Delta says Gulf carriers receiving tens of billions in subsidies

File photo of visitors inspecting a Boeing 777-200LR aircraft in Qatar Airways livery at the Dubai Airshow in United Arab Emirates in 2011. Photo: AP.

Delta Air Lines said carriers based in the Persian Gulf are receiving subsidies worth tens of billions of dollars from the governments of the U.A.E. and Qatar, as the war of words between airlines in the U.S. and the Middle East continue.

The U.S. government needs "full transparency to the actual financial condition of these airlines," and should "respond accordingly" if it finds they've received state support, Delta President Edward Bastian said.

U.S. airlines have been lobbying officials in Washington, D.C. and the European Union over the growth of state-owned Gulf carriers Emirates, Qatar Airways and Etihad Airways, saying they've received about $42 billion in aid over the past decade.

The U.S. should take a close look at the Open Skies agreements that allow these airlines access to U.S. airports, the head of the House transport committee said Tuesday.

"We'll compete with anybody," Delta's Bastian told a briefing in Sydney on Wednesday, "but when you're competing against a government - which, in our view, some of our Middle Eastern carrier competition is - that's when we want our government to have full transparency to the actual financial condition of those airlines."

The Gulf carriers offer artificially low prices on routes to Asia by routing flights through their Middle East hubs, according to a 55-page report that Delta, United Continental Holdings and American Airlines Group presented to the Obama administration in January.

That's disputed by the Middle East airlines. Speaking Tuesday in Washington, D.C., Etihad Chief Executive Officer James Hogan said his airline is "a David who's been facing Goliaths."

The established airlines Etihad is competing against often have been "gifted amazing infrastructure - airports, terminals, slots, landing rights - over decades," he said.

Speaking in Sydney, Bastian also said that over the past six months Delta has earned back all of the $150 million it spent in 2012 buying an oil refinery from ConocoPhillips.

That investment "has turned out to be a good decision," Bastian said.

The airline covers some 75 per cent of its U.S. fuel demands from production at the Trainer plant in Pennsylvania, Bastian said. It's exchanging diesel, gasoline and other petroleum by-products with oil companies to get hold of jet fuel, in addition to the 185,000 barrels of fuel the Trainer facility produces each day, he said.

Delta's fuel bill fell $342 million in the fourth quarter due to slumping crude oil prices and higher profits at the refinery, Delta said January 21. Delta's fuel costs in the 2013 fiscal year fell to their lowest level in six years as a percentage of total expenses, according to data compiled by Bloomberg.

- Bloomberg