April 1 7 , 2015

The Honorable John F. Kerry Secretary of State U.S. Department of State 2201 C Street, NW Washington, DC 20520

The Honorable Anthony Foxx Secretary of Transportation U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590

The Honorable Penny S. Pritzker Secretary of Commerce U.S. Department of Commerce 1401 Constitution Avenue, NW Washington, DC 20230

Dear Secretary Kerry, Secretary Foxx, and Secretary Pritzker:

We are taking the unusual step of writing to you again to emphasize two very important aspects of our January request that you move expeditiously to begin consultations with Qatar and the
UAE o ver the massive subsidization of their airlines.

First, we want to alert you to the aggressive expansion plans one of the Gulf carriers has announced in just the ten weeks since our visit to your offices in late January. At that time, we asked not only t hat you invoke the consultations provision of the bilateral air service agreements, but also that you request Qatar and the UAE to voluntarily freeze air service at then

- current levels pending the resolution of this matter. We presented strong evidence of ongoing subsidy using standard methods of analysis amply justifying our call for consultations , and have recently answered the list of supplemental questions that your departments asked us, providing additional evidence and analysis. Your departments have been analyzing that evidence, and a s you know, have recently announced th e opening of a public docket to solicit comments through May from interested parties . While we appreciate your diligent and coordinated evaluation of the evidence we have presen ted, this new procedural step will have the unfortunate effect of further delaying the opening of consultations. It is now apparent that the Gulf carriers are taking advantage ofPage 2 April 1 7

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th is delay to change the facts on the ground, rushing to add new widebody se rvice in an attempt to gain even more market share before the U.S. government acts to counter their subsidized expansion. In recent weeks, Emirates has announced new service from Dubai to Orlando (effective September 1), added a second daily flight from D ubai to Boston (effective October 1)
and from Dubai to Seattle (effective July 7), and announced that it will up

- gauge its Milan

- New York flight to a massive A380 (effective June 1). Beyond the announced new service, we
understand that one or more Gulf ca rriers have contacted three additional U.S. airports about starting new flights from the Gulf.

As we have detailed in our submissions to your departments, because Gulf carriers have failed to meaningfully stimulate additional traffic to/from the United States, these additional flights and capacity increases will exacerbate the existing harm to U.S. airlines by diverting even more passengers away from U.S. airlines’ services to Gulf carriers’ subsidized services. For example,
l ast year, over 11,000 passe ngers traveled on U.S. airlines between Orlando and Delhi/Mumbai

-

- passengers that U.S. airlines are now at an even greater risk of losing because of subsidized service to Orlando. Similarly, U.S. airlines are also at risk of losing a substantial number of the over 5,000 passenger s that they carried between Orlando and Bangkok over the past year , as those passengers will be siphoned off via a subsidized Gulf hub

.

T hese aggressive actions make requesting a freeze pending resolution even more urgent, beca use with every new U.S. flight, the Gulf carriers not only harm U.S. airlines and workers but also make reaching a negotiated solution more difficult. France and Germany have already frozen Gulf Carrier traffic rights, and the European Commission recently asked the UK

-- in a letter referencing the same subsidy evidence we have presented to the U.S. government

-- not to grant Gulf carriers any further market access until the Gulf states agree to proposed fair competition
rules. The U.S. situation is direc tly analogous to the EU’s. We ask that the U.S. request Qatar
and the UAE to direct their state

- owned airlines to freeze any additional flights or capacity increases as of January 28, 2015 (the date we presented the subsidy evidence and made our request) until this matter is resolved.

Second, in light of the compelling evidence we have presented, we urge you to request full
disclosure of contemporaneously audited financial statements not only from Emirates, Etihad and Qatar, but also for the government

- own ed entities that subsidize the Gulf carriers by providing them goods and services at discounted prices. While we were able to obtain the previously
undisclosed financial statements the Gulf carriers filed in various places around the world , the se financia ls do not answer fundamental questions regarding the material, opaque “related

- party
transactions” in which they engage . According to it s financial statements, since 2004 Emirates alone entered into over $11 billion worth of related

- party arrangements wit h other state

- owned companies, such as government banks, fuel companies, caterers, ground handlers and others. Under International Financial Reporting Standards, these transactions are presumed not to be at arm’s length. World Trade Organization (WTO) ru les require that, when subsidy cases arePage 3 April 1 7

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referred for resolution, the WTO “shall, upon request, initiate the procedure to obtain such information from the government of the subsidizing Member as necessary to establish the existence and amount of subsidization....” (WTO Subsidies Agreement, Annex V( 2)). In the WTO case against the EU for subsidies to Airbus, for example, the United States used the “Annex V” process to obtain key evidence of the EU’s subsidies that was not publicly available, and that the WTO dispute settlement panel later relied upon in concluding that Airbus was in fact subsidized. The U.S. government should make a similar request here. We urge you to request that Qatar and the UAE provide financial information covering the details of financial
transactions between their airlines a nd the government

- owned entities that provide them goods and services, in order to allow a complete and accurate valuation of this significant additional subsidy

.
We have amply demonstrated how Qatar and the UAE are pursuing policies fundamentally incompat ible with Open Skies and the United States’ overall trade policy, which are premised on fair competition, a level playing field, and the elimination of marketplace distortions such as subsidies. We urge you to move swiftly to reach a resolution of this ma tter before the Gulf carriers make any more preemptive moves to the detriment of the U.S. economy, airlines and
airline employees.

Sincerely,

Doug Parker Richard Anderson Jeff Smisek