Delta Air Lines Inc. is heralding a new agreement between the U.S. and the United Arab Emirates that it believes is the final blow in a fight to end what it sees as unfair competition from Middle Eastern carriers.
The U.S. State Department last week announced an “understanding” reached May 11 with the UAE that requires its state-owned airlines to publish audited financial statements in accordance with international accounting standards.
Delta seized on the news as a victory, as it has long alleged that Emirates and Etihad have used questionable bookkeeping to cover up billions in government subsidies in the form of state-backed loans, reduced airport operating fees and other practices.
In thanking the Trump administration and Congress, CEO Ed Bastian hinted in an interview with CNBC that the carrier could reopen international routes in response.
Delta ended flights to Dubai in 2015 and has complained that its India expansion has been stymied by Middle Eastern carriers’ pricing power and Indian airlines’ ability to buy Boeing jets at subsidized rates.
But some analysts are not so sure that much has changed in the new UAE deal, given ambiguity in its language that is already making room for both sides to claim victory.
For instance, both countries acknowledge that subsidies can lead to an uneven playing field — an aspect of the deal seized upon by Delta, United Airline and American Airlines, which have waged a years-long lobbying campaign asking the U.S. government to address what they call “illegal” state support.
“For the first time ever, the UAE acknowledged that government subsidies harm competition, a significant concession after years of denials,” Delta said in a news release.
But a copy of the “record of discussion” obtained by the Associated Press shows it stating that government support for airlines is “neither uncommon nor necessarily problematic in the global aviation sector.”
Delta had also called for a freeze on so-called “fifth freedom” flights in which carriers connect two destinations without a stop in their home hubs, a practice that is frowned upon under open skies agreements governing air travel between countries. Emirates operates flights from New York to Italy and Greece, according to the AP.
The UAE did note in a side letter that its carriers have no plans to open new routes such as these, but the agreement doesn’t force the closure of those already operating, the AP reported.
Delta and its industry allies have lobbied the U.S. government for years to amend or end an Open Skies pact with both the UAE and Qatar. Neither the UAE deal or a similar one reached with Qatar in January reopens or scraps these agreements.
That could be seen as a win for the travel sector, where industry leaders have argued that the emergence of Middle Eastern carriers has improved competition and increased route access while creating jobs in the United States.
Qatar Airways has a nonstop flight to Atlanta, but Emirates and Etihad have so far steered clear of the world’s busiest airport.
In a statement May 14, State Department at least acknowledged that the dispute is multifaceted:
“We are maintaining the Open Skies framework, which continues to yield real benefits for airlines, airports, labor, the travel industry and consumers, among others. Our goal is to provide beneficial results for as many U.S. stakeholders as possible.”