“The idea that open market access brings public benefits whatever the conditions applicable in the market simply does not hold true. State Aid and subsidies have the potential to distort competition to a significant extent. Consumers and labor alike will be severely penalized in the longer term.”Air France/KLM
Etihad Airways, Qatar Airways, and Emirates are expanding their networks at unprecedented rates. They are financially supported by their governments and do not need to earn profits on their new routes, which makes it difficult for commercial airlines to compete against them.
For every route lost to a Gulf carrier, 600 European jobs are lost.
By eliminating fair competition, consumers will have no other choice than to fly with the Gulf carriers.
As European carriers and their employees have begun to be affected by the unnatural expansion of the subsidized Gulf carriers, France, Germany, and the Netherlands have taken a stand. They have recently frozen new routes for the Gulf carriers into their countries until the subsidies are addressed and France and Germany have announced a combined effort to combat the illegal subsidies from the United Arab Emirates and Qatar to their airlines and ensure “fair competition”. They are asking their European Union partners and the EU Executive Commission to work together to find a strategy that will bring about a fair and equitable resolution to the issue of the Gulf subsidies.
This development comes after “current EU talks with the six-nation Gulf Cooperation Council on fair aviation competition have failed to curb market-distorting government aid to carriers such as Emirates, Etihad Airways PJSC, and Qatar Airways Ltd,” according to European Transport Commissioner Violeta Bulc.
If implemented, this new effort, supported by other EU member states and the European Commission, would replace individual bilateral agreement negotiations and would be headed by the Commission on behalf of individual members.
“State Aid is only allowed if it meets one of the exemptions set out in the EU Treaty (art. 107 ff). A crucial criterion is the so called “private investor test”. EU law does not prohibit public entities to participate in the internal market, but it expects that such government entities behave like a private investor and be fully transparent with respect to their support to private companies. The European Commission sanctions infringement of the rules on state aid regardless whether injury actually occurs. There is a presumption that state aid as such distorts the market. Consequently, affected companies are not obliged to demonstrate injury.”
-Lufthansa Docket Submission
Learn more about the Gulf subsidies destroying fair competition:
Emirates, the national airline of Dubai, has collected subsidies from their government for years. Learn about the different ways they have collected subsidies from the United Arab Emirates.
Etihad Airways has collected subsidies from their government since their inception. Learn how much they have collected and the different ways they have collected their subsidies from the United Arab Emirates.
Qatar Airways never needed to depend on profits to keep their airline in business. When funds are running low, they can depend on a check from their government. Who else is going to buy all of those wide body aeroplanes?