America’s Largest Airlines Received Taxpayer Benefits Worth $71.48 Billion

Back in August 2014, Emirates Airlines began operating service out of Chicago O’Hare. Offering service to Dubai International Airport in the United Arab Emirates. The carrier is competing with the three big U.S. carriers, United Airlines, American Airlines and Delta Air Lines. The carriers released a report in March claiming Emirates, Etihad Airways and Qatar Airways have received $42 billion in illegal subsidies over the past decade and they are unable to compete against the carrier's airfares because of these " illegal subsidies".

Releasing the findings by The Risk Advisory Group, the General Counsel and Company Secretary of Etihad Airways, Jim Callaghan, said on Thursday “We do not question the legitimacy of benefits provided to US carriers by the US government and the bankruptcy courts. “We simply wish to highlight the fact that US carriers have been benefitting and continue to benefit from a highly favorable legal regime, such as bankruptcy protection and pension guarantees, exemptions from certain taxes, and various other benefits. These benefits, which are generally only available to US carriers, have created a highly distorted market in which carriers such as Etihad Airways have to compete.”

Callaghan said the figures produced by The Risk Advisory Group were conservative, quantifiable and credible, and obtained from public records and statements. Callaghan referred to a 2011 interview, published by America’s National Public Radio, in which a former Vice President of Continental Airlines, Pete Garcia, was quoted as saying: “Bankruptcy, for the airline industry in particular, is just a way to refinance the business. It is a financial move to keep you in business and give you time to renegotiate with your lenders.”

The Risk Advisory Group identified the largest beneficiaries of Chapter 11 restructuring and bailouts from the Pension Benefit Guaranty Corporation as:

• United Airlines, with combined benefits estimated at US$44.4 billion;
• Delta Air Lines with combined benefits estimated at US$15.02 billion; and
• American Airlines with combined benefits estimated at US$12.05 billion.

• United achieved one-time bankruptcy debt relief totaling US$26 billion, and pension termination benefits totaling US$16.8 billion;
• Delta Air Lines achieved bankruptcy debt relief totaling US$7.9 billion, and pension termination benefits totaling US$4.55 billion; and
• American Airlines achieved bankruptcy debt relief totaling US$1.56 billion, and pension termination benefits of US$8.08 billion.

These figures include restructuring and bailout benefits achieved by other US airlines, since absorbed by Delta Air Lines, United Airlines and American Airlines.

Mr. Callaghan said the current claims by United Airlines, Delta Air Lines and American Airlines that they were being harmed by Etihad Airways were baseless, and an attempt to obstruct higher-quality competition. “There is no evidence whatsoever of any harm caused by Etihad Airways to any of the three big US airlines.”

“The US Open Skies policy has delivered more choice and better service for millions of consumers, more airline access to and from America, and record profits for the biggest airlines in the US. It is time to refocus on the real issue here – that the Open Skies policy is delivering the benefits it was designed to deliver, and that everyone is a winner.”

Update: Allied Pilots Applauds Chicago Mayor for Stance on Gulf Carrier Subsidies

May 15, 2015 - Allied Pilots Association President Capt. Keith Wilson issued the following statement regarding today's letter from Chicago Mayor Rahm Emanuel urging the Obama administration to open consultations with Qatar and the United Arab Emirates regarding government subsidies to the three Gulf carriers. "Mayor Emanuel is exactly right — government funding means the Gulf carriers aren't accountable to market forces, enabling them to grow at an astounding rate. As Mayor Emanuel urges, it's essential for the U.S. government to open consultations with Qatar and the United Arab Emirates to protect fair and equal competition in our skies.

"On behalf of the Allied Pilots Association leadership and the 15,000 pilots of American Airlines and US Airways we represent, I want to express my gratitude to Mayor Emanuel for his outstanding support on this issue. With 9,000 American Airlines employees in the Chicago area, we have a major stake in the community and in our airline's future there as a leading international carrier.

"We echo Mayor Emanuel in urging the Obama administration to take all necessary steps — including a freeze on new routes by the Gulf carriers while consultations proceed — to ensure that the open-skies agreements our nation has entered into are being complied with by all participating parties. Hundreds of thousands of middle-class airline employees who work hard and play by the rules expect our country's trading partners to do the same. Our livelihoods depend on it."

Founded in 1963, the Allied Pilots Association — the largest independent pilots' union in the United States — is headquartered in Fort Worth, Texas. APA represents the 15,000 pilots of American Airlines and US Airways, including several hundred pilots on full-time military leave of absence serving in the armed forces. The union's website is www.alliedpilots.org. American Airlines is the world's largest passenger airline. APA is a member of the Partnership for Open and Fair Skies, which is calling on the Obama administration to open consultations under the open-skies agreements with Qatar and the United Arab Emirates to address the flow of subsidized capacity to the United States and seek a freeze on new passenger service during the consultations.