Are Global Airlines Fair?

There are large concerns with U.S.-based airlines that if they are not checked, the Gulf carriers will drive them out of business.  Why is this, you ask?  Because these Gulf carriers receive massive government subsidies.  While many airlines are government owned, there are three Gulf carriers "Emirates, Etihad, and Qatar are growing disproportionately compared to their respective populations and GDP growth. In a few years these carriers will have more widebody aircraft than all US airlines combined, despite the fact that the UAE and Qatar have a population that’s less than 4% that of the US."  (Other Carriers, 2015)

According to Emirates' website, they have operated on open competition for over 30 years.  At the time of their launch in 1985, Emirates began operations with 2 aircraft, and have grown their fleet to over 230 aircraft.  These aircraft serve over 140 destinations.  They also claim to not be subsidized.  "Emirates is not subsidized. We operate on a fully commercial basis and have been profitable for the past 27 years. Our accounts, audited by PricewaterhouseCoopers, have been published annually since 1993-94."  (Open Skies, Emirates)

Ethiad Airways, based in Abu Dhabi, has been in operation for ten years, and claims to have established itself as the world's leading airline.  Ethiad is the second largest of the Gulf carriers, behind Emirates.  In regards to receiving subsidies, they also deny this.  According to their website, the dominant mega-carriers in the U.S. and Europe "claim that we receive Government subsidies – a claim we categorically reject."  (Keep the Skies Open, Ethiad)

According the a study conducted by Ethiad, the "Big Three" U.S. carriers (United, Delta, American) have received subsidies from the government to the tune of almost $71.5 billion.  This comes from an independent study performed by "Risk Advisory Group found that the vast majority of the $71.48 billion granted to American Airlines, United and Delta has been paid since 2000."  (U.S. Carriers, 2015)  One of the claims as to why the U.S. Big Three received subsidies after September 11, 2001.  Other claims include:

•  "A total of $761 million was granted to Delta by Minnesota to build a fleet maintenance facility
• American Airlines received $80-85 million in redevelopment funds from the State of Missouri in 2003
• United Airlines received another $6.3 million in tax credits from Colorado
• The report also points out that the US bars foreign airlines from its domestic market and stipulates that government-paid air travel must be on US carriers." (U.S. Carriers, 2015)

Emirates is currently operating more than 175 Boeing 777's, in addition to 37 Airbus A380, making them the largest Boeing operator in the world.  Emirates is backed by their owner, the Dubai government, but also backed by the U.S. government, "which helps Emirates buy Boeing aircraft with below-market interest rates provided by the Ex-Im Bank."  (Reed, 2013)  The way the Ex-Im Bank works is that it helps American companies of all sizes to export their products around the world.  Those who oppose the Ex-Im Bank will often use the level of support given to Boeing and other large companies as a way to show proof of favoritism shown to certain large firms, however smaller companies show higher numbers of bank financing, based on total numbers of transactions.  However, as of 1 July 2015, the EXIM Bank has lapsed in authority, and is not, at current time, taking new customers.

If everything is as it says on the surface (as the Big Three U.S. carriers say), then what the Gulf carriers are doing seems unfair.  To receive breaks on cost of aircraft, whereas the U.S. carriers get no cost breaks, and then allowing the Gulf carriers to share routes on top of that, they have an unfair advantage.  On the other hand, the two largest Gulf carriers deny receiving subsidies, and have made public their accounting records.  Also, if the U.S. carriers have received billions of dollars since 2001, then they can't claim to be the victim, can they?  

Keep The Skies Open (Etihad Global) Retrieved by http://www.etihad.com/en-us/about-us/keep-the-skies-open/

Open Skies | About Emirates | Emirates United States (Emirates United States) Retrieved from http://www.emirates.com/us/english/about/open-skies.aspx?intc_type=articles&intc_name=Open_Skies&intc_creative=link&intc_location=home

Other Carriers Can't Compete With Gulf Airlines Under The Current System - Here's Why - One Mile at a Time (One Mile at a Time) Retrieved from http://onemileatatime.boardingarea.com/2015/02/18/other-carriers-cant-compete-with-gulf-airlines-under-the-current-system-heres-why/

Reed, T. (2013, September 27). Growth at Emirates Airline Shows Need for US Airways/AA Merger (TheStreet) Retrieved from http://www.thestreet.com/story/12050241/1/growth-at-emirates-airlines-shows-need-for-us-airwaysaa-merger.html

US carriers 'have received $71.5 billion in state-aid' - Business Traveller (US carriers 'have received $71.5 billion in state-aid' - Business Traveller) Retrieved by http://www.businesstraveller.com/news/101647/us-carriers-have-received-dollar-71.5bn-in-stat