Gulf Airline Subsidies Have No Parallel in U.S.

No one knows the pain of bankruptcy better than the professional men and women of the U.S. airline industry.

Over the years, as one airline after another reorganized under the weight of heavy debt, it was the employees who suffered most. Pilots, flight attendants, gate agents, baggage handlers and others lost their jobs. Many of those who remained employed suffered pay cuts of more than 40 percent, drastic reductions in benefits and lost pensions. Marriages broke up, homes were lost and lives were ruined.

So it is galling, to say the least, to hear representatives of Emirates Airline, Etihad Airways and Qatar Airways assert that bankruptcy restructuring is the equivalent to receiving billions of dollars in subsidies from the governments of the United Arab Emirates (UAE) and Qatar.
Nothing could be further from the truth.

When my airline restructured in bankruptcy I had a front row seat to the bankruptcy process as the Air Line Pilots Association's designee to the Unsecured Creditors Committee. I was fighting to retain pay and benefits for my fellow pilots while not taking a dime of taxpayer (government) money.

Now, the Gulf carriers are abusing that painful experience by trying to confuse it with a very serious issue that is of crucial importance to our industry.

In the past 10 years, Qatar and the UAE have provided more than $42 billion in subsidies and other unfair benefits to their state-owned airlines - Qatar, Etihad and Emirates. This heavy subsidization is a clear violation of U.S. Open Skies policy - a policy that is designed to ensure fair competition and has benefitted the American aviation industry tremendously. These violations have allowed the Gulf carriers to expand in a way that threatens our airlines and the jobs of tens of thousands of airline workers.

The Air Line Pilots Association has joined with other unions and the three largest U.S. airlines, American Airlines, Delta Air Lines and United Airlines, to call on our government to enforce Open Skies agreements and stop Gulf carriers from benefiting from unfair competition. We have released more than 1,000 pages of evidence showing how they have improperly benefitted from their governments. In response, Qatar Airways, Emirates and Etihad have counterattacked U.S. airlines and made false claims about our carriers' finances in an attempt to thwart government action.

One of their principal tactics has been to try to use the fact that U.S. airlines have undergone bankruptcy restructurings to justify the billions in subsidies that they receive from their government owners. But despite what the Gulf carriers claim, bankruptcy is not a subsidy. Bankruptcy is a process that is painful and even transformational for the companies and employees that have to go through it - something I learned from personal experience. And while U.S. airlines and their workers have played by the rules, Gulf carriers have received endless injections of equity from their governmental sponsors in blatant attempts to gain a marketplace advantage.

So you can imagine, then, how grating it is for me to hear the Gulf carriers and their supporters say bankruptcy is a subsidy. We all know that their charge is nothing more than a political tactic designed to distract from the billions of dollars they have received from their governments' treasuries.

We know what a subsidy is - just look to the Gulf carriers for the clearest examples. The government in Dubai is currently spending tens of billions of dollars on airport infrastructure to benefit Emirates and, in 2009, shielded the airline from $4 billion in fuel-hedging losses. The government of Qatar has granted more than $17 billion in interest-free loans, shareholder advances and other types of support to Qatar Airways to underwrite the airlines' massive growth. And Etihad Airways has received more than $17.5 billion through interest-free loans from the government, equity infusions, airport fee exemptions, and more - despite accumulating $4 billion in losses.

Open Skies policy demands a level playing field for U.S. airlines to have a fair and equal opportunity to compete. The massive subsidies that the Gulf carriers receive run directly counter to that goal.

During bankruptcy, pain is unavoidable and it's just a matter of navigating through a process where everyone gets hurt. The $42 billion worth of subsides to the Gulf carriers, though, is avoidable - there is a remedy. The government can step in, and that's why more than 30 mayors, 262 members of the U.S. House of Representatives and dozens of local Chambers of Commerce and business groups have urged the Obama Administration to sit down and talk with the UAE and Qatar.

It's time for these state-backed airlines in Qatar and the UAE to be honest - about where their money comes from and what is truly a subsidy. To ensure fair competition in the skies, the U.S. government should immediately seek consultations with the Qatar and UAE governments to resolve this dispute and request a freeze on passenger capacity and routes while consultations are underway.

The future of the professional men and women of the U.S. airline industry rides on it.