New U.S. airline group backs Gulf carriers in Open Skies dispute

An airport worker leads JetBlue planes onto the tarmac of the John F. Kennedy International Airport in New York December 11, 2013. REUTERS/Lucas Jackson

(Reuters) - A challenge by U.S. airlines that accuses three Gulf carriers of distorting competition via government subsidies took another turn on Monday with the formation of a U.S. airline group that backs the Gulf-carriers’ cause.

Four long-time supporters of U.S. Open Skies agreements with Qatar and the United Arab Emirates, which remove restrictions on flying to and from those states, have formally banded together to create the U.S. Airlines for Open Skies Coalition. They are the air cargo unit of FedEx Corp FDX.N, JetBlue Airways Corp JBLU.O, Atlas Air Worldwide Holdings Inc AAWW.O and Hawaiian Holdings Inc HA.O.

“We thought it was important that the government understand that there are many different voices in this choir,” JetBlue’s general counsel, James Hnat, told reporters Monday in announcing a letter from the group to the Obama administration.

The letter comes just hours before the U.S. government closes a public comment period on Aug. 3 asking for views on whether Emirates [EMIRA.UL], Etihad Airways and Qatar Airways have dumped capacity and begun pushing competitors out of key markets via $42 billion in subsidies over the past decade.

Each Gulf carrier has denied the subsidy claims.

A coalition representing American Airlines Group Inc AAL.O, Delta Air Lines Inc DAL.N, United Continental Holdings Inc UAL.N and seven airline unions - known as the Partnership for Open and Fair Skies - has called on the Obama administration to initiate consultations with the Gulf states to address the alleged subsidies.

The Partnership’s spokeswoman, Jill Zuckman, called the new U.S. group “a meaningless coalition without a cause.” A majority of comments submitted to the U.S. government have backed the Partnership, according to the group.

The carriers in the new coalition have benefited from the Open Skies agreements in question: for example, FedEx Express has a hub in Dubai, and JetBlue has seen a boost in passenger traffic from a relationship with Emirates that feeds the New York-based airline many international customers.

Reporting By Jeffrey Dastin in New York; Editing by Steve Orlofsky