Trump resists calls to crack down on Persian Gulf airlines

The Trump administration is so far resisting calls to crack down on the United Arab Emirates and Qatar for funneling more than $50 billion in subsidies into their state-run airlines, but more aggressive penalties could be imposed further down the line, according to sources familiar with the discussions.

State Department officials met with U.S. airline representatives, industry stakeholders and union leaders on Tuesday morning to discuss the United States’ international Open Skies agreements with the United Arab Emirates and Qatar, which enables them to fly to the U.S.

President Trump has been facing growing pressure from the major U.S. airlines to freeze the Gulf carrier routes because Qatar Airways, Etihad Airways and Emirates receive massive foreign subsidizes from their governments. U.S. carriers argue those subsidies have created unfair competition and threaten U.S. jobs.

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Sources familiar with the discussions said the Trump administration has declined to formally rework its international aviation agreements with the Persian Gulf nations — at least for now.

Instead of entering into “formal consultations,” which would reopen the Open Skies agreements, the administration said it will continue informal discussions with the two countries — a similar strategy used by the Obama administration.

The State Department did not return a request for comment.

Secretary of State Rex Tillerson, who has been hearing from both sides of the debate since this summer and has been actively engaged on the issue, will meet with Qatar’s foreign minster over the topic this week, said one source.

The administration will try to urge Qatar and the UAE to phase out their subsidies and use commercial financing terms when they grant loans to their own airlines, among other things.

But if the two nations are not willing to “play ball” by a certain deadline, they may see more aggressive actions from the administration in the future, such as pulling the plug on their aviation agreements or having their flights frozen, according to one source.

Critics of the Gulf air carriers say they don’t care whether discussions are carried out formally or informally, as long as the administration continues them.

“We applaud the Trump administration for taking action to level the playing field with the Gulf carriers and their massive government subsidies,” said Jill Zuckman, spokeswoman for the Partnership for Open and Fair Skies, which represents Delta Air Lines, American Airlines and United Airlines.

“Their activities are harming American jobs and the U.S. aviation industry and we appreciate that the administration is acting to resolve these issues with the governments of the UAE and Qatar.”

But supporters of keeping the current aviation agreements intact have called Tuesday’s meeting a major victory. They have long argued that the new routes have given flyers more choices, driven down prices and encouraged more air travel.

One source briefed on Tuesday’s discussion said the airlines were unable to prove that any harm had been caused by the Gulf routes.

“Anyone who supports U.S. jobs and a strong U.S. economy should be very pleased by the administration’s decision to preserve existing Open Skies agreements,” said Roger Dow, president and CEO of the U.S. Travel Association.

“The Big Three U.S. airlines’ core demand—that the administration freeze flights by airlines flagged in Qatar and the UAE, and renegotiate U.S. Open Skies agreements with those countries—was, thankfully, set aside because their arguments fell well short of the mark.”