Last updated: 05:16 PM ET, Thu April 16 2015

British Airways Parent Quits Trade Group Over Gulf Carriers Divide

Airlines & Airports | Rich Thomaselli | April 16, 2015

British Airways Parent Quits Trade Group Over Gulf Carriers Divide

Tensions have boiled over for two prominent European airlines as the debate over the Open Skies Agreement momentarily shifts continents.

Multiple media outlets are reporting that British Airways and Iberia Airlines parent International Consolidated Airlines Group (IAG) has left the Association of European Airlines (AEA) over a decided difference of opinion on the growth of Middle East Gulf carriers.

Backed by Air France and Lufthansa, the AEA is calling for an investigation into Emirates, Etihad and Qatar airlines over subsidies received from their respective governments. Air France and Lufthansa – Europe’s largest airline – would like to limit access to Europe for the Gulf carriers.

That puts the AEA in line with U.S. domestic airlines American, Delta and United, which convinced the Obama Administration to open an investigation into the Middle East carriers, alleging they have received $42 billion in subsidies from 2004-2014.

That did not sit well with IAG, which owns British Airways and Spanish carrier Iberia.

In a statement, IAG said it is philosophically opposed to the AEA’s stance on the Gulf carriers “on some important policy issues (that) is not aligned with the other AEA legacy airlines. … In particular, we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matter.”

IAG CEO Willie Walsh (pictured above) cut a deal with Qatar Airlines earlier this year, allowing the Gulf carrier to buy a 10 percent stake in his company. But he has gone on record prior to that saying he sees no problem with the rapid growth of the Middle East airlines.

Etihad Airways CEO James Hogan met with European Union transport commissioner Violeta Bulc on Wednesday to discuss the burgeoning international dispute.

In a statement, Hogan said, “Growing resistance to us from a handful of protectionist competitors could have unintended consequences well beyond limiting our development. If our growth is curtailed or our investments in airlines are compromised, the real damage will be to Europe in lost jobs, lost flight connectivity, lost investment in local and national economies and lost consumer choice.”


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