Air carriers accuse Middle Eastern nations of violating agreement on flights

The nation’s big three air carriers — American, Delta and United — say two Middle Eastern nations are violating an agreement with the United States that is skewing aviation markets and giving three foreign airlines a competitive advantage on flights between the Mideast and the U.S.

The U.S. airlines have petitioned the government to open consultations with Qatar and the United Arab Emirates to level the competitive playing field. An open comment period is in place through the end of May.

The airlines, through an organization calling itself the Partnership for Open and Fair Skies, has accused Qatar and the UAE of subsidizing their flagship air carriers with an estimated $42 billion since 2005 in violation of an open-skies agreement the nations have with the United States.

The three Persian Gulf airlines — Qatar Airways, Etihad Airways and Emirates — have been growing exponentially in the past 10 years, ordering large fleets of jumbo jets that are being used on 25 flights a day to 11 U.S. cities. By comparison, the big three have two daily flights.

The open-skies pact signed by the U.S. airlines and the Gulf carriers forbid them from being subsidized by their governments.

The issue is important to Southern Nevada because the Las Vegas Convention and Visitors Authority is attempting to expand international visitation to 30 percent of the market within a decade.

Because American, Delta and United focus on connecting cities through hub airports, there’s little chance of Las Vegas getting direct international routes from those airlines. Foreign carriers provide the greatest opportunity for Las Vegas to get nonstop flights from overseas.

If the debate on open-skies rules ramps up to include carriers from other countries, Las Vegas could find itself facing a new roadblock in growing international traffic.

The big three carriers offer one- and two-stop flights from overseas cities with passengers traveling to McCarran International Airport through Los Angeles, San Francisco, Seattle, Minneapolis, Salt Lake City, Denver, Dallas, Houston, Atlanta, New York and Newark, N.J.

A debate on the open-skies controversy played out in the form of a debate Tuesday on the closing day of the CAPA-Centre for Aviation conference at the Lake Las Vegas Hilton.

The Partnership for Open and Fair Skies was represented on the panel by Ben Hirst, executive vice president and chief legal officer for Delta, and Will Ris, senior vice president of government affairs for American, who also participated in a Las Vegas Review-Journal editorial board meeting Tuesday.

Hirst said it took his organization two years to track down evidence that Qatar and the UAE were subsidizing the airlines, using investigators to track down government filings from other countries.

Ris urged the government to address the open-skies issue quickly before it gets worse. He and the partnership say that if the executive branch of the government doesn’t react quickly, other nations may get the message that they, too, could subsidize their own flagship carriers and expand their own economic development without fear of reprisal from the United States.

The partnership believes that every round-trip international flight lost to unfair competition with government-subsidized Gulf carriers costs more than 800 U.S. jobs. It’s urging the U.S. government to block the subsidies and put a freeze on the introduction of new passenger service by the Gulf carriers.

Other sides of the debate at the conference were voiced by Roger Dow, president and CEO of the U.S. Travel Association, and Jim Callaghan, general counsel and company secretary of Etihad Airways.

Dow said he’s watching out for the consumer who benefits from the low fares offered by subsidized carriers. He noted that subsidized carriers present the best chance for Las Vegas to get nonstop flights to and from foreign markets.

Dow called U.S. government intervention “a slippery slope toward protectionism” and that it appeared the big three U.S. carriers wanted the government to step in to stop competition.

Callaghan noted that U.S. airlines have their own competitive advantage that foreign carriers don’t have — liberal bankruptcy protection laws. Delta and United, to maintain operations, have made the trip to bankruptcy court to shed debt and reorganize, emerging as stronger competitors.

Clark County Aviation Director Rosemary Vassiliadis, who attended the debate at the conference, wouldn’t say whether Qatar, Emirates or Etihad have made overtures to serve Las Vegas, but she noted that the Indian subcontinent served by those airlines has been on the radar of the Convention and Visitors Authority, McCarran and the Nevada Tourism Commission as a potential emerging market for Las Vegas.

Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find @RickVelotta on Twitter.