France and Germany are leading a call for the European Union to ensure fair competition between EU airlines and those from the Gulf region, who are accused of receiving major state backing.
Transport Ministers discussed the Franco-German initiative to ensure “fair competition” between European airlines and the Gulf carriers at the EU Transport Council meeting last week.
Both the French and German transport ministers said that they want their EU partners and the EU Executive Commission to “adopt a common strategy to bring and end to these practices.” This new move is in retaliation to Gulf carriers such as Emiratesm Etihad and Qatar Airways which have surged while many EU airlines have struggled.
European airlines are losing market share as a result of unfair competition from Gulf carriers stemming from subsidies and state guarantees, the French Transport Ministry said in a statement.
France and Germany said that Gulf carriers benefit from "major subventions and public guarantees," and that landing rights in Europe should only be granted to airlines in exchange for fair trade controls on the way companies operate.
Other member states and the European Commission are supporting the initiative and agreed that instead of renegotiating bilateral agreements with the Gulf states, the Commission will pursue an EU agreement on behalf of the member states.
EU Transport Commissioner Violeta Bulc said during the press conference which followed the Council meeting, that the new approach would also be applied to other countries, including China, Brazil and Turkey. She also said the new approach would be part of the forthcoming EU Aviation Strategy.
Any commercial flying agreement including the granting of air traffic rights to foreign carriers should be accompanied by provisions allowing member states to monitor potential illegal subsidies and unfair competitive practices, French transport minister Alain Vidalies said in a statement.
"Aviation is very much challenged by competition right now and we need to address it in a more comprehensive way," said Violeta Bulc, EU Transport Commissioner.
This new approach will offer countries such as Germany and France who are under pressure from Gulf carriers to open their markets away from the current diplomatic setup. It will allow them to simply refer to the European initiative which replaces the ongoing bilateral talks. This could delay any decision to open European markets further and adds another dimension to the “fair competition” initiative – making it harder to reach any agreements in the near future.
"The benefit of an aviation agreement for us could be to get equal opportunities and for the Gulf carriers that there is the possibility, if there is an equal opportunity again, to talk about new landing rights,” said Alexander Dobrindt, Germany’s Transport Minister.
Etihad has warned against the US and EU restricting Gulf carriers, arguing that open skies is a model of success, generating benefits for both airlines and travellers.
In his first public comments since three US airlines launched a campaign against Etihad Airways and other Gulf carriers, James Hogan, President and Chief Executive Officer of Etihad Airways has called for reasoned debate based upon facts.
His speech laid out the key facts behind Etihad Airways and its competitive strategy: “Etihad is a David, a David who’s been facing Goliaths since 2003, when we started. In virtually every market we’ve entered, we’ve had to face existing competitors, with established businesses, established infrastructure, established sales and marketing, established brands, and established customer bases."
Mr Hogan finished his speech by saying Open Skies is about customer choice: “This is ultimately all about consumer choice. Customers choose to fly Etihad Airways because we offer a great product, with outstanding service, on the routes they want to fly, at prices that are competitive within those markets."
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