Action Taken by the European Union to Stop Further Market Distortion
On 11 November 2015, European Parliament asked the European Commission to seek a mandate to begin negotiations with the Gulf Cooperation Countries (GCCs) regarding the subsidization of their airlines.
Lawmakers want to include a safeguard clause that “defines an offence and the legal consequences of its violation.” So that the oil-rich Arab monarchies will be able face “legal consequences” for their violations once aviation agreements are reached.
A comprehensive package of aviation legislation that addresses this issue is supposed to be announced in early December.
But this doesn’t mean that the problem is solved. Until legislation is introduced, implemented, and enforced, Qatar, Emirates, and Etihad continue to expand at unprecedented rates. Action must be taken soon so that the subsidies are addressed before more damage has been done than can be repaired.
In November of 2015, the European Commission ruled that the €85 million Estonian Air had received in state aid from the Estonian government must be repaid and that the airline was ineligible to receive the additional €40 million slotted for restructuring.
As a result of this ruling, Estonian Air immediately ceased operations, and will begin the liquidation process.
As per EU guidelines, state aid can only be offered once per 10 year period. Estonian Air was granted at least three subsidy measures between 2010 & 2014.
It is time for the EC to take similar action with Qatar and the United Arab Emirates’ subsidized carriers.
“Any commercial flying agreement including the granting of air traffic rights to foreign carriers should be accompanied by provisions allowing member states to monitor potential illegal subsidies and unfair competitive practices.”French Transport Minister Alain Vidalies
Action Taken by France & Germany to Stop Further Market Distortion
France has recently frozen new routes for the Gulf carriers into their country until the subsidies are addressed.
France has joined ranks with Germany to announce a combined European effort to combat the illegal subsidies from the United Arab Emirates and Qatar to their airlines and ensure “fair competition”. They asked their European Union partners and the EU Executive Commission to work together in finding a strategy that will bring about a fair and equitable resolution to the issue of the Gulf subsidies.
“I want, together with my European colleagues, to take a tougher approach to the rise of airlines in the Middle East if there is talk of unfair competition.”Wilma Mansveld, Former Dutch State Secretary for Transport: Summer 2015
Action Taken by the Netherlands to Stop Further Market Distortion
In March, the Netherlands announced that it will not allow Gulf carriers to launch new flights into Amsterdam’s Schiphol Airport until the European Union decides on how to address and curtail the subsidization of Qatar and the United Arab Emirates’ national carriers, Qatar Airways, Etihad Airways, and Emirates.
Wilma Mansveld, Former Dutch State Secretary for the Ministry of Infrastructure and the Environment, who supports the initiative, stated “Since the granting of additional traffic rights will be part of such a comprehensive agreement, this means that the Netherlands will not issue any additional traffic rights to carriers from Gulf states, as long as negotiations on this agreement are ongoing.”
Learn more about the subsidized Gulf carriers:
Emirates is one of the subsidized carriers of the United Arab Emirates. Its government has helped Emirates expand at unprecedented rates, by injecting over €5.6 billion into the airline. Learn about the subsidies:
Etihad Airways CEO, James Hogan, has gone on the record to say that Etihad has one shareholder, the government of Abu Dhabi. How else are they going to pay for all of those sports sponsorships?
The state-owned airline of Qatar has benefited from over €16 billion in government subsidies. This money goes towards large wide-body aircraft orders and new routes the commercial market does not support.