Etihad to respond to US government on subsidy claims by May end

UAE flag carrier Etihad Airways has said that it will file an official response with the US government regarding subsidy allegations by the end of May.

Last year, Etihad, along with its counterparts Emirates and Qatar Airways, were accused by US airlines Delta, United and American of receiving about $42 billion in subsidies from their state governments to fund their expansion.

The Abu Dhabi carrier will be the first among the three Gulf airlines to respond to the claims if the statement is released by the end of this month. Both Qatar Airways and Emirates have implied that they would file responses later.

US airlines have urged the White House to cancel the Open Skies pacts it signed with the UAE and Qatar, claiming subsidies provided by those countries have allowed their carriers to invest massively in new aircraft and routes.

In response the US government has opened an investigation and said that it will receive comments until the end of May, the time at which Etihad’s responses are expected.

Etihad has also presented evidence in a new report that the three American airlines have increased the number of passengers they carried despite losing market share.

The report, prepared by the US consultancy Edgeworth Economics, showed that the US airlines saw growth of 18 per cent in passenger numbers between the US and the Indian subcontinent between 2009 and 2014.

They also saw a rise of 27 per cent in premium passengers between the US and Indian subcontinent, despite a 12.5 per cent decrease in market share, according to the report.

The Edgeworth report also dismissed claims that Gulf carriers have put “excessive capacity” into the market.

It claimed that the markets in which Etihad Airways operates have much higher average rates of economic growth than the global average, driving higher demand for air services, on top of pent up demand due to under servicing by US carriers.

“The claims made by the three US carriers that Etihad Airways and other Gulf carriers are damaging their business and taking ’their’ passengers, are not only false, but also arrogant,” said Kevin Knight, chief strategy and planning officer, Etihad Airways.

“They do not ‘own’ these passengers, nor do they do have a right to them.”

Knight also noted that in 2014 Etihad Airways fed 182,000 passengers onto US carriers, including American Airlines. Delta Air Lines and United Airlines, with the number forecast to grow by 65 per cent to approximately 300,000 passengers in 2015.

“The US Open Skies policy has been hugely successful for American carriers and has also allowed airlines like Etihad Airways to connect passengers to the U.S. who otherwise would not be able to travel,” he said.

“It has forced the big three carriers and their global alliance partners, which between them control over 50 per cent of global passenger traffic, to be more competitive. It is therefore disturbing that these same carriers are now seeking to roll back Open Skies and the huge benefits it brings for competition and consumers.”