By Robeel Haq
Lack of consumer protection, competition laws gives Gulf airlines unfair edge, says AEA boss
The head of a group representing 36 major European airlines
has accused Gulf carriers Emirates, Etihad and Qatar Airways of launching “pre-emptive
strikes” against their European rivals.
Ulrich Schulte-Strathaus, secretary general of the Association
of European Airlines (AEA), said state-linked Gulf carriers aren’t competing on
a level playing field with European airlines.
There are “no meaningful competition rules, no
consumer-protection rules, as we have in Europe,” he told Arabian Business’
sister title Aviation Business. “We do not believe there is a level playing
field between the European and the Gulf carriers.”
His comments come in response to an open letter published by
the CEO of Qatar Airways, Akbar Al Baker, who addressed comments made by
Schulte-Strathaus at the International Aviation Club in Washington concerning the
rise of Gulf carriers.
“The European airlines were pioneers in a large number of
areas. We in the Gulf airlines community have learnt a lot from them,” Al Baker
wrote “They should accept competition and that the customer being in the driver’s
seat…where does this protectionism end?”
European airlines, including British Airways, KLM and
Germany’s Lufthansa, have repeatedly called for curbs on the expansion of Gulf
carriers on long-haul routes.
The carriers claim Gulf airline use unfair subsidies and
state funding to finance aircraft deals and to take market share from existing
A number of US and European airlines are impacted by a 'home
market rule,' which states that countries where Boeing and Airbus build
aircraft cannot use export credit agencies to help their carriers buy passenger
The rule, which impacts carriers in the US, UK and France,
among others, is seen as offering an unfair advantage to Gulf carriers
unaffected by the law.
Schulte-Strathaus said Gulf carriers are expanding far
beyond their means in a bid to dominate long haul routes and divert traffic
through their local hubs.
“Akbar Al Baker will never persuade me that his country of
1.7 million ‘needs’ an airline with the long-haul capability of British
Airways, Air France or Lufhansa,” he said.
“Our sector was liberalised in 1993, so we have close to 20
years’ experience of operating as commercial enterprises rather than national
institutions. We find no such corresponding rules in the Middle East.”
AEA counts British Airways, Austrian Airlines and Lufthansa
among its members.
The bleating from Europe and the US will continue as long as the Gulf carriers are subsidised, openly or covertly, and since airlines such as Etihad apparently never have to turn a profit there has to be some merit in the European complaints. But it is the arrogance and posturing of the CEOs of the Gulf carriers that has perpetuated the debate. Humility, experience and effective and honest business practices will rule the day.
Translation of the above is blablablabla we cannot compete we are too lazy to improve and we like to look in the rear view mirror and cry over what was. Why would any european fly any gulf carrier if he did not see real value in doing so vs. what he is currently being offered in his homeland seriously ...all things being equal gulf carriers are doing a good job and the old continent is not used to being challenged by Arabs...wake up and smell the roses the client has a different view point and maybe some research as to why they are flying gulf carriers will help out a bit it cannot be price only can it? Otherwise ryan air would have put you out of business a long time ago :-)
ryanair and others put them out of the business long time ago... SwissAir (my favorite when I did not pay) down in 2001 I think, all US airlines flying (no pun intended) in and out of Chapter 11 since I can remember...
It is a very tough market. I do not follow it, but I suspect your vision may be a little bit simplistic. There is no equivalent in the Gulf to the many legal constraints that airlines face under EU to avoid subsidies.
Enjoy the ride.
Sadly Sami, it isn't Arabs who are the bug bear, it is the subsidies. The Gulf carriers get cheaper planes, pay their staff less, apart from the pilots, have no unions and don't have to make a profit. That is not a level runway by any stretch of the imagination. Ordering hundreds of new jets, actually subsidised by European and US taxpayers, is a further unfair advantage. Besides, Hogan doesn't strike me as being Arab.
Japan does not need to produce millions of cars out of proportion to its population. But they have a great business model and a great product.
Its the same with airlines business, the Gulf countries have a great model and product.
I recently tried to book a flight from Abu dhabi to NYC and in fact Emirates and Etihad had the most expensive seats. But i still booked them over Alitalia, BA, Air France, because of safety, fear of strikes, and the excellent service offered by these airlines.
germany of all countries, which is a major exporter of goods and services should not be complaining of such matters.
After decades of domination over the skies and the aviation market, it is time for Gulf carriers to enjoy good furtunes. Frankly, I don't see how European carriers will be able to ride out bumps in current cercumstances. May be Europeans will have to allow Gulf carriers to buy out stakes and board room seats in their busienss (hmm.. swallow the pride), that might be a way out. Agreed, Gulf carrierrs currently have everything running in their favor, quite unfairly so. But these restricting laws have been framed and implemented by Europeans themselves, so don't blame outsiders for taking advantage.
One thing I would say however, is that the CEOs of Gulf carriers need to sober down and stop acting like cowboys. They are lucky to be running corporations which are high on resources and low on punitive expectations. Good on them, indeed. Some humility and diluted jingoism would be very much in order. Arrogance and hill-top brashness is being used as unwanted and scaled up artillery, sadly.
So just because the European/US carriers have legacy costs due to previous union agreements and the fact that they cant negotiate good lease payments for their aircraft then carriers that dont have these restrictions should be restricted ?
Its an open market if the European/US carriers want to survive then they need to wake up and smell the coffee and start offering what the customer wants - the middle east hub is a more efficient way of travelling nowadays with the longer range aircraft allowing one-stop travel to almost everywhere in the world. If the European carriers offered the same level of service I get with my local carrier then I would book with them - it certainly is not because they are cheaper.....
Amazing how Germans and French come begging to buy their Airbuses, they just dont them to fly to Germany with them.
As Vicky said, once the CEO's get over the fact that they are not dealing with their office boys but seasoned professional and Goverments and are prepared to discuss concerns as equals(althought they are actually asking for business opportunities) then we may see some results.
As for anyone "begging" I think you may have to take in to account the very fact that for better or for worst none of these airlines have much of a choice, if Airbus & Boeing were to double their prices the airlines would still be buying their airplanes.
Bottom line they have to buy THEIR airplanes to fly THEIR passengers to THEIR airports and as a local I know would say "if they don't like, they can go back to their own countries"
Subsidies exist in varying forms throughout the industry -Assuming that the Gulf States subsidise their airlines, do not the Eurpean and US Governments subsidise the manufacturers?