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US ends ‘illegal subsidies’ row with Qatar Airways

The US government has reached an agreement with Qatar to end the three-year dispute between leading US carriers and Qatar Airways over alleged state subsidies.

US secretary of state Rex Tillerson announced a deal on Tuesday which will see Qatar Airways voluntarily open its accounts to scrutiny.

The US administration decided in December that it would not pursue an investigation of alleged state subsidies to Qatar Airways demanded by US carriers Delta Air Lines, American Airlines and United, or amend the Open Skies agreement between the countries.

There is as yet no resolution to similar claims by the three US carriers against Qatar’s Gulf rivals Emirates and Etihad Airways.

Announcing the agreement, Tillerson said: “These exchanges address concerns important to US aviation industry stakeholders and strengthen our economic cooperation.

“The outcome will ensure a level playing field in the global aviation market.”

The memorandum of understanding between the governments states that within a year Qatar Airways will issue “public annual reports with financial statements audited externally in accordance with internationally-recognised accounting standards, to the extent they are not already doing so”.

The State Department said Qatar Airways would all disclose all new financial transactions as “based on commercial terms”.

A side letter to the agreement stated that Qatar’s civilian aviation authority, headed by Qatar Airways chief executive Akbar al Baker, was unaware of any plans by the airline to fly to the US from third countries.

The three US carriers alleged in 2015 that Qatar, Dubai-based Emirates and Abu Dhabi-based Etihad received more than $40 billion in government subsidies and other “unfair advantages in the last decade”.

US airline chiefs welcomed the announcement. American Airlines chief executive Doug Parker said: “Today’s landmark action will help create a level and fair playing field for American Airlines and other US carriers.

“The administration’s actions thoughtfully address the illegal subsidies received by Qatar Airways.”

Delta Air Lines chief executive Ed Bastian hailed the agreement as “a strong first step in a process for commercial transparency and accountability”.

He said: “We remain committed to working with the administration to address the harmful trade violations by the United Arab Emirates as well.”

Qatar Airways declined to comment.

US Travel Association president and chief executive Roger Dow also welcomed the deal, saying: “We are pleased the big three US airlines and their allies are embracing the administration’s wise decision to reject both a freeze on international flights and renegotiation of Open Skies agreements.

“We have believed since the beginning that tampering with Open Skies would harm the US economy.”

Former US deputy assistant secretary for transportation John Byerly, a lead negotiator of open skies agreements under President Obama, said: “This appears to be the administration essentially throwing a meatless bone to the three US carriers.”

US Allied Pilots Association president Dan Care said: “Billions of dollars’ worth of subsidies later, it’s nice to know that at least one of the Middle East three is manoeuvring toward a level playing field.”

Qatar remains in a bitter dispute with the UAE and Saudi Arabia over the diplomatic and economic boycott of the country the pair have led in the region.

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