US airlines accuse Qatar Airways of accepting more government help

Photo for illustrative purposes only.

Qatar Airways/Flickr

Photo for illustrative purposes only.

Qatar Airways allegedly received a whopping US$7 billion in government funding last year, according to a lobbying group for three major US-based airlines.

The announcement comes as both Qatar and the UAE are scheduled to hold informal talks with the US government about the Open Skies agreements they’ve signed.

American Airlines, Delta and United have long complained that Qatar Airways competes unfairly with them on routes to and from the US.

Photo for illustrative purposes only.

Qatar Airways/Flickr

Photo for illustrative purposes only.

Last year, they began lobbying their government to impose restrictions on Gulf carriers that fly to American cities, with the help of the lobbying group Partnership for Open & Fair Skies.

At that time, they alleged that Qatar Airways had been given more than $16.5 billion in state subsidies since 2004.

Qatar Airways, Emirates and Etihad have all denied claims that they compete unfairly with the help of government support.

Open skies

According to the Open Skies agreement, airlines should have “a fair and equal opportunity” to compete on routes to and from their shores.

This means that it is the airlines themselves, not governments, that decide on the frequency, capacity and fares of flights between countries.

Photo for illustrative purposes only

Jody Clayborn / Flickr

Photo for illustrative purposes only

However, the big three US airlines now want to change this and restrict the Gulf carriers’ access to the American market.

They argue that Qatar Airways, Etihad and Emirates are state-supported, and therefore are competing unfairly.

Responding to these concerns, the US government has said that it is committed to liberal aviation agreements, but will hold talks with the three Gulf airlines to show that it’s taking the matter seriously.

The American market is an important one for Qatar, which now flies to 10 US cities. The carrier’s head also recently talked about rolling out a direct Doha-Las Vegas flight soon.

‘Trade-distorting aid’

According to the Wall Street Journal, documents submitted by the three US airlines to their government yesterday showed that Qatar Airways received $7 billion in “trade-distorting state aid” in the financial year ending March 2015.

Photo for illustrative purposes only.

Qatar Airways

Photo for illustrative purposes only.

The documents, which were apparently filed with a corporate registry office in Singapore, also allegedly show a further commitment of $3.7 billion in further state subsidies for Qatar’s national carrier.

Qatar Airways is wholly owned by the government and does not disclose its financial results, though its CEO has pledged to release some financial information this summer.

Qatar Airways CEO Akbar Al Baker

Qatar Airways/Flickr

Qatar Airways CEO Akbar Al Baker

Last year, Akbar Al Baker said that Qatar Airways netted a profit of $103 million and months later, added that the airline grew up by 25 percent.

However, he did not elaborate on how that growth was measured.

And in terms of figures, he did not break down how much money the airline made from ticket sales compared to the profits from Qatar Duty Free or the Qatar Distribution Company (QDC), which has a monopoly on selling alcohol for home consumption here.

A spokesperson for Qatar Airways told Doha News today that the airline will not comment on the allegations made in the report.

IAG stake

Although Qatar Airways is not considered an ally of any of the main US carriers, it has a different relationship with Europe.

This week, the airline confirmed that it had bought a major stake in Italian airline Meridiana.

There are also new reports that it is considering upping its stake in British Airways owner IAG following a large dip in the company’s share price after the Brexit vote.

Yesterday, Bloomberg cited anonymous sources as saying that Qatar Airways is thinking about boosting its IAG holding to about 20 percent from 15 percent.

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