & no nuisance government, tax free environment, Dubai's geographical location, its multicultural workforce and financially friendly local market are some clues to Emirates success. Emirates is now a massive threat to the western airlines hence the age old repetitive subsidy drama and this is just the start of the fat kid crying. Admission is the first step to recovery, therefore i say to the western airlines, cut the nuisance and work together in making mobility and aviation accessible to all.
due to the severty of these allegations, they should appoint an independant (might be hard to find lol) company to look at the alleegations on both sides and come up with a report..It would either clear the air, or at the least give the normal person on the street information to voice an accurate opinion.
The majority of the regional airlines staff lives in the region. Salaries paid are relatively lower than in Europe / US as they are not taxed. How much lower would the operational cost for any European or US airline be if they could reduce all salaries by the amounts that end up as tax payments?
And how would the EU / US airlines NOPAT improve if there was no tax to be paid?
Not collecting taxes from waged staff nor collecting tax on operating profit increases an airlines capacity for investments significantly.
This is not a direct subsidy - but then, it clearly shows uneven playing ground.
Furthermore, the UAE don't provide any social security system. Within the Gulf societies there is no concept of solidarity in the communities that would include the expats. This again has cost implications to the advantage of EK, EY and QR.