Qatar Airways will commit to greater financial transparency and to not run any indirect flights to the U.S. through other countries as part of an agreement with the Trump administration addressing U.S. carriers’ accusations that their Gulf competitors get unfair government help.
Airlines are hailing the agreement as a victory, if not a complete one, in one of the biggest trade disputes in U.S. history. They’ve estimated that Qatar gave $17 billion or more to Qatar Airways over a 10-year period.
“This would be a landmark milestone for the American airline industry that will protect our workers and ensure that our foreign competitors play by the rules and do not undermine our international agreements,” said Peter Carter, chief legal officer of Delta Air Lines. “We all support the administration as it holds their feet to the fire to ensure they live up to their commitments.”
Senior State Department officials said that within a year, Qatar Airways will adopt internationally recognized accounting standards, and issue annual reports and audited results, to the extent they’re not already doing so. Secretary of State Rex Tillerson will announce the arrangement on Tuesday, following weeks of negotiation among the State Department, White House and Qatar.
Within two years, the airline will disclose any major financial transactions with state enterprises to ensure those are being done on commercial terms, said the officials, who declined to be identified ahead of the official announcement.
Qatar Airways also informed the U.S. that it has no intention, for now, of conducting “Fifth Freedom” flights to the U.S. Under commercial aviation protocols, those flights are ones that start in an airline’s home country and touch down in a different nation before continuing on to a third country — in this case, the U.S.
Tillerson will announce the voluntary agreement when he meets his Qatari counterpart during a U.S.-Qatar Strategic Dialogue, said a senior State Department official who asked not to be identified discussing a deal that hasn’t been publicly announced.
A white paper issued by U.S. airlines in 2015 said Qatar had given more than $17 billion in subsidies to Qatar Airways, although airlines have since revised upward the estimates for the Gulf carrier— possibly as high as $25 billion.
Emirates and Etihad Airways PJSC, which U.S. airlines claim may have gotten an additional $25 billion in unfair subsidies, aren’t part of the arrangement for now.
Any such cooperation between the United Arab Emirates and Qatar has been made far more unlikely after the UAE joined three other nations in a diplomatic and economic blockade of Qatar starting over the summer over accusations that it’s funding terrorist groups.
Wadhams and Sasso write for Bloomberg.