April 17, 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 over 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 that 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 as you know, 

have recently announced the 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 presented, 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 of 
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this delay to change the facts on the ground, rushing to add new widebody service 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 Dubai 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 carriers 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, 

last year, over 11,000 passengers 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 passengers that they carried between Orlando and Bangkok over the past year, as 

those passengers will be siphoned off via a subsidized Gulf hub. 

These aggressive actions make requesting a freeze pending resolution even more urgent, because 

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 directly 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-owned 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, these 

financials do not answer fundamental questions regarding the material, opaque “related-party 

transactions” in which they engage. According to its financial statements, since 2004 Emirates 

alone entered into over $11 billion worth of related-party arrangements with 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) rules require that, when subsidy cases are 
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April 17, 2015

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 and 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 

incompatible 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 matter 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