1

BEFORE THE

DEPARTMENTS OF TRANSPORTATION, STATE AND 

COMMERCE

WASHINGTON, D.C.

Alleged Subsidies to Middle East Gulf State Air Carriers

DOT-OST-2015-0082

DOS-2015-0016

DOC-2015-0001

COMMENTS OF THE CARGO AIRLINE ASSOCIATION

Introduction

On April 10, 2015, the Departments of Transportation, State and Commerce opened 

the above-referenced Dockets to receive information on allegations by several U.S. airlines 

and unions that Emirates Airlines, Etihad Airways, and Qatar Airways “have received and 

are benefitting from subsidies from their respective governments of the United Arab Emirates 

(UAE) and Qatar that are distorting the global aviation market.”

The Cargo Airline Association (hereinafter “CAA” or “the Association”), and its 

member airlines, take seriously any charges of unfair competitive practices and believe that 

all such allegations, including those highlighted above, should be thoroughly evaluated by the 

Government. At the same time, the examination of any such charges must take place within 

the framework of each applicable Open Skies agreement. The United States must not take 

any unilateral action (such as an immediate freeze of competitive opportunities or any 

limitation of Fifth Freedom rights) that is not within the scope of these agreements. 
2

The Association is the nationwide organization representing the interests of the U.S. 

all-cargo air carrier industry. Direct air carrier members of the Association are ABX Air, 

Inc., Atlas Air, Inc., FedEx Express, Kalitta Air, Inc. and United Parcel Service Co. Each of 

these carriers operate international networks designed to meet the needs of a worldwide 

customer base and are unwavering supporters of United States Open Skies policies. As such, 

Association members are extremely concerned with any actions that may result in a return to 

unnecessary government protectionism and that in turn will have a negative impact on allcargo operations and the entire world economy. Any such protectionist actions will 

invariably lead to retaliation by the foreign government(s), retaliation that will adversely 

impact all-cargo carriers. The Government must avoid such consequences in dealing with 

allegations about the Gulf carriers.

Discussion

The first Open Skies agreement was negotiated 23 years ago.1 To date, the United 

States has negotiated 115 Open Skies treaties with countries around the world that have 

enabled all-cargo carriers to establish around-the-world networks of air transportation 

services. The agreements, and the policy of Open Skies generally, have been embraced by 

both Democratic and Republican administrations. The distribution networks of Association 

members are possible because of the provisions in these international treaties that provide for 

so-called beyond rights allowing all-cargo carriers to fly, not only between the parties to each 

agreement, but also beyond those countries to other trading partners.2

 1 U.S. Department of State – Open Skies Partners

http://www.state.gov/e/eb/rls/othr/ata/114805.htm

 With respect 

specifically to the Gulf Region at issue herein, beyond rights are crucial to efficient air cargo 

service to Africa, the Indian Subcontinent and points in Asia.

2 These rights are referred to as Fifth and Seventh Freedom rights.
3

Unfortunately, the issues raised herein have the potential for seriously disrupting 

these necessary services. Put somewhat differently, the collateral damage that may be 

inflicted by any protectionist moves by the United States Government outside the scope of 

the terms of the agreements in question will have significant negative consequences for the 

global supply chains and the world economy generally. And these consequences will fall 

disproportionately on the all-cargo industry segment, a segment that, in 2014, transported 

72.3% of international Revenue Ton Miles -- - up from 50.3% in 2000.

3

While the allegations referenced by the Departments of Transportation, State and 

Commerce are appropriately framed in terms of unfair competitive practices, the Association 

believes that a broader attack on Fifth and Seventh freedom rights may be intended. And that 

attack will disproportionately affect the all-cargo carriers. 

In order to continue serving customers around the world, Open Skies agreements, and 

especially their beyond rights components, are vitally necessary. Unlike passenger carriers, 

members of the all-cargo industry do not have code share agreements or worldwide alliances; 

they depend on the beyond rights inherent in Open Skies agreements to provide worldwide 

service. Indeed, it is not an overstatement that, absent Open Skies agreements, existing 

worldwide air cargo networks could not exist as we know them today and the ability to 

provide efficient, time-definite, transportation of high-value goods such as medical devices, 

pharmaceuticals, computers and computer parts, and health care products to a worldwide 

customer base would be severely diminished. Such actions would also put the jobs of many 

of our over 760,000 employees in jeopardy.4

Attached hereto is a letter, dated February 20, 2015, from the CEOs of the 

Association’s four Board Member companies describing these concerns in more detail.

 

 3 FAA Aerospace Forecast, 2015-2035, March 2015, p.57.

4 These over 760,000 employees are three times as many employees of the three major U.S. 

legacy carriers combined.
4

Conclusion

In view of the facts described above, the Association urges the United States 

Government to move cautiously in evaluating the allegations made against the carriers of the 

Gulf States region. In determining whether to request consultations under the terms of the 

applicable international agreements, the United States should not only determine whether 

subsidization has taken place, but also whether such subsidization is any different from 

assistance given by governments around the world, including the United States. 

Furthermore, the United States should determine whether any such foreign government 

assistance has actually damaged U.S. interests. Absent any such findings, no consultations 

are appropriate and the terms of each Open Skies agreement at issue should remain intact. 

Respectfully submitted,

 

Stephen A. Alterman

President

Cargo Airline Association

1620 L Street, NW

Suite 610

Washington, DC 20036

202-293-1030

salterman@cargoair.org

May 29, 2015