EU To Tackle Subsidies For Non-EU Airlines

The European 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.

The debate on unfair competition from Gulf carriers, such as Emirates, Etihad Airways and Qatar Airways, has been raging in Europe and the United States where several airlines and politicians claim they benefit from unfair state aid.

The EU's current law granting protection against unfair subsidies and pricing practices from non-EU airlines is considered to be ineffective by industry and policymakers.

The Commission, the EU's executive, is working on a new regulation that would protect European airlines in cases of unfair competition, such as discrimination of EU carriers and subsidies by foreign governments, according to a Commission document.

"On this basis, and pending the establishment of an international instrument, the Commission is of the opinion that there is a need for an effective EU defence instrument against unfair practices by third country airlines," the document says.

It is due to unveil a package of measures on December 2 designed to boost the competitiveness of Europe's flag carriers, hobbled by the rise of low-cost players such as Ryanair and easyJet, as well as Gulf carriers and the rise of Asia as a major air traffic hub.

The proposal on unfair competition is expected in 2016, two people familiar with the matter said.

The new law could cover a wider range of unfair practices than the current one and give the Commission more investigative powers to collect evidence in cases of alleged unfair competition, the document says.

It could also "reconsider" the burden of proof for the amount of evidence needed to open an investigation and introduce new sanctions, such as the restriction or suspension of traffic rights as a last resort.

The Commission has previously said it would address unfair competition concerns when it proposes a commercial aviation agreement with the Gulf region in December.

Lufthansa and Air France-KLM have spoken out against what they see as unfair competition from the Gulf carriers.

The Commission is also working on the development of a "fair competition clause" to be inserted in future aviation agreements.