The European Commission has announced it is prepared to dilute its requirements on foreign investment for European airlines — which cap non-European ownership of EU airlines at 49 per cent — through deals with individual countries.
But the rules will only be loosened for states that agree to abide by stricter regulations on state subsidies, which have become a bone of contention between some EU legacy airlines and carriers based in the Middle East.
The changes come as the EU attempts to boost the competitiveness of the European aviation industry, which has been hit by the rise of lower-cost rivals such as the Gulf airlines and the emergence of rival airport hubs in Asia and Dubai.
Over the past decade, Etihad, Emirates and Qatar Airways have grown from relatively small players to global challengers on many routes.
This year, the big three US airlines — American Airlines, United Airlines and Delta — asked Washington to review the Gulf carriers’ access to the US market, saying the $42bn in subsidies the state-controlled carriers are alleged to have received in the past 10 years breached international open skies agreements.
The debate has also intensified in Europe, with both Lufthansa and Air France-KLM repeatedly expressing concern about whether they are competing on equal terms with the Gulf airlines.
Violeta Bulc, the commissioner responsible for the EU’s transport policy, called the shift “economic diplomacy”, but she refused to say whether Gulf carriers benefited from “unfair” subsidies from their home states. “There has been lots of hype about that, but strong fair negotiation is a good answer to that,” she said.
All three carriers deny benefiting from state subsidies.
The European Commission will rip up its current rules on state subsidies within the airline industry, arguing that they are “not considered effective”. Although foreign investors are banned from owning a majority of an EU airline, critics in Brussels and in the industry suggest that this rule is widely flouted. Ms Bulc admitted that enforcing such rules was “hard”.
The commission will propose that it leads EU-wide negotiations with countries such as China and the United Arab Emirates. At the moment, these types of deals are done by national capitals. “Part of the negotiation — a strong component — will be an equal playing field and reciprocity,” said Ms Bulc. “If someone wants to play a role in the EU markets, they have to play by European rules.”
Etihad, which owns stakes in the European airlines Alitalia and Air Berlin, said it looked forward to a “pro-aviation” EU strategy that would enhance the competitiveness of European carriers.
Financial Times 7/12/2015
https://next.ft.com/content/246e2500-9c0b-11e5-b45d-4812f209f861?ftcamp=crm/email/2015127/nbe/EuropeBusiness/product
But the rules will only be loosened for states that agree to abide by stricter regulations on state subsidies, which have become a bone of contention between some EU legacy airlines and carriers based in the Middle East.
The changes come as the EU attempts to boost the competitiveness of the European aviation industry, which has been hit by the rise of lower-cost rivals such as the Gulf airlines and the emergence of rival airport hubs in Asia and Dubai.
Over the past decade, Etihad, Emirates and Qatar Airways have grown from relatively small players to global challengers on many routes.
This year, the big three US airlines — American Airlines, United Airlines and Delta — asked Washington to review the Gulf carriers’ access to the US market, saying the $42bn in subsidies the state-controlled carriers are alleged to have received in the past 10 years breached international open skies agreements.
The debate has also intensified in Europe, with both Lufthansa and Air France-KLM repeatedly expressing concern about whether they are competing on equal terms with the Gulf airlines.
Violeta Bulc, the commissioner responsible for the EU’s transport policy, called the shift “economic diplomacy”, but she refused to say whether Gulf carriers benefited from “unfair” subsidies from their home states. “There has been lots of hype about that, but strong fair negotiation is a good answer to that,” she said.
All three carriers deny benefiting from state subsidies.
The European Commission will rip up its current rules on state subsidies within the airline industry, arguing that they are “not considered effective”. Although foreign investors are banned from owning a majority of an EU airline, critics in Brussels and in the industry suggest that this rule is widely flouted. Ms Bulc admitted that enforcing such rules was “hard”.
The commission will propose that it leads EU-wide negotiations with countries such as China and the United Arab Emirates. At the moment, these types of deals are done by national capitals. “Part of the negotiation — a strong component — will be an equal playing field and reciprocity,” said Ms Bulc. “If someone wants to play a role in the EU markets, they have to play by European rules.”
Etihad, which owns stakes in the European airlines Alitalia and Air Berlin, said it looked forward to a “pro-aviation” EU strategy that would enhance the competitiveness of European carriers.
Financial Times 7/12/2015
https://next.ft.com/content/246e2500-9c0b-11e5-b45d-4812f209f861?ftcamp=crm/email/2015127/nbe/EuropeBusiness/product
