THE EFFECT OF UNFAIR GULF COMPETITION ON EUROPEAN AIRLINES

THE CURRENT REALITY… European airlines follow strict competition rules per European Commission $42 billion guidelines. Three Gulf carriers, however, have received massive aid- over $42 billion in subsidies- from their governments over the past 10 years. This has resulted in huge, artificial, and unfair advantages. the amount of market distorting state aid that has been provided Since it was founded in mid-2003, Etihad Airways has received more than to Emirates, Etihad, and Qatar $17 billion in subsidies from the government of Abu Dhabi (UAE), Airways by the governments of including $8.4 billion in “loans” and “shareholder advances” that have no the United Arab Emirates AND repayment obligations and $6.8 billion in reduced interest payments from government loan guarantees. Indeed, in 2014 alone, Etihad Airways received Qatar over the past 10 years

$2.5 billion in capital injections from their government.

Qatar Airways has also been provided with more than $17 billion from the 430% government of Qatar over the past 10 years. In fact, in 2009 Qatar Airways shareholders considered dissolving the airline as it had accumulated losses that exceeded 50 percent of its share capital. Without government subsidies, the increase in Gulf carrier Qatar Airways would not exist. capacity in Europe over the past 10 years Emirates has also received over $6 billion in subsidies from their home government of Dubai (UAE). These subsidies include debt assumption from fuel hedging losses and government subsidized airport infrastructure. 80% As a result of this aid, European airlines and their employees are losing market share on routes that were once profitable as Gulf carriers expand into regions regardless of market demand and flood routes with excess seats at the percentage of flights between artificially low prices. It has become impossible to compete fairly for the Gulf and Europe daily that are customers on such routes, and as a result, European airlines are having to operated by 3 gulf carriers withdrawal from routes they once served and forgo job growth.

This is detrimental to the European aviation industry & its workers. The European aviation industry supports over 7 million jobs- 7 million workers 23 who face the very possible risk of losing their jobs as a result of unfairly subsidized competition. This is bad news for travelers as well. Without the number of bilateral competitive fares, there will be significantly fewer airlines, leaving travelers agreements the UAE holds with EU with less choice and prices not determined by healthy competition, not to member states that have mention significantly less direct access to destinations both at UNLIMITED traffic rights including home and globally, particularly regarding travel to the Gulf, some with 5th freedom rights India, and South-East Asia. The future looks even worse taking into consideration the more than 200 wide-bodied aircraft these 3 airlines have on order for delivery over the next 5 years, fueling growth at unprecedented and unwarranted levels backed by home-state subsidies. Unless action is taken, these aircraft will largely be put into service on routes already served by European carriers, flooding markets & costing European jobs. WHAT’S AT STAKE

Massive subsidies distort the market and make it impossible for organizations to compete. Already the effects of these subsidies are rippling through Europe- money is being lost, routes are being forgone, and jobs are being cut. For example, between 2004 and 2015 European carriers have decreased their frequency to Bangkok by 8 flights a week, while Gulf carriers have added an additional 66 flights a week between Europe and Bangkok. For every route that a European carrier has to abandon or scrap from service expansion plans, over 600 jobs are lost. Unfair Gulf subsidies put almost 7 million jobs at risk. WHAT STEPS CAN WE TAKE TO ADDRESS THIS? We must convince our individual nations and EU governing bodies that these subsidies must be stopped. Rules must be adhered to and enforced. It is in the best interest of our individual economies, workers, and consumers, as well as in the best interest of the European Union as a whole, that Europe continues to be able to remain a player in the realm of international aviation. This is only possible if competition is fair.

“Aviation was made a strategic industry in Dubai 20 years ago (…) That is the big difference with Europe (where) there is no strategy.” -Thierry Antinori, CCO of Emirates

Information sourced from LUF and AFKLM submissions to the US DOT joint docket regarding Gulf carrier subsidies