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US airlines meet with government about air freight subsidies

September 23, 2015 | By

The international air freight market has always been competitive but over the last few years the voices from American carriers about unfair practices damaging the North American market for pricing and capacity have been growing louder. Allegations that large subsidies haved allowed air freight powerhouses Emirates, Etihad Airways, and Qatar Airways to significantly disrupt the air cargo market for U.S. carriers have been escalating due to instability that capacity changes seem to have brought to the intercontinental market.

The leaders of major US airlines held a recent meeting with Secretary of State John Kerry on Thursday to explain their concerns and position a strong case for collective American action against the subsidies that they allege three Gulf carriers mentioned have each received. The long desired meeting saw the heads of American Airlines and Delta have the opportunity to state their observations and insist that the administration addresses the practices of the UAE and Qatar that have destabilized the market according to the US airlines.

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No information was released about the outcome of the meetings and what action, if any, might subsequently be planned as a result. Officially "American, Delta, United Continental Holdings, and their unions charge that Emirates, Etihad Airways and Qatar Airways have received some $42 billion in subsidies from their home governments in the past decade." Such large subsidies have had a huge impact on capacity into the United States as the carriers have moved their focus far more towards the North American and European markets, building their own market share and negatively impacting pricing.

The response from Gulf-based carriers is a denial of subsidies and that service issues have seen them gain share, not pricing competitiveness due to funding. It's a finely balanced scenario and one that would require the restructuring of trade policy to have the government intervene on behalf of the US carriers. It's a story that certainly still has some distance left to run and one that we'll be watching here at AirFreight.com.

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