Europe Set to Take Aim at Subsidies to Airlines in Persian Gulf

  • EU transport chief Bulc seeks aviation accord with Gulf region
  • Green light for negotiations could come within six months

The European Union’s transport chief intends to start fighting alleged unfair subsidies to airlines based in the Persian Gulf within months in a bid to create a “level playing field” for EU competitors.

European Transport Commissioner Violeta Bulc said she hopes EU governments will give her an “open and flexible” mandate by April to negotiate an aviation agreement with the six-nation Gulf Cooperation Council. Curbing market-distorting aid to operators such as Emirates, Etihad Airways PJSC and Qatar Airways Ltd. will be a prime goal of any EU-GCC accord, she said.

“We would like to establish a level playing field,” Bulc said in an interview in her office in Brussels on Friday. “We will go into this direction.”

The European Commission, the EU’s executive arm, is gearing up for a bigger battle over state aid to Gulf-based airlines after national governments in Europe joined European carriers such as Air France-KLM Group and Deutsche Lufthansa AG in raising the matter.

Foreign Subsidies

France and Germany voiced concerns about foreign subsidies earlier this year at an EU meeting where transport ministers debated global aviation competition. The chief executive officers of several European airlines, including Air France-KLM and Lufthansa, wrote a letter to Bulc last December urging her to step up efforts to tackle government support for Gulf rivals.

There has been “a lot of hype about this,” Bulc said on Friday. “I cannot speak about details right now. But this is not only my story. I am representing the entire European aviation space. I am in very close contact with all players of the European market.”

Bulc will propose a mandate to negotiate an EU-GCC agreement as part of a Dec. 2 commission package of aviation measures that will also seek authority to strike separate deals with countries such as China. She held out the prospect of quick approval by the EU’s 28 governments to begin talks with the Gulf countries.

Next Year

“I’m hoping March-April next year,” said Bulc, who comes from Slovenia. She declined to speculate about how long any negotiations with the GCC would last.

To prepare the ground, Bulc will travel to the Gulf region Nov. 7-11, meeting ministers in Qatar and the United Arab Emirates as well as top executives of Emirates, Etihad Airways and Qatar Airways. She said it’s too early for her to broach the subject of subsidies during the upcoming trip, pledging to touch instead on less sensitive issues such as investment, air-traffic management and global efforts to curb aviation emissions that contribute to climate change.

“First we need to build trust,” said Bulc. “I will first try to find elements that we fully agree on and anchor them as the elements of a first step.”

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