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Thu 26 Feb 2015 11:21 AM

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US business council shames Delta over Gulf airlines dispute

President of US-UAE Business Council called on US carrier Delta to back down on its attack against Gulf carriers

US business council shames Delta over Gulf airlines dispute
Danny Sebright, president of the Washington DC-based UAE-US Business Council.

The president of the US-UAE Business Council has directly chided the management of Delta Airways for its attack on Gulf carriers, warning it could affect the US’ more than $20 billion trade surplus with the UAE.

Members of the council “strongly disagree” with Delta’s claim that the open skies agreement between the US and the UAE and Qatar is anti-competitive because the Gulf airlines, including Emirates, Etihad Airways and Qatar Airways, receive $40 billion in government subsidies, Danny Sebright said in a letter addressed to Delta senior vice president Andrea Newman.

Sebright’s blunt letter comes after Delta, American Airlines and United Airlines appealed to the US government to reassess its open skies agreement with the Gulf states, producing what it says is evidence of the unfair subsidies.

Delta CEO Richard Anderson then inferred during an interview with CNN that 9/11 terrorists “from the Arabian Peninsula” were to blame for his company’s bankruptcy bailout in 2005 – a form of financial assistance the Gulf carriers said was akin to government subsidy.

“We welcome an informed and responsible discussion on the benefits of Open Skies,” Sebright says in his letter. “Richard Anderson’s comments linking 9/11 to Open Skies certainly fell well below that measure.

“Delta’s CEO never publicly apologised and your company’s indifferent apology did little to acquit either Delta or its CEO.

“Furthermore, we strongly disagree with your assessment about the allocation of benefits under Open Skies. Open Skies did exactly what was promised – spurring rapid growth in bilateral airline services, generating huge sales of US commercial aircraft, and stimulating the overall trade relationship.”

Gulf carriers have rapidly expanded into the US since 2009, although they service a maximum of nine US cities and Emirates president Tim Clark said there was “virtually no” overlap with flights offered by the complaining US airlines.

Sebright said the new flights had brought “tens of millions of additional travellers into the global and US aviation networks”, which had led domestic airlines to launch new services.

“These compelling and irrefutable benefits may be the reason that virtually every single stakeholder in US commercial aviation has lined up against Delta in its efforts to restrict Open Skies,” Sebright wrote.

“This includes US airports, travel and hospitality companies, business travelers, and cargo airlines.”

Calling on the big three US carriers to publicly release their report that they say proves the $40 billion in subsidies, Sebright said a US-UAE Business Council report published in 2013 showed the open skies agreement between the two states had provided more than $16 billion in benefits to the US economy via direct and indirect spending, created more than 100,000 jobs and contributed more than $1.6 billion in tax revenue.

Aircraft orders from the UAE carriers to US-based aeroplane manufacturer Boeing totalled $37 billion at list prices and over time would support more than 200,000 high-paying US manufacturing jobs, with an additional 30,000 US jobs related to aircraft exports to the UAE, the report also says.

The increased number of travellers arriving from the UAE into the US also had generated nearly $6 billion in domestic tourism economic activity and helped create an additional 2,000 airport jobs at US gateways.

“Delta should see what other US companies already have - that the UAE is a major success story for US business,” Sebright says.

“The UAE is the largest export market for US goods and services in the region, generating a US trade surplus of more than $20 billion in 2013 alone.

“There clearly is a lot at stake in the US-UAE commercial relationship.”

Clark and Qatar Airways CEO Akbar Al Baker also have publicly criticised Anderson’s comments and categorically denied their airlines have received government subsidies.

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