EU considers imposing duties on Gulf carriers
Three major Gulf airlines have taken market share in last decade from more established Asia-Pacific, European and American carriers.
An Emirati man takes a selfie in front of a new Etihad Airways A380 in Abu Dhabi. (AP)
2017/02/19 Issue: 94 Page: 19
London - European airlines, long complaining of unfair competition from Gulf Cooperation Council (GCC) countries, could see a shift in their favour as the European Commission could impose duties on non-EU carriers.
The revamped law aims to guarantee fair competition between airlines by addressing business practices by foreign airlines and their governments, which cannot be addressed through open-skies agreements, a draft proposal of the measure, seen by the Reuters news agency, states.
A Reuters report said suspected unfair practices include illegal government subsidies or favourable treatment in airport charges, refuelling, ground handling services and other matters. The GCC’s biggest airlines are on the receiving end of accusations.
Emirates, Etihad and Qatar Airways — the Gulf’s leading carriers — all deny receiving illegal state subsidies and say US and EU airlines are being protectionist.
The European Commission has come under pressure, mainly from established global carriers such as Lufthansa and Air France, to do more with regards to the upstart Gulf airlines.
Reuters said that under the new draft proposal an airline or airline association from an EU-member can lodge a complaint with the commission, which will investigate with the existence of prima facie evidence of causing injury or “threat of injury” to an at least one EU carrier.
The investigation, which could last up to two years, would involve the commission looking into the non-EU country, provided its government and the carrier had given consent.
If the investigation found that a European carrier was harmed by unfair practices, the commission could impose additional taxes or suspend “concessions, services or rights of the third (non-EU) country air carrier” or the rights of the third country.
The draft law is the first since 2004, when a measure was implemented to counter alleged unfair pricing practices by US airlines on transatlantic routes but was considered ineffective and never used.
The issue with the new successful Gulf carriers extends across the Atlantic. In 2015, the United States’ biggest carriers, including American Airlines, United and Delta, initiated a programme called Open and Fair Skies, in which they asserted that Emirates, Etihad Airways and Qatar Airways had received $42 billion in government subsidies in the last decade.
The complaint by the US carriers was tied to cheaper ticket prices in once lucrative markets such as the Middle East and South Asia. American Airlines claimed it has had to drop its India route due to what it described as low, uneconomical fares set by Gulf airlines.
American, United and Delta are pressuring the US administration to renegotiate its open-skies agreements with the United Arab Emirates and Qatar.
The three major Gulf airlines have taken market share in the last decade from more established Asia-Pacific, European and American carriers. However, the rapid success of the Gulf carriers has been a tactical priority for both the UAE and Qatar.
The expansion of the three large Gulf airlines has been a strategic priority for Abu Dhabi, Dubai and Doha, which have built modern airports to serve as the carriers’ global hubs. For example, Abu Dhabi-owned Etihad received equity capital and loans from the government in the early stages of the airline’s operations.
Additionally, Qatar Airways has branched out in investing in the global aviation market. It purchased 9.99% of the International Airlines Group (IAG), the parent company of British Airways in January 2015 and increased its stake in the company to 15.01% in May 2016.