Emirates' response

Jun 29, 2015 - certain windows of time.) The government later allowed airlines to buy and sell their slots, so that airlines that had received allocations without charge could monetize their slots, capturing the scarcity benefit for themselves. As shown in. Figure IV-5, the estimated value of slots at major U.S. airports ranges ...
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Emirates’ response

to claims raised about state-owned airlines in Qatar and the United Arab Emirates

June 29, 2015

June 29, 2015 June 29, 2015

Executive Summary Executive Summary Emirates welcomes this opportunity to respond to the claims presented by Delta Air Lines, United Airlines, and American Airlines (“Legacy Carriers”) in their “White Paper.”

This submission rebuts, point-by-point, each of the Legacy

Carriers’ allegations. It proves false the claim that Emirates benefits from UAE government subsidies in violation of the U.S.-UAE Open Skies Agreement (“Open Skies Agreement”). Emirates is one of the world’s leading airlines precisely because Emirates does not depend on government subsidies, bail-outs, and bankruptcy laws, but operates as a consumer-focused, profit-driven, commercial enterprise. Emirates has earned a profit for twenty-seven straight years, because Emirates (1) is committed to world-class customer service, (2) is well-managed, and (3) has pioneered an innovative aviation model: long-haul to long-haul service that reduces costs and travel times and provides unrivaled global connectivity for international travelers, particularly in the heavily populated but underserved countries in the Indian Subcontinent and Africa. Emirates is a financially transparent business with nothing to hide. It is owned by a shareholder that seeks to derive value from its portfolio of assets. Over the course of the last 20 years, Emirates has returned more than $3.3 billion to its shareholder in dividends—far outweighing its modest capital base of $218 million—and has also paid out close to $1 billion to its employees in profit sharing payments, all of which is clearly spelled out in its publicly available, independently audited financial statements. Emirates has financed its growth from its own financial resources, reinvesting in its own business continuously and utilizing a wide range of external financing options available in the market. Each stage of Emirates’ organic growth story can be understood from the audited financial statements that Emirates’ has maintained from the date of its inception. There is no room in any of this for subsidy or unfair government benefits. i

June 29, 2015 June 29, 2015

Throughout its history, Emirates has always needed to be managed and run in a profitable and self-sustaining manner, even during and after the global financial crisis in 2007 and 2008, a period during which a number of allegations contained in the White Paper are alleged to have taken place. The White Paper conveniently omits to mention that this was a time when governments right across the globe were finding themselves in extremely difficult financial situations, including the Dubai Government which was, very publicly, working through its own financial priorities and challenges. Emirates continued to grow throughout this period, a feat which would have been impossible if it was reliant on Dubai Government funds. On the contrary, Emirates achieved this by continuing to focus on the key drivers behind its commercial success and the fundamentals underpinning its business model. The Legacy Carriers claim to have spent two years preparing their White Paper by conducting in-depth research across the globe.

As this submission

establishes, the White Paper in fact consists of a series of demonstrably inaccurate assertions, outright distortions, and legal misinterpretations of the Open Skies Agreement. I. Emirates is not subsidized. In their White Paper, the Legacy Carriers allege that Emirates has received over $6 billion in subsidies from the Dubai Government. This claim is patently false. All of the individual allegations are briefly summarized here: Fuel Hedging Allegation: The Legacy Carriers claim that the Dubai Government, through Emirates’ parent company, Investment Corporation of Dubai (ICD), shielded Emirates from “massive losses” on fuel hedging contracts after a sharp decline in global oil prices