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Etihad Airways, the national airline of the United Arab Emirates, has urged the US Government to ‘keep the skies open’, in a comprehensive formal response to the joint campaign by Delta Air Lines, United Airlines and American Airlines to block competition and roll back the benefits of Open Skies.
The Etihad Airways response, which has now been submitted to the US Department of State, the US Department of Transportation and the US Department of Commerce, emphasises the many benefits delivered by Open Skies to consumers, to American workers, to US carriers and to US trade and tourism.
It categorically refutes claims made by the Big Three carriers about Etihad Airways’ finances, giving a clear and compelling explanation that the equity funding and shareholder loans provided by the Government of Abu Dhabi, by way of investing in a successful business model, fully comply with the US-UAE Air Services Agreement and all other applicable rules.
The submission also shows that the Big Three carriers have gained more than $70 billion in benefits from US Government authorities, and through legal processes such as Chapter 11 bankruptcy reorganization, over the last 15 years.
In a letter supporting the airline’s formal submission, James Hogan, Etihad Airways President and Chief Executive Officer, said: "Etihad Airways did not seek this fight; we focus on making money by providing world class, innovative, re-imagined and value-for-money product and services to our guests."
Etihad Airways has submitted that the Big Three carriers’ claims, allegations, and requests for relief are not supported by fact, logic, law, or treaty, and that: (1) Etihad’s conduct, and that of the UAE Government, is fully consistent with the USUAE Air Services Agreement, applicable United States law and the governments’ respective treaty obligations; (2) Government ownership is not an issue under the US-UAE Air Services Agreement; (3) Shareholder equity and loans are not subsidies; (4) While Etihad competes vigorously for all passengers, it does not charge artificially low fares; (5) Etihad causes no actionable harm to the Big Three carriers, and actually provides them with significant commercial benefits in terms of connecting passengers onto their networks (an estimated 300,000 in 2015); (6 ) Etihad has been successful in markets in which the Big Three carriers affirmatively choose not to compete, and is in fact providing the Big Three carriers with an avenue (through codeshare and interline agreements) to offer their passengers routes that they choose not to fly themselves; and (7) Etihad treats its worldwide employees, who come from over 140 countries, including the United States, fairly and with respect. Mr Hogan said: "For these reasons, we respectfully submit that the Big Three carriers’ campaign against Etihad Airways should end immediately and that there is no basis whatsoever for government-to-government consultations under the USUAE Air Services Agreement."
Etihad Airways’ submission includes detailed information about the airline, its financial strategy and its business performance.
The airline was established in November 2003, decades after its major international competitors, by the Government of Abu Dhabi, the capital of the UAE.
Today, Etihad Airways is a globally-recognized, full-service international airline, which carries almost 15 million passengers per year and flies to, or is planning to serve, more than 110 destinations. The airline currently operates almost 120 aircraft and more than 260 flights per day from its hub at Abu Dhabi International Airport.
Etihad Airways has had to invest heavily to compete effectively against its more established competitors. Recognizing the enormous cost of entry to the airline industry, the Abu Dhabi Government invested in Etihad Airways by providing capital and shareholder loans.
Since 2003, the Government has invested $14.3 billion in Etihad Airways; of this amount, $9.1 billion was provided in equity funding and a further $5.2 billion was provided in shareholder loans.
These commitments were made on the basis that the airline would operate commercially, deliver a long-term return on investment, repay shareholder loans and achieve sustainable profitability.
Etihad Airways receives no Government subsidies or sovereign guarantees and, contrary to the claims of some competitors, it does not receive free or discounted fuel or airport services in Abu Dhabi, its home and global hub.
Since 2003, Etihad Airways has raised in excess of $11 billion in long-term funding through the global financial markets, including $3.7 billion debt funding raised in 2014. Approximately $5 billion of the airline’s borrowings have been repaid since 2003, including $800 million in 2014.
The airline has established strong relationships with more than 80 global financing partners and aircraft lessors, 26 of which are based or headquartered in the US.
Etihad Airways is highly focused on its commercial mandate. Although it is only 11 years old, the airline has posted consecutive net profits since 2011. Etihad Airways complies with International Financial Reporting Standards (IFRS) and is audited by KPMG.
Commenting on the submission, James Hogan said: "Our story is one of an airline that has chosen to challenge the global status quo, bringing new competition to markets that have for too long been dominated by the major legacy airlines.
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