US and Qatar reach agreement in long-running dispute

Senior officials from the US and Qatar have reached an agreement aimed at addressing the concerns of major US carriers over alleged subsidies to state-owned Qatar Airways.

US secretary of state Rex Tillerson has confirmed that the country has reached an understanding with Qatar over alleged airline subsidies.

The agreement aims to address the concerns of major US airlines which claim that three Gulf carriers – Qatar Airways, Emirates and Etihad – have been unfairly financed by their governments, putting US rivals at a competitive disadvantage.

Under the framework, Qatar Airways will issue financial statements in the coming year that are audited in accordance with internationally recognised accounting standards.

Within two years, the carrier will publicly disclose significant new transactions with state-owned enterprises and “take steps” to ensure that such transactions are based on commercial terms.

The Qatari government has also made an assurance to the US that there are no plans at the moment for Qatar Airways to operate fifth freedom flights to the US.

Officials plan to meet again bilaterally in one year to discuss progress.

At a meeting with Qatari foreign minister Sheikh Mohammed and defence minister Khalid bin Muhammad al-Atiyah, Tillerson said the US “welcomes the understandings” reached on civil aviation.

“These exchanges addressed concerns important to US aviation industry stakeholders and strengthened our economic cooperation,” he said. “The President has made this matter a priority, and the outcome we achieve will ensure a level playing field in the global aviation market.”

The agreement, which operates within the existing Open Skies deal between Qatar and the US, follows more than two years of pressure on the US government from American Airlines, Delta Air Lines and United Airlines over alleged government subsidies for Gulf carriers.

The growth of Gulf carriers on US-Middle East routes has far outstripped that of US counterparts over the past five years, despite the temporary ban on electronics and proposed travel restrictions hitting demand in 2017.

Emirates had the most available US-Middle East capacity last year, with 2 million available seats according to OAG Schedules, although the figure was a 6.3 percent reduction compared with 2016.

“Today’s landmark action will help create a level and fair playing field for American Airlines and other US carriers," says Doug Parker, chairman and chief executive of American, in a statement. "The administration’s actions today thoughtfully address the illegal subsidies received by Qatar Airways."

Ed Bastian, chief executive of Delta, added that the agreement was the “first step in a process for commercial transparency and accountability”.

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