EU plans to lower bar for airlines complaining about foreign rivals
Flag carriers allege Gulf groups are engaged in anti-competitive behaviour
Brussels has unveiled proposals to give European airlines greater powers to challenge alleged unfair practices from their foreign rivals following complaints against Middle Eastern carriers.
Lufthansa and Air-France KLM, the flag carriers of Germany and France, have long argued that Gulf airlines are engaged in anti-competitive behaviour and this year told the EU that such actions had “severely damaged European network carriers”.
EU-based airlines said they had suffered from restricted access to airport slots and ground-handling services. They complain of being forced to compete on unfair terms owing to alleged state subsidies at airlines such as Emirates, Qatar Airways and Etihad Airways. Those airlines deny the accusations.
US airlines have also raised concerns. Three big American carriers last year lodged a trade complaint with the US government after claiming to have documented billions of dollars of state subsidies to Gulf carriers.
The EU’s proposals, which have to be cleared by the European Parliament and Council, lower the bar for airlines or member states to launch a complaint against foreign rivals. A 2004 law against unfair competition in aviation has never been used, with European airlines complaining the burden of proof to submit a complaint was too high.
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Member states, airlines, or the European Commission itself will be able to launch a complaint based on “foreseeable” harm from anti-competitive practices, including restricted access to services such as airport slots or refuelling.
If the commission finds a foreign airline has broken the rules, it can issue the country with financial duties and restrict the services that the airline receives at European airports.
The news comes at a difficult period for Middle Eastern carriers, which have been hit badly by the Trump administration’s laptop ban, restrictions on immigration procedures and the collapse in the oil price.
In May, Emirates revealed that profits plummeted 82 per cent in the past year — its first full-year profit decline for five years. Bookings for the summer are “particularly worrying”, according to an internal memo seen by the Financial Times.
Qatar is also under pressure following the decision by a group of Middle Eastern countries to end ties with the oil-rich nation. The United Arab Emirates and Saudi Arabia have blocked their carriers from flying to Qatar. They have also blocked their airspace to Qatar Airways.
The commission’s new proposals were cheered by European aviation groups on Thursday, who said they were long overdue. “The new rules tabled today should provide an objective, transparent and robust process to investigate alleged distortions of competition in air transport,” said Olivier Jankovec, European director-general of Airports Council International.
“This will hopefully allow us to move on from mere allegations and somewhat sterile debates to established facts and legal action, where needed.”
Brussels also published guidelines to help member states understand its strict rules on control and ownership, which limit foreign buyers to 49 per cent of an airline.
The guidelines were published as Alitalia looked for a buyer after entering administration.
It is still unclear how airline groups such as IAG, Ryanair and EasyJet will meet ownership requirements once UK nationals are no longer considered EU nationals after Brexit.
https://www.ft.com/content/04657c80-4c3c-11e7-919a-1e14ce4af89b