MIAMI—Airline executives from the Middle East, who are poised to
clash face-to-face with their U.S. and European counterparts in
Miami this week in the multibillion-dollar battle over subsidy
claims and market access, began by arguing over how widespread the
dispute has become.
At stake are traffic rights into the U.S. and Europe and billion
of dollars in aircraft orders to Boeing Co. and Airbus Group SE as
well as wider global trade issues, said John Strickland, director
of aviation advisory JLS Consulting.
The three major U.S. carriers—Delta Air Lines, United Airlines
and American Airlines—and Europe's Air France-KLM and Deutsche
Lufthansa, have urged their governments to block further market
access to a trio of Middle East carriers they accuse of receiving
$42 billion in government backing. The subsidies allow them to
compete unfairly, the critics charge. Emirates Airline, Qatar
Airways and Etihad Airways deny they are subsidized and say their
rivals have received hefty handouts.
Airline representatives from around 150 carriers are gathering
Monday and Tuesday in Miami for the annual meeting of the
International Air Transport Association, the airline industry's
biggest trade group, amid intensifying acrimony between the Persian
Gulf carriers and their critics.
"This has now become a global debate," said Carsten Spohr, chief
executive of Lufthansa, which has long argued for curbs on growth
of the Persian Gulf rival. Having the U.S. airlines join the German
carrier's argument "makes our discussion more credible," he told
reporters on the eve of the gathering.
Mr. Spohr said competition isn't fair because the Gulf carriers
are state backed. He suggested that airlines look at World Trade
Organization dispute-resolution models as a way to create a level
playing field. "There needs to be a rebalancing mechanism," he
said.
James Hogan, chief executive of Etihad Airways argues opponents
of the Mideast carriers are a minority. "It is two airlines in
Europe and it is three airlines in the U.S.A. Does that represent
the world of aviation?," he said in an interview on Sunday.
The Abu Dhabi-based last month responded to a U.S. government
request for comment on the issue of traffic rights. Mr. Hogan
dismissed the challenge from the U.S. as a "narrow attack" aimed at
protecting their trans-Atlantic traffic. "We have certainly not in
any way damaged the U.S. carriers," he said.
Middle East carriers are trying to navigate the political
minefield with a carrot-and-stick approach, highlighting the
economic returns they generate for Europe and the U.S. through
large jetliner purchases and by offering flight connections not
provided by their rivals, while warning of consequences if they are
shut out from growing.
Rather than costing the U.S. jobs, Etihad has created them, Mr.
Hogan said.
Emirates Airline President Tim Clark, in a letter to Chicago
Mayor Rahm Emanuel—who is backing the U.S. carriers—said the
Dubai-based airline generated $200 million annually in economic
benefits for the city and was buying lots of planes from
Chicago-based Boeing.
Qatar Airways chief executive Akbar Al Baker said last month in
Amsterdam that Dutch companies could face repercussions after the
Netherlands moved to temporarily stop granting additional slots to
carriers from the Persian Gulf. Dutch companies may be shut out
from $150 billion in planned infrastructure contracts planned by
the Qatari government, the boss of the state-owned Doha-based
airline said.
The Dutch government said it has stopped granting new travel
rights to the Middle East airlines as it waits on the European
Union to negotiate a broader aviation accord with Persian Gulf
states.
How the U.S. and European governments proceed is uncertain. Mr.
Strickland said "There are so many potential ramifications. It is
hard to predict the outcome."
Write to Robert Wall at robert.wall@wsj.com
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