Two of the Middle East’s most aggressively growing airlines said charges that they benefit from government subsidies, artificially low fuel prices, cheap airport facilities and preferential financing refuted these charges at the World Routes conference in Chicago this week.
Neither, however, addressed charges they unfairly benefit from US ExIm Bank funding, a particularly sensitive topic for Delta Air Lines which has been waging an effective campaign to cast doubt over the Depression-era institution intended to support US exports. Boeing is the largest user of ExIm financing and Emirates in particular has been an active participant in the program. Delta claims ExIm provides below-market rate fees and interest charges.
Officials of Etihad Airlines of Abu Dhabi and Emirates Airlines of Dubai each said the carriers pay market rates for fuel, airports and financing.
Kevin Knight, chief strategy and planning officer of Etihad, and Tim Clark, president of Emirates, said their carriers have to compete just as with any other airline.
“The mandate by our single shareholder,” said Knight, “is to be profitable. There is no free lunch.”
Knight said Etihad has advantages, however, in being a young carrier without built-in legacy costs and a nimbleness that gives it an advantage. The carrier has also taken a number of minority investments to give it access to local markets, a strategy that has drawn opposition in many regions, principally in Europe.
Knight decried a “resurgence of protectionism in the US and Europe.” This is “a dangerous development, not only of the airlines but also for global trade,” he said.
Emirates’ Clark, who has waged an aggressive counter campaign to Delta (without ever specifically naming the carrier), asked rhetorically, “Why would the US be concerned about what’s good for customers and the economy?” He said that many international destinations east of Dubai are not served by US carriers. “They have been starved for international service.”
Delta, however, dropped service to India, claiming it could not compete with a “subsidized” Emirates that benefited from cheaper ExIm financing for its Boeing 777-300ERs. Clark did not specifically address this complaint. Instead, he vowed that more US cities will receive Emirates service in the coming years.
Clark said that Emirates doesn’t get “interest free loans, fuel breaks” or other financial breaks. “There are no bank guarantees (from Dubai), no subsidies.”