Through much of 2015, the U.S. airline industry has been
divided by a fight over whether Persian Gulf carriers Emirates, Etihad and
Qatar should be sanctioned by the U.S. government for alleged violations of
Open Skies agreements.
Now, it appears that same debate is about to be reignited in
On Dec. 2, the European Commission will put forward a
comprehensive policy paper on aviation. Expected to be included in it,
according to a commission source, is a request for an open mandate from EU member
states to negotiate a Europe-wide Open Skies agreement with the Gulf nations,
most notably Qatar and the United Arab Emirates.
But even if that request gets the expected approval,
European negotiators will have to deal not only with the Gulf states and their
airlines, but with deep divisions within the EU itself.
“Whether they will reach an agreement is anybody’s guess,”
said Barry Humphreys, a former external affairs director for Virgin Atlantic
who in May ended a six-year run as chairman of the British Air Transport
Association, an industry trade group.
At issue in the European negotiations will be the same
question of state subsidies that has spurred so much rancor this year in the
U.S. The three largest U.S. airlines — Delta, American and United — assert that
Emirates, Etihad and Qatar have received $42 billion in subsidies from their
governments since 2004. If true, the subsidies would violate Open Skies
agreements by giving them an unfair advantage in the international aviation
U.S. cargo carriers and smaller airlines, however, have
strongly opposed the push by the legacy giants to block further expansion of
the Gulf carriers’ U.S. routes, arguing that open competition is best for all.
The Gulf carriers deny that they have received government
A similar debate has been playing out in Europe for at least
a decade, Humphreys said, and the dividing lines are firmly established.
The Lufthansa Group and Air France/KLM want the European
Commission to get tough on the Gulf carriers in an effort to end subsidies.
Backing those airline groups are the German and French governments.
On the other hand, the International Airline Group (IAG),
whose largest holdings are British Airways and Iberia, has questioned whether
Emirates, Etihad and Qatar are even receiving subsidies. The U.K. already has
liberal bilateral Open Skies agreements in place with the United Arab Emirates
and Qatar, Humphreys said.
The significance of the Open Skies debate in Europe is
amplified by the growth of the Gulf carriers, which saw their passenger count
nearly double between 2008 and 2013.
But according to John Strickland, owner of the London-based
airline industry analyst firm JLS Consulting, the Gulf carriers’ push into Europe has
brought plenty of economic benefits. Emirates, for example, now runs direct
flights from the medium-sized European cities Lyon, Glasgow and Newcastle to
Dubai, something no European carrier even offers.
Meanwhile, British Airways and other carriers are competing
with the Gulf airlines vigorously on routes out of Heathrow and other European
hubs. Gulf carriers are increasing price competition as well as providing
greater market access to regional cities, Strickland said.
In statements provided to Travel Weekly last week, neither
Lufthansa nor IAG appeared to be backing away from their opposing positions on
the Open Skies debate.
“Over the past decade, foreign state companies, with the
support of billions of dollars and no home markets of their own, have used
‘open markets’ to take unilateral advantage of freedom,” Lufthansa said in an
email that carefully avoided mentioning the Gulf carriers directly. “In the
absence of international competition law/subsidy rules and with no WTO
membership of aviation, no framework regulates anti-competitive behavior. This
is contrary to the meaning of free competition, which always implies voluntary
or compulsory fair play.”
IAG sounded a far different note.
“We support the full liberalization of the airline industry,
and we are concerned that protectionist sentiment is increasing, notably in the
U.S.,” the company wrote in its email.