Emirates urges caution on EU-level aviation agreement with Gulf

BRUSSELS: Emirates has written to several European governments expressing concern that its flying rights could be frozen if the European Commission is allowed to use aviation negotiations with Gulf countries as a way to challenge alleged illegal state subsidies to Gulf airlines. The Commission, the European Union’s executive, is expected to ask member states for a mandate to start talks on flying agreements with the Gulf countries and others such as China and Turkey when it presents an aviation package in December.

However, some European countries, notably France and Germany, have pushed the Commission to use a commercial aviation agreement with the Gulf countries as a way to tackle alleged subsidies to carriers like Emirates, Etihad Airways and Qatar Airways. The debate on unfair competition from the Gulf carriers has been raging in both Europe and the United States, where several airlines are campaigning to persuade Washington to alter commercial flying arrangements with Qatar and the United Arab Emirates.

In a letter to Hungary, seen by Reuters, the company’s President Timothy Clark says handing power to the Commission to initiate talks “on the wrong terms” would undermine connectivity and tourism growth in Europe.

“It has come to our attention that there has been growing pressure on the European Commission from the French and German Transport Ministers to ensure conditions are virtually impossible for all sides to adhere to, thereby freezing Emirates’ flying rights as long as any negotiations are ongoing,” the letter says.

Emirates sent letters to governments in its major markets in Europe. Germany’s Lufthansa and France’s Air France KLM have spoken out against what they see as unfair competition from the Gulf carriers.

Emirates has firmly denied receiving subsidies. In the letter Clark says Emirates has been profitable for the last 27 years and supported 85,100 jobs across the EU in 2013-14.

“Rather than receive subsidies as erroneously alleged, Emirates has in fact paid its state shareholder over $3.363 billion in dividends up to and including its 2014-15 financial year.”

The Commission is working on a legislative proposal to tackle unfair competition from non-EU airlines which could include the ability to suspend air traffic rights, according to a document seen by Reuters. It is also developing a “fair competition” clause to be inserted in commercial flying agreements with non-EU countries.

A spokesman for the Commission said fair competition would be addressed as part of the “comprehensive agreements the Commission aims to discuss with several countries.”

“The need to ensure a level playing field when liberalising is widely recognised internationally,” said Jakub Adamowicz. An Emirates spokeswoman said the airline remained committed to developing its European operations and regularly engages with governments on various matters, but declined to elaborate on details of specific communications. —Reuters