EU sharpens competition tools to face Gulf carriers’ challenge

The European Commission (EC) is set to revamp a law enabling it to impose duties on non-EU airlines or suspend their flying rights if it finds they have caused injury to European airlines, as it seeks to counter rising competition from Gulf carriers.
In a draft proposal seen by Reuters, the EU executive aims to guarantee fair competition between airlines in the bloc by tackling “unfair” business practices by foreign airlines and their governments, which cannot be addressed through open skies agreements.
These include illegal government subsidies or favorable treatment when it comes to slot allocation, ground handling services, airport charges and refueling, among others.
The proposal is likely to stoke tensions between European legacy carriers — hit by increased competition on long-haul routes and shifting traffic flows to Asia — and the three major Middle Eastern airlines.
Qatar Airways, Emirates and Etihad Airways have faced accusations of receiving illegal state subsides, which they deny.
The EC has come under heavy pressure from France and Germany as well as their flag carriers, Air France, KLM and Lufthansa, to do more to tackle the challenge posed by the Gulf airlines.
Lufthansa has started cooperating with Abu Dhabi-based Etihad. But the issue of unfair competition has not gone away, with Lufthansa CEO Carsten Spohr repeating last week that he rejected subsidies as he signed a catering deal and maintenance project with Etihad.
“It is not a secret that Lufthansa has always been and remains an opponent of state subsidies,” he said at a press conference in Abu Dhabi.
The draft law would replace the current one, adopted in 2004 to counter unfair pricing practices by US airlines on transatlantic routes. It has never been used and is widely considered to be ineffective.
Under the draft proposal, an EU member state, airline or airline association will be able to submit a complaint to the EC, which will open an investigation if there is “prima facie” evidence of a practice causing injury or “threat of injury” to one or more EU carriers.
During the probe, which should be concluded within two years, the EC may carry out investigations in the third country concerned if the government and foreign carrier have given their consent.
If the EC concludes that a European carrier has suffered injury or threat of injury because of unfair practices from a country or airline, it may impose duties or suspend “concessions, services or rights of the third country air carrier” or the rights of the third country.
However, the EC will not adopt redressive measures if their impact on EU citizens or interested parties “would be negative and clearly disproportionate compared to any advantages given to the Union air carrier(s) concerned,” according to the document.

Source: Arab News