Hidden Financial Documents Point to Over $7 Billion in Additional Subsidies for Qatar Airways in Fiscal 2014-15
Total Known Subsidies for Emirates, Etihad Airways and Qatar Airways Rise to $50 Billion
Washington, D.C. (June 29, 2016) – Forensic investigators have uncovered new financial documents that show the breadth and depth of subsidies by the United Arab Emirates and Qatar to their state-owned airlines in far greater detail than previously known.
Investigators for the Partnership for Open and Fair Skies have uncovered a financial statement in Singapore for Qatar Airways that indicates that the government of Qatar provided more than $7 billion to the company in fiscal 2014-15 and authorized a further $3.7 billion in subsidies. This enormous subsidy is in addition to the $17 billion Qatar Airways had already received from its state owner in the past decade, bringing the total amount of known subsidies and other benefits that the three Gulf carriers have received to nearly $50 billion.
The U.S. Department of State recently announced plans to hold discussions in July with representatives from the UAE and Qatar on these issues. The now $50 billion in documented subsidies that Emirates, Qatar Airways and Etihad Airways have received from their government sponsors violate the Open Skies agreements between our nations and are threatening American workers and the U.S. aviation industry.
“We strongly support the U.S. government’s initiation of face-to-face discussions with the Gulf nations,” said Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies. “This is a critical first step and we have confidence our government is on the right path to address the harm caused by these massive subsidies.”
The discovery of additional subsidies directly contradicts information that Qatar Airways submitted to the United States government, as well as public claims by CEO Akbar al Baker. Qatar Airways has long refused to release its full compendium of financial documents, and this state-sponsored subsidy, like many others, was omitted from the official filing submitted to the U.S. government’s public docket.
These new financial infusions show a clear pattern of violations to the Open Skies agreements with the U.S. One of the main objectives of Open Skies agreements is to “ensure that competition is fair and the playing field is level by eliminating marketplace distortions, such as government subsidies.”
Data from seven major U.S. cities show that bookings on international routes on U.S. carriers and their joint venture partners declined by as much as 21 percent after a Gulf airline entered the market.
When Gulf carrier expansion drives bookings too low, U.S. airlines are forced to cancel routes. In 2016 alone, both United Airlines and Delta Air Lines have cancelled once viable routes to Dubai due to overcapacity caused by subsidy-fueled Gulf carrier growth.
These subsidies place tens of thousands of aviation jobs at risk. Economists estimate that for every international route cancelled due to subsidy backed Gulf carrier expansion, 1,500 hard-working Americans lose their jobs.
Other countries have felt the devastating impact of Gulf airline subsidies, and are already taking action to protect jobs and restore fair competition. The European Union, for example, has passed a mandate to open negotiations on comprehensive air transport agreements with the United Arab Emirates and Qatar, which will seek to level the playing field and prevent market distortions.