US/Gulf: US feud with Gulf airlines nears end with UAE agreement

The United Arab Emirates agreed to increase financial transparency in its airlines as part of a deal with the US to resolve allegations that two state-owned carriers have unfairly benefited from billions of dollars in government subsidies. The US and UAE acknowledged that while government support of airlines isn’t unusual, it may “adversely impact competition,” according to a copy of the agreement. The Persian Gulf country, home of Emirates and Etihad Airways, also committed to issue annual public financial reports under internationally recognized accounting standards. While the accord doesn’t freeze so-called fifth-freedom flights, the UAE pledged that its carriers have no plans for more of these routes, a senior State Department official said. Such flights have proved controversial in the past because of the indirect market access they provide. Under commercial aviation protocols, the flights start in an airline’s home country and touch down in a different nation before continuing on to a third. Emirates makes such flights from Dubai to Athens and then on to Newark, New Jersey. The agreement settles the final piece of a long-running dispute over government aid, which pitted the largest US airlines against rivals in the UAE and Qatar. American Airlines, Delta and United Continental claimed in 2015 that the Persian Gulf carriers were able to compete unfairly on flights into the US because of government subsidies. US Secretary of State Mike Pompeo is expected to announce the agreement May 14. <br/>