EU to tackle unfair airline competition

[F24]

"The European Union proposed new rules on Thursday to more effectively tackle alleged unfair competitive practices by foreign airlines as it seeks to ensure European carriers can withstand fierce competition overseas..."
EU to tackle unfair airline competition with new rules | Reuters (http://www.reuters.com/article/us-eu-aviation-idUSKBN18Z1A0)

[oldchina]

Yippee
Now we can all be Alitalia !

[Craggenmore]

Good luck with that Mr EU..!

Gulf carriers bring in revenue beyond the EU tax mans wildest dreams. No one is going to stop that.

EK alone makes the UK Chancellor about 5 million GBP a day in APD tax with their 14 dailies.

Etihad open to ?deepening? Alitalia ties as bidding kicks off | GulfNews.com (http://gulfnews.com/business/aviation/etihad-open-to-deepening-alitalia-ties-as-bidding-kicks-off-1.2039530)

[Jack D]

So you are saying that each EK flight provides £ 357,000 revenue daily to the U.K. Govt ? Shurley shome mishtake , or have I misunderstood ?

[Jetscream 32]

No but flights to Dubai alone bring in the UK govt taxpayer £654,566 per day x 30 or
£19.6 mill PCM

This is worked out by bag of "fag packet" 269,000 departing pax PCM to DXB x £73 APD
I am not however an expert spotter that counts every person on or off of the a/c for all destinations but purely splitting the 538,000 pax PCM that are both arr/dep into the UK and halfing them.

[fab777]

Whe are talking EU here. UK is not a good exemple anymore...

[SMT Member]

Why on earth would the EU care about the APD tax in the UK? They're on their way out, in case you didn't get the memo.

Here's a quote from the article: The move comes after repeated complaints from some European airlines, notably Air France KLM and Lufthansa, about Gulf carriers receiving illegal government subsidies, charges Emirates, Qatar Airways and Etihad all deny.

No mention of IAG, who've been awfully silent in this debate. Surely not because they are partially owned by Qatar?

It is also interesting to read, what 'sanctions' the EU will bring upon non-EU airlines who, following a complaint from an EU carrier, are found to be engaging in unfair practices: They'll go after ground handling and/or impose financial penalties. This elegantly skirts around the issue of traffic rights, as in 'sure, you can land in FRA, but there won't be anybody there to handle your flight and, oh, here's bill for a couple of millions'.

The loser here will be the consumers, who will have to pay the actual going rate for a jolly to Bangers. Well, the ME3 would also stand to lose much, if not all, but I for one couldn't care less what hardship airlines based in a theoratic dictatorship might face. I'd rather protect taxpaying jobs in the EU, if it comes to that.

[pax britanica]

I think the EU issue is to avoid LH and AF (and BA as it is now Spanish owned not British) from being screwed over any more by the ME 3 pirates with their once bottomless pit financing. They are gradually having to adjust to the realities of lower oil prices and this si the time to hit them hard.

The Eu are not that bad on airline competition actually after all EZ FR and Wizz do pretty well and have materially impacted pricing in UK. But its one thing these Eu upstarts taking revenue from BA LH etc because they are still EU companies but the ME 3 are not .
As for the APD argument -well if the ME3 disappeared the pax would still be going but on an EU carrier instead so that revenue isnt lost to any government

[RexBanner]

How do Norwegian fit into all this? Grey area.

[pax2908]

I have only read the Reuters article, to me it is not clear how that is going to help and on what timescale. Governments and airlines may send complaints to the EC, good. Does it say what the EC shall do once it receives such complaint and on what time scale? That part I missed.

[ATC Watcher]

This seems only to target the big ME3 (possibly soon to be reduced to 2 ) while the real danger to our West European main Airlines and its associated social model is in my views more coming from inside our own continent. The "damp lease" system started by Norwegian , and the recent move by RYR to go for the business pax and base aircraft at main airports ( e.g. FRA) are just the most striking examples.

[pax britanica]

ATC W
What you say is true but FR are an EU outfit and Norwegian are sort of EU so money may flow from say AF-FR but it stays within the EU, money lost by BA or LH to EK doesn't and EK have nothing to give in return. How they coned the UK regulators to give them access to every major UK airport is quite beyond me

[Piltdown Man]

How they conned the UK regulators to give them access to every major UK airport is quite beyond me.

Good point. I presume a deal was done in the back room of smoky bar by a few EU civil servants hopelessly distracted by good looking women (and probably a boys), as it always is. They can do this because the criminals who run the EU have no oversight and are totally unaccountable. Why should they care if the EU has not received a reasonable quid-pro-quo, after all, their gravy train will run forever? The deal agreement to allow unfettered access to the EU will last as long as these criminals stay in charge. As the first whiff of a problem, the great and good will be whisked off first class for a meeting in [name somewhere nice served by the pirates] for a two week extensive briefing and intelligence gathering process so a rapid decision can be taken in the next ten years or so.

[Chris2303]

It's called "Free Trade".

It really means screwing everybody except those making a profit.

[BluSdUp]

I think now that we are getting closer to this Oasis, it turns out to be fake:
A true mirage: Everything is upside down and Poof, disappear.

Not even the old Flag carriers of Europe and the rest of the world was subsidized a 100% like this, ever. The hub and spoke is dead, yet they steal pax from Europe and North America at a dramatic rate. Just to sell Airbus and Boeing a/c.
The Delta CEO has manned up long time ago and called the bluff. About time EU did the same.
The open skies of Europe is old as sin. I did wetlease for Proteus in France in 1997 in a LN aircraft ( Norwegian). Proteus was a AF feeder and we were going to expand the Do328 TP operation as Proteus expanded to F100. Just an example of european co-operation.

It is a fact that the low cost has made it hard for the Flagcarriers, but I have used my own money on every tqt since 1999 and the cost of a tqt before lowcost was absurd.

The problem for the old guard is: Fair and free internal competition internaly in EU AND absurdly state run and 100% subsidized ME 1950s hub and spoke style carriers.

How EU even let one ME carrier land in EU is strange, never mind killing of our long haul with this armada.

And letting them invest in EU carrier, now that is high treason.

I was wondering when Europe and North America was going to wake up.
A little bit late , but not to late.

[GrahamO]

Can someone explain in simple terms how exactly the ME3 have an unfair advantage, other than being in a low tax environment, not paying much for staff and delivering a good product ?

I read the Reuters article and can see no mention of how an unfair advantage is gained, in practice and just some waffle about what happens if there is any evidence ?

[45989]

[QUOTE=GrahamO;9798354]Can someone explain in simple terms how exactly the ME3 have an unfair advantage, other than being in a low tax environment, not paying much for staff and delivering a good product ?

The advantage the Pirates, as some see fit to call them, have is a vastly superior service coupled with very low fares.
Same as whinging about theLoCo's on shorthaul except for the service difference.
I avoid legacy carriers esp US ones due to poor service

[Piltdown Man]

No, it's not an unfair advantage but it's not a level playing field either. The ME3 are little more than pirates who rip off whatever they can from others. Instead of robbing ships they now do this using airliners flown by staff with few rights, pay little tax and virtually nothing in social costs. Worst, the westerners who work there expect to return home to a society they have not contributed to and possibly even helped destroy. It's not as is if they even have a local market worth tapping into by way of trade. So, if the ME3 want access, let's have a level playing field and a social tax, per flight, on the ME3 may be the way forward. If they don't want to contribute, that's no problem. They can just stick to flying in their own region.

[GrahamO]

Thanks. I thought as much.

Sounds like it is, as you say, not an unfair advantage but a situation where the EU is trying to enforce its employment laws and bloated economic model onto other countries by trying to tell other countries how they should employ people and behave, so as to make themselves as uneconomic as EU based airlines ? basically, be as sh*t as EU airlines or we wont let you in.

It appears you have a significant chip on the shoulder there if I may be so bold.

Staff choose to work for airlines and if they don't like the terms then they shouldn't go there in the first place - but very many do, and are very happy doing it for the money.

It sounds like you are the sort of person who makes a choice to sign up to something, and then spends their life complaining about your choice, as if someone else forced you to make it.

Workers in the ME choose to get a tax tree income (not a tax free environment though) and forego the bloated bureaucracy and tiny benefits of the EU - even if working in the EU were actually available to them as a choice.

Its personal choice. A choice which you would appear to believe should not even be offered.

As to the tax issue, most people flying and working in the ME wouldnt even get a job in their own economies so its hardly sensible to suggest they should stay in a broken economy when they can work overseas and send valuable money to their families at home to support them.

Maybe the EU should stick to flying in its own region if it plans on remaining hopelessly uncompetitive in the world market, and offering second class service for first class prices ?

PS the concept of a level playing field is complete BS in business. The inventor of the next successful 'widget' wont give up that advantage just because the EU wants the others failures to have chance will it ? Oh yes, its the EU - failures must be protected even when the market changes and they are completely useless.

[Piltdown Man]

Let's look at other regions. Like the former Eastern Bloc, the Americas, Russia, Asia etc. Each of these regions have different social norms, different religions and trading practices. But at their heart they have economies that are worth trading with. The UAE does not, so what's in it for us? Even the Chinese are putting something back into the African hosts whose countries they are currently raping.

Fat, bloated, inefficient - these are all adjectives that can quite correctly be used to describe many European airlines. But in turn, the societies from which they operate can also be described as open, fair, caring, tolerant, moral, progressive etc. But this comes at a price. That price can be paid by allowing fair access, trade or tariffs. The countries hosted by the ME3 offer nothing in return. Trade is trade, meaning both sides should get something out of it. Our current arrangement is unbalanced and needs redress.

Lastly, our lives are richer if they are made up of more than just money. Being valued, treated with respect, having the opportunity to do what you want and not having to worry too much about your future. But when you trade with people who offer nothing in return these things become harder to achieve.

So I'm in total agreement with you. We'll stick to our bit of the world and the ME3 can stick to its own. Problem solved.

[Aluminium shuffler]

Piltdown man, you do talk some rubbish. For a start, the expats in the ME aren't using home nations' resources or services. If they're not, why should they pay home taxes? As it happens, many do continue voluntary payments to social systems like the NIC to continue payments to their pensions. As for their employers not paying taxes, the do pay education, housing and medical benefits, so that evens out.

Perhaps you should be looking a little closer to home, at the P2F, zero hour contract and other "atypical employment" schemes of low cost airlines, where these social contributions and taxes are often missing entirely, and who circumvent the law to avoid proper employment or union representation.

[Piltdown Man]

AS - We don't need the ME3 for anything, they give us nothing so they can either cough up or bugger off. But I'm in total agreement with you on P2F and other scumbag employers who also don't play by the rules. Maybe we could export them to somewhere where their attitudes are considered enlightened. But if they stay behind, their circumvention of employment laws and tax evasion should be criminal offences, punishable by fines and imprisonment. Company executives don't like prison much.

[Aluminium shuffler]

Pilt, it's market forces. If the EU airlines don't have the spaces for everyone and the locos don't offer good packages, then where do you expect pilots to go? Should they accept lower conditions and work for unscrupulous employers just to stay in a high tax environment to pay for people who don't work, students, health tourists and so on? As long as people pay what liabilities they have, what's the problem? Those who continue to pay social contributions will get their full pensions, and those who don't will have reduced state pensions based on prior contributions. So where is the problem? Let's face it, AF, Olympic, Iberia and others all go state aid even when it was made explicitly illegal, and I suspect AF and Alitalia still do. Even KLM was helped by the EU allowing it to buy up AF after BA were blocked from doing so.

[Piltdown Man]

My beef is not with the employees of the ME3 carriers. Their pilots have got to be some of the poorest rich people around and the treatment of cabin crew/service staff is close to despicable. These people have to work to put food on the table and get their kids through school. They have had to take jobs wherever they are. As I said earlier, the real rogues are in the EU and the ME3 have taken advantage of an open goal. The problem is, pressure is now being placed on the scum in the EU and as a result they may have to install a few goalkeepers.

Even KLM was helped by the EU allowing it to buy up AF after BA were blocked from doing so.

Nearly. AF bought KLM (well, swapped shares. 10 AF vs 1 KLM). The merger (or acquisition) of KLM by BA didn't go ahead because BA refused to guarantee that existing KLM board members would retain their seats.

[RAT 5]

"The European Union proposed new rules on Thursday to more effectively tackle alleged unfair competitive practices by foreign airlines as it seeks to ensure European carriers can withstand fierce competition overseas..."

It is alleged that there are some unfair competitive practices closer to home. Some employment structures offer distinct advantages in cost base compared to those who use more conventional employment contracts. Surely the EU's own back yard should be sorted out first.

[UAV689]

They should look into the practices of ltd companies and crews....

All tax dodging, for the pilots until expenses used up, and social dumping by the airline.

Get their own house in order first, these loco practices are damaging for people, countries, lowering tax revenues for goverments, and lining some rich shareholders, no doubt most of whom are not eu based....

[racedo]

Can someone explain in simple terms how exactly the ME3 have an unfair advantage, other than being in a low tax environment, not paying much for staff and delivering a good product ?

I read the Reuters article and can see no mention of how an unfair advantage is gained, in practice and just some waffle about what happens if there is any evidence ?

Finance at 0% never repayable which means the bottomless pit just gets topped up when required.

[racedo]

Let's look at other regions. Like the former Eastern Bloc, the Americas, Russia, Asia etc. Each of these regions have different social norms, different religions and trading practices. But at their heart they have economies that are worth trading with. The UAE does not, so what's in it for us? Even the Chinese are putting something back into the African hosts whose countries they are currently raping.



Remind me how well the benolvent states of Europe treated Africa.

[Miserlou]

The EU could begin by requiring airlines operating in EU airspace to have signed, and demonstrably comply with, various United Nations human rights and labour bills.

That would put an immediate end to most of these issues.

In fact, wouldn't it be nice if all European governments required that to be the case before accepting financing, shares purchases and the like from any such country.
Ooops, didn't Qatar just buy a substantial portion of the national gas infrastructure?!

[GrahamO]

The EU could begin by requiring airlines operating in EU airspace to have signed, and demonstrably comply with, various United Nations human rights and labour bills.

That would put an immediate end to most of these issues.

No it wouldnt as the ME region is based upon low/zero taxes and PAYG for anything you want, not breaching anything. The UN doesnt tell anyone how much they should pay, nor how long they should work, just that they should be paid and paid on time. The UN doesnt say what interest rates should be charged, and it certainly doesnt tell anyone how to run its business. In fact, the EU airlines would be far better off adopting ME practices of paying for actual performance, not just for turning up for work and expecting an annual pay rise for breathing another year.

The vast majority of people in the ME are more than happy to not pay for a bloated European bureaucracy and only pay for what they use, as they end up with far higher disposable incomes. They come to the ME to get away from the bloat of Europe, or the poverty of their own countries and almost always come out better than staying at home.

The EU just want to drag everyone else into its bloated, inefficient cosseted state of affairs as its killing itself slowly with bureaucracy and wants to drag everyone else down with it.

[racedo]

The EU could begin by requiring airlines operating in EU airspace to have signed, and demonstrably comply with, various United Nations human rights and labour bills.

That would put an immediate end to most of these issues.


First country to object lies Westward of the current EU with its capital in Washingto DC.

[Odins Raven]

Luckily the EU has outstanding morals and none of it's members have embraced globalisation. You would never see an EU-based company taking advantage of cheap labour and non-domestically produced goods.

Take EU airlines for example. They only buy fuel from oil sourced organically in pretty villages in the French countryside, and all their uniform materials, passenger food, aeroplane parts, IT etc is all hand-made traditionally by locals with all the money being pumped straight back into local regeneration. You never see poverty in the EU because it works so well and we don't live in glass houses and throw stones.

Just off to buy a Starbucks coffee on the way to paying my taxes. I know I'll get served by Johnny English and the company will pay its taxes straight into my wonderful government tax pot so I can enjoy benefits such as wonderful state health care, regular waste management etc.

[ShotOne]

The fact that others (Starbucks,Amazon) seem to get away with paying a minuscule tax rate doesn't even begin make it a level playing field with the Middle East airlines. There's almost unlimited access to cheap (free?) capital. Labour costs which reflect medieval working practices (not hyperbole; In Qatar it is a criminal offence to leave your employment, even with wages unpaid for years) and finally, almost zero tax and social costs.

Regarding the amount of APD collected on EK flights, that argument only holds water if we assume aviation grinds to a halt if with a level playing field.