The EU Parliament and Council reached a provisional deal on tougher aviation laws aimed at protecting European passenger and cargo carriers from unfair competition. Market experts consider the agreement to be a breakthrough after years of controversial discussions within the bloc. Next, as a mere formality, the Parliament and the Council need to approve the accord.
Last week, Qatar Airways Group CEO Akbar Al Baker met with more than a dozen influential European Parliamentary members and top decision makers in Brussels. The aim of his visit was to strengthen
the relationship between the Qatari carrier and the European Union.
However, it is questionable whether his charm offensive will lead to visible results. Doubts are justified, because only hours after the Brussels-held VIP dinner was over and Al Baker was out of town again, negotiators of the EU Parliament and the Council reached an accord to shield the EU airlines from unfair protection.
The same names repeatedly
In a release published right after, the European Parliament's rapporteur for the regulation, Markus Pieper (Conservative Group) did not mince his words, criticizing public subsidies harshly. According to him “the Gulf airlines are considered to be particularly aggressive as is Turkish Airlines.” This applies to some Chinese and Russian carriers as well, he added, without naming them directly.
It is not a new discovery, but since years an open secret that particularly Middle Eastern airlines enjoy significant state subsidies in different manners, be it financial support by government bodies or public banks to grow their fleets, the granting of ground handling privileges, state-tolerated employment contracts that are contrary to international norms, partially refunded landing fees or paybacks on fuel prices camouflaged as internal settlement.
Thorn in the flesh of commercial carriers
Public aids are a gateway for competitive distortions, enabling airlines to play foul by offering passenger fares and cargo rates below their own costs, criticizes the EU since long. A well-known strategy to gain market shares and widen the reach step by step to the detriment of their commercial competitors. Practices that have been a thorn in the side of commercially driven EU carriers that since a long time demand a tough stance from their politicians to put an end to these distortions.
However, this might turn out like Don Quixote's attack on windmills. Because there are already strong market shares of non-European subsidized airlines both in passenger and freight traffic operating within Europe like QR’s Italian offspring Air Italy.
“We have understood”
Nonetheless, with their latest decision, the EU politicians seem to have understood the complaints echoed continuously by their carriers - after years of discussing the pros and cons of tougher aviation laws to protect the competitiveness of airlines registered in one of the member states.
The deal reached by the EU negotiators means that Europe will soon have a sharp sword at hand should competition laws be breached by a non-EU carrier, charging air fares or cargo rates which are sufficiently below those offered by its EU competitors. In case of appropriately substantiated rule violation, heavy fines can be imposed or landing rights been denied.
Addressing Washington and Beijing as well
Whereby each case must be proved in which way a non-EU carrier benefited from a non-commercial advantage.
Supposedly not an easy task!
And there is another, fundamentally political and also economic aspect to the bill, as rapporteur Pieper indicates: "The U.S. and China should know that European airlines can no longer be taken advantage of in commercial disputes."
A clear message to the rulers in Washington and Beijing.