Etihad hits back at US rivals’ state aid claims

Etihad AirwaysEtihad Airways hit back Tuesday against claims by its US rivals that it receives unfair subsidies, urging Washington to “keep the skies open” in an official response to the allegations.

The national airline of Abu Dhabi said that it “receives no government subsidies or sovereign guarantees” and no discounted fuel or airport services.

The response, submitted to the US departments of state, transportation and commerce, emphasised “the many benefits” of increased competition for US consumers, workers and carriers as well as trade and tourism.

“Our story is one of an airline that has chosen to challenge the global status quo, bringing new competition to markets that have for too long been dominated by the major legacy airlines,” Etihad CEO James Hogan said.

“It is now time to get back to the business of providing high quality air services and enhancing consumer choice, just as Open Skies intended,” he said, referring to a pact allowing carriers more access to each other’s markets.

“Let’s keep the skies open.”

In March, American Airlines, Delta Airlines and United Airlines, along with US airline labour groups, accused Gulf carriers of enjoying interest-free loans, subsidised airport charges, government protection on fuel losses, and below-market labour costs that are considered unfair subsidies by the World Trade Organization.

They called on the US government to open new talks over bilateral air agreements to address what they said are violations of those pacts, giving the Gulf carriers unfair competitive advantage.

Etihad Airways said that “the Big Three carriers’ claims, allegations, and requests for relief are not supported by fact, logic, law, or treaty.”

It also reiterated earlier claims that the three US carriers had received US government subsidies worth $70 billion in the past 15 years.

The Abu Dhabi government has invested $14.3 billion in Etihad Airways since its establishment in 2003, of which $9.1 billion was provided in equity funding and $5.2 billion in shareholder loans, it said.

“These commitments were made on the basis that the airline would operate commercially, deliver a long-term return on investment, repay shareholder loans and achieve sustainable profitability,” Etihad said.

Since 2003, Etihad Airways has raised in excess of $11 billion in long-term funding through the global financial markets.

Around $5 billion of the airline’s borrowings have been repaid, including $800 million in 2014, it said.

Last year, the three largest US carriers posted profits of almost $9 billion, close to half the gains racked up by the entire worldwide aviation industry, the airline added.

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