LONDON — It has been announced that the United States and the United Arab Emirates have signed a deal on May 11th which resolves a long spat over the use of alleged Emirati government subsidies to its airlines and accusations of unfair competition within the United States.
The deal was signed in private at the State Department by Manisha Singh, the Assistant Secretary of State and Yosef al-Otaiba, the Emirati Ambassador to the United States. Both sides all declined comments to the press. It is being expected that the deal will be formally announced on Monday, May 14th when the Emirati Foreign Minister is due to visit Washington. Also, the language in the deal has been “carefully crafted” to allow both the ME3 and the US3 to claim victory within these agreements made.
The deal states that Emirates and Etihad Airways will voluntarily open up their accounting books by publishing annual financial statements that are to be consistent with the accounting standards recognized across the globe. This is based on the accusations made by the US3, Delta, American, and United that those financials obscure billions in hidden subsidies by the Emirati Government.
The US and the Emirati State has signed an agreement based on the ongoing issues regarding unfair competition and state subsidies. This deal was apparantly voluntary and states that no more Fifth Freedom Flights are to be planned by the likes of Emirates and Etihad. #AvGeek pic.twitter.com/ZsdQT3OIBb
— James Field (@AvGeekJames) May 11, 2018
In a side letter to the agreement, the Emirati state said that they will not add any more “Fifth-Freedom flights”, where passengers can fly to or from the US to third countries without needing to set foot in the UAE. The US3 believe that this has made ME3 carriers undercut them on certain routes across the globe. Emirates offers flights directly from New York to airports such as Milan and Athens. U.S airlines have said that ME3 carriers could expand offerings to Paris or London to pick up more passengers before going onwards to New York. This side letter did not explicitly promise that any more routes would be added but indicated no further routes are planned. The US had sought a freeze and a binding commitment that this would not continue to happen.
The deal doesn’t say that neither side caved on the issue but gives them a lot of room to say whether that is the case or not. “The delegations stated that government support in whatever form — including policies, practices, and rules — is neither uncommon nor necessarily problematic in the global aviation sector,” the agreement says.
Both Etihad and Emirates have denied for a significant period of time about them receiving unfair government subsidies. The US3 has been pressing on the Obama and Trump administrations for tough action and are eager to develop this issue into a victory for them. The aim of the US3 was that if they have more visibility into the finances of the state-owned Emirati airlines, then they wouldn’t be able to get away with it any further.
This deal now highlights overall success on agreements across the Middle East. A previous agreement was made in January this year between the US and Qatar regarding the same issue. However, the agreement with the UAE averts the more serious step that the U.S airlines are wanting to achieve. This aim is to reopen the open skies treaties that will ultimately put the UAE and the rest of the Middle East in less favorable conditions.