US and Gulf carriers’ dispute

American airlines have lost at least five percentage points of their share of flight bookings from the United States to the Indian subcontinent and Southeast Asia since 2008, due to fierce competition from Gulf carriers.

More recently, US carriers have seen an erosion in their share of bookings to Milan, according to a report the US airlines sent to the White House and the Departments of State, Transportation and Commerce.  The Gulf carriers' share of that market has jumped to 40% from only 12% seven years ago, according to the report.

The US airlines are stepping up efforts to persuade the American government to alter or terminate the Open Skies agreements.

The white paper, citing confidential financial statements from the Gulf airlines, alleged that their rivals have received subsidies from their home governments contrary to US trade policy.  The report says government subsidies enable the Gulf carriers to buy planes and add capacity in excess of demand, forcing industry-wide price cuts on certain routes.

Advocates for travellers, both in the US and abroad, say that cutting prices and improving service is precisely what Open Skies agreements are intended to achieve.

"We have no problem with competition.  In fact, we relish it," Sir Tim Clark, President of Emirates, said in a statement last week. http://airlines.org

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