Many foreign airlines could face severe challenges flying to the United Arab Emirates if the US chooses to dismantle its open skies agreement with the country, Emirates Airline warns.
Sir Tim Clark, chief executive of the fast-growing carrier, spoke to reporters on Tuesday at the annual meeting of the International Air Transport Association, the main trade body for airlines, whose event in Miami Beach has been dominated by a stand-off between the big three US legacy carriers and their state-controlled Gulf rivals.
The US carriers claim Dubai’s Emirates, Abu Dhabi’s Etihad Airways and Qatar’s Qatar Airways have together received $42bn in market-distorting subsidies over the past 10 years from their governments, which they allege breach the agreements.
However, Sir Tim said the UAE recognised that an antitrust immunity which underpins many co-operation agreements between western airlines was part of reciprocal arrangements that allowed Emirates to fly to US destinations. Without it, he said, the agreements would be illegal.
“We signed the open skies agreement with the US in 1999,” Sir Tim said. “Two or three years later, antitrust immunity started to appear on the horizon.
“They gained [antitrust immunity] on a co-ordinated schedule and pricing basis. If I had done that with Emirates with any of those airlines, I would have ended up being jailed.”
The UAE had not complained about the change, Sir Tim said. “We didn’t complain because, as far as I’m concerned, all’s fair in love and war,” he added.
Sir Tim went on to say the open skies agreement, which he helped negotiate as part of the UAE team, covered very few of the issues which the US carriers have complained about.
The deal provides wide latitude for UAE-based airlines to operate into the US from other jurisdictions, including a service from Milan’s Malpensa Airport to New York JFK that Emirates launched in late 2013, he said.
This brought the airline into the lucrative US to Europe market that generates much of US carriers’ revenue.
Many other international airlines were either partly or wholly state-owned and have received subsidies similar to those allegedly given to the Gulf carriers, Sir Tim said.
He insisted that Emirates had received no more than about $200m worth of aid from the emirate of Dubai when it started in the 1980s.
The company now has assets worth $31bn and would be valued in an initial public offering at $60bn-$120bn, he estimated.
The “underlying tensions” that the stand-off between US airlines and Gulf carriers had created could threaten wider international airline co-operation through organisations such as Iata, which deals with safety and other standard-setting issues, Sir Tim said.
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