U.S. lawmakers seek answers soon on Gulf airline subsidy claims

Reuters News
Posted: May 14, 2015 1:57 PM

By Jeffrey Dastin

(Reuters) - U.S. lawmakers 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 on Thursday, 19 House Judiciary 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.

U.S. airlines say that Gulf-state subsidies amounting to $42 billion let Emirates [EMIRA.UL], 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 Air Lines Inc, United Continental Holdings Inc and American Airlines Group Inc, saying worse service on the U.S. airlines has caused them to lose market share.

The Obama administration has said it takes the U.S. airlines' concerns seriously but is committed to the Open Skies policy that authorizes flights to and from foreign 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. International Consolidated Airlines Group SA, known as IAG and parent of British Airways, echoed this sentiment in a separate letter on Thursday.

"There can be few major carriers in the world that have not previously benefited 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 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 U.S. airlines and aviation workers," Jill Zuckman, spokeswoman for a U.S airline-union coalition known as the Partnership for Open & Fair Skies, said in a statement on Thursday.

(Editing by Ted Botha)