Qatar Airways has yesterday submitted a ‘White Paper’ to the United States Government which fully refutes the subsidy allegations levelled against it by the Big 3 US carriers.
The detailed submission comprehensively addresses and answers all issues raised in the ‘Open Skies’ debate, which has put into question the longstanding US policy of allowing carriers to fly to and from the United States with minimal government interference.
The Big 3 – American, Delta and United (and their unions) have been pressing the US Government to depart from its pro-Open Skies stance and impose unilateral limits on the services operated by Gulf airlines, even though the U.S. Open Skies policy was specifically designed by the US Government to ensure that US carriers were free to operate their extensive networks without foreign government restrictions on the level and routings of the services they offer.
The biggest US carriers have made ample use of their behind-country (Sixth Freedom) traffic rights, and have fought hard to preserve their own access to those rights, and to carry Fifth Freedom (third country) traffic as well. Given that these policies were created by and for US carriers, it is ironic that they are now describing the use of these traffic rights to be “unfair” when exercised by Gulf carriers.
In its report, Qatar Airways demonstrates that the many of the market changes complained of by the Big 3 are not the product of “unfair competition” (or anything remotely related to subsidy), but are instead the byproduct of important advances in aircraft technology and significant demographic changes. With ultra-long range B777 and B787 aircraft, passengers bound for the Middle East and India can now over-fly congested European hubs, and enjoy convenient one-stop services to their destinations, instead of making longer two-and three stop journeys.
These technological changes have shortened travel times, and have brought families and businesses closer together.
Qatar Airways also demonstrated that although US carrier market share to the Indian subcontinent may have shifted over time, the market as a whole has grown, and US carriers are carrying more traffic in absolute terms.
Qatar Airways also disproved the claim that its services harm any US carrier, noting that it does not compete against any US carrier on any nonstop route, and serves cities that have never been served by US carriers, such as Cochin, Karachi and Amritsar. In fact, the services operated by Qatar Airways benefit US carriers. Qatar Airways works cooperatively with and feeds traffic to US carriers, including American Airlines (its code-sharing and oneworld alliance partner) and JetBlue. The report also proves that the airline’s operations to the US market have significantly contributed to the economy in terms of jobs, cargo and overall passenger traffic (tourism and business travel growth), as well as providing benefits for non-aligned US passenger carriers, cargo carriers and airports.
In addition to benefiting American travellers, Qatar Airways has strongly supported the US aerospace industry. As of today, the airline has 162 aircraft flying to 150 destinations, of which over 40 per cent are Boeing jets worth over $19 billion USD.
Qatar Airways Group Chief Executive, Mr. Akbar Al Baker, commented: “Qatar Airways was a relatively unknown airline when it first launched a service to the United States in 2007.
“Since then, we have built up a significant brand presence on the routes that we operate to the United States. Our passengers have come to know us, not through size alone, but by the signature service and quality of the product on board – and also the breadth of our network.”
“There has been significant demand for our services from the U.S. not just to the Middle East – but beyond – where no other carriers fly. This makes us a natural choice for consumers, and is a reflection of how globalised our world has become. People are travelling further than ever before and it is important that in an economy focused on open market principles, our wings remain open for business, rather than closed.”
Qatar Airways also demonstrated that its services are lawful and consistent with the US-Qatar Agreement, which in Article 11.2 says that “neither Party shall unilaterally limit the volume of traffic, frequency or regularity of service, or the aircraft type or types operated by the designated airlines of the other Party.” Despite this clear language, the Big 3 are urging the US Government to ignore its obligations by imposing a unilateral limit on Qatar Airways’ capacity.
Other US airlines have noted that foreign governments often try to block competition from strong US airlines by challenging “excess” capacity offered by US carriers, and cautioned the US Government against deviating from a free trade policy that has worked to the overwhelming benefit of US airlines.
As Qatar Airways GCEO Mr. Akbar Al Baker observed: “The US Government should reject calls to “freeze” the US-Qatar Open Skies Agreement, and recognize these allegations for what they are – a transparent attempt by the Big 3 to block air services that compete with their own.”
Qatar Airways also examined and rebutted each of the subsidy allegations made, noting that US carriers benefit from many of the same policies they have attacked. Indeed, the claims of subsidy advanced by the Big 3 include items of support that US carriers have themselves received for decades, and items that have never been viewed as a form of subsidy. In fact, many other airlines (including US airlines) have acknowledged publicly that they and the Big 3 have themselves been long-time beneficiaries of subsidies and favorable US policies and support.
While Qatar Airways is used to strong competition, it expressed concern about the efforts of the Big 3 to persuade the US Government to refer to rules that do not apply to aviation to resolve their complaints. The application of WTO trade principles, and US domestic trade laws to these complaints – rules that apply solely to trade in goods – would be completely unlawful.
Qatar Airways GCEO Mr. Akbar Al Baker added:, “It is puzzling to see the biggest US carriers describe Qatar Airways as a “threat,” given our small size and lack of direct competition with them. Their long-standing focus on other markets, and large (and growing) profits completely undercut this claim. The Open Skies model was developed by the American carriers and has demonstrated how an Open Skies paves the way for an open economy. We are concerned to see the Big 3 seek to change the rules of the game as soon as they see US consumers respond well to the services offered by a competitor. Qatar Airways is proud of its signature five-star service, brand identity, and the high standards we deliver to our passengers onboard.”