The governments of the United States and the United Arab Emirates are nearing an agreement which would end the protracted spat over alleged subsidies to Etihad Airways (EY, Abu Dhabi International) and Emirates (EK, Dubai International), the Associated Press has reported. Under the terms of the deal, both Emirati carriers would open their books to scrutiny and suspend fifth-freedom plans for the US market.
In January, Qatar Airways (QR, Doha Hamad International) reached a similar deal with the US. The carrier has committed to releasing a financial statement audited in accordance with international standards, as well as to disclose all transactions with other state-owned entities.
The details of the deal under consideration are still not final and the authorities are not commenting. The US State Department has only confirmed that talks are ongoing.
The three major US-based legacy carriers, namely American Airlines, Delta Air Lines, and United Airlines, have long been accusing Etihad Airways, Emirates, and Qatar Airways of receiving billions of dollars worth of public subsidies thus distorting the Open Skies regime, a charge that the Gulf airlines have been vehemently denying. According to a report backed by the American carriers, the subsidies have allegedly amounted to USD52 billion since 2004, including through interest-free loans, loan guarantees, subsidies, equity investments, and other means.
The US carriers have also been trying to block the fifth-freedom rights for the Gulf carriers on their services to the United States. While, reportedly, a formal freeze is not possible, the agreement is likely to include a temporary and unilateral commitment from Etihad Airways and Emirates not to offer any additional such services.
According to the ch-aviation capacity module, Emirates currently offers two fifth-freedom routes to the US, namely from Milan Malpensa to New York JFK and from Athens to New York Newark. For its part, Etihad Airways does not offer such services.
