Frequently Asked Questions
Q: What type of subsidies did your investigation uncover?
A: Evidence gathered during a global two-year long investigation shows that Qatar Airways, Etihad Airways and Emirates Airline received $42 billion in quantifiable subsidies and other unfair benefits in the past decade alone. The subsidies took a wide variety of forms, including interest-free “loans” with no repayment obligations, capital infusions, government loan guarantees, cash grants, free land and subsidized airport facilities, to give just a few examples.
Q: What are the
unquantifiable subsidies mentioned in the report?
A: In addition to the $42 billion in quantifiable subsidies and unfair benefits that the Gulf carriers have received since 2004, our investigation revealed that these airlines receive billions more in subsidies and benefits that cannot be quantified due to the three airlines’ lack of financial transparency. For example, Emirates made purchases of more than $11 billion in goods and services from other government-owned companies at lower than fair market prices, which constitutes a subsidy. Emirates doesn’t disclose what it purchases or at what specific prices, making a precise subsidy calculation impossible. However, if Emirates is paying just 15 percent less than it would pay to an unrelated party, it is receiving a subsidy of $330 million per year.
Q: Is the report available on this website the same report provided to U.S. government officials?
A:Yes, it is the same report. As noted in a footnote on page 30, the original white paper inadvertently misquoted a paragraph from a study on Emirates’ business model. The error has since been corrected and communicated to the U.S. government. A subsequent review of all quotes used in our white paper found an instance of a Emirates’ report omitting a sentence from the original third party source document. We’ve addressed this in a footnote on page 45.
Q: What makes Qatar and the UAE different from other countries that provide subsidies to their national carriers?
A: Qatar and the UAE are global outliers in several ways:
- In the sheer magnitude of the subsidies granted to the three airlines.
- In the unprecedented expansion of subsidized capacity that their carriers are deploying on international routes, including on U.S. routes, far in excess of the growth in global demand.
- In the extent to which they are intervening in the market to help their state-owned airlines radically increase the flow of airline passengers through their hubs in the Middle East.
Q: Are you seeking similar reviews of Open Skies agreements with any other jurisdictions?
A: Our request for the U.S. government to initiate consultations is limited to the Open Skies agreements with Qatar and the UAE.
Q: Are you proposing that the U.S. government change its approach to the negotiation and signature of Open Skies agreements?
A: We strongly support Open Skies, which has brought great benefits to U.S. travelers, U.S. airlines and the U.S. economy. What we are seeking is to restore genuine Open Skies with respect to Qatar and the UAE, by addressing their trade-distorting subsidy practices in this sector.
Q: If the U.S. government agrees with your case after review, what do you want them to do?
A: We are asking that the Administration immediately request consultations with both Qatar and the UAE as provided for in the Open Skies agreements. We are seeking a solution that will address the flow of subsidized Gulf carrier capacity to the United States and a freeze on the introduction of new passenger service during these consultations.
Q: By expanding service in the United States, aren’t the Gulf carriers benefiting the U.S. economy?
A: No. While the three Gulf carriers are taking significant market share from U.S. and third country airlines, they are not meaningfully creating new demand, which is the only way there would be net benefits for U.S. jobs and the U.S. economy in the long term. They are merely shifting the economic benefits and jobs that come from serving the U.S. market from the United States to the Gulf.
Q: Won’t your campaign reduce consumer choice and increase prices?
A: No. Consumers benefit from a competitive marketplace that is free of government distortions that favor some airlines over others. The international marketplace is being distorted by massive government intervention from the UAE and Qatar, which is antithetical to the Open Skies policy of free and fair competition. If U.S. airlines are forced to withdraw from international markets in the face of these massive subsidies, the ripple effects will harm domestic service and consumer choice as a result.
Q: The U.S. airlines received government payments following the 9/11 attacks. Wasn’t that a government subsidy?
A: No. The 9/11 payments were not subsidies. Rather, they were partial reimbursements of the losses that U.S. airlines incurred as a result of the government-mandated shutdown of U.S. airspace after the 9/11 attacks.
Q: The U.S. airlines have all used bankruptcy laws to obtain relief from their creditors and slash costs. Wasn’t that in effect a government subsidy?
A: No. Bankruptcy proceedings are not subsidies. They are restructurings conducted by an independent judiciary that do not involve any injections of taxpayer funds. They are not subsidies under international trade laws and are a common feature of many legal systems around the world.
Q: Isn’t the anti-trust immunity that has been granted to U.S. airlines so they can form global alliances also government support similar to a subsidy?
A: No. Anti-trust immunity is not a subsidy. The purpose of anti-trust immunity is simply to allow U.S. carriers to work more efficiently and effectively with foreign carriers to provide superior service to customers.
Q: Isn’t the Fly America Act a subsidy for U.S. airlines?
A: No. The Fly America Act merely requires that all U.S. government-funded air travel be booked, whenever possible, with U.S. airlines, with foreign airlines that code share with U.S. airlines, or with foreign airlines from countries that the U.S. has an agreement with regarding government-procured transportation. Because the Fly America program requires U.S. airlines to competitively bid for traffic, the result is that the U.S. government pays ticket prices that are below commercial rates, which is the opposite of a subsidy. In addition, the Gulf carriers participate in the program by carrying Fly America traffic through codeshare partners.
Q: Shouldn’t U.S. airlines simply focus on their own product and service offerings in order to win over more customers?
A: U.S. airlines and their employees have proven that they can compete with the very best foreign airlines, but forcing U.S. airlines to compete with foreign governments that offer multi-billion dollar subsidies to their airlines should not be asked of any privately owned company – precisely the conduct to which Open Skies policies are directed.
Q: Is state ownership of the three carriers’ central to your concerns about their business practices?
A: State ownership is not the issue. Rather, the issue is the massive subsidies that Qatar and the UAE have provided to these airlines as part of managed efforts to divert international traffic previously carried by U.S. and third-country airlines to their own hubs.
Q: How do you explain your pursuit of increased access to other markets in light of your request to revisit Open Skies agreements with Qatar and the UAE?
A: We strongly support the Open Skies program and its objective to increase market access. Our request to the U.S. government is an effort to ensure that Open Skies works as intended with respect to Qatar and the UAE.
Q: Are your concerns related specifically to a particular destination, route or type of service that undermines your ability to compete fairly?
A: Our concern relates to the $42 billion in subsidies and other benefits that Qatar and the UAE have provided to their state-owned airlines over the past decade. The subsidies are intended to distort trade in favor of their airlines, resulting in precisely the outcome that Open Skies was created to address, and resulting in an un-level playing field, contrary to Open Skies.