Delta Eyes New Flights to India after Gulf Deal

Delta Air Lines Inc. Chief Executive Ed Bastian said an agreement between the U.S. and two Persian Gulf states affords new protections to U.S. airlines that make it worth restarting service to foreign destinations that could include India.

“We can now go back into markets that we’ve been run out of,” he said Monday in an interview.

Hours after the U.S. and the United Arab Emirates reached an agreement, a diplomatic spat broke out over its interpretation.

Gulf carriers such as Emirates Airline for years have been taking market share on flights to India and Africa from U.S. and European airlines. U.S. airline executives and some lawmakers have argued that Gulf carriers have illegal government backing to buy jets and set fares at below-market price.

The U.S. and the United Arab Emirates on Monday said they’d resolved the dispute, mirroring a deal struck earlier this year between the U.S. and Qatar.

However, White House adviser Peter Navarro later told airline industry leaders that the U.A.E. had agreed to freeze additional flying between the emirate and the U.S. via Europe.

U.A.E. officials said the issue hadn’t been raised in months of talks.

United Continental Holdings Inc. UAL -0.42% is the only U.S. carrier that flies direct to India, from its hubs in Newark and Chicago. American Airlines Group Inc. AAL -0.33% dropped its Chicago-to-New Delhi service in 2012, three years after Delta ended a flight from New York to Mumbai. Delta also stopped a Mumbai flight operated via Amsterdam in 2015.

Gulf carriers such as Emirates deny they receive illegal subsidies. They say they have expanded consumer choice by offering more flights, lower fares and better service than their U.S. airlines and their European partners such as Deutsche Lufthansa AG and Air France-KLM SA.

European officials are also in discussions with Persian Gulf states over alleged airline subsidies.

The new agreements commit Emirates and Etihad Airways in neighboring Abu Dhabi, as well as Qatar Airways, to improve financial disclosures and avoid doing business at low prices with service companies that are in turn subsidized by Gulf governments.

Gulf government officials said financial transparency was important, but the new agreements left airlines free to operate as before.

“U.A.E. and U.S. airlines will continue to have complete commercial flexibility to add or adjust service to meet travelers needs,” said U.A.E. Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan.

Emirates, the world’s largest carrier by traffic, said it welcomed the U.S.-U.A.E. agreement but that it wouldn’t curb existing flights and retained the right to expand services to the U.S., including flights via Europe.

The U.S. pacts with the U.A.E. and Qatar preserve existing open-skies aviation deals that allow unlimited direct flying between the two nations. The pacts also protect other benefits including rights for U.S. cargo carriers such as FedEx Corp. to operate a hub in Dubai.

The U.S. has such deals with more than 100 countries, with China a notable exception.

The Chinese government still controls the country’s largest airlines, which in recent years have rapidly expanded service to the U.S. and started funneling passengers and cargo from other countries through their own airport hubs.

American CEO Doug Parker has said state subsidies to Chinese carriers are “nothing close” to the level secured by Gulf carriers.

Still, Mr. Bastian said the subsidies stood in the way of open-skies deals.

“That would be a discussion at the table before an agreement was reached,” he said.

Delta has a 3.6% stake in China Eastern Airlines Corp. Ltd. American—which also campaigned against the expansion of Gulf carriers-—is allied with China Southern Airlines Co. Ltd.

“We will see what happens if we ever get to open skies with China,” Mr. Parker said in an interview earlier this year.

The U.S. and China haven’t held talks on liberalizing their aviation deal for several years. However, airline executives said an opportunity may emerge next year when new capacity becomes available at congested airports in Beijing and Shanghai.

Write to Doug Cameron at doug.cameron@wsj.com

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