EU considers imposing duties on Gulf carriers

Sunday 19/02/2017
An Emirati man takes a selfie in front of a new Etihad Airways A380 in Abu Dhabi. (AP)

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.