Etihad Airways has issued a report claiming that the three largest US airlines have received over $70 billion in government and court-sanctioned benefits.
The claims are in retaliation to Delta Air Lines, United Airlines and American Airlines’ wish to restrict the Gulf carriers from competing on Open Skies routes to North America.
The United Arab Emirates airline outlined a range of government and court-sanctioned benefits and concessions received by the Big Three US airlines and other carriers with which they have merged, worth a total of $71.48 billion, more than $70 billion of which has been since 2000.
Etihad is reacting to the claims made by the Big Three U.S. carriers that it allegedly received more than $17 billion in state subsidies from the Abu Dhabi government since 2004. The airline has denied the claims, saying it has received equity and shareholder loans from its state owner.
Commissioned by Etihad, The Risk Advisory Group – a London-based investigation and intelligence firm, performed a review of financial and other governmental benefits provided to American Airlines, Delta Air Lines and United Airlines, and found that the three US airlines benefitted from approximately $35 billion in bankruptcy-court debt relief.
They also received $29 billion in pension-fund bailouts while they were being restructured, the report said.
The three big US carriers generated collective net profits of $8.97 billion last year, equivalent to 45% of the total $19.9 billion profits achieved in 2014 by the global airline industry, and the trend has continued into 2015, with all three airlines announcing strong net profits for the first quarter.
“We do not question the legitimacy of benefits provided to US carriers by the US government and the bankruptcy courts.We simply wish to highlight the fact that US carriers have been benefitting and continue to benefit from a highly favourable legal regime, such as bankruptcy protection and pension guarantees, exemptions from certain taxes, and various other benefits,” said Etihad general counsel and company secretary, Jim Callaghan.
In addition, the report showed that the three US airlines received approximately $5.6 billion in fuel subsidies, and nearly $1 billion in preferential financing from a range of state aid, incentive packages and financing. “There is no evidence whatsoever of any harm caused by Etihad Airways to any of the three big U.S. airlines,” added Jim Callaghan.
Kevin Mitchell, founder of the US lobby group OpenSkies.travel said the report confirms that the US has found numerous ways to financially help its airline industry become established.
“At a time when the ‘Big Three’s’ profits are being driven to record highs by the benefits of anti-trust immunized alliances, customer service cost cutting and avoidance of ticket taxes on billions of dollars of revenue from ancillary services, it represents arrogance-in-the-extreme to demand protection from competition,” he said.
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