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ATW Editor's Blog

Accusations over Gulf carriers finally becomes a debate

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The furor over alleged Gulf carrier subsidies and Open Skies compliance got a thorough airing today at the US Chamber of Commerce Foundation 14th Annual Aviation Summit in Washington DC.

The debate, reported here, was healthy and overdue. After too many behind-closed-doors meetings and secret reports, the summit (and all credit to chief organizer Carol Hallett) finally provided a forum for all sides to state their cases.

Among those weighing in at the summit were Lufthansa Group CEO Carsten Spohr, Etihad Airways James Hogan, Boeing Commercial Airplanes CEO Ray Conner, United Airlines CEO Jeff Smisek and American Airlines CEO Doug Parker. Emirates’ president Tim Clark, meanwhile, addressed the issue via a briefing at the National Press Club in Washington.

What was interesting was how Smisek and Parker both seemed careful to focus much of their arguments on the Gulf governments rather than their state-owned airlines. Indeed, Parker said he was not challenging the motives of the Gulf carriers. He also acknowledged to reporters that Etihad was a codeshare partner – a good one – and that he had a positive meeting with Hogan earlier this week. (for the record, Qatar is a fellow member of the oneworld alliance with American, but no mention was made of meetings with Akbar Al Baker).

Smisek, similarly, said the Gulf carriers were “good airlines”.

That’s a lot more constructive than where the US campaign has appeared previously, with direct and repeated digs at the airlines themselves, repeated mentions of their “sheik” rulers and, worst of all, Delta CEO Richard Anderson's remarks made on CNN in February.

I asked Parker today if he felt those remarks by Anderson had been unhelpful to the campaign (Anderson was not at the summit or scheduled to participate). To his credit, Parker took the question and gave what I believe was his first public remark on the incident.

“I don’t agree with Mr. Anderson’s remarks, but he apologized,” he said. “What I know is that Delta, United and American all agree on the principles that we love to compete, but the playing field has to be level. And we are agreed that we want consultations.”

This issue will not be resolved resolved soon. The much-touted white paper commissioned by the US airlines and that alleges more than $42 billion of government subsidies to their Gulf carriers will be challenged. Some of its numbers seem to be based on old data and may prove irrelevant. The US carriers still risk having counter-attack subsidy accusations made at them, and not all will be defensible. And, being newly profitable (as they deserve to be; nothing wrong with profitable airlines), US Congress is bound to question why US carriers that survived because of Chapter 11 support and approved mergers now want to shut out competition.

But at least today’s debate was a start on the more level playing field of openness and debate,  and all sides had their say.

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