Emirates and Etihad About to Settle Open Skies Dispute

For three years Delta, United and American have been complaining that despite being heavily subsidized themselves, and protected from foreign competition in the U.S. market, that it’s not fair that they should have to compete against Emirates, Etihad, and Qatar.

They have sought to have the US limit flights by those 3 airlines, limiting consumer options and raising prices, effectively transferring wealth from US consumers to airline shareholders, despite a signed treaty between the US and Qatar, and between the US and the United Arab Emirates specifically allowing the flights that are at issue (and nowhere banning state subsidies).

This argument went nowhere under the Obama administration. The airlines hoped their case would resonated more with the protectionist leanings of President Trump. The nationalists in the administration lost a key ally when Steve Bannon was pushed out. That left Peter Navarro versus Gary Cohen. Cohen left, but was replaced by relative free trader Larry Kudlow.

In the meantime Qatar settled their dispute essentially giving up nothing. They agreed to greater financial transparency (but there are no limits on subsidies) and they said they do not currently plan to fly between the U.S. and Europe. They haven’t done so in a decade (back when they didn’t have aircraft capable of making the US-Doha journey non-stop) and they don’t need to in any case — owning 20% of British Airways parent IAG and 49% of ‘Air Italy’.

Now the UAE will come to a similar settlement offering more financial transparency (but not limit on any subsidies) and saying they do not currently plan to add additional flights between the US and Europe (or the US and other countries besides the UAE).

Under the budding deal, Dubai-based Emirates and Abu Dhabi-based Etihad Airways would agree to voluntarily open up their accounting books, long accused by the U.S. airlines of obscuring billions in subsidies. The airlines will also assert to the United States that they currently have no plans to add additional flights to the United States from Europe or other destinations outside of the United Arab Emirates.

This ultimately amounts to three years of vitriol for nothing. It lets the US airlines claim they got something (of little value) while allowing the targeted Gulf carriers to go on about their business.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. “Nothing”? You are an (unintentionally) funny man. The one thing the US airlines wanted from the Middle East airlines is financial transparency. If they are in fact required to report real audited financial reports, that’s the whole enchilada. Those reports will show several billion in annual losses for each airline. For this reason, though, I am skeptical that this settlement can actually occur. In particular, I do not believe Emirates would be willing to have the world see their true financial situation. So we will have to wait and see if a deal is actually made.

  2. I dunno, I think this is exactly what the US carriers wanted. It will be very hard to hide subsidies if the books are open for inspection. Personally, I expect there to be a gigantic line item called “other” which will be where they hide their subsidies, but when asked about it they will likely describe it as “miscellaneous” or “ancillary” revenue. LOL. It’s Gary Cohn, btw, no “e”.

  3. @Rashid’s cousin – “The one thing the US airlines wanted from the Middle East airlines is financial transparency.”

    That is not at ALL what they wanted. That’s not even what they said they wanted last year or two years ago.

  4. Yeah the financial transparency thing was a smokescreen. This was always about just Emirates and always about fifth freedom flying. And on that score this is a resounding defeat for the US3 because there is nothing stopping EK from adding more fifth freedom routes if it chooses to.

  5. Frankly, as I have witnessed the decline of service and comfort in parallel to the uncompetitive hegemony of the remaining 3 U.S. carriers, why should we embrace the monopolistic perspectives of US3 to shield them from upping their game with real competition? To shield their inefficiencies, it is to be expected that AA, DL, and UA would cling to regulations to protect their undeserved turf.

    When you look at how the passenger train devolved under Amtrak’s monopoly, that should be a clear signal why we must prevent that same self-protective mentality from cocooning the US3 from market realities.

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