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Emirates’ Tim Clark: Subsidy dispute is destabilizing global airline industry

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Though IATA did its best to keep the subsidy dispute under wraps during its AGM, there was a great deal of negative tension at the meeting, Clark said.

Emirates Airline president Tim Clark, in Washington DC to officially rebut the subsidy allegations made against Emirates and the United Arab Emirates by American Airlines, Delta Air Lines and United Airlines, said the very public dispute between the “Big Three” US airlines and the “Big Three” Gulf airlines has “been damaging to the aviation industry.”

I asked Clark to elaborate. “It’s a fragile industry,” he said. “Margins are very low. We all have to work extremely hard. It’s not an industry that deals with destabilization very well.” He gave examples of destabilizing things airlines have to deal with that are outside airlines’ control: financial crises (such as what is happening in Greece), fluctuations in oil prices, disease outbreaks, extreme weather events, terrorist attacks, etc.

But this destabilization, Clark contended, is of the major US airlines’ own making. “When [airlines] turn on themselves in a public manner as this has been done, it contributes to that destabilization effect,” he said. “It could see the fracturing of the way the international airline industry goes about its business today.”

If the US airlines’ complaints about government support are taken to their logical extreme, “the [global airline] alliances could be broken up,” Clark said. “There are a large number of unintended consequences that the [US] legacy carriers haven’t thought through.”

Clark said there was an “almost electric atmosphere at the IATA AGM” in Miami in early June when the world’s airline executives gathered. Though IATA did its best to keep the subsidy dispute under wraps during the AGM, there was a great deal of negative tension at the meeting, Clark said.

“This is not something small,” he said. Clark accused the US airlines of “bullyboy tactics and browbeating” and said they have opened the door to intense scrutiny of government support the US carriers themselves benefit from, such as using Chapter 11 bankruptcy protection to shed liabilities, including pensions taken on by the US federal government. “It brings to mind that old biblical quote: Take the log out of your own eye before you take the splinter out of someone else’s eye,” Clark said. “In the end, enough is enough. We must move on. We have enormous work to do. We at Emirates have all these airplanes to take from Boeing, hundreds of them. Why would you put all those at risk?”

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