Government Affairs There's a deal with Gulf airlines, but it's a bit hazy By Robert Silk / May 15, 2018 Share 1 -- Though all sides are claiming victory, an agreement signed Friday by the U.S. and the United Arab Emirates (UAE) has no restrictions on U.S. flights for Emirates and Etihad. The Record of Discussion document, which secretary of state Mike Pompeo and the State Department commented on publicly for the first time Monday, is the latest, and perhaps the last, salvo in the dispute over government subsidies and unfettered air access that Delta, American and United have waged against Emirates, Etihad and Qatar for more than three years. The document does include language that requires airlines from the U.S. and UAE to produce audited financial statements that meet internationally recognized standards at least annually. It asserts that Emirates and U.S. airlines already issue such reports. Etihad will begin issuing such reports at least annually once it completes a restructuring that is underway. However, the Record of Discussion makes no mention of flights operated by Emirates that depart from the UAE, make stops in a second nation, and then continue on to the United States. Emirates currently operates two such routes, known in industry parlance as "Fifth Freedom" flights, with one going from Dubai to Athens to Newark and the other going from Dubai to Milan to New York. The Big 3 U.S. carriers assert that the major Gulf carriers have accepted more than $50 billion in state subsidies since 2004, violating the bilateral Open Skies aviation agreements that the U.S. has with Qatar and the UAE. In their campaign, the Big 3 and U.S. labor unions initially asked the U.S. government to put a freeze on all new U.S. routes by the Gulf carries until such subsidies were addressed. But more recently, they have scaled back their demands to ask only for a freeze on Fifth Freedom routes. In an email Monday, State Department spokeswoman Farahn Morgan said that the UAE had informed the department that Emirates and Etihad "have no current plans to make changes to the Fifth Freedom services that they operate to the United States."But in its own statement on Friday, the UAE Embassy in Washington noted that cargo carrier FedEx maintains a Dubai base and operates the most Fifth Freedom routes under the UAE-U.S. aviation agreement. "All current and future rights for both countries' carriers to fly all flights, including fifth freedom flights, remain in place as an outcome of the discussions," the embassy said. "Airlines in both countries are free to continue to add, reduce or adjust flights and services consistent with the broad provisions of the 2002 (air transport agreement)."The lobbying group U.S. Airlines for Open Skies (composed of FedEx, cargo carrier Atlas Air, Hawaiian and JetBlue) has fought the Big 3 on this issue, and it claimed victory in a statement Monday. "This resolution is a clear victory for American workers, travelers and exporters, and reaffirms the U.S. commitment to open skies," the group said. "We commend the Trump administration for its thoughtful approach and unwavering commitment to resolve this matter in a way that fully protects the rights of each party under the agreement." Despite the words of the UAE embassy and the State Department, the lobbying group for the Big 3 and the U.S. unions asserted that the UAE has committed to a "freeze" on any additional Fifth Freedom passenger flights to the U.S.The group, called the Partnership for Open & Fair Skies, also said the deal would put an end to UAE subsidies of Emirates and Etihad. "For the first time ever, the UAE acknowledged that government subsidies harm competition, a significant concession after years of denials," the group said.In addition, the agreement will require Emirates and Etihad to pay their share to operate out of their international airports, said the Partnership for Open & Fair Skies."Until now, improvements to Emirates and Etihad Airways' airport terminals in Abu Dhabi and Dubai have been subsidized by the UAE government," the Partnership said. The Trump administration entered into a similar agreement with the Qatar government in January.