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Four U.S. Airlines Object to Complaints in Gulf Airline Fight

08/03/2015 | 02:45pm US/Eastern

A long-running attempt by the three largest U.S. passenger airlines to persuade their government to limit access to U.S. air routes by three big Persian Gulf airlines received more pushback Monday when four opposing U.S. carriers warned that rolling back liberal air treaties would cause economic damage and possibly retaliation.

Executives from FedEx Corp.'s FedEx Express delivery unit, Atlas Air Worldwide Holdings Inc., JetBlue Airways Corp. and Hawaiian Holdings Inc.'s Hawaiian Airlines said that they have formed a group called U.S. Airlines for Open Skies to underscore their opposition to the position taken by American Airlines Group Inc., United Continental Holdings Inc. and Delta Air Lines Inc.

The three big U.S. passenger carriers in January asked the U.S. government to renegotiate air treaties with the United Arab Emirates and Qatar because three state-owned airlines in those two nations allegedly have received more than $40 billion in government subsidies since 2004. The U.S. trio claims this backing has allowed Emirates Airline, Etihad Airways and Qatar Airways to distort global trade by expanding quickly without having to worry about turning a profit.

The U.S. Departments of Transportation, State and Commerce said they would listen to the three big U.S. airlines and opened regulatory dockets where all variety of parties could file information. Emirates, Etihad and Qatar have denounced the U.S. carriers' claims, denied they are subsidized and filed rebuttals on the U.S. dockets.

A number of other groups in the U.S. also filed their opposition to the stance of American, United and Delta, including trade associations representing U.S. tourism interests, aerospace industries and individual carriers such as Alaska Air Group Inc.'s Alaska Airlines.

Previously, all four airlines in the new coalition individually filed their objections on the docket. But now, the three U.S. agencies are requesting that further submissions be made to the docket by the end of Monday, and that any additional materials commenting on submissions by made by Aug. 24.

A person familiar with the U.S. government's position said prior submissions are being reviewed and considered, but no decisions have been made.

FedEx, Atlas, JetBlue and Hawaii on Monday submitted a letter to the secretaries of three federal agencies explaining that the big three U.S. carriers don't speak for all or even most U.S. airlines. The four, in their letter, also said there would be extensive harm to U.S. consumers and the U.S. economy if the government were to agree to renegotiate the liberal air treaties with the U.A.E. and Qatar.

American, United and Delta, supported by several labor unions, have their own group called Partnership for Open and Fair Skies. A spokeswoman for the group claimed Monday that a majority of the submissions on the dockets of the Departments of Transportation and State supported the position of the trio, something that couldn't be independently verified. She said the risk to open skies "is the Gulf carriers themselves and their massive, market-distorting government subsidies."

Since 1992, the U.S. government has negotiated 117 "open skies" treaties with other countries, which give airlines from both sides unfettered access to airports in both countries (although not the right to fly domestic-only routes in the other's territories.) Many of the agreements also contain extra freedoms that allow cargo carriers such as Atlas and FedEx to fly from one foreign land to another without touching their home markets, an arrangement that lets them get their freight and express-air shipments where they need to go in the most efficient manner.

Rush O'Keefe, general counsel of Fedex Express, said if the U.S. starts retreating from its open skies policies, some trading partners would likely "retrench" and want to revert to less liberal aviation policies, which would cost U.S. jobs. FedEx operates 44 flights a week through its hub in Dubai and believes it would be " the entity most subject to retaliation" should the U.S. government try to restrain the growth of Dubai-based Emirates, which is growing quickly and will add its 10th U.S. destination next month.

JetBlue has benefitted from open skies, said James Hnat, that airline's general counsel, and believes the big U.S. carriers simply want to "thwart open competition and growth." Not only have such liberal treaties given JetBlue opportunities to serve new countries such as Colombia, but the influx of foreign carriers to the U.S. has created partnership opportunities. JetBlue code-shares with the big three Persian Gulf carriers, meaning their passengers can make easy connections to JetBlue's domestic flights JetBlue passengers can easily travel to most of the world via the three Middle East hubs.

Highlighting the links, Emirates on Monday separately announced the launch of a new "Americas Pass" that will allow its customers to travel on five partner airlines on fares starting from $99 each way. The partners are JetBlue, Alaska Airlines, Virgin America Inc., and two Canadian carriers.

Write to Susan Carey at susan.carey@wsj.com

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