Answers Sought On Gulf Airline Subsidy Claims

May 14, 2015

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Members of the US House Judiciary Committee have stepped up pressure on the Obama administration to take a stance on allegations that three Gulf airlines received market-distorting subsidies, asking it to answer several questions by May 20.

In a letter released to media, 19 committee members including its Republican chairman and ranking Democrat said they wanted to know whether the government was aware of foreign airline subsidies, and if so, how it would respond to them.

There are no international subsidy standards governing airlines, which is forcing the Obama administration to chart new territory.

US airlines say that Gulf-state subsidies amounting to USD$42 billion let Emirates, Etihad Airways and Qatar Airways lower prices and push competitors out of certain markets.

The May 20 deadline comes before the Obama administration has said it will conclude its review. It solicited comments on the claims from interested parties last month and said it would begin reviewing them by the end of May.

The Gulf carriers have denied the claims by Delta, United and American, saying poorer service on the US airlines has caused them to lose market share.

The Obama administration has said it takes the US airlines' concerns seriously but is committed to the Open Skies policy that approves flights to and from other countries.

On Thursday, the Cargo Airline Association called on the government to reject protectionist changes to the Open Skies agreements with Qatar and the United Arab Emirates, saying its members could not operate without these and other treaties. British Airways and Iberia parent IAG echoed this sentiment in a separate letter on Thursday.

"There can be few major carriers in the world that have not previously benefitted from state support of its business in one form or another or does not currently," IAG said.

Qatar Airways was the second-biggest shareholder in IAG, after Capital World Investors, as of March 25.

Two weeks ago, more than 250 members of US Congress signed a letter urging the administration to seek consultations with Qatar and the UAE over the alleged subsidies.

"There is a tremendous groundswell of bipartisan support from Congress to ensure a competitive playing field for the US airlines and aviation workers," Jill Zuckman, spokeswoman for US airline-union coalition Partnership for Open & Fair Skies, said in a statement.

(Reuters)