American Airlines Group Inc. Chief Executive Officer Doug Parker said Persian Gulf carriers threaten U.S. jobs because the Middle East companies are benefiting from unfair government subsidies.
Investor-owned U.S. airlines can’t compete with state-backed rivals, Parker said Tuesday in Washington, ahead of his remarks later in the day to the U.S. Chamber of Commerce Foundation’s 14th annual Aviation Summit.
“If you don’t level the playing field, jobs will flow from the U.S. to the Gulf,” Parker said in an interview with Bloomberg at the gathering. “It certainly won’t be good for the consumer if we start flying less and they fly more, then you’ll start seeing those fares going up over time.”
American, Delta Air Lines Inc. and United Continental Holdings Inc. contend state-owned airlines in the United Arab Emirates and Qatar — Qatar Airways, Emirates and Etihad Airways — benefit from more than $40 billion in subsidies. The U.S. carriers presented a 55-page report on their findings to the Obama administration in January.
“American would like to fly to India, but given how low the fares are because of the subsidies, we simply can’t do that,” Parker said. “They’re flying at fares that certainly can’t be profitable.”
The Gulf trio offers artificially low prices on flights to Asia, by routing passengers through their hubs in the Middle East, according to the U.S. industry. The U.S. airlines and some unions formed an advocacy group called The Partnership for Open & Fair Skies to build support for their cause, and have begun lobbying Congress. Representatives for the U.S. airlines met with European Union officials last month.
European airlines including Deutsche Lufthansa AG and Air- France KLM have been complaining to the European Union for more than a decade about the Gulf carriers. Without proof of subsidies, dialogue with the Gulf Cooperation Council hadn’t produced any tangible results.
At the conference in Washington, Lufthansa CEO Carsten Spohr called the gulf carriers an “oligopoly” that has hurt the European airline industry. Lufthansa has only three daily flights to “dynamic” Southeast Asia, including markets such as Singapore, which reflects the enormous growth of the Gulf airlines. He suggested that the U.S. airlines’ direct appeal to the Obama administration has been more effective than Europeans’ own appeals to their various governments.
“It seems like the American way of raising these issues with the public is much more efficient or at least more effective,” Spohr said during a speech at the U.S. chamber summit.