Commission wants aviation deals with growing markets by 2019

The Commission expects an economic benefit of up to €8.4 billion during the first eight years of the agreement with the Gulf Cooperation Council. [Crazy Diamond/Flickr]

The European Commission will start negotiating comprehensive aviation agreements with United Arab Emirates, Qatar, Turkey, and countries from the Southeast Asia region, after member states gave the green light on Tuesday (6 June).

As revealed earlier this month, the technical work has almost concluded for EU Transport ministers to finalise the few remaining details during the Transport Council held in Luxembourg.

EU to finally start talks with Gulf countries on aviation agreements

With several months delay, EU member states are expected to give the European Commission the green light next Tuesday (7 June) to start negotiations with the United Arab Emirates (UAE) and Qatar on comprehensive aviation agreements that will also cover alleged subsidies given to their airlines.

As part of these negotiations, the European Commission intends to address the issue of the alleged subsidies given by the Gulf countries to their airlines to compete with the ailing European carriers.

A Commission official said these agreements will be “the right vehicle” to address Lufthansa and Air France’s concerns raised over the last months.

The Commission hopes the aviation deals will give European airlines greater access to some of the world’s fastest growing aviation markets, notably the Gulf countries and Turkey, and bring billions of euros in economic benefits.

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

Emirates airlines fears that its flying rights could be frozen if the European Commission is allowed to use aviation negotiations with Persian Gulf countries as a way to challenge state subsidies to Gulf carriers.

The executive estimates an economic benefit of up to €8.4 billion during the first eight years of the agreement with the Gulf Cooperation Council, which also includes Saudi Arabia, Bahrain, Kuwait, Oman, besides the UAE and Qatar.

Europe’s aviation industry, which contributes 110 billion euros ($123 billion) to EU gross domestic product, has been hit by the rapid expansion of Gulf airlines, such as Emirates, Etihad Airways and Qatar Airways, and shifting traffic flows to Asia.

Therefore, the Commission asked national governments in December for a mandate to start talks on aviation agreements with a number of countries, which also includes China and Bahrain.

“Once agreed, these agreements will offer new business opportunities to the whole aviation sector, new routes and better fares to passengers, whilst guaranteeing a level playing field to our companies,” said EU Transport Commissioner Violeta Bulc.

Commission mulls new measures against aviation subsidies from third countries

The issue of subsidies and “unfair pricing” in the aviation sector will be an “important” part of the upcoming talks with Qatar, the United Arab Emirates and Turkey, according to the latest draft of the aviation package seen by EURACTIV.

Commission officials explained that the institution wants to conclude the negotiations “quickly”. The ambition is to reach an agreement with these fast-growing markets by 2019.

The member states did not give a ‘blank check’ to the executive for the talks, as the national governments introduced an expiration date to the negotiation mandates.

The mandates for Turkey and the Association of Southeast Asian Nations (ASEAN) – which includes Laos, Thailand, Vietnam, the Philippines, Malaysia, Indonesia, Singapore, Myanmar, Brunei and Cambodia – will last four years, whilst the ones for Qatar and the UAE three years. The Commission will be able to ask for an extension if the talks are progressing.

However the Commission is expected to challenge the idea of a sunset clause at the EU’s top court, the official added.

In its aviation strategy adopted in December 2015, the European Commission highlighted its intention of negotiating comprehensive aviation agreements with high-growth markets in Asia and the Middle East.

Such a strategy "can contribute to improving market access and investment opportunities for European aviation in important overseas markets, increasing Europe's international connectivity and ensuring fair and transparent market conditions for EU airlines,” the Commission said.

The EU has reached aviation agreements with Canada, Georgia, Israel, Jordan, Moldova, Morocco, US, and the Western Balkans. An agreement with Ukraine is ready to be signed, while the EU authorities are negotiating similar deals with Australia, Azerbaijan, Brazil, Lebanon, New Zealand, Tunisia.

Now the Commission is requesting to open negotiations with Armenia, China, Mexico, and Turkey as well as groups of nations, including ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar/Burma, Philippines, Singapore, Thailand, Vietnam), and Gulf countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates),

Out of the 335 million passengers that flew in and out the EU in 2014, 42% were covered by external aviation agreements already signed, and 72% would be covered if all proposed deals are reached.

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