December 12, 2017 / 7:22 PM / in a month

Trump administration holds talks with airlines, keeps pressure on Gulf carriers

WASHINGTON (Reuters) - The Trump administration met with major airlines on Tuesday to discuss complaints that some Gulf states are unfairly subsidizing state-owned carriers, keeping up pressure on the Middle East airlines at the center of a spat with U.S. rivals.

U.S. and Gulf airlines representatives met at the U.S. State Department with administration officials to discuss the status of the government’s review of complaints about subsidies. A State Department official said there would be no announcement after the meeting, but officials plan new talks with Gulf states starting this week.

Heads of the three largest U.S. passenger carriers - American Airlines Group Inc (AAL.O), United Continental Holdings Inc (UAL.N) and Delta Air Lines Inc (DAL.N) - have urged the Trump administration to challenge the conduct of three major Middle Eastern carriers under “Open Skies” agreements signed in the early 2000s. The U.S. airlines contend the Gulf carriers are being unfairly subsidized by their governments.

The airlines, Qatar Airways, Etihad Airways and Emirates, have denied those accusations. The Gulf airlines operate around 200 flights per week to 12 U.S. cities.

President Donald Trump told airline executives in February he recognized they were facing pressure from foreign carriers, but added that he wanted foreign airlines also to do well.

“They come with big investments, in many cases those investments come from their governments, but they are still big investments,” he said.

Slideshow (4 Images)

In a Sept. 14 White House memo seen by Reuters on Tuesday, Trump administration officials agreed the U.S. government “should take action to address the unfair behavior of Gulf carriers.” It said the government should “seek disciplines on subsidies, transparency and state owned enterprises” and consider withdrawing from the Open Skies agreements if “sufficient progress it not made.”

The Partnership for Open & Fair Skies, which includes Delta, American, United and some major airline unions, on Tuesday applauded “the Trump administration for taking action to level the playing field with the Gulf carriers and their massive government subsidies”, spokeswoman Jill Zuckman said.

    But U.S. smaller airlines grouped under the U.S. Airlines for Open Skies Coalition said their larger rivals “still cannot point to a specific violation” of the Open Skies agreements.

    It said it was “confident further investigation by the Trump administration will show the claims for what they are: a political ploy to protect themselves from competition and limit choice for U.S. travelers”.

    The coalition represents Atlas Air Worldwide Holdings Inc (AAWW.O), FedEx Corp (FDX.N), Hawaiian Airlines, and JetBlue Airways Corp (JBLU.O).

    U.S. Travel Association President and CEO Roger Dow also said on Tuesday: “We strongly oppose any efforts to reduce secure travel, connectivity, growth and consumer choice.”

    Reporting by David Shepardson; Editing by Susan Thomas

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