April 15, 2015

The Honorable Susan Kurland

Assistant Secretary for Aviation and International Affairs

United States Department of Transportation

1200 New Jersey Avenue, SE

Washington, DC 20590

Dear Assistant Secretary Kurland:

It has come to our attention that the President of Emirates Airline, Tim Clark, has circulated a 

letter in which he asserts that our White Paper outlining the government subsidies received by the 

Gulf airlines “inaccurately interpreted and skewed” the views of Dr. John O’Connell, who 

authored a report that is excerpted in the White Paper. Mr. Clark was correct in pointing out that 

Dr. O’Connell was inadvertently misquoted in the White Paper. We regret this error, assure you it 

was unintended and have promptly corrected the quote. 

While we regret this mistake, the corrected quote does not change the substance of the point we 

were making about the relationship between Emirates and Dubai International Airport and the 

benefits that Emirates receives from subsidized airport charges.

Indeed, we are pleased that Mr. Clark raised this issue because it caused us to re-examine all the 

quotes used in the White Paper. In so doing, we discovered that a verbatim quote from an 

Emirates publication that we had included in the White Paper appears itself not to have properly 

quoted the original source material, as it omits a crucial statement that goes to the substance of our 

concerns with subsidized Gulf carrier competition.1

 The relevant discussion, which appears in the 

White Paper at pages 45-46, reads as follows (the missing statement is enclosed in brackets):

The Gulf Governments’ Competing Economic Strategies Are Causing Serious 

Overcapacity in the World Market: If Emirates was the only Gulf carrier targeting the U.S. 

market, it would still be a serious threat to U.S. airlines, given its enormous increases in 

capacity. But the fact that the governments of Abu Dhabi, Dubai and Qatar are 

simultaneously pursuing largely identical and competing economic strategies substantially 

increases the problem, as it effectively forces Emirates, Etihad and Qatar to continually 

match each other’s increases in capacity. As Emirates acknowledged in the March 2010 

edition of its “Open Sky” public affairs journal:

1 The quote differed from the original source material in other respects as well, but the missing statement is the most 

significant difference. 

 
The Honorable Susan Kurland

Page 2

April 15, 2015

The third driver creating over-capacity in some markets is government 

policies. Many airlines are pressurised by their governments to expand 

services and widen networks in support of national policies to develop 

incoming tourism or local business. Such airlines tend to order or operate 

many more aircraft than required in the markets they are serving. [This 

inevitably pushes down fares and cargo yields to the detriment of all airlines 

serving the same markets.] The most recent and vivid example of this is that 

of the Gulf airlines, Etihad Airways of Abu Dhabi and Qatar Airways, 

which have been tasked by their governments to match the worldwide 

network and success of their neighbouring carrier, Emirates. For these 

carriers profitability is seen as a long-term objective, not a short-term 

requirement.2

Of course, this description applies equally to Emirates, which presumably explains why 

Emirates’ “Open Sky” journal omitted the second half of the paragraph from the original 

source:

Both these airlines have placed huge orders for aircraft, which were more than 

matched by earlier orders by Emirates, which included 45 Airbus A380s. In 2008 

alone, in the midst of a worsening industry crisis, Etihad ordered 96 new aircraft, of 

which 70 were large twin-aisle jets and six were Airbus A380s. It is hardly 

surprising, then, that in summer 2009, when US, European and Asian airlines were 

cutting frequencies and capacity in response to falling demand, weekly seats offered 

in July 2009 on routes between the Gulf and Europe or the Gulf and Asia were 

some 17 per cent higher than in July 2008 (IATA, 2009)! This additional capacity 

would destabilize not only these two markets but was also targeting the Europe –

Asia through traffic with a stop in one of the Gulf airports. Inevitably yields in all 

these markets would be driven down.3

This is the issue that U.S. airlines are facing today. In the five years since Emirates published that 

edition of “Open Sky,” all three Gulf carriers have continued to introduce enormous quantities of 

additional capacity on international routes. All told, based only on their firm orders, the three 

airlines will take delivery of 596 additional widebody aircraft – including 81 Airbus A380s. The 

orders will nearly double their current capacity. And as the Gulf carriers continue to introduce that 

subsidized capacity on international routes to the United States – both direct routes to the Middle 

East and beyond and fifth freedom routes between the United States and Europe or Asia –

inevitably, yields in those markets are driven down to unsustainable levels, to the detriment of U.S. 

airlines and their employees.

2 Footnote in the original: Emirates, Open Sky (March 2010) at 3 (Open Sky: they said it best . . . ), quoting Rigas 

Doganis, Flying Off Course (4th ed. 2010), at 322. 3 Footnote in the original: Rigas Doganis, Flying Off Course, Airline Economics and Marketing (4th ed. 2010), at 322. 

Doganis is a consultant to airlines, airports and governments and the chairman of the European Aviation Club in 

Brussels. He is a former Chairman/CEO of Olympic Airways and was formerly a non-executive director of easyJet 

and South African Airways. He is also a visiting Professor at Cranfield University. In addition to Flying Off Course, 

Doganis is the author of The Airline Business and The Airport Business.

 
The Honorable Susan Kurland

Page 3

April 15, 2015

As our White Paper explains, the $40 billion in subsidies and other unfair benefits that the Gulf 

carriers have received since 2004 are inconsistent with U.S. Open Skies policy and contrary to the 

Obama Administration’s broader trade policy regarding subsidized competition from State-Owned 

Enterprises (SOEs). It is for this reason that we have asked the Administration to request 

consultations with Qatar and the United Arab Emirates under the bilateral agreements with each 

country in order to address the flow of subsidized Gulf carrier capacity to the United States.

We remain deeply grateful for your understanding of this extremely important subject and again, 

urge you to begin consultations as contemplated by the Open Skies agreements.

Sincerely,

 

Howard Kass Steve Morrissey Alexander Van der Bellen

VP Regulatory Affairs VP Regulatory & Policy MD Regulatory & Intl. Affairs

American Airlines United Airlines Delta Air Lines