Are Gulf carriers getting too big for their boots?
Canada denies the UAE valuable landing slots while European carriers seek restrictions. It should be fine, as long as everyone acts in a mature fashion. Unfortunately, this is the Middle East.
October 11, 2010 2:30 by Samuel Potter
Plenty of news in the air industry this week, as GCC carriers seem to be falling out with just about everybody. The latest news is that European airlines are ganging together to ask the European Union to contain the expansion of Gulf carriers in the region. The European companies think that airlines like Etihad and Emirates pose a major threat to their market share.
Air France Chief Executive Officer Pierre-Henri Gourgeon said, “Europe is at the crossroads of international air travel, and this is a role we need to value and defend. What we’re telling the authorities is that we need a strategy that gives us a chance to resist.”
According to Emirates 24-7, top European airline chiefs will also meet to ask for changes that will make it easier for their companies to get credit. At present they cannot get plane financing deals that are anywhere near as competitive as the government-backed deals seen in the Gulf.
“Our ability to fund the acquisition of new aircraft is handicapped by the so-called ‘home-country’ rule,” BA spokesman Paul Marston was quoted as saying by Bloomberg. “These guarantees are not operating in the way they were intended — and we therefore urge the EU to amend the rules to remove the competitive distortions that have developed.”
Gourgeon says that a company like Emirates pays very little in the way of airport charges in or fuel tax, and avoids the “social charges” faced by European companies. “When you’re supported in this way you can offer the end product at very low prices,” he said. “They don’t pay tax — they don’t even have a word for it.” [Yes, we do Pierre, we call it “tax.”]
Meanwhile, clearly eager to get itself into a showdown before Europe makes its move, the UAE has managed to pick a fight with Canada. Talks between the two countries have been going on for years to try to secure more landing slots for UAE airlines Emirates and Etihad, but they finally broke down this week when Canada turned down the request. The UAE carriers were seeking dozens of new slots on the basis that the six weekly flights currently permitted are not enough to meet demand. But Transport Canada, the government agency that oversees the airline industry, is worried such a move would damage Air Canada, according to Bloomberg.
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