While the fiery dispute between U.S. legacy carriers and three major Gulf airlines continues to rage, the focus of Qatar Airways has now shifted to Europe. Reuters reported early on February 5, 2019, that the State of Qatar and the European Union (EU) are getting closer to finalizing a comprehensive air services agreement. The deal was signed later in the day, hailed by Qatar Airways chief as a “landmark” agreement that should provide “a significant competitive edge” to carriers from both the EU and Qatar.
According to a statement by CEO Akbar Al Baker, the State of Qatar and the EU are “in the final stages” of closing a comprehensive “Open skies” air services agreement, negotiations over which have been going on for years, Reuters reported early on February 5, 2019.
“We have taken bold steps by agreeing to articles on fair competition, social aspects, business practices, and transparency,” Al Baker stated at the CAPA Qatar Aviation, Aeropolitical and Regulatory Summit in Doha.
Later that day, both parties announced they have concluded negotiations on the Open Skies agreement, having agreed to articles on fair competition and transparency, environmental and consumer protections, as well as social aspects.
The broad deal also includes a doing-business provision, which exempts EU carriers from the obligation to hire a local General Sales Agent in Qatar to operate flights to Doha. According to Qatar Airways’ official press release announcing the news, “all air carriers from the 28 European Union member states and Qatar now have unlimited and unrestricted access to their respective territories.”
“Qatar has committed to offer a fair and friendly business environment and as a result European airlines will enjoy unrestricted commercial opportunities unlike ever before,” the Qatar Airways chief was quoted as saying by Reuters.
“We approach the principle of fair competition very simply: fair access to markets, competing for market share based on products and services of what the customer wants and is willing to purchase,” Al Baker states in the official announcement.
The Qatar Airways Group has hailed the deal as “historic” and “the first of its kind ever between the EU and a Gulf Cooperation Council (GCC) member state.”
Qatar already has an air services agreement with the U.S. In recent years, however, the agreement has been rattled by allegations of unfair competition followed by an aggressive campaign against the three major Gulf carriers serving the U.S.
The dispute first erupted in January 2015, when American Airlines, Delta and United urged the American government to reopen negotiations over agreements for the co-called “fifth freedom rights” between the U.S., Qatar and the UAE.
The Partnership for Open & Fair Skies, spearheaded by the three U.S. legacy carriers, argued that the state-owned Qatar Airways, as well as the UAE-based Emirates and Etihad, had received more than $50 billion in subsidies and other benefits from their governments. The Gulf carriers have always denied the allegations.
De-escalation of the trade dispute came about after Qatar reached a deal with the Trump Administration in January 2018, modifying the existing Open Skies agreement between the two countries. Under the deal, Qatar pledged to engage in transparency and to disclose detailed financial information about Qatar Airways, as Bloomberg reported at the time.
The airline also reiterated it would not launch any more “fifth freedom” flights to the U.S. (primarily transatlantic flights via Europe) assuring it would only operate direct routes from Qatar to the U.S. without any stops at third countries.
At the time, the deal was hailed as a victory by both sides. “These exchanges address concerns important to U.S. aviation industry stakeholders and strengthen our economic cooperation,” the former Secretary of State Rex Tillerson said in announcing the agreement.
“The president has made this matter a priority and the outcome we achieved will ensure a level playing field in the global aviation market,” he was quoted as saying by USA Today.
The thaw, however, did not last long. Come December 2018, and the feud was reignited again when Air Italy, co-owned by Qatar Airways, announced it would double its route network to the U.S. The move was perceived as a way for Qatar to dodge its pledge not to add fifth freedom flights to the country.
While the U.S-Qatar air services negotiations were mostly focused on fifth freedom rights and market capacity, the negotiations for Open Skies between the EU and Qatar (and the UAE) are rather concerned with the ”fair competition” clause.
Agreements between the EU and Qatar (as well as the UAE) are more difficult to reach because the three major Gulf carriers are more direct competitors to European airlines than they are to U.S. airlines (despite the claims made by American, Delta and United as mentioned previously), CAPA points out.
Which is why the Gulf carriers have also faced strong accusations within Europe. A coalition composed of European airline workers, passengers and companies, known as Europeans for Fair Competition, has campaigned against the Qatar Airways, Emirates and Etihad.
The movement argues that European airlines cannot compete with state-subsidized carriers that “do not play by the rules” and thus threaten European jobs.
“It’s not just the subsidies that come in the form of cash that massively undermine fair competition. The financial realities of aviation competitiveness are also affected by other areas of governmental control”, it is stated on the Europeans for Fair Competition website.
What the coalition takes into account is that any negotiations over international air services include not only traffic rights, but also important issues such as safety, job security, and environmental protection.
“In Europe there are taxes on air travel, high airport charges, emission requirements, night flight bans, and job protection, among other elements aimed at increasing safety and worker protections.”