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NEW: What the Agreement Between the UAE and the United States Really Means for Emirates and Etihad

NEW: What the Agreement Between the UAE and the United States Really Means for Emirates and Etihad

NEW: What the Agreement Between the UAE and the United States Really Means for Emirates and Etihad Airways

Last week the United States and the UAE finally settled a spat over their Open Skies agreements – the regulations that allow airlines from both countries to fly freely between them.  While Emirates and Etihad Airways have expanded into an increasing number of U.S. cities, there are currently no American carriers which serve the UAE.

The big three U.S. airlines – American, Delta and United Airlines, sometimes referred to as the US3 – claimed Middle East carriers like Emirates and Etihad, as well as Qatar Airways, used illegal government subsidies to fund their huge growth.  They said those subsidies created an “unlevel playing field” which they simply couldn’t compete with.  As a result, they argued hundreds of thousands of American jobs were at risk.

The US3 created a lobby group called the Partnership for Fair and Open Skies which was pushing the Trump administration to clamp down hard on UAE airlines.  When news of an agreement emerged, the American carriers claimed a victory – saying it would protect American jobs and help enforce trade deals from unfair business practices.

At the time it seemed like the US3 were putting a lot of spin on what had actually been agreed.  The UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan said the agreement meant it would be “business as usual” for his country’s airlines – despite what airline’s like Delta Air Lines would have us believe.

And now authorities in the UAE have released the official text of the agreement signed with the United States – known as a Record of Discussion.

The document starts by underscoring the “strong and multi-faceted partnership across the political, economic and security spheres” between the two countries.  It then goes onto state how Emirates and Etihad have actually benefited the U.S. economy, saying:

  • The UAE is the largest importer of U.S. goods in the Arab world
  • The largest international buyer of U.S. commercial aircraft
  • Host to over 1,500 American firms
  • A significant source of foreign direct investment into the United States

Which, together, supported “the growth of both economies”.

Importantly, the agreement reaffirmed both countries “strong support” for the Open Skies accord without any changes.  The document simply states that UAE airlines have always been in full compliance with the Open Skies agreement.

In terms of government subsidies, or as the document calls it “government support” – the text says such help is “neither uncommon or necessarily problematic”.

One of the areas that the US3 did claim a big victory on was forcing Emirates and Etihad to provide annual, fully audited accounts which adhere to international standards.  That’s something that Emirates has been doing for years although the UAE has agreed to get Etihad doing the same.

They’ve also agreed that access to finance and debt should “to the greatest extent possible”, be consistent with market conditions – although that still leaves a lot open to interpretation.

Interestingly, the US3 also said that Emirates and Etihad wouldn’t start any further so-called ‘Fifth Freedom’ flights like Emirates’ Dubai-Athens-Newark service.  Peter Navarro, an assistant to President Trump has said there will be “no additional routes into the United States until further notice,” although the agreement actually makes no mention of this whatsoever.

It seems, like what many observers have already noted, that this agreement is a major win for the likes of Emirates and Etihad.  Business really will continue as normal with only a few minor changes – mostly affecting Etihad.  For it’s part, Etihad said it is going through a restructuring exercise which would ensure it complies with the agreement.

Last year, Emirates released a report that claimed the airline supported 104,000 American jobs and contributed $21.3 billion USD in revenue to the U.S. economy.

Sir Tim Clark, the President of Emirates has previously said the US3 were making “unfounded accusations” against his airline.

“Evidence repeatedly points to the benefits that Emirates bring to U.S. consumers and the economy, and the total absence of alleged competitive harm,” he noted.

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