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Subsidy claim gets U.S. government response

WASHINGTON, DC: Three U.S. government agencies - Commerce, State, and Transportation – have set up a web site urging "any interested stakeholder" to comment on a report by American, Delta and United that Gulf airlines have received US$42 billion in government subsidies.

Citing recent lobbying by the U.S. carriers, the Obama Administration says it "takes seriously the concerns raised in the report and is interested in receiving insights and feedback from stakeholders before any decisions are made regarding what action, if any, should be taken".

EK and AA at DFWAmerican Delta and United claim Emirates Airline, Etihad and Qatar Airways have benefited from 10 years of government subsidies and are distorting their (mainly) international passenger business.

In addition to denying the claim, Emirates notes in its rebuttal the hidden subsidies to U.S. carriers enabled by Chapter 11 bankruptcy protection while quoting JP Morgan: "We cannot find anything in Emirates' accounts which indicates that the business is subsidized directly or indirectly or given any undue preferences."

Since 2004, American, Delta, Northwest, United and U.S. Airways have all filed for bankruptcy and subsequently emerged with much lower operating costs and less debt. At the same time this process has helped reduce the number of major U.S. airlines from 10 to just four – American, Delta, United and Southwest.

Ironically only Southwest has remained profitable throughout its 44-year operating history and is not party to the current lobbying.

Emirates president Tim Clark says his airline understands "that despite no evidence, an oft-repeated myth can ultimately be accepted as conventional wisdom". Noting that subsidies are an affront to what Emirates stands for, he says his airline welcomes a fact-based debate on state aid and hopes this applies to all industry participants: "Vocal rival carriers, which themselves have benefited from governmental support, are peddling self-serving falsehoods when they allege that Emirates is somehow at an advantage," he adds.

The three U.S. agencies say they are encouraging submissions to http://www.regulations.gov/#!home before they will begin their own review at the end of May.

In a related move IAG Group, owner of British Airways and Iberia, says the two airlines have withdrawn their long-time membership of the Association of European Airlines declaring: "We believe global liberalisation of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matter."

In January this year, Qatar airways bought a 9.99 percent stake in the airline group for a £1.15 billion.

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