European Airports Support Gulf Carriers; Lufthansa Group Decries "Loss of Connectivity" at European Hubs

The three Gulf carriers, which are under attack by the three largest U.S. carriers and their competitors in Europe in an ongoing row over subsidies, have won the support of Europe’s airports and tourism boards.
Meanwhile, Lufthansa and Air France-KLM are increasing their pressure on their Arabian competitors by calling on the authorities to ensure a level playing field as a prerequisite for fair competition.

Arnaud Feist, President of ACI Europe and CEO of Brussels Airport  /  source: hs
Arnaud Feist, President of ACI Europe and CEO of Brussels Airport / source: hs

A report, commissioned by the Airports Council International (ACI)-Europe and the European Travel Commission (ETC), supports the fast growth witnessed by the Gulf carriers and claims the support the three airlines receive from their governments is a “legitimate economic development policy.”
Arnaud Feist, president of ACI Europe and CEO of Brussels Airport, said: “The European airlines attacking their Gulf competitors are our long-time partners. For many of us, their fate is also our fate. They are right in saying that the expansion of these airlines is a fierce challenge for European aviation. But the issues they are raising in this context and the remedies they are proposing are the wrong ones."
Feist added that: "Open Skies and fair competition need to go hand in hand. But Europe’s airports do not regard the public financing of airport infrastructure, start-up aid for airlines and more favorable fiscal regimes as necessarily involving unfair competition – but rather as legitimate economic development policy choices, made by the Gulf States.”

The Gulf Airlines’ growth has exceeded normal patterns…
Meanwhile, Lufthansa Group, the largest European aviation group, said earlier this month the U.S. and EU must collectively resolve the subsidies row, which it says is effectively a trade dispute.
The group, which includes Lufthansa German Airlines, Austrian Airlines, Swiss International Air Lines, Germanwings, Eurowings, Cityline and Lufthansa Cargo, outlined its concerns to U.S. officials over the “unprecedented growth of the three Gulf carriers” in the EU and U.S. markets, which it claims has exceeded normal patterns.

…leading to excessive capacity and shifts of traffic flows
in a letter to the US Department of Commerce, U.S. Department of State and the U.S. Department of Transport, Thomas Kropp, senior vice president head of group international relations and government affairs at Lufthansa Group, said the growth of Etihad Airways, Emirates and Qatar Airways was six times that of the European airlines.

“The capacity growth of the Gulf carriers is far higher than what all other international carriers are able to accomplish in the market. In the case of Europe, average annual growth in seats between 2004 and 2014 was 16.5 percent for the Gulf carriers and only 2.7 percent for all other European airlines,” said Kropp in his letter.
The “excessive capacity” had led to a shift in traffic flows, with “80 percent of passengers occupying seats in an aircraft of the Gulf carriers are flying beyond the Gulf hubs to destinations in Asia and Africa,” the letter claimed, citing data from the European Commission. The shift in patterns has led to a loss of connectivity at Lufthansa Group’s European hubs at Frankfurt, Munich, Vienna, Zürich and Brussels, he stated. Cargo flows are similarly affected.

Air France-KLM calls for fast action
 “Today about 3.1 million passengers travel from and to Germany through the hubs in the Gulf instead of using direct services of German, Asian and African airlines,” said Klopp, who claimed that the airlines of the Lufthansa Group are “unable to fairly compete for the growth” in Asia and Africa.
In a similar filing to the U.S. Department of Transportation (DOT), Air France-KLM said it “fully supports” U.S. carriers - American Airlines (AA), Delta Air Lines (DL) and United Airlines (UA) - on claims raised about state-owned airlines receiving subsidies in Qatar and the United Arab Emirates (UAE).
The Franco-Dutch carrier has called for urgent action from regulators in the U.S. and elsewhere “for a reaction proportionate to the magnitude of the threat” from the fast-expanding passenger and cargo activities of the Gulf carriers. It warns that, unless action is taken swiftly, the U.S. will find itself facing in five to 10 years the level of market penetration by the Persian Gulf airlines that already exists in Europe.
It notes that “between 2004 and 2014 the Gulf carriers have increased the number of points served in Europe from 23 to 69 and their overall capacity has grown by more than 400%.

U.S. travelers are in favor of Open Skies policy
In a related development, U.S.-based has released the results of a U.S. survey, conducted online using Google Consumer Surveys, among 2,546 U.S. adults ages 18 and older.
The survey found that 89% of Americans who have travelled internationally or outside of the U.S. by aircraft agreed that they support U.S. government Open Skies policy objectives, “to lower airfares and provide more convenient travel options.” In addition, 67% of Americans agreed that, “the government should not give into U.S. airlines’ demands that foreign airline expansion into the U.S. be stopped.”
Kevin Mitchell, and Business Travel Coalition founder described the results as "a wake-up call" for the U.S. Departments of Transportation, State and Commerce. "Consumers realise the significant benefits of our Open Skies policy and see straight through the U.S. airlines’ allegations of unfair Gulf carrier competition as nothing more than blatant commercial protectionism."
The survey also found that 61% of the participants agree that U.S. airlines need more competition from foreign airlines, while a minority, or 41%, agrees major U.S. airlines are focused on the best interests of consumers. A large majority, or 76%, agrees that the Gulf airlines have increased travel opportunities and cargo transport options from the U.S. to key markets in the Middle East, India and Southeast Asia.

Nol van Fenema

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