The aviation industry in Europe contributes 2.1% to Europe’s GDP and employs close to five million people in the European Union currently. In December 2015, the European Union (EU) came up with an aviation strategy to give a boost to the European economy, while providing cheaper, yet clean and safe flights to customers.
The strategy called for more uniform and transparent rules between the European Union and other countries, primarily from the Gulf Cooperation Council (GCC) who are the biggest competition to the EU aviation industry. This would improve the market access to the EU, along with better options for the customers in both connectivity and pricing. The EU also felt a need to clamp down on unfair commercial practices from other countries.
A work in progress
The European Commission (EC) has been authorized to start negotiations for EU-level aviation agreements between the European Union and the GCC and other countries. The EU Commissioner for transport, Violeta Bulc has assured that these agreements will create both economic and job growth in the EU. Along with a level-laying field for aviation companies in the EU, there would also be improved services for the customers, she added.
A question of competition…
The EC has also proposed looking at ownership regulations of EU airlines. There is a 49% cap on foreign ownership of EU airlines, but some GCC airlines have stakes in multiple EU airlines. This EU-level aviation agreements is a shift from existing bilateral deals between the GCC and individual European countries, and the Dubai-based airline Emirates has questioned the need for the same.
Emirates pointed out that competition is an issue already addressed by the bilateral aviation agreement. They also gauged the impact the new strategy would have on state-supported airlines. The aviation traffic in Europe is set to grow exponentially in the next 20 years, but much of the current contributors to this volume are the Gulf operators. So the EC sees the new agreements as a way to increase the competitiveness of the European companies through elevated investment and business opportunities.
The EC is also looking to tackle issues like the employment of overseas workers by EU airlines instead of hiring EU citizens, in an attempt to save costs. The EC will weigh in to see if a change in labor laws is required. Capacity constraints, the use of drones, the emission of greenhouse gases are some other points on the agenda. For long-haul flights between Asia and the Americas, destinations like Dubai, Abu Dhabi and Doha are emerging as favorites, leaving traditional hubs like Paris, London and Amsterdam behind. This is also seen as a threat to the EU airline industry by European carriers.
There is also a proposal to complete the project called Single Europe Sky, to merge the national air corridors, which would lead to a reduction in costs and emissions. The new aviation strategy has been hailed by the five largest players in the European market – Lufthansa Group, Air France-KLM, International Airlines Group, Ryanair and easyJet.
The new aviation strategy is seen as manna for the aviation industry in Europe, and both the airlines and customers can reap the benefits in the years to come.