EMIRATES president Tim Clark has warned against a resurgence in “protectionist rhetoric” in aviation policymaking as he predicted another challenging year. The Dubai-based carrier is expected to continue its relentless global expansion this year after ordering 200 aircraft at last year’s Dubai Airshow, with 27 new planes - including 13 Airbus A380 superjumbos - due to join its fleet this year.
It took delivery of 24 aircraft last year and launched nine new routes as first-half passenger traffic increased 15 per cent, revenues rose 12 per cent and load factors held at about 79 per cent.
The airline has already unveiled new routes to Kiev, Taipei and Boston, as well as the Nigerian ports of Abuja and Kano, to bring total destinations to well over 140.
Mr Clark said the airline now contributed “a whopping 28 per cent of Dubai’s GDP and supports, in one way or another, 250,000 jobs” and expected to carry 70 million passengers annually by 2020.
“Despite our long-standing nemesis of fuel costs and the weakening of major currencies against the dollar, Emirates posted a modest 2 per cent profit growth to $US463 million ($517.8m) at the end of the half year to September 2013,” he said in the airline’s international and government affairs journal Open Sky. He said this year would be “no less challenging”.
“The resurgence of protectionist rhetoric in aviation policymaking could potentially undo all the benefits that competition brings to consumers,” he said.
The newsletter expanded on Mr Clark’s comments with an article that claimed state-owned airlines were “competitively neutral” and that state ownership alone did not distort competition.
Emirates, which faces opposition to its expanding global footprint from some unions and airlines, contended the phrase “state-owned” was used by critics to conjure up “the spectre of illicit state aid without using the word subsidy”.
“They paint a picture of good versus evil: wholesome privately held airlines forced to struggle in an unfair contest against state-owned carriers that, as the script would have it, enjoy unfettered access to state support and advantages,” the newsletter said.
“But facts do not support this argument in aviation or other sectors. In fact, on closer examination the argument is political rhetoric that ignores international economic policy and requires the proponents to ignore the state-owned elephants in their own cherished alliance living rooms.”
The newsletter pointed to European Union law and policy making it “expressly clear” there was no preference for public versus private ownership.
“Rather, the litmus tests is whether an entity receives competition-distorting subsidies or is advantaged by legislation,” it said.
“The state ownership, competitive distortion argument is especially misplaced in aviation given the significant number of airlines that have some degree of state ownership.”
The argument comes as Qantas is claiming that it is at a disadvantage to Virgin Australia because the smaller airline is backed by state-owned Etihad and the government-supported Singapore Airlines and Air New Zealand. Qantas has asked the federal government to intervene to help rectify what it sees as an unlevel playing field, with the focus now on a debt guarantee.
A Qantas spokesman said the Emirates argument applied to the international market and not to the situation in Australia’s domestic market.
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