x Abu Dhabi, UAEWednesday 26 July 2017

Western airlines encouraged to embrace competition from Gulf

An airline trade group has urged an end to industry in-fighting that has seen European airlines lobby their governments to block the expansion of Middle East carriers.

European carriers have been increasingly vocal in opposing the growth of the three largest Gulf airlines, which they contend are a threat. Paulo Vecina / The National
European carriers have been increasingly vocal in opposing the growth of the three largest Gulf airlines, which they contend are a threat. Paulo Vecina / The National

SINGAPORE // Airlines in the West should stop trying to block the expansion of their Gulf rivals, says the head of the International Air Transport Association (IATA).

At an annual gathering of airline executives in Singapore yesterday, Giovanni Bisignani, the chief executive of the IATA, urged European and Canadian airlines to stop lobbying their governments to curb the growth of Gulf carriers, which include Emirates Airline, Qatar Airways and Etihad Airways, and instead take what he called a more responsible approach to industry competition.

"The increasing tensions about the rapid growth of the Gulf carriers must be removed," Mr Bisignani said. "The solution to call in governments as advocates or as referees has not worked, and it won't work. As responsible leaders of this global industry we must find a fair way forward ourselves." In the past five years, carriers such as Air France, Lufthansa, Austrian Airlines and Air Canada have been increasingly vocal in opposing the growth of the three largest Gulf airlines, which they contend are a threat. And while many delegates saw the Gulf airlines' growth as inevitable and a boon for consumers and the global economy, tensions still remained high at the Singapore gathering.

Robert Milton, the chief executive of ACE Aviation Holdings, which owns Air Canada, praised Gulf airlines for what he said were their superior product offerings and success in expanding. But he called the three Gulf carriers "the most protected airlines around" because they were state-owned and supported. "It hardly seems a fair match."

Gulf airlines were adding excessive capacity in markets such as Vienna, said Peter Malanik, the Austrian Airlines chief executive. He also accused Gulf governments of taking punitive steps against foreign companies, such as construction contractors, if their governments did not approve landing rights for airlines from the region. Tim Clark, the president of Emirates, said the rancour was unhealthy for the industry. "It is time they realised [Gulf airlines] are a fact of life and a fact of commercial economic reality, and so let's just get on with the job and stop trying to beat each other up," he said.

"The notion that we do not play according to the rules is not true," Mr Clark told the meeting of 700 airline executives. "I've said that for many, many years. Show me the evidence of that and I'd be very happy to give the truth on that."

In contrast to Air Canada, some rivals to the Gulf's long-haul carriers voiced their support.

"We've competed with Emirates for 26 years and I've got no problems with the way they operate," said Willie Walsh, the chief executive of IAG, the parent company of British Airways. "If there is an issue, it is one of jealousy. We would love to have support they have from their governments, and it is clear that in the Middle East, governments value the contribution that airlines make to their economies."

Alan Joyce, the chief executive of Qantas, said governments should put an end to protectionism. The Australian carrier had not asked for any help against Gulf airlines, he said.

"I'd be quite happy tomorrow if the whole world had open skies and we could fly the Qantas brand anywhere," he said, noting his own challenges in operating the desired number of flights to China and France.

However, criticism could increase in India, where airlines have also complained that Gulf carriers had an inordinate share of international traffic to and from the subcontinent.

"Right now, 70 per cent of international traffic in and out of India are served by foreign carriers," said Vijay Mallya, the chairman of Kingfisher Airlines.

"There is a clear imbalance there which needs to be addressed."

igale@thenational.ae