Lufthansa ‘remains an opponent’ to state subsidies

The German carrier is among the European and US airlines that claim carriers from the Arabian Gulf benefit from unfair state backing - an allegation that has been denied by the region’s big three carriers.

Lufthansa still opposes unfair state subsidies in the aviation sector, its chief executive said yesterday.

“Lufthansa remains an opponent to state subsidies [and] we have stayed firm in our principles,” said Carsten Spohr, the chairman and chief executive of Lufthansa Group. “Two successful airline groups can have differences [in opinion] but still become successful partners.”

The German company is among European and US airlines that claim rivals from the Arabian Gulf benefit from unfair state backing, an allegation denied by the region’s big three carriers, Etihad, Emirates and Qatar Airways.

Mr Spohr also said Middle Eastern carriers should rationalise their capacity.

He was speaking in Abu Dhabi yesterday at an event to announce the signing of a US$100 million catering deal between Etihad and Lufthansa, and an initial agreement to cooperate in aircraft maintenance.

The Abu Dhabi airline will also move its operations to Lufthansa’s hubs in Frankfurt and Munich.

“Optimisation of capacity and rationalisation of capacity will need to play a bigger role,” Mr Spohr said. “I am convinced that we will see a phase of more consolidation in Europe in years to come, and am also convinced that there is a space for more rationalisation in aviation in this part of the world.”

Last year, 185 airlines operated in Europe, down from 264 in 2005 and 200 in 2015.

“The mid-size players without a wider European group, such as Alitalia or Air Berlin, probably face the biggest challenges,” said Peter Morris, the chief economist at London-based consultancy Ascent Worldwide.

Regional carriers have invested heavily in expanding capacity to attract more long-haul passengers through their hubs in Dubai, Doha and Abu Dhabi. But the big three carriers have been forced to scale back some of their operations in response to global overcapacity in the sector.

“Given the number of serious global market challenges, some consolidation in the Gulf region in due course is probable too,” said John Strickland, an aviation analyst at the London-based JLS Consulting.