Qatar Agrees to Settle With US Government on Open Skies Dispute

Jan 29, 2018

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The battle between the biggest three US airlines and the biggest three in the Gulf — Emirates, Etihad and Qatar Airways — is taking an unexpected twist: the government of Qatar has agreed to disclose more financial information about its state-owned airline, which the US carriers accuse of receiving, like the other two, state aid it uses to compete unfairly.

On Tuesday, the US State Department is expected to announce a settlement with Qatar. As reported by Reuters, Qatar is expected to announce a new agreement with the US government to release detailed and more transparent Qatar Airways financial information. The announcement may  settle the ongoing — and sometimes brutal — dispute between the US and Gulf airlines, with the Americans accusing the rival airlines of violating the terms of the Open Skies agreements that regulate air traffic.

With the new agreement, Qatar Airways will issue audited financial reports within a year, and within two years it must disclose any significant new transactions with state-owned enterprises. The complete deal is expected to be announced in Washington on Tuesday, with Secretary of State Rex Tillerson, Defense Secretary James Mattis and senior Qatari officials.

American, Delta and United have long waged a war on the so-called ME3 (Middle East Three) carriers. Specifically, since 2015, Delta has led the attack on the ME3, urging the US government to challenge the Middle Eastern competition under Open Skies agreements. The US airlines have long argued that the Gulf carriers are being unfairly subsidized by their respective governments, a claim that the ME3 have each denied.

This agreement is expected to come after weeks-long negotiations with US and Qatari officials. As part of the deal, Qatar said that it has no current plans to offer fifth-freedom flights — passenger-carrying flights from the US to another country, by the airline of a third country — and that it will offer greater financial transparency. Fifth-freedom flights include, for example, Emirates’ route from Newark to Dubai via Athens, on which Emirates has the right to transport passengers between Athens and Newark.

The deal with Qatar, which is expected to be announced tomorrow, does not apply to the other two large Gulf carriers, Emirates and Etihad. According to Reuters, the State Department will conduct talks with the government of the United Arab Emirates, which is home to both Emirates and Etihad, as early as next week.

The US carriers will view this agreement as a win. However, Qatar isn’t really losing anything. It’s never been focused on launching fifth-freedom routes to the US. The only major change for the Doha-based carrier will be transparently disclosing its finances. This deal should reduce tensions between the ME3 and US carriers, and without Qatar losing out on too much.

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