WASHINGTON – Emirates CEO Tim Clark denied the airline received unfair subsidies in a report written to the U.S. government, after rival airlines had accused the Arabian Gulf carrier of getting support from their regional governments.
"It's got to a stage now where there must be a line drawn in the sand," Clark told reporters Tuesday at the National Press Club. "In the end, enough is enough. We must move on."
The three largest U.S. airlines – American, Delta and United – contend that three Gulf rivals — Emirates, Etihad Airways and Qatar Airlines — received subsidies from their governments totaling $42 billion over the last decade.
The U.S. carriers' allegations, filed with the U.S. government in January, argue that their Gulf rivals get no-interest loans and subsidized ground services from Gulf-region governments Qatar and United Arab Emirates.
The Gulf airlines have vigorously disputed that, saying they get no special treatment and that U.S. airlines want to hinder competition. Clark said the U.S. government, under its Open Skies police, had welcomed Emirates and other airlines to fly to any cities.
Emirates, based in the United Arab Emirates, made $1.6 billion in profit last year, which provided a $700 million dividend to shareholders and $300 million in bonuses for employees, Clark said. The company's balance sheets are independently audited, he said. He called the allegations from U.S. airlines "outrageous" and "factually inaccurate."
"The legacy carriers have failed to make a persuasive case," said Clark, who met Monday with officials at the U.S. departments of State, Transportation and Commerce who are considering the allegations.
U.S. officials haven't said when they will make a decision in the case. Clark said the officials were receptive to the information, but that they gave no hint when the case would be resolved. He suspected they would huddle for a detailed analysis in July or August.
Etihad, also based in the United Arab Emirates, earlier released a report arguing that since 2000 U.S. airlines received $70 billion in benefits as a result of bankruptcy laws, largely for debt relief and reduced pension obligations.
"They come to this debate with unclean hands," Clark said of U.S. airlines. "The legacy carriers' real goal is protection from competition and an end to Open Skies."
The U.S. airline CEOs, who explained their case at a Press Club luncheon May 15, have asked the federal departments of State, Transportation and Commerce to open formal consultations with United Arab Emirates and Qatar to end the alleged subsidies. The government hasn't set a deadline to resolve the case, but is collecting comment and said a detailed review of the information would begin in earnest this month.
"Emirates can submit as many pages as it wants, but it still won't paper over what has been well-documented: Emirates has received billions in subsidies and unfair benefits from the treasury of the UAE," said Jill Zuckman, spokesman for the Partnership for Open & Fair Skies, a group representing U.S. airlines and their unions. "Our investigation shows that these massive subsidies have allowed Emirates, Etihad and Qatar airlines to expand far beyond what market forces could ever support, distorting international competition and tilting the playing field to its advantage."
The U.S. airlines have also asked the government to block additional flights from the Gulf airlines until the dispute is resolved.
"With American jobs at stake, the time for action is increasingly urgent," Zuckman said.
Clark said any denial of access would be a "flagrant violation" of the Open Skies agreement between the countries.
Asked about U.S. expansion, Clark said Emirates now flies 84 flights to nine cities. Orlando will become the 10th destination on Sept. 1.
Emirates planned in 2000 to fly to 20 U.S. cities and still plans to grow to that many routes, which could quadruple travelers who could also fly on U.S. airlines, Clark said. But he said U.S. airlines could benefit from carrying those travelers farther.
"We have plans to execute," Clark said. "We're ready to move."
One concern among U.S. carriers is that Gulf rivals will fly more flights from lucrative routes in Europe. Emirates fueled this concern June 1 with an Airbus A380 route from Milan to New York.
Clark said 20 other European cities have asked Emirates to provide flights to the U.S., and he refused to rule them out. But he said Emirates' business plan is to fly long-haul from Dubai, rather than intermediate flights connecting through Europe.
"Could we do it? Yes we could," Clark said. "I'd rather think we could make our own way."