Business

EU transport chief gets mandate to negotiate aviation pacts with the UAE, Qatar

The air-transport deals being sought with the UAE and Qatar are a priority because those nations have fast-growing aviation markets and the issue of subsidies in the Arabian Gulf states has become politically sensitive in Europe.

Bloomberg

June 08, 2016

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European Union governments gave EU transport chief Violeta Bulc the go-ahead to negotiate aviation agreements with the UAE and Qatar, setting up a pot­ential clash over alleged unfair subsidies to airlines based in the two Arabian Gulf nations.

European transport ministers meeting on Tuesday in Luxembourg included a provision on financial transparency in the negotiating mandates for Ms Bulc, targeting any market-distorting aid to Emirates, Etihad Airways and Qatar Airways. The ministers also approved similar mandates for accords with Turkey and the Association of South East Asian Nations.

“These agreements will offer new business opportunities to the whole aviation sector, new routes and better fares to passengers, while guaranteeing a level playing field to our companies,” Ms Bulc said after receiving the ministerial green light.

The air transport deals being sought with the UAE and Qatar are a priority because both have fast-growing aviation markets and the issue of subsidies in the Arabian Gulf states has become politically sensitive in Europe. Ms Bulc, who is in charge of transport at the European Commission, aims to reach agreements by the end of 2019.

The commission, the EU’s executive arm in Brussels, has been gearing up for a bigger battle over state aid to Gulf-based airlines after national governments in Europe joined Euro­pean carriers such as Air France-KLM Group and Deutsche Lufthansa in raising the issue.

France and Germany voiced concerns about foreign subsidies last year at an EU meeting where transport ministers debated global aviation competition. The chief executives of several European airlines, including Air France-KLM and Lufthansa, sent a letter to Ms Bulc in December 2014 urging her to step up efforts to tackle government support for Gulf rivals.

Total seats on scheduled flights between the EU and the six nations of the GCC, which also includes Saudi Arabia, Kuwait, Oman and Bahrain, have more than tripled over the past decade to 39 million last year. The UAE has more direct traffic with the EU than China, India and Japan combined, according to the commission.

The targeted deals are “comprehensive” because, in addition to provisions on “fair competition,” they would cover such areas as market access, investment and technologies for air-traffic management.

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