Germany Tells Non-EU Airlines To Raise Prices

November 19, 2009

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The German government is putting pressure on airlines, including Dubai-based Emirates, to raise business class prices on some routes so they don't undercut European carriers.

Emirates has complained to the European Commission and has asked to meet Germany's new transport minister, Peter Ramsauer, saying the move hurts competition and consumers' interests, Emirates' senior vice president Andrew Parker said on Thursday.

"To us, this is the equivalent of Mercedes complaining about the prices of Lexus (cars)," Parker said.

The German government said in a letter that it was illegal for non-EU airlines such as Emirates to undercut the prices of other carriers on routes from Germany to non-EU destinations, citing its international bilateral air transport agreements and European Parliament rules.

"This measure does not primarily affect Emirates but I have also called upon other aviation companies from non-EU countries to remove their tariffs from the market," the president of Germany's Office of Transport Goods, Andreas Marquardt, said in the letter, which was sent to Parker.

The Commission was not immediately available for comment. A spokesman for Germany's Transport Ministry said he was unaware of any plans for Ramsauer to meet Emirates representatives.

Emirates, the Arab world's largest airline, has based its strategy on routing air traffic through its fast-expanding hub in Dubai. It has 49 weekly flights at four German airports.

Emirates competes with Lufthansa and Air France-KLM, among others, on the routes covered by the government complaint -- Frankfurt to Johannesburg, Hamburg to Singapore and Berlin to Singapore.

Even with higher prices, Emirates is not considering withdrawing from the German market, Parker said.

"We're absolutely committed to the German market. We buy a very large amount of German-made aircraft," he said.

(Reuters)