Open Skies Pact To Survive Gulf Subsidies Dispute- Boeing Exec

An “Open Skies” agreement between Gulf and United States airlines is likely to survive a dispute over subsidies, planemaker Boeing’s Middle East president said on Monday.

Dubai-based Emirates Airline will present its response this week in Washington to a dossier compiled by a group of U.S. airlines alleging that Emirates, Etihad Airways and Qatar Airways had received more than $40 billion in state subsidies, giving them an unfair advantage.

“U.S. stands for free trade,” Boeing’s Jeff Johnson said in Dubai on the sidelines of an aviation conference.

“The subsidies issue needs to be resolved between the governments, I don’t think we will see a change in Open Skies, it’s a low risk.”

Such agreements allow for liberalisation of commercial aviation and fewer restrictions on landing slots.

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 United Arab Emirates. Emirates, Qatar Airways and Etihad Airways deny receiving subsidies.

Some U.S. companies like Boeing, which like European rival Airbus is a big supplier to Gulf airlines, have said the Open Skies agreement is a key factor in promoting economic benefit and fair competition.

The Gulf trio’s growth over the last two decades has eaten into the market share of legacy carriers. But those in Europe and U.S. — most with older fleets — have cried foul over competition from the region.

In response to questions on cost-advantage for Gulf carriers, Johnson said rapid government spending on infrastructure has helped the local carriers offer better service. UAE and Qatar, where trade unions are banned, enjoy close ties between the public and private sector.

“The thing you find here, and Dubai in particular, the government-industry alignment is what really helps the industry,” he said, referring to swift runway works and new terminal constructions.

“(Dubai) can bring a new terminal in three to four years – whereas it took (London) Heathrow 25 years to bring Terminal 5.”