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Etihad says US carriers want to stifle airline competition

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Etihad Airways PJSC, one of three Persian Gulf airlines accused by US carriers of flooding the skies with unfairly subsidized flights formally denied the allegation, saying the US rivals are trying to stifle competition that has greatly benefited consumers.

[ATLANTA] Etihad Airways PJSC, one of three Persian Gulf airlines accused by US carriers of flooding the skies with unfairly subsidized flights formally denied the allegation, saying the US rivals are trying to stifle competition that has greatly benefited consumers.

The effort by Delta Air Lines Inc, American Airlines Group Inc and United Continental Holdings to have the US government push for talks on the Gulf airlines' finances should end immediately, Etihad said in a statement on Monday. The carriers' "claims, allegations and requests for relief are not supported by fact, logic, law or treaty," Etihad said.

The Obama administration is weighing whether government aid to Etihad, Emirates and Qatar Airways Ltd is being used to increase US flights and offer discounted connections through Middle Eastern hubs to win international traffic. The US carriers want the new talks because they say the governments of the United Arab Emirates and Qatar have granted their airlines more than US$42 billion in market-distorting subsidies.

Etihad has received US$14.3 billion from its state sponsor, the government of Abu Dhabi, since 2003, according to a 60-page document the airline sent to the US departments of State, Commerce and Transportation. Etihad called the capital injections an allowable mix of shareholder's equity and loans.

"The Big 3 Carriers' claim that they are only seeking 'consultations' to have a discussion is disingenuous - they cannot ignore that there is no basis whatsoever for such consultation and their true objective is to eviscerate the US- UAE Air Services Agreement to suit their current anticompetitive objectives," Etihad wrote in the letter Monday.

A spokeswoman for the Partnership for Open & Fair Skies, a coalition representing the US airlines and labor groups, said Etihad's claim that the US carriers' effort is really about stifling competition is "getting incredibly old." "US airlines compete for passengers, day in and day out, route by route, flight by flight, in a highly competitive environment," said the spokeswoman, Jill Zuckman. "And we welcome anyone else who wants to do so, but it has to be on a level playing field - not with constant infusions of billions from foreign treasuries." Etihad, based in Abu Dhabi, filed its most-detailed rebuttal to a 55-page investigative report commissioned by the three US airlines and distributed to the Obama administration in January. Among other things, Etihad's letter challenges a claim that the UAE government offers its airlines artificially low airport fees by saying all airlines operating at Abu Dhabi's airport get the same rate, regardless of origin.

State-Owned Airlines Also, the carrier asserts that US airlines have competed against state-owned airlines for years, including when the US drafted its agreement with the UAE.

"There is no prohibition against equity or loans made by a government or having a government as an airline's shareholder," Etihad wrote.

"We have helped fully realize the best in international aviation policy: safe travel provided by the highest quality airlines at fair prices that allow millions of passengers to travel conveniently and easily to and from the United States," the airline said in the statement.

The payments from Abu Dhabi to Etihad are subsidies, not simply equity investments and loans, Ms Zuckman said.

"Equity infusions and loans are subsidies if they are not on commercial terms, which is the case here," Ms Zuckman said. "The subsidies directly enable Etihad - which would not even exist but for the subsidies - to deploy massive capacity to the United States."

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