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07/12/2016

Qatar Airways CEO voices doubt about proposed EU air traffic accords

Transport

Qatar Airways CEO voices doubt about proposed EU air traffic accords

qatar_airways.jpg

[Curimedia/Flickr]

The head of Qatar Airways on Wednesday cast doubt on proposed European Union air traffic agreements that might limit Gulf carriers from flying to European destinations because of what some see as unfair subsidies.

Qatar Airways Chief Executive Officer Akbar Al Baker said the effort, which the European Commission announced on Monday, was unlikely to gain necessary support from EU members.

>>Read: EU plans measures to even competition with non-EU airlines

“I already know five countries that have told us that they will not back this,” he said in an interview in New York.

The European Commission is seeking approval from member states to start talks on new agreements that would bolster European airlines. Violeta Bulc, the EU Transport Commissioner, said she hopes to receive a mandate from EU member states in April to open talks with Gulf countries.

>>Read: Transport Commissioner starts long battle against Gulf aviation subsidies

Al Baker’s comments come after Emirates airline also voiced concern about the proposal and amid some opposition in Europe. Ralph Beisel, head of German airports association ADV, said having fair competition clauses would have prevented Germany from reaching some recent traffic agreements.

Agreement amongst all EU member states to start negotiations on behalf of the bloc could take five years, he added.

>>Read: Emirates urges caution on EU-level aviation agreement with Gulf countries

The plan has drawn support from the head of the European airports association, ACI Europe, who said Europe needed more “Open Skies,” or unrestricted traffic agreements, like those it has with the United States, but also needs clarity on what constituted “fair competition.” Some EU airlines have received state help, but are under strict rules about repaying aid.

Major US airlines also back the EU plan and are pressing the United States to enter talks with Gulf carriers over state subsidies.

“While the Gulf carriers are dumping capacity on the US thanks to their government treasuries, the US airlines are forced to cut routes,” the Partnership for Open and Fair Skies said in a statement on Wednesday.

United Airlines said on Wednesday it would cancel Washington, D.C.-Dubai service after the US government awarded a contract for travel to JetBlue Airways Corp and its codeshare partner Emirates Airline.

“Qatar Airlines has received more than $17 billion in unfair subsidies and other lopsided benefits from its government sponsor – decimating any chance of fair competition and violating Open Skies agreements with the United States,” the partnership said.

Middle Eastern carriers say they are not receiving unfair subsidies. On Wednesday, Qatar Airways CEO Al Baker said Delta Air Lines Inc reduced Middle East flights to appear that it was getting “pushed out” but that it was stifling competition. Delta did not respond to a request for comment.

Background

Gulf carriers compete with Europe’s airlines on international flights but the subsidies they receive create distortions in the market, denting the competitiveness of EU and US carriers, critics say.

Qatar, Saudi Arabia, and United Arab Emirates airlines have received €39 billion in state aid from their governments since 2004, according to a study compiled for the big three US airlines: American, Delta, and United.

France and Germany complained about the situation at a meeting of EU transport ministers in Brussels on 13 March, saying “European airlines are losing market share against the Gulf companies, because of their unfair competitive practices, and in particular because of the significant public subsidies and guarantees they enjoy.”

Paris and Berlin called on the European Commission to end such practices by adopting a common strategy on controlling foreign airlines’ operations with traffic rights in the EU.

The EU's Transport Commissioner Violeta Bulc said she will seek a new mandate from EU countries to reopen talks with Persian Gulf states about market-distorting state aid to airlines.

She said the Commission will look not into state aid in Persian Gulf states, but also in countries like China, Brazil, and Turkey.

>> Read: Commission to review competition from Gulf-based airlines

Timeline

  • March-April: Commission expects 'green-light' from the Council to launch negotiations with oil-rich monarchies.