U.S. to Hold Talks with U.A.E., Qatar in Airline Dispute
June 27 2016 - 6:20PM
Dow Jones News
The State Department intends to hold "informal, technical
discussions" with the United Arab Emirates and Qatar next month
about a dispute over Persian Gulf airlines' funding and access to
the U.S. market, according to people familiar with the matter.
But the State Department isn't planning to move to formally
renegotiate its liberal, "open skies" air treaties or freeze new
flights to the U.S. by Emirates Airline, Etihad Airways or Qatar
Airways, these people said.
Those are steps American Airlines Group Inc., Delta Air Lines
Inc., and United Continental Holdings Inc. have sought since early
2015 as a way to battle what they claim are multibillion-dollar
subsidies the Persian Gulf carriers receive from their state
owners.
Another group of U.S. carriers that opposes the position of
those three airlines has been invited to meet State Department
officials on Wednesday to discuss the government's plans. That
group, which includes FedEx Corp., Alaska Air Group Inc., JetBlue
Airways Corp. and Hawaiian Holdings Inc., has expressed concerns
that rolling back liberal air treaties could cause economic damage
and possible retaliation.
The State Department on Monday said it takes seriously the
competition claims raised by some U.S. airlines. But it also
remains committed to its "open skies" aviation policy, under which
liberal air treaties are struck to boost passenger choice and help
the broader economy through increased travel, trade and job growth,
a spokeswoman said.
The three Gulf airlines have been adamant that they don't
receive subsidies and say they serve parts of the world, including
Africa and South Asia, where big U.S. airlines mostly don't choose
to fly. The Gulf carriers filed lengthy rebuttals on U.S.
regulatory dockets and have given numerous speeches denying that
they are distorting the global air market.
U.S. Travel Association, which also opposes the position of the
largest U.S. carriers in this trade dispute, confirmed that it was
invited to the Wednesday meeting.
"This was the result that we hoped and expected for a year,"
said Jonathan Grella, executive vice president of public affairs
for the trade group, which supports growth in flights to the U.S.
and the attendant tourism and economic activity it brings.
Mr. Grella said it is hard to know if informal talks with the
U.A.E. and Qatar will lead to anything. He said the State
Department's approach is "the least of the token gestures that
could be tossed" at the big three U.S. carriers.
Those carriers, who are supported in their position by several
airline labor unions, were heartened by the State Department's
disclosure last Friday in a meeting that it plans to talk to the
Persian Gulf states, according to people familiar with their
thinking. The Friday meeting was earlier reported by Politico.
Talks with the U.A.E. are planned for July 18 and 19 and with
Qatar on July 25. "Our perspective is this is a good development,"
said one person with knowledge of the thinking of the largest U.S.
carriers. "We're pleased. The government focused on this issue and
they're taking an action."
On the other hand, this person added, the talks with the Gulf
states seem "kind of open-ended." But this isn't a dispute that can
be resolved in court, said another person. "We've always known this
is a diplomatic process."
The three big U.S. carriers and several labor unions have a
lobbying group called Partnership for Open and Fair Skies. In a
statement Monday, the group said it appreciates "how seriously the
U.S. government has taken the issue of massive subsidization of the
Gulf carriers. Discussions between our governments are an important
step forward."
The Friday meeting was hosted by Catherine Novelli, Under
Secretary of State for Economic Growth, Energy and the Environment,
and she is slated to lead the Wednesday meeting. Representatives
from the Transportation and Commerce departments and the Office of
the U.S. Trade Representative were also on hand at Friday's
meeting, said people familiar with the matter.
Write to Susan Carey at susan.carey@wsj.com
(END) Dow Jones Newswires
June 27, 2016 18:05 ET (22:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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