WASHINGTON, May 12, (AP): The United States and the United Arab Emirates signed a deal Friday to resolve a years-old spat over alleged Emirati government subsidies to its airlines and accusations of unfair competition in the US. After months of negotiations, a deal was reached that was carefully constructed to allow both sides to claim victory.
Yet in a sign of how testy the issue has become, the Emiratis and the US airlines immediately disagreed about what the deal said about the most controversial issue: flights to the US that don’t stop in the UAE. The deal was signed in private at the State Department by Assistant Secretary of State Manisha Singh and Emirati Ambassador to the US Yousef al-Otaiba.
The State Department declined to comment. The Associated Press obtained the text of the agreement, known as a “record of discussion.” Under the deal, Dubai-based Emirates and Abu Dhabi-based Etihad Airways agreed to voluntarily open up their accounting books by publishing annual financial statements “consistent with internationally recognized accounting standards.”
The major US carriers — Delta Air Lines, American Airlines and United Airlines — have long alleged those financials obscure billions in hidden subsidies by the Emirati government. The more sensitive issue related to so-called “Fifth Freedom flights” in which passengers can fly to or from the United States to third countries without ever setting foot in the UAE. The US airlines had sought a “freeze” — a binding commitment that they wouldn’t offer any more Fifth Freedom flights — from the Gulf airlines.
Instead, they got a side letter in which the Emiratis state they currently have no plans to add more of the flights. Currently, Emirates offers flights directly from New York-area airports to Milan, Italy, and Athens. Otaiba, the Emirati ambassador, called that a victory, because Emirati airlines would remain “free to continue to add and adjust routes and services.”
“The UAE is very pleased that our understanding with the US preserves all of the benefits of Open Skies for travelers, airlines, communities and aerospace companies in both countries and around the world,” Otaiba said, referring to the so-called open skies agreements that govern international civilian air travel. Not so, said Scott Reed of the coalition representing the big three US airlines. “This agreement will freeze Emirates and Etihad Airways from adding additional direct fl ights from the United States to Europe and Asia,” Reed said in a statement.