US in addition to United Arab Emirates strike deal resolving airline competition feud

The United States in addition to the United Arab Emirates signed a deal Friday to resolve a years-old spat over alleged Emirati government subsidies to its airlines in addition to accusations of unfair competition from the U.S.

After months of negotiations, the deal was signed in private at the State Department by Assistant Secretary of State Manisha Singh in addition to Emirati Ambassador to the U.S. Yousef al-Otaiba. The State Department, the Emirati Embassy in addition to a representative for the U.S. airlines all declined to comment. The Associated Press obtained the text of the agreement, known as a “record of discussion.”

The deal can be anticipated to be announced Monday when the Emirati foreign minister visits Washington, according to a State Department official, who wasn’t authorized to speak to reporters about the agreement in addition to requested anonymity.

The deal’s language was carefully crafted to allow both the Emirati airlines in addition to the U.S. airlines to claim victory.

Under the deal, Dubai-based Emirates in addition to Abu Dhabi-based Etihad Airways agreed to voluntarily open up their accounting books by publishing annual financial statements “consistent with internationally recognized accounting standards.” The major U.S. carriers — Delta Air Lines, American Airlines in addition to United Airlines — have long alleged those financials obscure billions in hidden subsidies by the Emirati government.

In a side letter, the Emiratis state they currently have no plans to add more so-called “Fifth Freedom flights” in which passengers can fly to or via the United States to third countries without ever setting foot from the UAE. Those flights have long been the bane of the U.S. carriers, who argue the flights undercut their own routes.

Currently, Emirates offers flights directly via brand-new York-area airports to Milan, Italy, in addition to Athens. The U.S. airlines have feared Emirates or Etihad could expand their offerings by adding flights via Abu Dhabi or Dubai to, say, Paris or London, stop to pick up more passengers, then fly on to brand-new York.

The U.S. airlines had sought a “freeze” — a binding commitment of which they wouldn’t offer any more Fifth Freedom flights — via the Gulf airlines. Under the deal in addition to side letter, the Emiratis do not explicitly promise never to add more such routes, yet simply indicate none are planned. Still, the agreement rests on a tacit understanding between the U.S. in addition to Emirati governments of which more routes won’t be added, several individuals familiar with the negotiations said.

The U.S. airlines can also point to language included from the agreement of which affirms their longstanding claim of which Emirati government subsidies are hurting their business. The agreement says of which both sides agree “of which such government support in whatever form may adversely impact competition in providing international air transportation.”

Yet in another example of how the deal gives both sides room to say of which the additional side caved, the idea also includes language of which effectively states the opposite.

“The delegations stated of which government support in whatever form — including policies, practices, in addition to rules — can be neither uncommon nor necessarily problematic from the global aviation sector,” the agreement says, paradoxically.

Both of the Emirati airlines have long denied receiving unfair government subsidies. The three U.S. carriers have spent huge sums over the last three years pressing the Obama administration in addition to Trump administration for tough action, in addition to have been eager to show a win on the issue. The airlines have hoped of which if they have more visibility into the finances of the state-owned Emirati airlines, the Emiratis will no longer be able to get away with unfair subsidies.

The deal closely mirrors one reached in January between the U.S. in addition to Qatar. For the UAE, the agreement averts the more serious step U.S. airlines wanted: re-opening the so-called open-skies treaties of which could ultimately lead to less favorable conditions for Persian Gulf airlines.

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