New airlines from emerging markets want to help more people get out and see the world. If the world wants them to visit, then they need to allow those flights, or increase service from legacy U.S. and E.U. carriers to those markets, or both. There are plenty of eager travellers to go around.
Europe’s airports and tourism boards took a side today in favor of Gulf carriers as the Open Skies debate, which rages on in the United States, made its way to the European Union.
At the Airports Council International (ACI)-Europe annual congress in Prague, European airports have presented their arguments in favor of allowing free competition from Gulf carriers in the market. They question claims by Europe’s legacy airlines — which are largely supportive of legacy U.S. carriers — that the Gulf airlines receive aid which could be interpreted as unfair subsidies, and present this argument to EU Transport Commissioner Violeta Bulc, who has previously said she would challenge unfair competition from the Gulf in the European aviation market.
Arnaud Feist, President of ACI Europe and CEO of Brussels Airport said in opening statements today that, “The European airlines attacking their Gulf competitors are our long-time partners. For many of us, their fate is also our fate. They are right in saying that the expansion of these airlines is a fierce challenge for European aviation. But the issues they are raising in this context and the remedies they are proposing are the wrong ones.”
Both airports and tourism boards argue that more liberal competitive policies in Europe have greatly benefited the region.
“To a large extent, these developments have transformed intra-European air transport into a commodity. This has in turn supported economic growth, with the relationship between air connectivity and GDP coming to the fore: a 10% increase in air connectivity yields +0,5% of additional GDP growth per capita,” they state in a joint paper on Open Skies [embedded below]. “The abolition of regulatory restrictions on designated airlines, route rights, capacity and pricing has not only allowed airlines to choose their business model and innovate – it has also given airports equal and increased opportunities in terms of route development. This has resulted in the development of new and competitive air services with passenger numbers at EU airports growing by a staggering +136% since 1993.”
They point out that trade with Gulf states, connectivity in the market to the Middle East provided by the Gulf airlines–“especially Emirates, Etihad Airways and Qatar Airways”–have helped the region cope with industry slow down after the 2008-2009 Global crisis.
The attraction of Europe as a tourism destination to a growing middle-class in the Middle East and Asian markets, they say, are a growing and attractive market to European tourism and aviation.
“India, as one of the fastest growing outbound markets, has moved into the spotlight as the country is expected to generate more than 13 million tourist arrivals worldwide in 2015, which is only dwarfed by China’s 72 million. Both markets are gaining weight as travel from China and India to European destinations is expected to increase around 6% and 5% per year respectively until 2020, outperforming expected growth from established European markets,” the report states.
European airports and tourism boards question claims that Gulf carriers are subsidised by their governments and of claims by EU airlines that they only want “a level playing field” by asking for a review of established Open Skies agreements. Instead airports and tourism groups say argue, market results validate a more liberal aviation policy.
“Restrictions placed on market access, airline designation, capacity and pricing by ‘traditional’ Bilateral Air Services Agreements are all aimed at ensuring equality of outcomes through Government intervention. Focusing one quality of outcomes thus interferes with market forces and hinders innovation. This results in artificially constrained air connectivity, more limited consumer choice and ultimately reduces wider economic benefits,” the airport and tourism groups assert.
Active and growing Gulf carriers in Europe have benefited European airports by generating healthy competition for their services, allowing airports opportunities to cover their costs of infrastructure not otherwise financed by legacy European airlines nor even by the active regional low-cost carriers.
The groups concede that the Gulf region’s expanded connectivity poses a challenge to the European market, with Gulf hubs developing as competitors to European hubs, a dynamic made possible by long-range aircraft produced by European and U.S. aircraft manufacturers. But European airports believe the best response to this challenge is to support free market competition which encourages Gulf carriers to choose hubs in Europe, rather than for the EU to revert to more restrictive policies.
“The expansion of Gulf carriers in Europe has exposed EU airlines to new competition on selected external markets – in particular Middle East and Asian markets. As a result, EU hubs have also been exposed to new competition from Gulf hubs,” the report indicates, adding:
“The risk of Europe’s hubs falling behind competitors in other regions should be a concern for European policy makers — especially in a context where Asia is now the largest aviation market, has become the major source of growth in international tourist arrivals and has the highest GDP of all other World regions.
“To address the challenge posed by the expansion of the Gulf airlines, the competitive position of EU airlines and EU airports relative to their Gulf competitors needs to improve significantly. While both EU airlines and EU airports are working hard to improve their competitive position, the decisive factor in the competitive gap with their Gulf competitors comes from them benefitting from a framework of government policy and investment which truly embraces aviation and supports air connectivity. By providing the right climate for investment to take place in infrastructure and air carriers, this approach has also challenged the overall position of European aviation, and potentially exposed Europe to being increasingly by-passed as a Global aviation hub — undermining potential economic benefits for the EU, in particular as regards tourism.”
The full document can be viewed here:
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Tags: open skies
Photo credit: Arnaud Feist, President of ACI-Europe, speaking at an event at Brussels Airport, where he is also CEO. Brussels Airport / Flickr