U.S. Is Said to Plan Qatar, U.A.E. Talks on Airline Subsidies

(Bloomberg) -- The U.S. State Department is planning talks with Qatar and the United Arab Emirates to discuss allegations that the Persian Gulf nations have spent billions of dollars subsidizing their state-sponsored airlines, people familiar with the matter said.

The Trump administration will seek commitments to financial transparency, said the people, who asked not to be identified because the talks are private. They said the meetings will start as early as this week. U.S. airlines have been pushing for a crackdown on what they describe as more than $50 billion in unfair subsidies for Qatar Airways Ltd., Emirates and Etihad Airways PJSC.

The State Department will also inquire about the Persian Gulf airlines’ plans for “fifth freedom” flights, which start in an airline’s home country and touch down in a different nation before continuing on to the U.S., the people said, citing a meeting Tuesday between U.S. aviation-related executives and the State Department. U.S. officials will also push the Persian Gulf countries to keep an arm’s-length approach toward their carriers, the people said.

Government-to-government talks would mark a renewed U.S. focus on the airline trade spat, which has been raging for years. Earlier this year, President Donald Trump said the Persian Gulf carriers received major government subsidies, without specifying what action he might consider. The Obama administration conducted “informal, technical” discussions with representatives of Qatar and the U.A.E. late last year without taking action.

The State Department confirmed that Paul Brown, its acting deputy assistant secretary for transportation affairs, attended the meeting. The agency didn’t provide additional details. Qatar Air, Emirates and Etihad didn’t immediately respond to requests for comment. The airlines have disputed the allegations of their U.S. rivals.

The Gulf carriers “are harming American jobs and the U.S. aviation industry and we appreciate that the administration is acting to resolve these issues with the governments of the U.A.E and Qatar,” said the Partnership for Open and Fair Skies, which represents Delta Air Lines Inc., United Continental Holdings Inc., American Airlines Group Inc. and airline unions.

The U.S. Travel Association said the talks would take place outside of formal “open skies” agreements.

“The Big Three U.S. airlines’ core demand -- that the administration freeze flights by airlines flagged in Qatar and the U.A.E, and renegotiate U.S. open skies agreements with those countries -- was, thankfully, set aside because their arguments fell well short of the mark,” U.S. Travel Chief Executive Officer Roger Dow said.

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