LH Chief Says Gulf Competitors May Face Limitations

Gulf carriers could face limitations on destinations and frequencies into Germany when the bilateral air agreement between the Gulf States and the European Union is addressed this year, the chief executive of Lufthansa Carsten Spohr said.
Meanwhile, FedEx had warned against ‘cold wind’ of U.S. protectionism.

Lufthansa helmsman Carsten Spohr
Lufthansa helmsman Carsten Spohr

Speaking at a press conference during the annual general meeting of IATA in Miami, Spohr said Lufthansa had long been complaining about Emirates Airline, Qatar Airways and Etihad Airways and their aggressive expansion, first in Europe and now in the U.S.
He added that he welcomed American Airlines, Delta Airlines and United Airlines to the dispute over whether the three Gulf carriers are unfairly competing against legacy airlines.
Spohr claimed that six hubs and their airlines in Europe are mostly affected by the rising influence of Gulf airlines.
“In Europe, I would say there are five or six hubs that are affected because they are depending on the transfer traffic to Asia,” he was quoted as saying. These are “Amsterdam, Paris, Munich, Frankfurt, Zurich, and Vienna. The airlines of those hubs are the ones that are taking position (against Gulf carriers).”

Herr Spohr urges the WTO to examine the Gulf carriers’ practices
Spohr added that for Lufthansa the number and amount of flights between Europe and South East Asia has been reduced “dramatically” because of the state aided Gulf airlines. “Lufthansa is now down to three destinations in South East Asia,” he said.
He called on regulators to look to the World Trade Organization (WTO) and its mechanism used to determine whether unfair competition and/or illegal subsidies exist.
“Let’s look at the WTO to see what we can learn from there. This discussion I want to start, from the industry to the public,” he said.
But not all (European) airlines agree with Lufthansa. International Airlines Group (IAG), the mother company of British Airways and Spain’s Iberia, has refused to join the subsidy debate. IAG also augmented its ties with Qatar Airways when this year it sold a near 10% stake to the Doha-based airline.

JetBlue steps in
In the U.S., JetBlue Airways joined the debate by saying in a letter to the secretaries of the State, Commerce and Transportation departments that the rules for airline alliances are hurting consumers.
American, Delta and United airlines use international alliances with antitrust protection to stifle competition and control pricing, JetBlue alleged, adding that U.S. regulators should review the agreements known as "immunised joint ventures" to ensure they are "truly benefiting the traveling public." The accords should be re-examined periodically, the airline said.
"Left unchecked, this U.S. government-sanctioned collusion will continue to stifle innovation and competition in international aviation and will directly harm JetBlue and consumers," said the letter signed by Robert Land, senior vice president for government affairs.

U.S. integrators warn of ‘cold wind of protectionism’
Meanwhile, express operator FedEx, which together with rival United Parcel Service (UPS), has three times as many employees as the U.S. carriers combined, warned the White House that any action it may take could be interpreted as “the cold wind of U.S. protectionism.”
FedEx, which is expanding its hub in Dubai, told federal regulators that “we would potentially be subject to the greatest harm” if the U.S. moves against its Gulf competitors.
“We just don’t see how we could be kept out of the potential crossfire, even if it was not the intent of the Big 3 (US airlines) to involve us,” FedEx managing director Nancy S. Sparks wrote in a formal filing to the U.S. Department of Transportation. In its 11-page filing, FedEx argues strenuously against any U.S. action.
The integrator says U.S. airlines exploited the Open Skies agreements to build their international network with code sharing and eliminating competitors by banding with foreign airlines. But now, FedEx contends, they are “making it appear that U.S. international aviation policy must be formulated first and foremost to secure U.S. airlines’ profits.”
“In this case, we believe the consumers should be allowed to be the winners,” Sparks wrote, an allusion to the belief that competition from gulf carriers may bring about lower ticket prices in the near term.

Nol van Fenema

Write a comment

Comments: 0