EU seeks new air traffic agreements in Gulf carrier battle

Mon Dec 7, 2015 1:27pm EST
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By Julia Fioretti and Victoria Bryan

BRUSSELS/BERLIN (Reuters) - The European Commission is seeking a new European-wide air traffic agreement with Gulf states as a way of boosting European airlines against what some of them have termed unfair subsidies enjoyed by Middle East-based rivals.

Europe's aviation industry, which contributes 110 billion euros ($119 billion) to EU gross domestic product, has been hit by the rapid expansion of Gulf airlines and shifting traffic flows to Asia.

The EU executive, in a package of proposals unveiled on Monday to boost the competitiveness of Europe's aviation sector, asked national governments to give it a mandate to start talks on air transport agreements with a number of countries including China, Turkey, United Arab Emirates, Kuwait and Qatar.

Such agreements, at the moment often done on a bilateral basis between the governments of two countries, would set out where and how often foreign airlines could fly into the EU, and vice versa.

Some European legacy carriers, notably Lufthansa and Air France KLM, as well as major U.S. airlines, have accused Gulf carriers of receiving unfair state subsidies, allegations they have rejected.

The Commission said it would look to include fair competition provisions in upcoming traffic rights negotiations, and would also consider measures to address unfair practices outside the bloc, "as soon as possible in 2016."

The head of European airports association ACI Europe, Olivier Jankovec, said Europe needed more "Open Skies," or unrestricted traffic agreements, along the lines of what it has with the United States, but that clarity was still needed on what constituted "fair competition".

"A level playing field is a misleading concept. The playing field will always be unlevel, for example, depending on the airline or airport's geographic position," Jankovec said.   Continued...

Violeta Bulc of Slovenia adjusts her hearphones as she addresses the European Parliament's Committee on Transport and Tourism at the EU Parliament in Strasbourg, October 20, 2014. REUTERS/Christian Hartmann