EU makes slow progress on aviation deals with Gulf countries

The EU wants to reach agreements with the Gulf nations to open their markets while addressing the alleged unfair practices. [Kiefer/Flickr]

Member states have not even started discussing the mandate for the European Commission to negotiate agreements with fast-growing aviation countries in the Persian Gulf, despite a push from Brussels to get the green light by early spring.

As part of its aviation strategy presented last December, the Commission announced it will seek approval from member states to begin negotiating with various countries and regions to “deal with possible unfair commercial practices in international aviation”.

EU plans measures to even competition with non-EU airlines

The European Commission is considering new measures to tackle what it sees as unfair competition from non-EU airlines as part of a package of proposals unveiled on Monday (7 November) designed to boost the competitiveness of Europe’s aviation sector.

Some major European airlines, including Air France and Lufthansa, consider some companies from the Gulf Countries like Emirates, Qatar Airways or Etihad represent unfair competition because they are subsidised by oil-rich monarchies.

Violeta Bulc, the EU’s Transport Commissioner, said market access agreements with Gulf countries would ensure a level playing field with competitors there.

Bulc expects a go-ahead from member states in March or April to kick off the negotiations as soon as possible, she told EURACTIV in an interview last November.

Transport Commissioner starts long battle against Gulf aviation subsidies

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.

But the 28 national governments have not even started to discuss these mandates, EU officials confirmed to EURACTIV.

To date, the European Council’s working group has only held a broad discussion on this issue and it is expected to address the individual mandates only in the second half of March.

A spokesperson for the Dutch EU presidency said The Hague still hopes to agree a mandate for the executive during the first half of 2016, when the Netherlands holds the rotating presidency of the Council of Ministers, which represents the 28 EU member states.

But there are still some outstanding issues and the mandate “has to be one with broad support and one that will enable the Commission to indeed come to an agreement” at the end of the process, the spokesperson said.

National representatives explained that there are some legal issues to be ironed out and capitals disagree over the length of the mandate to be given to the executive for the negotiation.

The Commission sought to play down the delay, with one official insisting the Council was not necessarily progressing slower than expected.

“It is all on track, but it was clear from the beginning last December that it would not be a process of one or two months. The dynamics have now started. The objective remains the same: having an agreement with the UAE and other countries in the not too distant future,” the official explained.

The informal Transport Council in April, and the regular one in June, will be “two important milestones” to make progress in this field, the Commission official noted.

Safety agreements

Despite slow progress with Gulf states, the European Commission welcomed the Council’s approval on Monday (7 March) to open negotiations with China and Japan to reach Bilateral Air Safety Agreements.

These agreements help to remove the duplication of oversight activities and support mutual safety recognition between the EU and third countries.

The EU has already concluded aviation safety agreements with the United States, Brazil, and Canada.

“The new Bilateral Air Safety Agreements we are pursuing will offer European companies new business opportunities in China and Japan, two key aeronautical nations,” Bulc said in a statement on Tuesday (8 March).

She stressed that these new agreements would bring opportunities to European companies by facilitating exports of aeronautical services to these countries.

These safety deals “with important aeronautical manufacturing nations such as China and Japan” were included in the December Aviation strategy. During the talks, the Commission will be supported by the EU’s European Aviation Safety Agency.

The EU and China have strengthened their aviation relations over the last years, as the country is one of the fastest growing aviation markets in the world. Brussels also eyes launching negotiations on a comprehensive aviation agreement with Beijing and the Association of Southeast Asian Nations (ASEAN) in the months to come.

According to estimates from the EU executive, the Asia-Pacific region will represent around 40% of the world air traffic in two decades, a major opportunity for the aviation sector in Europe.

MEPs call for strong action against subsidies for Gulf airlines

The European Parliament called for fair competition from the Gulf countries in the aviation sector.

The EU aviation sector directly employs between 1.4 million and 2 million people and overall supports between 4.8 million and to 5.5 million jobs. The direct contribution of aviation to EU GDP is €110 billion, while the overall impact, including tourism, is as large as €510 billion.

The EU aviation strategy presented by the European Commission in December 2015, includes three key priorities:

  • Tapping into growth markets, by improving services, market access and investment oportunitites with third countries, whilst guaranteeing a level playing field;
  • Tackling limits to growth in the air and on the ground, by reducing capacity constrains and improving efficiency and connectivity;
  • Maintaining high EU safety and security standards, by shifting to a risk and performance based mindset.

As part of the package, the Bilateral Air Safety Agreements with third countries, such as China and Japan, aims at facilitating the cooperation in the aviation safety domain, including certification, testing and maintenance of aeronautical components, air operations, flight crew licensing, air traffic management and airports.

They are expected to reduce the transaction cost of exporting aircraft, while ensuring high levels of safety in partner countries and helping to harmonise product standards worldwide.

China is the eleventh largest market for the EU aviation sector (7.2 million annual passengers), while Japan is the sixteenth largest market (five million annual passengers).

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