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Thu 2 Jun 2016 01:59 PM

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Emirates hits out at Lufthansa 'hypocrisy' over $1.2bn subsidies

Dubai carrier highlights German gov’t criticism of deal between Lufthansa and Munich airport

Emirates hits out at Lufthansa 'hypocrisy' over $1.2bn subsidies

Emirates has lashed out at rival Lufthansa after a report in a German newspaper showed that the European airline had been provided with benefits worth $1.2 billion from one of its hub airports.

In the latest edition of its in-house journal, Open Skies, the Dubai carrier referred to the practice, revealed by Süddeutsche Zeitung, as ‘hypocrisy’.

The Munich-based newspaper cited a previously undisclosed report from the Bavarian Supreme Audit Office (ORH), which criticised an agreement between Lufthansa and the owner of Munich Airport that allowed the carrier exclusive use of a new terminal for 20 more years than had previously agreed.

The ORH report said that the agreement resulted in an economic benefit to Lufthansa of almost $1 billion.

In addition, a decision to prevent Lufthansa from paying more than market rents at the terminal from 2051 onwards will result in an additional $200 million gain for the airline – potentially violating EU subsidy rules in the process – the ORH report said.

“Emirates has exclusive use of Terminal 3 at Dubai International, but we do not benefit from preferential rates on landing charges or rents,” the Dubai airline said in the article.

“In fact, we pay the same fully published landing charges and rents as other airlines, and have done since the airport was built.”

The article is the latest spat in a long-running war of words between Emirates and Lufthansa, which has come under increasing pressure not only from long-haul carriers in the Gulf but also the rise of low-cost carriers at home in Europe.

Last year, Lufthansa chief executive Carsten Spohr claimed that Emirates did not pay taxes or participate in emissions trading schemes, accusations that the Dubai carrier denied. The German airline has also accused the Gulf airlines of receiving government subsidies, thus curbing its ability to compete.

In May, Lufthansa reported a net loss of $9.2 million in the first quarter, compared to a profit of $476 million in the same period a year earlier.

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