Governments Should Address Subsidy Spat, American Air CEO Says

Doug Parker
American Airlines Chief Executive Officer Doug Parker. Photographer: Victor J. Blue/Bloomberg

A dispute between the largest U.S. airlines and Persian Gulf carriers over alleged subsidies has reached an impasse and should be taken up at the government level, the head of American Airlines Group Inc. said.

American Airlines, Delta Air Lines Inc. and United Continental Holdings Inc. contend that Emirates, Etihad Airways PJSC and Qatar Airways Ltd. receive government subsidies that allow them to compete unfairly. Talks with counterparts at Gulf airlines haven’t resolved the issue, American Airlines Chief Executive Officer Doug Parker said Tuesday in Hong Kong.

“We’ve agreed to disagree and I think this now belongs with governments, not CEOs,” Parker said at a media briefing. “We can compete with airlines; we can’t compete with countries.”

The major U.S. airlines say Gulf carriers have received $42 billion in subsidies from Qatar and the United Arab Emirates, allowing them to win market share by offering cheap international connections through their hubs. The U.S. airlines have asked the government to keep the Gulf carriers from adding more U.S. flights pending a review of Open Skies air treaties among the countries.

“We’re petitioning the government to enforce our trade laws,” Parker said.

The Gulf carriers deny they receive subsidies and say the U.S. airlines are trying to bully them because they can’t compete on quality. U.S. carriers received their own subsidies after the Sept. 11 terrorist attacks and shed debt with government blessing via Chapter 11 bankruptcy reorganizations, Qatar Airways CEO Akbar Al Baker said in May.

Subsidy Argument

Parker disagreed.

“You just need to ask the creditors of U.S. airlines that filed bankruptcies or the employees who took pay cuts as to whether or not the governments subsidized those airlines, or whether they did,” Parker said. “If that’s the real argument they have, that ‘You’re subsidized also,’ we disagree, but let’s have that conversation.”

Qatar Airways could pull out of the Oneworld alliance, which includes American Airlines, if the dispute drags on, Al Baker said last week. Parker said he hoped that wouldn’t happen.

American Airlines “is really happy with Oneworld and the partnerships that are there, and hopes those relationships continue to exist,” he said. “That’s a marketing relationship that we view as separate from public policy.”

Parker was in Hong Kong to celebrate the first anniversary of American Airlines’ non-stop service from Dallas/Fort Worth to Hong Kong. The carrier has also added services from Dallas to Beijing and Shanghai, Parker said.

American Airlines will soon begin service from Los Angeles to Sydney, Parker said. The carrier also will take over Delta Air Lines’ former landing slot at Tokyo’s Haneda Airport, flying there from Los Angeles, he said.

American Airlines has no plans to add additional cities in the Asia-Pacific region for now, Parker said.

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