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International Airlines States Subsidized

The big airlines in US and Europe are worried about the Middle-East origin airlines, namely Emirates Airways, Etihad Airways and Qatar Airways, and are claiming that these airlines are being benefited from the subsidies they are getting from their oil-rich governments, and are expanding aggressively in the western countries courtesy the central help from their government, thus hurting their (US and European airlines) revenue figures. The western country airlines are also alleging that East-based airlines can lower their prices, and can offer more amenities on new planes because of state subsidies. Moreover, Obama administration is worried as there is no international trade rules or even by Federal Government addressing subsidy claims. In addition, such issues does not fall under the legislature of World Trade Organization, but rather under ‘’Open Skies’’ agreement that authorize commercial flying between countries. Ironically, even the agreement is silent on whether airlines can benefit from subsidies claims.
However, the Federal Government has now turned cautious over the issue as the airlines have reported that Middle-East governments have allocated subsidies worth $42 billion to their airlines to gate-crush the western market. It has also been cited that Gulf airlines are buying aircrafts with top amenities, adding new US and European destinations, increasing weekly flights to US and European cities to lure American and European customers. As a result, three federal departments, Transportation, Commerce and State departments have been given the charge of investigating the matter where they will be holding a public hearing to collect arguments from both parties on a public forum. Meanwhile, Emirate Airline is the first to respond on the issue and has rejected US accusations of state subsidies.

Conclusion

Although Federal Government has initiated the research into the allegations made by their airlines, but we feel that it will not be easy for Gulf Airlines to stop them from using subsidy funneled by their government to promote their business in US and Europe market

References

Daston, Jeffry. U.S. to chart new territory in Gulf airline subsidy review. 18 March 2015. http://www.reuters.com/article/2015/03/19/us-airlines-competition-regulator-idUSKBN0MF07D20150319. 17 April 2015.
Emirates Airline rejects US accusations of state subsidies. n.d. http://www.themiddleeastmagazine.com/wp-mideastmag-live/2015/02/emirates-airline-rejects-us-accusations-state-subsidies/. 17 April 2015.
Jansen, Bart. U.S. to investigate Gulf airlines for alleged subsidies. 11 April 2015. http://www.usatoday.com/story/todayinthesky/2015/04/10/gulf-airlines-subsidies-dot-commerce-state-emirates-etihad-qatar-american-delta-united/25605097/. 17 April 2015.
Karp, Aaron. Gulf Airlines take on subsidy claim. 23 September 2014. http://atwonline.com/blog/gulf-airlines-take-subsidy-claim. 17 April 2015.