Gulf carriers in the spotlight as EU addresses “unfair” airline competition

Non-EU carriers could see their rights to fly in the bloc revoked if they or their home countries engage in “unfair” competitive practices under rules voted on by a European Parliament committee on Tuesday.

Some EU airlines, notably Air France-KLM and Lufthansa, have long complained about what they see as unfair competition from carriers such as those in the Gulf region – Emirates, Etihad and Qatar Airways – whom they accuse of receiving illegal state subsidies.

Read: Emirates rejects Lufthansa, Air France-KLM claims

The three airlines have vehemently denied such claims.

While the rules passed by members of the European Parliament’s transport committee on Tuesday are not the final version of the law, they represent a hardening of the original European Commission proposal.

“The pressure from highly subsidised third country carriers is increasingly noticeable. It potentially undermines a level playing field in the market, at the expense of European airlines,” said Markus Pieper, the EU lawmaker who is steering the legislation through the European parliament.

“Particularly carriers from the Gulf region, Turkey, China and Russia have strong state connections which can cause market distortions.”

The proposal would allow EU governments and airlines to submit complaints to the European Commission about alleged discriminatory practices they face in non-EU countries or illegal subsidies benefiting non-EU airlines.

Read: Lufthansa sees rapid growth of Gulf airlines slowing

The version passed by the European Parliament would see the Commission being able to impose “provisional redressive measures” on third country airlines even before an investigation has been concluded to prevent irreversible injury.

The provision was pushed by the second largest group in the Brussels legislature, the Socialists and Democrats.

The Commission – the EU executive – had not originally proposed curtailing airlines’ flying rights as these are typically granted on a bilateral basis between governments.

Instead it had proposed financial penalties or other measures such as a suspension of ground services.

The Commission has denied that the proposed regulation is a protectionist measure, but many EU governments oppose it on the grounds that it could hurt transport links to their countries.

The Gulf airlines have faced similar pressure in the United States.

Qatar recently agreed to release detailed financial information about state-owned Qatar Airways after talks with the U.S. government.

Read: Qatar Airways agrees to financial disclosures in spat with US carriers

EU lawmakers will have to reach an agreement with member states on a final version of the EU regulation before it can take effect, meaning it will likely undergo further changes.