MEPs call for strong action against subsidies for Gulf airlines

The Commission believes that European companies' difficulties are due to the lack of implementation of the Single European Sky framework, and the need to boost innovation. [Aero Icarus]

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

Otherwise, the oil-rich Arab monarchies should face “legal consequences” once new aviation agreements are reached, according to a resolution approved by the plenary on Wednesday (11 November).

The aviation sector in Europe faces an uphill battle due to existing barriers between member states, the need to revamp national companies and airports, and the risk of unfair competition from rising Asian firms, and especially Gulf airlines.

Ringing the alarm bell, MEPs urged the European Commission to seek a comprehensive mandate from the Council “as soon as possible” to start negotiating an agreement with Gulf Cooperation Council (GCC) countries.

The aim is to “ensure a level playing field for European airlines and airports” by including an “effective fair competition clause”, the resolution said.

>>Read: Commission working on law tackling unfair subsidies to non-EU airlines

In order to ensure the effectiveness of an agreement with Gulf states, lawmakers want to include a safeguard clause that “defines an offence and the legal consequences of its violation”, the text said.

The resolution, put forward by the centre-right European People’s Party (EPP), the Socialists & Democrats (S&D), and the Alliance of Liberals and Democrats for Europe (ALDE), passed by 428 votes to 149, with 53 abstentions.

During the debate, legislators warned that European companies cannot compete against airlines subsidised by oil-rich nations. “Airlines need assurances that they can work in a fair competitive environment” while foreign companies need to respect EU standards, commented Marian-Jean Marinescu (EPP).

MEPs urged the EU executive to revise existing rules in order to tackle more effectively unfair practices that distort the market, such as subsidies and state aid awarded to airlines from non-EU countries.

The Commission is ready to guarantee a level playing field and to revise competition clauses with non-EU countries. These elements will be part of a comprehensive “aviation package” of legislation the EU executive will announce in early December. The package will also include a series of mandates to negotiate aviation agreements with various countries and regions, including the Gulf states, China and the ASEAN countries.

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

However, the Commissioner for Transport, Violeta Bulc, played down the impact of subsidies on the difficulties affecting the aviation sector in Europe. Bulc told MEPs that the use of “alleged” subsidies by Gulf airlines and the related “negative consequences” in Europe still remain to be proven.

Instead, she told the plenary that the current downturn was caused by the fragmentation of the EU aviation landscape, the lack of implementation of the Single European Sky, insufficient infrastructure and the need to boost innovation in the sector.

She stressed that Europe should not be “afraid” of the fast-evolving global market, but instead engage in shaping this new world.

Bulc acknowledged however that the companies from Asia and the Middle East represent a “strong competition”, saying European companies should be “well-equipped” to compete against them. In this regard, she said that the future agreements with these regions would help to prevent distortions in the market.

Social and safety concerns

Meanwhile, MEPs were equally concerned about the social conditions in the sector, in particular some “problematic business practices”, the resolution said. The text named the “atypical forms of employment” such as “bogus self employment” or zero-hour contracts, “which may have potential safety implications”.

>>Read: Zero-hour pilot contracts threaten air safety, says study

Bulc agreed that there are “many social matters that need to be addressed”. But she emphasised that “the most important thing” to address these concerns was to maintain a strong social dialogue. “And I think we established the conditions in the high-level conference A social agenda for transport, in June 2015,” she said.

The Commissioner explained that the executive will soon publish a report on the working conditions in the companies and airports, while the European Aviation Safety Agency (EASA) has set up a working group on how safety and conditions are affected by new business models.

EASA will gain new powers under the upcoming aviation strategy. MEPs welcomed the intention to increase the agency’s responsibilities, to become the single aviation authority in the EU in the field of safety and security measures of commercial air transport, and drones.

However, some MEPs from the Greens and left groups missed additional efforts to address the worsening social conditions and to tackle the growing emissions from this sector.

In Bulc’s view, innovation and technology could play a key role to reduce the aviation sector’s carbon footprint. Meanwhile, she said the executive n will do “everything” to agree on solutions at a global level, in order to cut CO2 emissions from flights. 

Over the next 20 years, global air traffic growth is projected to increase at a rate of 5% a year, while air traffic in Europe will grow at a rate of 3.5%, according to the US aircraft maker Boeing.

In 2014, the number of passengers travelling by air in the EU amounted to 849.4 million, an increase of 4.4 % compared with 2013 and of 16.9 % compared with 2009.

The European airlines are expected to go through a period of consolidation in the coming years. The number of major airlines is still quite high compared to the US. Tough competition from low-cost carriers and and Middle Eastern airlines is expected to further support this consolidation. More than 20,000 job cuts have been implemented or scheduled by European airlines since 2012.

The European Commission will present in December a strategy to boost the competitiveness of the European aviation industry, to strengthen European airlines, airports and the aeronautic industry, and to ensure a level playing field in the global market, while setting out a long-term strategy for Europe’s aviation sector;

This sector generates a turnover of around €100 billion per year. In 2012 the air transport economy in Europe directly supported 2.6 million jobs and contributed more than 2.4 % of EU GDP.

>> Read: Clear skies for aviation industry, turbulence ahead for EU airlines

  • Early December: European Commission announces an aviation strategy, including a mandate to negotiate with the Gulf countries and other regions.
  • March-April: Commission expects 'green-light' from the Council to launch negotiations with oil-rich monarchies.
  • European Parliament resolution on the upcoming aviation package (11 Nov. 2015)
  • European Pilots Association (ECA)´s position paper on the upcoming aviation strategy.

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