BEFORE THE DEPARTMENTS OF TRANSPORTATION, STATE AND COMMERCE WASHINGTON, D.C.

Information on Claims Raised About StateOwned Airlines in Qatar andthe UAE ) ) ) ) Dockets: DOT-OST-2015-0082 DOS-2015-0016 DOC-2015-0001

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COMMENTS OF ATLAS AIRWORLDWIDE HOLDINGS, INC.

Communications with respectto this document should be served on: William

### J. Flynn President & ChiefExecutive Officer ATLAS AIRWORLWIDE HOLDINGS, INC. 2000 Westchester Avenue Purchase, NY 10577-2543 (914) 701-8527- Telephone (914) 701-8081 -Fax adam.kokas@atlasair.com
Adam R. Kokas Executive Vice President, General Counsel, ChiefHuman Resources Officer & Secretary ATLAS AIR WORLDWIDE HOLDINGS, INC. 2000 Westchester Avenue Purchase, NY 10577-2543 (914) 701-8576- Telephone (914) 701-8333- Fax adam.kokas@atlasair.com May 29,2015 Russell E. Pommer Associate General Counsel ATLAS AIR WORLDWIDE HOLDINGS, INC. 801 1

### th Street, NW, Suite 410

Washington, D.C. 20006 (202) 822-9121 -Telephone (202) 822-9152- Fax rpommer@atlasair.comBEFORE THE DEPARTMENTS OF TRANSPORTATION, STATE AND COMMERCE WASHINGTON, D.C.

Information on Claims Raised About StateOwned Airlines in Qatar and the UAE ) ) ) )

________________________________

### ) Dockets: DOT-OST-2015-0082 DOS-2015-0016 DOC-2015-0001

COMMENTS OF ATLAS AIR WORLDWIDE HOLDINGS, INC. ByNotice published at 80 Fed. Reg. 25671 (May 5, 2015), the Departments of Transportation, State and Commerce havejointlyrequested views "onclaims that three foreign airlines- Emirates Airline, Etihad Airways, and Qatar Airways- have received and are benefitting from subsidies from their homeland governments that are distorting the global aviationmarket." Related to those claims are recent calls for the unilateral U.S. imposition ofa freeze onnew services by Emirates, Etihad and Qatar and suggestions that certain "open skies" agreements oughtto be cutback. Atlas AirWorldwide Holdings, Inc. ("AAWW") wishes to address those three points onbehalfofits two U.S. air carrier subsidiaries, Atlas Air, Inc. ("Atlas") and Polar Air Cargo Worldwide, Inc. ("Polar"). 1 In brief, ifafter careful reviewthe U.S. government finds that the subsidization claims have merit, it should pursue them through normal intergovernmental channels as it would any "doingbusiness" issue in accordance withthe applicable air services agreement. That the air services agreements in question follow the open skies model is irrelevant. Unilateral U.S. action would be ill-chosen and

1 AAWW wholly owns Atlas and holds a 75% voting/49% total equity interest in Polar
.received poorlyby important strategic allies. Furthermore, arguments thatthe U.S. open skies policy (as opposed to alleged government subsidization) has placed U.S. passenger carriers at an unfair competitive disadvantage lack foundation and ought to be rejected. I. 

### Notwithstanding Implied Attacks, the U.S. Open Skies Policy Greatly Benefits U.S. Carriers and Continues To Be Rightfor theNation To putthe extraneous arguments to rest at the outset, the U.S. open skies policy has beenpursued vigorously for almost 25 years by Republican and Democratic Administrations alike. The policy was adopted, inpart, to recognize the need for the U.S. government to pursuebenefits for more constituencies thanthe U.S. airline industry. According to the US. InternationalAir Transportation PolicyStatement adopted by DOT in April1995, objectives include "[i]ncreas[ing] the variety ofprice and service options available to consumers" and "[e]nhanc[ing] the access ofU.S. cities to the international air transportation system" (emphasis added). With open skies agreements now inplace with 115 countries, the policyhas more than proven itself. As the State Department website states, "[ o]pen skies agreements have vastly expanded international passenger and cargo flights to and from the United States, promoting increased travel andtrade, enhancing productivity, and spurring high-quality job opportunities and economic growth. Public benefits include:
• More passenger flight options and fare competition, benefitting passengers.
• More air freight options and rate competition, benefitting shippers.
• Enhanced facilitation ofinternational trade.
• Economic benefits to U.S. communities receiving increased air service due to increased local expenditures and employment.
-2-• Indirect economic benefits to those communities and the broader U.S. economy through the multiplier effect. Although recent critics sometimes have suggested otherwise, U.S. air carriers have benefitted greatly from the open skies agreements that have been negotiated. Energetic U.S. governmentpursuit ofthe policy has produced substantial additional traffic rights for passenger (as well as all-cargo) carriers over the years, in agreements with countries such as Canada, Colombia, Ecuador, Japan and the United Kingdom. U.S. all-cargo operators like Atlas and Polarbenefit substantially from the 51 h and 71 h freedom traffic rights provided in open skies agreements. Because air freight moves on a one-way basis and cargo markets are both seasonal and directional, those rights are essential to the successful operation ofglobal air cargo networks. In 2014, Atlas and Polar operated to 123 countries; and local traffic inintermediate and beyond markets played an important part in supporting those flights. Itis unclear where those criticizing Gulfcarrier expansion stand withrespect to the U.S. open skies policy. Initially, according to press reports, they were quite critical of it. Consistent with those reports, their January 28, 2015 study, Restoring Open Skies: the Needto AddressSubsidized Competitionfrom State-OwnedAirlines in Qatar andthe UAE, at 3, states as follows: "[t]he Open Skies agreements have conferred enormous benefits on Qatar and the UAE by opening the most lucrative market in the world to their airlines, ven though they provide essentially no benefits to the U.S. carriers in return" (emphasis added). More recently, those criticizing Gulfcarrier expansionhave tempered their rhetoric, asserting that they strongly support open skies and are targeting their disapproval 

### -3-solely onthe expansion funding mechanism. That may be so. But in a recent letter to Secretaries Kerry, Foxx and Pritzker, the CEO's ofAmerican, Delta and United focused attention on the fact that the Gulfcarriers continue to expandtheir U.S. services notwithstanding the alleged failure to stimulate additional traffic, which "will exacerbate the existing harm to U.S. airlines by diverting even more passengers away from U.S. airlines' services." 2 Although alleged subsidizationis mentioned inthe same sentence, the rhetoric sounds remarkably similar to arguments advanced by some in the 1990'sin opposition to open skies agreements. That debate was concluded long ago with the determinationthat competition through open skies agreements advances the overall U.S. public interest eventhough certain carriers may experience traffic diversion and revenue losses. II. The U.S. Government Should Critically Evaluate the Government Subsidization Claims AAWW expresses no position onwhether the Gulfcarriers are being unfairly subsidizedbytheir governments. The U.S. government should take seriouslythe subsidization claims, as it would any concerns raised by U.S. air carriers about foreign competitive constraints. If, after investigation, the U.S. government finds thatthe claims have merit, it should pursue them on an intergovernmental basis,justlike it has pursued similar matters raised by U.S. carriers doing business inItaly, Venezuela, China and Japan. The applicable air services agreements prohibit denying air carriers ofthe other country a fair opportunityto compete, and they establish consultationprocedures to

2 Letter to Secretaries Kerry, Foxx and Pritzker from Doug Parker, Richard Anderson and JeffSmisek, April17,2015at2. 

### -4-address problemsthathave been identified. Ifthe U.S. governmentbelieves that foreign governmental subsidization is denying U.S. passenger carriers a fair opportunity to compete, it should address the matter through the consultationprocess. The U.S. government should nottake unilateral action before it has let the intergovernmental process follow its course. We also cautionthe U.S. government not to rushtojudgmentonthe basis ofthe informationprovidedto date. The questions ofwhat constitutes subsidization, and what degree ofsubsidizationresults in denial ofa fair opportunityto compete, are complex
ones. Many foreign air carriers have government ownership andreceive governmental support; and many governments (including the U.S.) take actions to promote civil aviation inorder to advance their national economic and security interests. Whatthe U.S. government decides withrespect to the Gulfcarriers undoubtedly will have precedential consequences when similar claims are made inthe future about other carriers and government-approved carrier arrangements.

May 29,2015

# Jr:**::t??~** Russell E. Pommer Associate General Counsel ATLAS AIRWORLDWIDE HOLDINGS, INC. 801 17th Street, NW, Suite 410 Washington, DC 20006



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