Hogan hits out at US rivals over open skies dispute

The chief executive of Etihad Airways has urged the big three US airlines to immediately end their campaign against the carrier and said there was no basis for changing the open skies agreement.

The latest salvo from James Hogan describes the claims made by US rivals as an attack on the country as well as the airline.

In a letter to John Kerry, the US secretary of state, and the heads of the departments of transportation and commerce, he said:

“Etihad Airways did not seek this fight; we focus on making money by providing world class, innovative, re-imagined and value-for-money product and services to our guests.”

“However, we could not stand by idly while these … airlines and their … proxy groups attempted to malign us, the way we do business and our home country.”

Etihad, Emirates airline and Qatar Airways became embroiled in a bitter row with Delta, American Airlines and United Airlines after the US carriers released a 55-page document detailing allegations of unfair government subsidies and other financial incentives given to Gulf carriers.

The US carriers claim their Gulf rivals have enjoyed unfair financial benefits to the tune of US$42 billion over the past decade, in contravention of the rules of open skies. Allegations which the Gulf airlines refute.

Etihad said yesterday in its response to the claims that the government ownership of the airline was not an issue under the US-UAE air services agreement.

The airline also said that it has been successful in markets in which the US carriers choose not to compete.

“In many markets, airlines react to our new competition by improving their own offer to consumers. It is ironic that in the home of free competition, a market in which we account for only a tiny fraction of one per cent of international departures, we have instead been attacked,” said Mr Hogan in a separate statement.

Mr Hogan wrote in the letter: “One country that shared the vision of the US is our home, the UAE, which also embraced the idea of open and less regulated traffic flows despite being a small and, at the time, relatively unknown country working towards financial stability and success.”

“This is why we find it so ironic that in 2015 Etihad Airways finds both itself and its home country under attack.”

In April, the US government said it would seek consultations from stakeholders willing to comment on the row.

Last month, the US department of transportation said there was no deadline for the responses and that it would keep a joint docket on the issue open.

Etihad said that since 2003 it had raised more than $11bn in long-term funding through the global financial markets, including $3.7bn debt funding raised last year. It added that about $5bn of its debt was repaid since 2003, including $800 million last year.

“Etihad Airways receives no government subsidies or sovereign guarantees and, contrary to the claims of some competitors, it does not receive free or discounted fuel or airport services in Abu Dhabi, its home and global hub,” the company said.

“The airline has established strong relationships with more than 80 global financing partners and aircraft lessors, 26 of which are based or headquartered in the US,” it added.

Referring to the bankruptcy protection received by US carriers, Mr Hogan said in the letter that unlike them, “Etihad does not have an avenue by which we can periodically clean up our balance sheet by disclaiming debts and other legal obligations. We have to carry these … on our books.”

Last week, Etihad posted a 52 per cent year-on-year jump in its 2014 net profit to $73 million. Its revenue rose 26.7 per cent to $7.6bn.

On the same day, Jill Zuckman, the chief spokeswoman for the Partnership for Open & Fair Skies, the lobby group that represents the US airlines, said: “Etihad continues to claim that it is profitable, but it refuses to open its books because it knows the subsidies it receives from the treasury of the UAE are in direct violation of open skies policies. Just because Etihad says it is profitable, doesn’t make it so.”

In his letter, Mr Hogan offered to personally appear before the US government to discuss the issue.


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