Transport Commissioner starts long battle against Gulf aviation subsidies

Transport Commissioner Bulc will take a step-by-step approach on Gulf aviation subsidies. [Federation European Cyclists]

Transport Commissioner Violeta Bulc is seeking to level the playing field between European aviation companies and their rivals from the Gulf states, where heavy subsidies have given these big airlines a clear advantage.

Bulc spoke to EURACTIV.

Commissioner, you will visit the Gulf countries this weekend (8-10 November). When do you expect to ask for a mandate to negotiate a new agreement with these governments?

My visit to the Gulf countries is my first trip. I am travelling there with a clear mission. Firstly, to establish a good relationship with these countries. This is really important for me, because Gulf countries are an important partner especially in aviation, but we see potential also in other areas. Our goal is also to build trust. This will be my primary goal. More specifically, we will discuss the aviation sector. We already have very strong relationship with Gulf countries but of course there is room for improvement. We have established some core elements of our relationship.

Europe is the market through which they grew, which means that Europe has a well-developed market. On the other hand, they are one of the strongest investors in Europe. They are buying 50% of Airbus A380 capacities. This is an important factor.

And for Europe?

For us, Gulf countries are a great opportunity for exports, not only of industrial products but also standards and frameworks. It is important to continue developing with them a global understanding of development of aviation space. They are becoming important players. So we have already elements on which we can capitalise.

Naturally we are moving toward a more comprehensive agreement with them, which is one of the primary goals of the aviation package we are submitting to the college in December.

I can confirm that we will ask the Council for open and flexible mandate within which we can negotiate the terms for full mutual cooperation. [During this visit] I will talk about the basic lines of this agreement, especially to pave the way forward in the negotiation.

Which are the key elements of the mandate you are seeking?

I don’t want to go into details but of course we will speak about the conditions that are mutually agreeable, and for sure establishing a level playing field. And I will try to assess their willingness to discuss a broad and comprehensive agreement.

When do you expect to receive the mandate from the Council?

I am hoping March or April of next year.

How big is the problem of subsidies and why isn’t your current relationship with the Gulf countries able to deal with it?

There has been a lot of hype about it. We are oversimplifying the issue. But I will make sure that, in our dialogue, European interests are fully represented. I would really try to seek commonly inclusive solutions.

You have had European and US companies contacting you…

European airlines want to have equal, level playing field. Full stop. We will go into this direction.

Is it not equal now?

Well, we don’t have a comprehensive agreement yet.

How far do you intend to go to address the issue of subsidies?

We want a level playing field, which it means that the rules are respected in both sides. Of course, there will be also elements of social issues, of subsidiarity. I hope I would convince them that this is the right way to go.

Since European companies are not heavily subsidized like in the Gulf Countries, does it mean that once the agreement is reached the Gulf countries will not be able to subsidise their companies at the current level?

I would like just to make sure that we open up completely how the basis for our agreement will look like. I cannot speak about details now. This is not only my story. I am representing the entire European aviation sector. I am in close contact with all players of the European market. I even received a letter from three major airlines encouraging us to enter into this comprehensive agreement with the Gulf countries which we are willing to do.

When you say ‘level the playing field’ it means that it is not level today. So for those below it means you will raise them, and for those a bit above you will have to lower them. Is it what you mean?

No, I want to be very clear. I will ask for a mandate to the Council and the member states will have to decide in an unanimous way how far we can go. All [bilateral] agreements in place right now will continue. We will not downplay any of the [bilateral] agreements in place. Everything that we will negotiate on behalf of the EU will be in addition to them. But as soon as we have a mandate, all the negotiations ongoing, and not completed yet, will cease. The European negotiation will take over.

In your to-do list subsidies must be part of the discussion. Will you raise it already this weekend?

Yes of course it will be part of my list, but I am not going to raise it. First we need to build trust. Otherwise there will be no basis for the negotiations. I will try to find elements on which we fully agree and anchor them as the elements of a first step. These are investment, access to market under European rules. These rules are very clear: 49% is the limit for the stake of a foreign company, and we are very strict on that. We will also present them [with] the European investment plan.

We will discuss also future steps in the global aviation market, decarbonisation, and we will present our developments in standards and regulatory frameworks, which may be very interesting for them. If we see that there is a good energy flowing, we will enter slowly in more challenging topics probably next year.

Another issue you mentioned is the social aspect. How concerned are you about the social conditions of employees there?

Right now I am not going to interfere. I am a bit reluctant to speak now because the social element is part of the aviation strategy to be submitted to the college of commissioners on 2 December.

The social conditions in the aviation sector are currently not the same in Europe and Gulf countries. Does it mean that these countries will have to raise their standards?

It will be a topic of the discussion, but not now. Rather next year, when we will know where we really stand, how far we can go and what is the EU position.

In Europe there is an issue with the social conditions, notably with low-cost airlines. It has been denounced as a case of social dumping. What is your view?

Yes, there are issues with it here in Europe. What is important for me is that we lead the European aviation industry to the next century. We are setting up the foundations in the field of IT, digital capabilities, bringing new services. We can see that there is willingness for change.

Specifically, do you believe that self-employed contracts for pilots are acceptable?

It is a very specific question. I haven’t thought about it. If it comes to the table from the stakeholders’ side we will consider discussing every good proposal that has consensus.

Will the social conditions of the aviation sector improve once this aviation strategy is in place?

These conditions have to be clear, predictable and agreed upon. From the consumer point of view, my long-term ambition is start creating conditions at a global scale to make available affordable prices.

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