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Sun 15 Feb 2015 12:35 PM

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US airlines should swallow sour grapes

The Americans need to make the claims in their investigation public if they want any credibility, says Sarah Townsend

US airlines should swallow sour grapes

Success breeds envy. It’s an age-old truth, and last week’s story about the US airlines riled by alleged subsidies they claim Gulf rivals received illustrates it rather well.

Three of America’s top airlines carried out a year-long investigation they say proves $40 billon of government subsidies were handed to Emirates, Etihad and Gulf Airlines, giving them a competitive advantage.

American, United and Delta presented a 55-page document to the US in late January, asking for a review of US air treaties with relevant Gulf nations.

But Emirates’ CEO Tim Clark has hit back at their claims, denying receiving subsidies or bailouts and saying the airlines’ call for political protection from Gulf rivals’ expansion “makes absolutely no sense”.

I can’t help agreeing with Clark. In this cut-throat capitalist world all Emirates and the others are doing is taking advantage of the UAE’s prime geographical position linking east and west.

That they’ve cornered the market so rapidly with regular flights, reasonable costs and (generally) high quality service provision is surely good business to be praised not attacked.

He also makes a valid point when he highlights how US airlines have benefited from American bankruptcy laws that enabled them to park debt and cut costs to continue flying.

“As far as the airline industry is concerned, aero-political protection for airlines [would] arguably [be] the biggest subsidy of all,” Clark said in a statement to Arabian Business on Wednesday.

Of course, the UAE’s weak competition and monopoly laws may raise alarm bells for global airlines operating in the Gulf, and they are right to ask questions. But if they wish to publicly suggest their rivals have received unfair subsidies, then they should do it properly.

After all, they have yet to explain how they reached the $40 billion figure, and if they want greater public sympathy, they may have to make public the contents of their investigation.

Arabian Business digital magazine: read the latest edition online